Lenzing AG — Annual Report 2021

Mar 17, 2022

```markdown

Annual Financial Report 2021 Lenzing Group

Management Report CHAPTER 1 /3

Content

• General Market Environment 3
• The Development of Business in the Lenzing Group 5
• The Development of Business in the Division 7
• Investments 12
• Research and Development 13
• Non-financial statement 14
• Risk Report 15
• Report on the Key Elements of the Internal Control System (Section 243a Para. 2 of the Austrian Commercial Code) 20
• Shareholder structure and information on capital 22
• Outlook 24
• Appendix: Notes on the Financial Performance Indicators of the Lenzing Group 25

Consolidated Financial Statements of the Group 2021

• Content Notes 31
• Consolidated Income Statement 32
• Consolidated Statement of Comprehensive Income 33
• Consolidated Statement of Financial Position 34
• Consolidated Statement of Changes in Equity 35
• Consolidated Statement of Cash Flows 37
• Notes to the Consolidated Financial Statements 38
• Auditor’s Report 109
• Declaration of the Managing Board 113
• Lenzing Group Five-Year Overview 114

Jahresabschluss AG 2021

• Bilanz 116
• Gewinn- und Verlustrechnung 118
• Anhang zum Jahresabschluss 120
• Erläuterungen zur Bilanz 123
• Erläuterungen zur Gewinn- und Verlustrechnung 130
• Sonstige Angaben 133
• Entwicklung des Anlagevermögens 142
• Entwicklung der Zuschüsse der öffentlichen Hand 144
• Bestätigungsvermerk 145
• Erklärung des Vorstandes 148

Imprint 149

General Market Environment

Global economy

1 In 2021, the global economy recovered from the previous year’s recession, despite the ongoing COVID-19 pandemic. The International Monetary Fund estimates that growth amounted to 5.9 percent in 2021 (-3.1 % in 2020). The economy in industrialized nations is expected to have expanded by 5 percent (2020: -4.5 %). At 5.6 percent (2020: -3.4 %), growth in the USA was higher than that of the Eurozone at 5.2 percent (2020: -6.4 %). As in the previous year, China recorded above-average growth of 8.1 percent (2020: 2.3 %). Despite the economic recovery, 2021 was characterized by numerous economic challenges: supply failed to keep pace with demand in many areas of the global economy. In addition to further reasons, including structural reasons, this led to significant price increases, particularly in the energy area, and to problems in global supply chains. For 2022, the IMF forecasts growth of 4.4 percent. However, a continuation of the economic recovery remains exposed to risks, especially the further course of the pandemic and its implications for individual economic sectors.

Global fiber market

2 Global demand recovers to pre-crisis levels; fiber production continues to rise

Following the pandemic-related shock in the previous year, the demand situation in the textile and apparel industry largely recovered in 2021. Retail sales of apparel returned to pre-crisis levels worldwide. However, major regional differences were evident: in the USA, sales increased by up to 50 percent year-on-year, to stand some 10 to 15 percent above pre-crisis levels. Sales in China were stable, although only just above their 2019 level, while EU sales were almost 20 percent below their 2019 level. Sales in Japan were down by as much as 20 to 25 percent. These differences, some of which are very significant, are particularly due to local infection patterns and the government measures taken. The extensive recovery in the textile and apparel industry and continuing high demand for medical and hygiene products, which also led to strong demand for nonwoven fibers in 2021, fed through to a significant recovery in the world fiber market. Initial estimates suggest that production levels on the world fiber market are likely to have risen by 2 to 3 percent year-on-year to 116 mn tonnes.

Cotton production decreased by 7 percent to 24.3 mn tonnes in 2020/2021, according to preliminary estimates. This is mainly due to the effect of comparatively high crop yields in the 2019/2020 pre-season. Demand rose by 13 percent to 25.7 mn tonnes. Cotton stocks subsequently reduced, but still remained above 2019 levels. Wood-based cellulosic fiber production in 2021 increased by 8 percent to set a new high of 7.3 mn tonnes, supported by strong demand and capacity expansions. The production of modal and lyocell fibers rose at an above-average rate. Production volumes of synthetic polymer fibers grew by almost 6 percent to 78.5 mn tonnes, according to initial estimates. Polyester fibers reported the fastest growth in 2021. Polyamide, polypropylene and acrylic fibers were at lower levels, due mainly to price disadvantages compared to polyester, and difficulties in raw material supplies.

	2021-12-31	2020-12-31	2019-12-31
ifrs-full:IssuedCapitalMember
ifrs-full:CapitalReserveMember
ifrs-full:OtherEquityInterestMember
ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember
ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember
ifrs-full:ReserveOfCashFlowHedgesMember
ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember
ifrs-full:RetainedEarningsMember
ifrs-full:EquityAttributableToOwnersOfParentMember
ifrs-full:NoncontrollingInterestsMember
	2021-01-01 to 2021-12-31	2020-01-01 to 2020-12-31	2019-01-01 to 2019-12-31
	iso4217:EUR	iso4217:EUR	iso4217:EUR
xbrli:shares
ifrs-full:IssuedCapitalMember
ifrs-full:CapitalReserveMember
ifrs-full:OtherEquityInterestMember
ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember
ifrs-full:ReserveOfGainsAndLossesOnFinancialAssetsMeasuredAtFairValueThroughOtherComprehensiveIncomeMember
ifrs-full:ReserveOfCashFlowHedgesMember
ifrs-full:ReserveOfRemeasurementsOfDefinedBenefitPlansMember
ifrs-full:RetainedEarningsMember
ifrs-full:EquityAttributableToOwnersOfParentMember
ifrs-full:NoncontrollingInterestsMember
```# Annual Financial Report 2021 Lenzing Group

General Market Environment

2 All production-related figures in this section were updated from the initial estimates published in the Annual Report 2021. Source: ICAC, IWF, Cotton Outlook, CCFG, FAO

Price trends further affected by COVID-19

The ongoing COVID-19 pandemic continued to affect the general price level for staple fibers in 2021. Prices for a number of fiber types recovered, in some cases significantly, as demand returned. The cotton price amounted to 127.2 US cents per pound as of December 31, 2021, corresponding to an increase by 50 percent compared with the beginning of the year. On average, the cotton price was 41 percent higher than in the previous year. The rise in cotton prices is only partly attributable to fundamental factors. It is primarily driven by dynamics on international commodity markets and problems in the global supply chain.

Prices for standard viscose hardly changed over the year. At RMB 12,000 per tonne, the year-end price was only 4 percent higher than that at the previous year-end. However, price trends were subject to significant fluctuations over the course of the reporting year. In the first quarter, prices recorded a significant recovery from the COVID-19 crisis to peak at RMB 15,600 per tonne as of the end of February. As a consequence, prices came under pressure in an environment of subdued demand and rising stocks. In September, the Chinese government imposed measures to reduce energy consumption in industry. This also affected the textile value chain, such as spinning and weaving mills, which in turn had a negative impact on fiber demand and viscose price trends. A brief recovery phase was followed by further decreases in prices from the end of November with the emergence of the omicron variant. Average 2021 prices for standard viscose stood 45 percent higher than the previous year’s average.

Prices for wood-based specialty fibers such as those of the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands were much more stable than those for standard fibers. The Chinese import price for fiber pulp, the key raw material for the production of wood-based cellulosic fibers, rose by 24 percent to USD 905 per tonne during the year, outpacing the increase for paper pulp. In the meantime, the price had even risen to USD 1,106 per tonne in April. Supporting factors for the sustained high price level included a supply shortage due to supply bottlenecks and logistical problems, as well as higher demand at the end of the year. At USD 991 per tonne, the average price for the year was 36 percent higher than in the previous year.

The polyester price in 2021 was affected by significant price fluctuations for crude oil and intermediates, as well as a recovery in demand. The price of polyester staple fiber in China rose by 19 percent year-on-year to RMB 7,020 per tonne at the end of the year. The average price for the year was also RMB 7,020 per tonne, 20 percent higher than the previous year’s average.

1 Source: ICAC, CIRFS, TFY, Lenzing estimates
2 Source: CCFG, CCA

Thanks to its strategic focus on specialty fibers and a largely positive market environment, the Lenzing Group recorded a significant year-on-year improvement in revenue and earnings trends in 2021. Growing optimism in the textile and apparel industry as a consequence of the progress made with vaccinations and the continuing recovery in the retail sector ensured a significant rise in demand and prices on the global fiber market, particularly at the beginning of the year under review.

Revenue rose by 34.4 percent to EUR 2.19 bn in 2021, reflecting both higher sales volumes as well as higher fiber prices. The focus on wood-based specialty fibers, such as those of the TENCEL™, LENZING™ ECOVERO™ and VEOCEL™ brands, also exerted a positive impact on revenue growth. These positive price and mix effects more than offset negative currency effects.

The earnings trend mainly reflects Lenzing’s position within the current market environment. A continued focus on measures to improve structural earnings in all regions reinforced this positive effect. Significant increases in energy, raw material and logistics costs were recorded throughout the reporting year. Earnings before interest, tax, depreciation and amortization (EBITDA) almost doubled year-on-year to EUR 362.9 mn in 2021 (compared with EUR 192.3 mn in 2020). The EBITDA margin rose from 11.8 percent to 16.5 percent. Operating profit (EBIT) amounted to EUR 200.6 mn (compared to EUR 33.9 mn in 2020). The EBIT margin rose accordingly from 2.1 percent to 9.1 percent.

The financial result of EUR minus 17.7 mn includes the full write-off of the interest in Hygiene Austria LP GmbH as well as a loan to this same company. Earnings before tax (EBT) increased to EUR 182.9 mn compared with EUR 22.3 mn in 2020). Net profit for the year amounted to EUR 127.7 mn compared with EUR minus 10.6 mn in 2020) and earnings per share stood at EUR 4.16 (compared with EUR 0.24 in 2020). The income tax expense of EUR 55.2 mn (compared with EUR 32.8 mn in 2020) follows the earnings trend and reflects currency effects and the valuation allowance applied to individual Group companies’ tax assets.

Details on revenue and earnings trends in the year under review are as follows:

Condensed consolidated income statement

EUR mn	Change 2021	Change 2020	Absolute	Relative
Revenue	2,193,000	1,630,000	563,000	34.5%
Cost of sales (excluding depreciation)	(1,768,000)	(1,428,000)	(340,000)	23.8%
Gross profit	425,000	202,000	223,000	110.4%
Other operating income	4,684	2,424	2,260	93.2%
Selling expenses	(258,000)	(187,000)	(71,000)	38.0%
Administrative expenses	(125,000)	(66,000)	(59,000)	89.4%
Research and development expenses	(48,000)	(32,000)	(16,000)	50.0%
Other operating expenses	(75,000)	(139,000)	64,000	(46.0%)
EBIT	10,700	33,900	166,700	491.7%
Financial result	(17,700)	(11,700)	(6,000)	51.3%
EBT	182,900	22,300	160,600	720.2%
Income tax expense	(55,200)	(32,800)	(22,400)	68.3%
Net profit/loss for the year	127,700	(10,600)	138,300	n/a

1) Since the beginning of the 2021 financial year, the Lenzing Group has reported its consolidated income statement by applying the cost of sales method. The previous presentation applied the nature of expense method. The complete consolidated income statement is presented in the consolidated financial statements.

Higher level of investment activities

Gross cash flow almost tripled to EUR 372 mn in 2021 (compared to EUR 126.8 mn in 2020), which mainly reflects the earnings trend. Cash flow from operating activities amounted to EUR 394 mn (compared with EUR 48.9 mn in 2020). Free cash flow stood at EUR minus 445.5 mn (2020: EUR minus 614.8 mn), which was especially due to investment activities related to the projects in Thailand and Brazil. Capital expenditure on intangible assets, property, plant and equipment, and on biological assets increased by 26.3 percent to EUR 844.3 mn in the reporting period, approximately half of which was financed from cash flow from operating activities. The sharp increase in investment volumes is primarily due to the implementation of the two key projects. The liquidity position rose by 4 percent year-on-year to stand at EUR 1.11 bn as of the end of 2021.

Solid balance sheet structure

The Lenzing Group’s total assets grew by 27.9 percent compared to December 31, 2020, and amounted to EUR 5.3 bn as of the end of December 2021. The most significant changes relate to the increase in property, plant and equipment due to the higher level of investing activities. Adjusted equity rose by 10.9 percent to EUR 2.12 bn as of the end of 2021, primarily due to the operating profit trend in 2021. The adjusted equity ratio decreased from 45.8 percent to 39.7 percent, due particularly to the higher level of total assets. Net financial debt amounted to EUR 977 mn as of the end of the reporting year (compared to EUR 471.4 mn as of December 31, 2020). This increase reflects the financing of the two key projects in Thailand and Brazil. Net gearing rose to 46.2 percent as of the reporting date (compared with 24.7 percent as of December 31, 2020). Trading working capital increased by 0.9 percent to EUR 387.4 mn.

The Development of Business in the Lenzing Group

In order to prepare the Lenzing Group for the challenges and opportunities deriving from the investment projects and the changed market environment, the Managing Board presented a new organizational structure that is to support the sCore TEN strategy objectives with a focus on profitable, organic growth in specialty fibers, and further enhance efficiency and transparency. As a consequence, the management of the business was adjusted and divided into the two new divisions of “Fibers” and “Pulp”.

The Lenzing Group’s investment activities in 2021 continued to focus on the expansion of the Group’s internal fiber pulp production, raising the share of specialty fibers, and implementing the climate targets in line with the sCore TEN corporate strategy.

In September, the Lenzing Supervisory Board reached an amicable agreement with long-serving CEO Stefan Doboczky on the early termination of his contract. Mr. Doboczky informed the Supervisory Board that he would not be available for a further extension of his contract from 2022. The Lenzing Supervisory Board noted this with great regret, and in agreement with Mr. Doboczky terminated his contract as of the end of the third quarter. Cord Prinzhorn was appointed CEO on an interim basis. Mr. Prinzhorn has been a member of the Lenzing Supervisory Board since the Annual General Meeting in April of this year. As of November 4, 2021, he relinquished this position until further notice, and assumed the CEO role.# Division Fiber

The Fibers Division comprises all business activities of the Lenzing Group with the different generations of wood-based cellulosic fibers. Specialty fibers are Lenzing’s great strength. The objective is to generate more than 75 percent of fiber revenues from business with wood-based specialty fibers such as lyocell and modal fibers by 2024. The focus of this strategic target was the start-up of the new state-of-the-art lyocell plant in Thailand with a nominal capacity of 100,000 tonnes. Production starts in the first quarter of 2022. Moreover, Lenzing is investing more than EUR 200 mn in production sites in China and Indonesia to convert existing capacities for standard viscose into capacities for environmentally compatible specialty fibers. In Nanjing, Lenzing is working on converting a line to TENCEL™ modal fibers. The portfolio of the Chinese fiber plant will thereby consist entirely of specialty fibers by the end of 2022. As part of the investment in Purwakarta, Lenzing will bring its entire viscose production up to EU Ecolabel standards. The site will thereby become a pure specialty viscose supplier as of 2023.

Note 3 to the condensed consolidated interim financial statements as of June 30, 2021

In addition to the new lyocell plant in Thailand, which is designed to be carbon neutral, investments at existing sites are also in line with Lenzing’s targets to reduce carbon dioxide emissions per tonne of product by 50 percent by 2030, and to be climate neutral by 2050. With the repositioning of its product brands, the Lenzing Group has been sending a strong message to consumers since 2018. With TENCEL™ und LENZING™ ECOVERO™ as umbrella brands for all specialty products in the textile segment, VEOCEL™ as the umbrella brand for all specialty nonwoven products, and LENZING™ for all industrial applications, the company showcases its strengths in a targeted manner. Lenzing continued to enhance the visibility of its brands in 2021 through targeted communication measures. The revenue of the Fibers Division reached a level of EUR 1.9 bn in 2021, 69.4 percent of which was attributable to textile fibers and 30.6 percent to fibers for nonwovens and special applications. Fiber sales volume increased by 15.5 percent in 2021 to approximately 909,000 tonnes (2020: approximately 787,000 tonnes). The share of specialty fibers in fiber revenues decreased to 72.3 percent (2020: 76.2 %) as a consequence of the recovery in standard viscose prices. The division’s earnings (EBITDA) amounted to EUR 214 mn, while operating earnings (EBIT) stood at EUR 107.4 mn.

Textile Fibers

The market for textile fibers performed very well in 2021, although significant differences in demand for standard viscose and specialty fibers were discernible in some cases. Prices for standard viscose were very volatile. High energy, raw material and logistics costs coupled with poor availability of containers further affected the economic attractiveness of standard viscose fibers. In contrast, the wood-based specialty fibers business recorded stable and high demand in all major producing textile markets such as China, India, Pakistan, Bangladesh and Turkey, as well as for all Lenzing product groups (TENCEL™ lyocell and modal fibers, LENZING™ ECOVERO™ fibers), driven by growing demand for high-quality and sustainably produced fibers from retailers and fashion brands.

Lenzing also presented a variety of new fiber innovations in 2021, which help make its partners’ product ranges more sustainable. In February, Lenzing launched TENCEL™ brand modal fibers with Indigo Color technology. The single-stage spun-dyeing process used here enables indigo pigments to be incorporated directly into the fiber. Compared to conventional indigo dyeing processes, this ensures better color fastness with significantly lower resource consumption. The product has been awarded the EU Ecolabel. This label is awarded to products that meet high environmental standards throughout their life cycle. To meet demand for more recycling solutions in the textile and apparel industry, in September Lenzing presented carbon-neutral TENCEL™ fibers enhanced by REFIBRA™ recycling technology. The carbon-free lyocell and modal fibers of the TENCEL™ brand generated significant growth in interest among customers and partners along the value chain in 2021. These fibers represent an important step taken by Lenzing and its partners on their joint path to carbon neutrality. In October, Lenzing expanded its product range to include matt TENCEL™ lyocell fibers. These provide a matt appearance to garments, in contrast to the typical sheen of TENCEL™ lyocell fibers. Feedback from fashion brands and retailers was very positive, leading to good initial sales figures.

In addition to environmental protection, transparency also represents a great challenge for the textile industry. To address the issue, Lenzing expanded its fiber identification system to include TENCEL™ lyocell and modal fibers in 2021. With this step, the company once again underlined its commitment to a transparent textile value chain. In addition, Lenzing offers an innovative solution based on blockchain technology in collaboration with TextileGenesis™ to ensure traceability along the textile value chain. As of December 31, 2021, more than 600 different partner companies have been successfully integrated into the platform. Thanks to the innovative Fibercoin™ technology of the TextileGenesis™ platform, Lenzing is able to issue digital tokens in direct proportion to physical fiber deliveries. These track deliveries along the value chain and act as a kind of digital twin. The feedback from leading fashion brands and retailers is positive.

Lenzing also made very good progress in the development of the lyocell filament business under the TENCEL™ Luxe brand. TENCEL™ Luxe filaments have been registered with The Vegan Society™ since 2021. The independent certificate proves that the wood-based filaments are manufactured entirely without animal testing or animal components. In 2021, more fabrics were developed as sustainable and vegan alternatives to silk fabrics for outerwear, footwear, activewear and traditional Indian clothing. Leading fashion brands and designers have already incorporated some of these developments into their collections. Lenzing also optimized the operation of its second pilot plant in 2021 and received approval for a project to eliminate capacity bottlenecks in December as a consequence of the positive market trend.

In addition, Lenzing further expanded the awareness and visibility of its TENCEL™ and LENZING™ ECOVERO™ brands in 2021. In the first half of the year, Lenzing reached more than 400 million consumers worldwide with brand activation at Earth Day (#checkwhatsgood), the Oscars (with Red Carpet Green Dress and TENCEL™ Luxe) and #FeelsSoRight. New co-branding initiatives in collaboration with partners such as Zara, PULL&BEAR, Zalando, Massimo Dutti, Camper, H&M and Esprit have greatly increased visibility in the market. The TENCEL™ eShop was opened in February 2021. It now includes ten brands, including Levi’s®, H&M, Esprit, Jack & Jones, J.Crew, Mara Hoffman and West Elm. It is the world’s first e-commerce portal from a sustainable fiber producer. It was featured in Vogue magazine and has reached over 20 million people to date. The portal now has more than 100,000 page views from an international audience and is continuing to grow. To further raise awareness for sustainable fashion, Lenzing implemented the #MakeItFeelRight campaign from June to December. By the end of the year under review, 510 million consumers in nine countries had been reached.

Nonwoven Fibers

The nonwoven fibers business continued to comprise an important strategic pillar for Lenzing in the second year of the pandemic. Higher demand for hygiene products as a consequence of COVID-19 also had a positive impact on demand for nonwoven fibers in the first half of 2021. The high level of stocks worldwide weakened this effect somewhat in the second half of the year. Lenzing’s nonwoven fibers business also continued to benefit from the long-term global trend toward more sustainable, biodegradable materials, supported by new regulations in the markets. The company welcomes the issuance of the guidelines for the implementation of the Single-Use Plastics Directive (EU) 2019/904, which came into force on June 5, 2019. In this directive, the EU Commission specifies which products fall within its scope, thereby providing clarity in the EU member states’ joint fight against plastic waste pollution. Lenzing’s wood-based and biodegradable nonwoven fibers, such as those under the VEOCEL™ brand, offer a sustainable and innovative solution to this man-made problem.

The Single-Use Plastics Directive also provides for uniform labeling requirements for certain products on either the packaging or on the product itself from July 3, 2021. These include feminine hygiene products and wet wipes for personal and household care that contain plastics. With its VEOCEL™ brand, Lenzing provides consumers with clear guidance for their purchasing decisions: products bearing the VEOCEL™ brand logo on their packaging follow stringent certification criteria. This assures consumers that the fibers of the labeled product are biodegradable and contain 100 percent cellulosic material. With the #ItsInOurHands environmental initiative, the VEOCEL™ brand is specifically raising consumer awareness of issues such as sustainable materials, as well as climate and environmental protection. In 2021, the initiative achieved a global reach of more than 70 million, again also increasing the visibility of the VEOCEL™ brand.With the “It’s In Our Hands” school project, the brand is also involved in the “Citizen Science” area, which aims to raise awareness among students aged 10 to 16 concerning the importance of sustainable materials in everyday products. The launch took place in the fall of 2021 in the USA, Germany and Austria.

With the “Nature re-imagined” campaign, Lenzing placed an even greater focus on its particularly environmentally compatible lyocell process in its advertising activities in 2021. The process developed by Lenzing enables more than 99 percent of the solvent to be recovered in a closed loop and to be always fed back into the production process. With VEOCEL™ brand lyocell fibers, Lenzing thereby offers customers in the nonwovens sector a sustainable fiber that also features special properties in terms of quality.

As part of the “Climate Care” campaign, Lenzing launched the first carbon-neutral cellulosic fibers on the global nonwovens market in the second quarter. The launch of fibers certified as CarbonNeutral® products in accordance with the CarbonNeutral Protocol guidelines represents a further milestone on the joint journey of Lenzing and its partners towards carbon dioxide neutrality. This new offering in the VEOCEL™ brand portfolio is the result of targeted measures to reduce specific product emissions. By utilizing renewable energies, low carbon dioxide raw materials and energy sources, efficient production methods, and carbon dioxide offsetting via verified climate protection projects, it is possible for the first time to offer fibers for nonwoven fibers with a carbon-neutral footprint.

The hydrophobic LENZING™ Lyocell Dry fiber is a further product innovation from the year under review. This combines the benefits of standard lyocell fiber with the ability to repel moisture and liquid. Unlike conventional cellulosic fibers, water cannot penetrate the fibers, with the water instead forming beads on the surface. The fiber thereby makes it possible to tap further application areas that were previously largely dependent on petroleum-based fibers.

With a focus on information and education as well as innovative new products, the company succeeded in expanding its global brand presence and network of co-branding partners in 2021: in the USA, the VEOCEL™ brand cooperates with well-known brands such as Coterie and Neutrogena, and in China with Kotex, a brand of US hygiene products manufacturer Kimberly-Clark. In Turkey, the VEOCEL™ brand joined the multimedia campaign of Turkish hygiene products manufacturer DeepFresh.

Co-products of fiber production

The Lenzing Group produces LENZING™ sodium sulfate as a co-product at all locations where viscose or modal fibers are manufactured. This is used in the detergent and glass industries and for the production of food and animal feed. Sales volumes at the Lenzing site increased by 12 percent year-on-year in 2021.

Since 2019, Lenzing has produced and marketed LENZING™ calcium sulfate, a further co-product reporting a constant trend level. Sales volumes already amounted to 16,000 tonnes in 2021.

Division Pulp

The Pulp Division comprises all Lenzing Group business activities from wood procurement through to the production of fiber pulp and biorefinery products. In addition to the activities in Paskov and Lenzing, the division focused on the implementation of the major project in Brazil in 2021. The construction of the fiber pulp mill in Minas Gerais continues to proceed according to plan, despite the challenges caused by COVID-19. Commissioning is still planned for the first half of 2022.

In addition to securing internal supplies, the new pulp mill also enables Lenzing to achieve an important milestone in its climate neutrality strategy. It will be one of the world’s most productive and energy-efficient mills and feed more than 50 percent of the electricity generated into the public grid as renewable energy.

In 2019, Lenzing made a commitment to reducing its greenhouse gas emissions per tonne of product by 50 percent¹ by 2030 compared with a 2017 baseline. The aim is to be climate-neutral by 2050.

In order to further boost closed loop recycling, Lenzing signed a partnership agreement with Swedish pulp producer Södra in June. The cooperation involves the transfer of knowledge between the two companies, which have been proactively driving closed loop recycling for many years, as well as a joint new process development for the recycling of textile waste. A capacity expansion for pulp from textile waste is also planned. The aim is to be able to recycle approximately 25,000 tonnes of used textiles per year by 2025. Lenzing has proactively developed and promoted innovations in recycling for several years (such as the REFIBRA™ and Eco Cycle technologies) in order to provide solutions to the global textile waste problem.

The Pulp Division’s revenue reached a level of EUR 759 mn in 2021. Divisional earnings (EBITDA) amounted to EUR 210.1 mn, and operating earnings (EBIT) stood at EUR 164.2 mn.

Wood

Developments on global commodity markets also had a significant effect on the wood market in 2021. A labor shortage in the value chain, increased demand for firewood and biomass as a consequence of high energy prices, as well as a high level of production in almost the entire wood processing industry have tightened the availability of various types of wood and prompted an upward price dynamic. The Lenzing Group’s current procurement strategy entailing long-term master agreements achieved a good stabilizing effect on volumes and prices. Lenzing was consequently able to ensure a good supply situation with moderate price increases at its two pulp plants at the sites in Lenzing (Austria) and Paskov (Czech Republic) during the reporting period.

In 2021, an audit in accordance with the Forest Stewardship Council® (FSC®) and Programme for the Endorsement of Forest Certification™ (PEFC™) forest certification systems confirmed again for both sites that, in addition to stringent forestry laws in the supplier countries, all wood used derives from PEFC™ and FSC® certified or controlled sources.

¹ License code: FSC-C041246 and PEFC/06-33-92 (Lenzing), and FSC-C118737 and PEFC/08-31-0025 (Paskov)

Biorefinery Pulp

The Pulp Division supplies the Lenzing Group’s fiber production sites with high-quality fiber pulp, and operates its own fiber pulp plants at the Lenzing and Paskov sites. This covers around two-thirds of Lenzing’s pulp requirements. The remainder is largely purchased on the basis of long-term agreements. A total of approximately 600,000 tonnes of fiber pulp was produced at Lenzing’s two pulp plants in 2021.

The price of hardwood-based fiber pulp in China increased by 36 percent in 2021 to USD 991 per tonne as of December 31, reflecting high demand along the entire value chain, especially at the start of the year.

Increasing internal fiber pulp production forms a key element in the implementation of the sCore TEN strategy. Construction of the pulp mill in Brazil as part of the joint venture with Dexco (formerly Duratex) continued to run to schedule in 2021, and its commissioning is planned for the first half of 2022. The expected construction costs amount to USD 1.38 bn. The project is predominantly financed through equity and long-term debt. To provide the biomass, the joint venture secured over 44,000 hectares of FSC®-certified commercial forest, and leased additional land, in order to have approximately 70,000 hectares of FSC®-certified land when completed.¹ These plantations operate in full accordance with the Lenzing Group’s guidelines and high standards for the sourcing of wood and pulp.

¹ FSC license code: FSC-C006042

Biorefinery products

In addition to pulp, the Lenzing Group’s biorefineries also produce and market biorefinery products so that further components of the valuable raw material wood are utilized. Renowned customers from the food, animal feed, pharmaceutical and chemical industries increasingly rely on biobased products from Lenzing. Sales volumes of the biorefinery products LENZING™ Acetic Acid Biobased and LENZING™ Furfural Biobased rose on average by 3 percent and 14 percent, respectively. The price increases on the cost side were successfully passed on to sales products.

The biorefinery products business area also places a strong focus on sustainability. A lifecycle analysis performed by the research institute Quantis confirmed that the carbon footprint of LENZING™ Acetic Acid Biobased is more than 85 percent less than that of comparable products based on fossil resources. Customers increasingly perceive this product advantage as a benefit.

Divisional supplies of energy and other raw materials

In the Fibers and Pulp divisions, energy and other raw materials are significant factors influencing the Lenzing Group’s financial position and performance.

Energy

Lenzing’s biorefinery concept at the Lenzing and Paskov locations makes the Group a pioneer in highly self-sufficient pulp and fiber production. For its other locations, Lenzing is developing energy efficiency enhancement programs.

After historically low prices in the previous year, the 2021 financial year was characterized by extreme price increases for all energy commodities, mainly due to a tight supply situation on the European natural gas market caused by delay in the commissioning of the “Nord Stream 2” pipeline project. Higher demand due to the long winter of 2020/2021 and the good economic situation exacerbated the situation. Prices for gas and electricity in Europe were well above previous record levels. Natural gas prices were up by 325 percent in 2021, and electricity prices increased by 205 percent. Coal prices rose by 118 percent in 2021 due to the strong economic recovery coupled with a reduction in supply, primarily in Asia.# Prices for carbon credits increased by 108 percent in the year under review, due not only to an artificial shortage of credits issued but also to higher demand for solid fossil fuels such as coal as a consequence of the sharp rise in gas prices. Oil prices, by contrast, recorded a “moderate” increase of 54 percent during the year under review, due to the dampening effect of global travel restrictions on demand.

The Lenzing Group’s procurement strategy for the main cost components, electricity and natural gas, is based on procurement via the spot market. Price increases on global energy markets consequently also led to a significant rise in the company’s energy costs in the reporting year. The Lenzing Group’s energy production facilities operated on a largely normal basis in 2021. At the Lenzing site, the construction of the largest open-space photovoltaic plant in the province of Upper Austria is planned on an area of 55,000 m². The project will be implemented in 2022, subject to final regulatory approvals.

In Paskov, a voltage dip in the European power grid led to the prolonged outage of a turbine. As a consequence, less surplus energy was fed into the public power grid in 2021 than in the previous year. The power plants in Purwakarta were operated with high availability levels and were further optimized. As the coal price in Asia was still very high in historical terms, energy costs remained high in 2021. The price of coal rose by 45.3 percent year-on-year. The grid electricity price recorded a small increase in comparison and was 4.1 percent higher in 2021 than in 2020.

The rising coal price also affected steam prices at the Nanjing site. On average, the steam price in 2021 was 23.1 percent higher than in 2020. The grid electricity price stood 3.8 percent higher than in the previous year. The switchover in energy production from coal to natural gas, which is intended to reduce carbon emissions, was progressed further in 2021.

Other raw materials

The shock to global commodity markets triggered by COVID-19, especially in the fourth quarter, led to tighter supplies and significant price increases in 2021. Lenzing is working on a long-term concept to enhance supply security. The successful completion and commissioning of the air purification and sulfur recycling plant at the Lenzing site in 2021 represented an important step along this path. Since the start of construction in 2019, Lenzing has invested approximately EUR 40 mn in the project, which will further reduce carbon emissions and increase self-sufficiency in relation to critical process raw materials.

Caustic soda

Caustic soda is used in the production of pulp and is also an important primary product for the production of viscose and modal fibers. It arises as a co-product from chlorine production.

Counter 10 Annual Financial Report 2021 Lenzing Group 35 Annual Report 2021 Lenzing Group

To the general price trend on raw material markets, prices for caustic soda decreased in the first half of 2021 due to oversupply in the market. Lower demand as a consequence of COVID-19 was offset by comparatively high production volumes due to generally good demand for chlorine. The market turned around in the second half of the year, and demand has increased significantly while supply has tightened. This situation led to a significant price increase worldwide.

Sulfur

Sulfur is an important starting material for the production of carbon disulfide and sulfuric acid. In turn, both raw materials are used in the viscose process. Sulfur prices also recorded a significant price increase in 2021, mainly due to higher demand and lower production volumes as a consequence of COVID-19 – with negative effects on availability in the meantime.

Others

The “Others” area mainly comprises central headquarters functions and overarching activities as well as R&D activities and the activities of BZL-Bildungszentrum Lenzing GmbH (training and personnel development). Revenue in the “Others” area reached EUR 6.1 mn in 2021. The result (EBITDA) amounted to EUR minus 58.4 mn, while the operating result (EBIT) stood at EUR minus 68.2 mn.

Hygiene Austria LP GmbH

After the allegations surrounding Hygiene Austria LP GmbH became known in March 2021, Lenzing worked intensively to address them. Accompanied by a corresponding set of specifications for the continuation of business operations on a firm footing, Lenzing also transferred its interest to Palmers Textil AG. In order to ensure the continuation of the company as a going concern in accordance with the nature of its formation, Lenzing initially waived a corresponding purchase price (see also press release of Lenzing AG of 04/02/2021). The entirety of this interest has been written off in the meantime.

11 Annual Financial Report 2021 Lenzing Group 36 Annual Report 2021 Lenzing Group

The Lenzing Group’s investing activities in 2021 continued to focus on increasing its internal fiber pulp production, raising the share of specialty fibers, and implementing the climate targets in line with the sCore TEN corporate strategy. Capital expenditure on intangible assets, property, plant and equipment and biological assets increased by 26.3 percent to EUR 844.3 mn in the reporting year. The sharp rise in the volume of capital expenditure is particularly due to the implementation of key projects in Brazil and Thailand.

In Brazil, Lenzing and its partner Dexco (formerly Duratex) are constructing the largest pulp mill of its kind with a nominal capacity of 500,000 tonnes per year. Dexco acquired a 49 percent interest in the LD Celulose joint venture, with Lenzing retaining 51 percent. Construction work also progressed according to plan in the year under review, despite the challenges due to COVID-19. For this reason, the commissioning of the mill is still planned for the first half of 2022. The expected construction costs for this largest project in Lenzing’s corporate history amount to USD 1.38 bn. The financing is mainly provided by long-term debt funding. IFC, a member of the World Bank Group, and IDB Invest, a member of the IDB Group, are supporting the investment program. Export credit agency Finnvera and seven commercial banks also participated in the approximately USD 1.15 bn financing package.

In Thailand, Lenzing worked at full speed in 2021 to complete the new state-of-the-art lyocell plant with a nominal capacity of 100,000 tonnes per year. Production started in the first quarter of 2022. The investment volume amounts to around EUR 400 mn.

In addition, Lenzing is investing more than EUR 200 mn in production sites in China and Indonesia to convert existing capacities for standard viscose into capacities for environmentally compatible specialty fibers. In Nanjing, Lenzing is working on converting a line to TENCEL™ modal fibers. The portfolio of the Chinese fiber plant will thereby consist entirely of specialty fibers by the end of 2022. As part of the investment in Purwakarta, Lenzing will bring its entire viscose production up to EU Ecolabel standards. The site will thereby become a pure specialty viscose supplier as of 2023.

In addition to the new lyocell plant in Thailand, which is designed to be carbon neutral, investments at existing sites are also in line with Lenzing’s targets to reduce carbon dioxide emissions per tonne of product by 50 percent by 2030 and to be climate neutral by 2050. In 2021, Lenzing also announced plans for the largest open-space photovoltaic plant in the state of Upper Austria, covering an area of 55,000 m² at the Lenzing site. In Grimsby (UK), the company is investing GBP 20 mn (equivalent to EUR 23.3 mn) in the construction of a new, state-of-the-art wastewater treatment plant, thereby implementing a planned measure to reduce wastewater emissions by 2022. The year 2021 also saw the successful completion and commissioning of the air purification and sulfur reprocessing plant at the Lenzing site. Thanks to the new plant, carbon dioxide emissions will be further reduced and self-sufficiency in critical process raw materials will be increased. Lenzing has invested approximately EUR 40 mn in this project since the start of construction in 2019.

Investments 12 Annual Financial Report 2021 Lenzing Group 37 Annual Report 2021 Lenzing Group

Research and development activities

Research and development activities in the Lenzing Group are concentrated in the Research and Development Department (R&D), a corporate unit based in Lenzing. At the end of 2021, a total of 222 staff were employed in R&D. R&D expenditures, calculated according to the Frascati method (after the deduction of grants), amounted to EUR 31.6 mn (compared with EUR 34.8 mn in 2020). Lenzing holds 1,487 patents and patent applications (from 190 patent families) in 52 countries as of the end of 2021.

The pandemic and its implications for public and private life continued to affect R&D in the year under review. Lenzing adapted its R&D portfolio to these circumstances in order to continue to fully support key projects and to further advance strategic topics such as textile recycling and forward solutions (e.g. TENCEL™ Luxe and LENZING™ Web Technology).

Focus areas in 2021

Sustainability is not only a core value within Lenzing’s strategy, but also a guiding principle for innovation and product development. In both process and product development, the R&D function is continuously working on solutions that further support the ambitious goal of carbon neutrality by 2050. A current focus in process development is the further integration of the biorefinery concept at the pulp production sites, and consequently even better material utilization of wood as raw material. Further projects focus on closing loops and reducing wastewater, as well as energy efficiency enhancement and the reduction of carbon dioxide emissions. Lenzing continued to expand its product offering for the textile and nonwovens industries in 2021.# Risk management

Risk management also includes the proactive analysis of potential events and near-misses. Further tasks include actively controlling risks and evaluating appropriate measures with the respective business areas. Since 2020, both long-term risks and opportunities related to climate change have been identified and assessed within the Lenzing Group. Mitigation measures corresponding to such risks are taken into consideration in the risk management process, including the requirements of the TCFD (Task Force on Climate-related Financial Disclosures) in relation to climate-related risks.

Risk management strategy

Lenzing pursues a multi-step approach to risk management:

Risk analysis (based on the COSO ®1 Framework)

The Central Risk Management Department carries out semiannual risk assessments with a five-year time horizon at all production locations and functional units. Long-term risks and opportunities are also analyzed in connection with ESG issues. The main risks, as well as an increasing number of opportunities, are recorded and quantitatively assessed in accordance with international COSO ® standards. Those risks are presented outside the consolidated statement of financial position and the consolidated income statement. The financial impact of a potential loss on Group EBITDA or on cash and cash equivalents is taken into consideration. The risks are simulated against EBITDA planning, and the range of potential deviations from the respective budget is determined. Lenzing uses a simulation software which also calculates other KPIs such as value at risk, risk-adjusted ROCE and a sensitivity analysis. Risks that cannot be measured in monetary terms are recorded qualitatively.

Risk reduction

The objective is to minimize, avoid or, in certain cases, intentionally accept risks based on appropriate measures. The actions taken depend on the expected impact of the specific risk on the Group.

Responsibility

Individual risks are assigned on the basis of the existing organization matrix. Each risk is assigned to a member of the Managing Board as “risk owner” and to a risk officer.

Risk monitoring/control

The effectiveness of the risk management system used by the Lenzing Group was evaluated by KPMG Austria GmbH pursuant to Rule 83 of the Austrian Corporate Governance Code (ACGC) as part of a special, limited assurance audit in the reporting year.

Reporting

The main risks are presented in detail in a report and discussed with the Managing Board and the Audit Committee. The risk report is also submitted to the Supervisory Board.

1 Committee of Sponsoring Organizations of the Treadway Commission

Market environment risks

Market risk

As an international corporation, the Lenzing Group is exposed to a variety of risks. The trend in prices and volumes for textile fibers and, to a lesser extent, also for nonwoven fibers, is cyclical as it is dependent on global and regional economic conditions. Lenzing fibers compete with cotton and synthetic fibers in many submarkets. Consequently, price trends for these products also have an influence on Lenzing fibers’ revenue and sales volumes trends. The Lenzing Group counteracts this risk by steadily increasing the share of specialty fibers in its global product portfolio and a consistent sustainability and innovation strategy. In addition to increasing the share of specialty fibers, which now accounts for around 72 percent of fiber revenue, the aim is to further expand the company’s role as a leader in terms of sustainability in the fiber sector. Lenzing fibers also offer a differentiating feature in the standard fiber sector with their high sustainability and quality standards combined with customer-oriented and solutions-oriented technical support. The Lenzing Group relies on a strong international market presence, especially in Asia, combined with a first-class regional support network for customers, as well as a high level of customer-oriented product diversification.

Sales risk

A comparatively small number of major customers are responsible for approximately one half of the Lenzing Group’s fiber revenue. A decrease in sales to these major customers, or the loss of one or more major customers without an immediate replacement, poses a certain risk. The company counteracts such risk with its global presence and the continuous broadening of its client base and sales segments. Possible default on trade receivables is covered by clear receivables management and global credit insurance.

Competitive and innovation risks

The Lenzing Group is exposed to the risk of losing its position on the fiber market due to greater competition or new technologies developed by competitors. In particular, the Lenzing Group could relinquish its market position if it were no longer able to offer its products at competitive prices, if its products were to fail to comply with customer specifications and quality standards, or if its customer service were to fail to meet customer expectations. Lenzing counteracts this risk with research and development activities that exceed the average for the sector, and by a high level of product innovation and steady cost optimization. The Lenzing Group – similar to other producers – is exposed to the risk that acceptable or superior alternative products may become available and at more favorable prices than wood-based cellulosic fibers.

Laws and regulations

The Lenzing Group is confronted with different legal systems and regulations in its global markets. A change in laws or other regulations (e.g. import duties, product classifications, environmental requirements etc.), as well as a more stringent interpretation of existing regulations and laws, could lead to significant additional costs

16 Annual Financial Report 2021 Lenzing Group 41 Annual Report 2021 Lenzing Group

or competitive disadvantages. The Lenzing Group maintains certified management systems for quality management according to ISO 9001, for environmental management according to ISO 14001, and for safety management according to ISO 45001. Legal compliance in connection with these management systems is regularly audited both internally and externally. With its own legal and compliance department, the Lenzing Group has a corporate division that performs corresponding consulting services and risk assessments. In response to the far-reaching implications of global warming for society and ecosystems, governments and further stakeholders are likely to introduce more stringent laws and regulations. For example, in addition to reducing carbon credits issued in the EU, new taxes on carbon dioxide emissions could be introduced. Other regions and countries are currently also planning to implement similar steps. The implementation of regionally differing measures could have a negative impact on the Lenzing Group’s civic performance and success. The Lenzing Group is implementing a number of measures to reduce climate-related transition risks, and to further enhance resilience in this area.

Intellectual property risks

A risk exists that Lenzing’s intellectual property may be infringed or incompletely protected. The Lenzing Group counters such risks by means of a dedicated intellectual property protection department.

Climate change and marine pollution

Increasing awareness of problems caused by climate change, such as rising sea levels, the frequency and severity of natural disasters, and a growing risk from pollution of the world’s oceans by plastic waste and microplastics, are creating major risks for the entire fiber industry. By producing biodegradable fibers, Lenzing regards this development as an opportunity for its business model. The Lenzing Group has recognized the far-reaching effects of climate change on society and ecosystems and offers a sustainable alternative with its innovative and biodegradable products. Lenzing is constantly working to set clear sustainability targets and is continuously seeking ways to enhance its energy efficiency as well as opportunities to utilize renewable energy sources or those with lower carbon dioxide emissions. As early as 2020, Lenzing became the first fiber manufacturer to commit to carbon neutrality by 2050.

ESG (Environment, Social and Governance)

As part of a materiality analysis conducted in 2021, Lenzing conducted a multi-stage, holistic survey of the main issues relating to its sustainably oriented business model. From this analysis, the most important risks and opportunities were determined for each ESG topic area. The topics are integrated into the Enterprise Risk Management System and are successively reflected in Lenzing’s long-term strategic business planning. In the environmental responsibility area (Environment), the main focus topics in the risk matrix comprise climate-related issues in connection with global warming (carbon dioxide reduction) as well as sustainable raw material procurement (wood, chemicals) and the growing water shortage in certain regions. Increasing regulation, particularly in relation to the taxation of greenhouse gases and the pricing of carbon, represents a significant risk for Lenzing. Regulations concerning greenhouse gas emissions have already been introduced in countries where Lenzing operates carbon-intensive processes. Lenzing is consistently working on the implementation of energy efficiency measures, as well as the reduction of carbon dioxide emissions in order to reduce the potential burden of eco-taxes. For Lenzing, wood is the most important natural resource for the production of its biodegradable cellulosic fibers. Despite sustainable sourcing policies and backward-integrated production, a risk exists that wood prices will rise due to climate change, increasing global demand for biomass, and alternative land use. In this context, Lenzing is expanding its pulp capacities in Brazil (see Lenzing Risk Outlook).# Risk Factors

The global textile industry, especially the fashion industry in which Lenzing’s products are frequently deployed, is regarded in a critical light due to its sometimes resource-intensive consumption of raw materials and its production processes. Lenzing identifies significant business opportunities through access to new and emerging markets with innovative new products and technologies. Innovation and sustainability lie at the heart of Lenzing’s sCore TEN corporate strategy. The production of pulp and fibers is associated with high levels of water consumption and emissions. Lenzing operates a careful global water management system that ensures compliance with both local laws and global standards. Lenzing is counteracting the increasing scarcity of water by continuously improving resource utilization and by optimizing the selection of sites for the expansion of production capacities. In the area of social responsibility (Social), the main risks were identified in the area of cyber attacks (see IT risks). With regard to the corporate governance area (Governance), the risk of inadequate compliance with corporate governance and resultant risks is considered material. Lenzing is continuously tightening its internal rules and expanding its compliance organization accordingly.

Operational risks

Procurement risk (including pulp supplies)

The Lenzing Group purchases large volumes of raw materials (wood, pulp, chemicals) and energy for the manufacture of its cellulosic fibers. Fiber production and related margins are exposed to risks arising from the availability and prices of these raw materials, which can fluctuate to the Lenzing Group’s disadvantage and may increase as a consequence of climate change. Such risks are countered through the careful selection of suppliers based on price, reliability and quality criteria, EcoVadis-based sustainability assessments, as well as the establishment of long-standing, stable supplier-customer partnerships, in some cases with multi-year or long-term supply agreements. In addition, all suppliers must comply with Lenzing’s Global Supplier Code of Conduct. Nevertheless, a risk exists of violations of this code, which may have a negative impact on the Lenzing Group and its stakeholders along the value chain. Supply chain risks may also result from disruptions caused by natural disasters. Lenzing has also entered into long-term contractual relationships with several raw material suppliers and service partners. These agreements require Lenzing to purchase specified quantities of raw materials on standardized terms and conditions, which may also include price adjustment clauses. Lenzing may consequently not be able to adjust prices, purchase volumes or other contract conditions over the short term in order to respond to market changes. The sCore TEN strategy includes an increased focus on backwards integration through the expansion of the Group’s own cellulose production.

Operating risks, environmental risks and risks relating to climate change

The production of wood-based cellulosic fibers involves complex chemical and physical processes that cause certain environmental risks. These risks are very well controlled thanks to proactive and sustainable environmental management, closed production cycles, ongoing emissions monitoring and state-of-the-art production techniques. Lenzing continuously works on increasing safety and environmental standards through voluntary references such as the EU Ecolabel. As the Lenzing Group has operated production facilities at several locations for several decades, risks arising from environmental damage in earlier periods cannot be completely excluded. Although the Lenzing Group has set very high technological and safety standards for the construction, operation and maintenance of its production sites, the risk of breakdowns, disruptions and accidents cannot be completely excluded. These types of disruptions can also be caused by external factors over which Lenzing has no control. It is impossible to provide direct protection against certain natural hazards, such as cyclones, earthquakes and floods. Moreover, a risk exists that personal injury, material and environmental damage, both within and outside the production facilities, could result in substantial claims for damages and even criminal liability. The Lenzing Group’s production activities are concentrated at a small number of locations. Any disruption at one of these facilities has a negative impact on the company’s business operations.

Product liability risk

The Lenzing Group markets and sells its products and services to customers worldwide. These business activities can lead to damage to customers, or along the value chain, through the delivery of a defective product by Lenzing or one of its subsidiaries. Moreover, product safety can be jeopardized by pollution, which may cause problems in the value chain, such as potential health implications for employees and customers. Lenzing is also subject to local laws in the countries where its products are delivered. Especially in the USA, the potential implications are considered to be severe. Such risk is countered by a special department that focuses exclusively on customers’ problems in processing Lenzing products and on handling complaints. Appropriate precautions in the production process and regular quality inspections have been implemented. Third party damages caused by Lenzing are covered by a global liability insurance program.

Financial risks

For a detailed description of financial risks refer to notes 36 to 39 in the Notes to the Consolidated Financial Statements.

Tax risk

The Lenzing Group’s production sites are subject to local tax regulations in their respective countries and are required to pay corporation tax as well as other taxes. Changes in tax legislation or different interpretations of prevailing regulations could lead to subsequent tax liabilities.

Compliance

Increasingly stringent international codes of conduct and legal regulations are creating additional demands on Lenzing in relation to compliance and monitoring. Inadequate controls in business processes or a lack of documentation can lead to the violation of applicable laws or regulations, and significantly jeopardize reputation and commercial success. Lenzing addresses this risk by, among other measures, continuously developing its Group-wide compliance organization, the corporate code of conduct that is valid throughout the Group, as well as directives addressing the areas of bribery and corruption, money laundering and antitrust practices. Further information on compliance is provided in the Corporate Governance Report.

IT risks

Lenzing depends on highly developed information technology (IT) systems for its daily operations. IT systems are vulnerable to a range of problems, including software and hardware malfunctions, malicious hacking and cyberattacks, physical damage to key IT centers, and computer virus infections. Consequently, any major damage, disruption and/or circumvention of its existing IT systems may disrupt Lenzing’s business operations.

Personnel risks

Personnel risks may arise through the turnover of key staff as well as the recruiting of new staff at all global sites. The Lenzing Group has established a Human Resources Department which operates internationally and coordinates personnel planning with the respective sites. It is responsible for the central management and monitoring of all personnel-related issues, including the organization of global management and training programs for potential executives. At the production facilities, Lenzing Group employees as well as external contractors’ workers and employees are exposed to a risk of injury. Lenzing’s “Heartbeat for Health & Safety” program takes such risk into consideration and includes a strategic approach to risk reduction, precautionary measures and extensive training. For more information, please refer to the Lenzing Group Sustainability Report. In addition, risks related to compliance with legal requirements arise when engaging contractors, particularly in connection with the two major projects in Thailand and Brazil.

Risks relating to major projects

The Lenzing Group is continuously expanding its capacities in numerous projects. Examples include the new pulp mill in Brazil and the lyocell mill in Thailand, which is being ramped up at present. These types of major projects entail an inherent risk of cost and schedule overruns. Lenzing counters such risks with a standardized planning process, consistent project management, ongoing cost controls, as well as insurance solutions and risk transfer. In addition to ongoing risk management, Monte Carlo simulations are used for projects of this and similar size to model the sensitivity of the key financial indicators. Despite the currently difficult environment due to the COVID-19 pandemic, progress with these two projects is largely running to schedule to date.

Risks from an external perspective and for other stakeholders

As a globally operating company, the Lenzing Group is aware of its social responsibility. The risks described in the risk report refer primarily to the effect on the Lenzing Group’s assets and earnings. As one of the sustainability leaders in its sector, the Lenzing Group seeks a balance between the needs of society, the environment and the economy. The company assumes such responsibility, particularly with respect to potential effects of its operations on neighbors of the production sites and in relation to society as a whole.# Report on the Key Elements of the Internal Control System (Section 243a Para. 2 of the Austrian Commercial Code)

Active stakeholder work to mitigate risks (partnership for systemic change) and to create additional benefits for people and the environment is a clear goal of the Lenzing Group’s innovation and operating activities. The Lenzing Group was awarded platinum status in EcoVadis’s CSR rating in the reporting year. This evaluation covers the most important practices in the Corporate Social Responsibility (CSR) area. In cooperation with its partners, the Lenzing Group is working on understanding the risks for stakeholders and on finding solutions to mitigate such risks. This work is based on open communication and transparency as well as continuous improvement of technologies and sustainable practices.

Internal Control System

The Lenzing Group’s internal control system is designed to safeguard the reliability of financial reporting, ensure compliance with legal regulations and corporate guidelines, and present the risks not reported on the consolidated statement of financial position or in the consolidated income statement. The Lenzing Group’s organizational structure and processes form the main basis for the control environment and the internal control system. The organizational structure includes the assignment of specific authorities and responsibilities to the various management and hierarchy levels at the Austrian sites and at all international subsidiaries. Key Group functions are centralized in corporate centers which reflect Lenzing’s global market presence as well as its decentralized business and site structure. The respective management teams are responsible for coordinating and monitoring business operations at national level.

Lenzing’s process organization is characterized by a well-developed and comprehensive set of guidelines which provide an effective foundation for a strong controlling environment and control system. Important Group-wide approval processes and responsibilities are defined in the Lenzing Group Mandates. The management of each business area or department is responsible for monitoring compliance with the respective regulations and controls.

Financial Reporting

The Corporate Accounting & Tax Department has central responsibility for financial reporting, the accounting-related internal control system, and tax issues within the Lenzing Group. The goal of the accounting-related control system is to ensure the uniform application of legal standards, generally accepted accounting principles, and the accounting regulations specified in the Austrian Commercial Code. This system also covers the consolidated accounting process and thereby ensures compliance with the rules defined by International Financial Reporting Standards (IFRS) and internal accounting guidelines, in particular the Group accounting manual and schedules.

The accounting-related internal control system is designed to safeguard the timely, uniform and accurate recording of all business processes and transactions. It thereby supports the preparation of reliable data and reports on the Lenzing Group’s financial position and financial performance. The subsidiaries included in the consolidated financial statements prepare financial statements in accordance with both local laws and IFRS standards at the company level on a timely basis. The subsidiaries are responsible for the decentralized implementation of existing rules and are supported and monitored in these activities by the Corporate Accounting & Tax function.

The Supervisory Board’s Audit Committee is integrated in the accounting-related control system. In addition, the annual financial statements are audited by external certified public accountants and the half-year financial statements are reviewed on a voluntary basis.

The Global Treasury Department, and above all the payments unit, is classified as a highly sensitive area due to its direct access to the company’s assets. The accompanying increased need for security is reflected in comprehensive regulations and instructions for all relevant processes. The entire process, from procurement through to payment, is subject to stringent corporate guidelines. These guidelines are largely supported by a Group-wide IT system which requires stringent functional separation, a clear authorization concept to prevent authorization conflicts as well as a stringent dual control principle for transaction settlement, in particular for payments, as well as regular reporting, among other measures.

The Internal Audit Department is responsible for monitoring the application of, and compliance with, controls in business operations.

Compliance with Legal Regulations and Internal Guidelines

The Lenzing Group’s Legal, Intellectual Property & Compliance Department is responsible for legal management. This centralized function handles legal matters within the Lenzing Group and is also responsible for the Compliance Management System (CMS). Together with the Managing Board, it oversees Group-wide compliance with legal regulations and internal guidelines as well as the prevention of legal violations and improper behavior. The Legal, Intellectual Property & Compliance Department reports directly to the Lenzing Group CEO.

The CMS evaluates compliance-relevant risks, analyzes deviations from standards and, if necessary, takes measures to reduce them (“prevent, detect, respond”). This department also draws up compliance-relevant guidelines and supports employee training activities worldwide. The Managing Board and the Supervisory Board (or the Audit Committee) receive regular reports on compliance measures.

The Lenzing Group complies with the rules defined by the Austrian Corporate Governance Code (ACGC) and prepares a Corporate Governance Report which is published as part of the Annual Report. The Corporate Governance Report requires the participation of the Supervisory Board, which delegates the responsibility for monitoring compliance with the related obligations to the Audit Committee.

The Corporate Audit Department is independent of all other organizational units and business processes and reports directly to the CFO. It evaluates whether the Group’s resources are deployed legally, economically, efficiently and correctly in the interests of sustainable development. The Corporate Audit Department’s activities are based on the international standards published by the Institute of Internal Auditors (IIA). Regular reporting to the Managing Board and the Audit Committee ensure the proper functioning of the internal control system.

Reporting of Risks Outside the Statement of Financial Position and Income Statement

The Risk Management Department is responsible for the reporting of risks that are not reported on the statement of financial position or in the income statement, and prepares a semi-annual risk report for this purpose. The major risks are also discussed in the Annual Report. The risk report is based on the international COSO® standards (Committee of Sponsoring Organizations of the Treadway Commission). Enterprise Risk Management adopts a holistic approach in this context. In addition to corporate and project risks included in medium-term planning, the focus is increasingly on the long-term consideration and evaluation of ESG criteria and the associated opportunities and risks for the sustainable development of the Lenzing Group’s performance and profitability.

Share Capital and Shareholder Structure

The share capital of Lenzing AG amounted to a total of EUR 27,574,071.43 as of the balance sheet date and is divided into 26,550,000 no-par-value shares. B&C Group is the majority shareholder with an investment in the voting rights of 50 percent plus two shares. NN Group N.V. holds approximately 5 percent of the shares. The free float amounts to approximately 45 percent. This is divided between Austrian and international investors. The Lenzing Group holds no treasury shares.

Position of Shareholders

Each no-par-value share grants the shareholder one vote at the Shareholders’ General Meeting of Lenzing AG. Unless provided otherwise by mandatory provisions of the Austrian Stock Corporation Act (AktG), the Shareholders’ General Meeting passes resolutions by a simple majority of the votes cast and – if a majority of the share capital is required – by a simple majority of the share capital represented at the Shareholders’ General Meeting. Lenzing AG has no shares with special control rights.

A resolution passed by the Annual General Meeting on June 18, 2020 authorized the Managing Board, subject to the consent of the Supervisory Board, to purchase treasury shares in the company for a period of 30 months starting on the date of the resolution pursuant to Section 65 Paras. 1 no. 4 and 8 and Paras. 1a and 1b AktG. The treasury shares acquired by the company may not exceed ten percent of the company’s share capital. The consideration to be paid for the repurchase must lie within a range of plus/minus 25 percent of the weighted average closing price on the last 20 stock exchange days preceding the start of the corresponding repurchasing program of the Lenzing share. The Managing Board was also authorized, subject to the consent of the Supervisory Board, to withdraw repurchased treasury shares without any further resolution by the Shareholders’ General Meeting (including the authorization of the Supervisory Board to adopt changes to the articles of association resulting from withdrawing the shares), or to resell them and to determine the conditions of sale.This authorization can be exercised in full, in several parts and in pursuit of one or several objectives by the company, by a subsidiary (Section 189a no. 7 of the Austrian Commercial Code [UGB]) or by third parties for the company’s account. In addition, the Managing Board was authorized for a period of five years from the date of the resolution to approve the sale of treasury shares, subject to the consent of the Supervisory Board, in any manner permitted by law other than through the stock exchange or public offer, and also to exclude shareholders’ repurchasing rights (subscription rights), and to determine the conditions of sale. A resolution passed by the Annual General Meeting on April 12, 2018 authorized the Managing Board, subject to the consent of the Supervisory Board, to increase the share capital by up to EUR 13,787,034.68 through the issue of up to 13,274,999 no-par-value bearer shares – including in tranches – in exchange for cash and/or non-cash capital contributions, within five years from the entry of the changes in the articles of association in the commercial register and to determine the issue price and the further issue conditions (“authorized capital”). This authorized capital was recorded in the commercial register on May 23, 2018. The statutory subscription right may be granted to shareholders in such a manner that the convertible bonds be assumed by a bank or a syndicate of banks with the obligation to offer them to the shareholders in accordance with their subscription right (indirect subscription right). The Managing Board was also authorized, subject to the consent of the Supervisory Board, to exclude shareholders’ subscription rights in the event of a capital increase from the authorized capital in whole or in part (i) if the capital increase in exchange for non-cash capital contributions is carried out for the purpose of acquiring companies, parts of companies, operations, parts of operations, participating interests in companies or other assets connected with an acquisition project, (ii) to satisfy an over-allotment option (greenshoe) or (iii) to compensate for fractional amounts. In addition, the Managing Board was authorized by a resolution of the Annual General Meeting on April 12, 2018 to issue, subject to the consent of the Supervisory Board, convertible bonds in one or several tranches that grant or provide for the subscription or conversion right or a subscription or conversion obligation for up to 13,274,999 shares in the company. These can be serviced through conditional capital to be approved and/or treasury shares. The issue price and issue conditions are to be determined by the Managing Board, subject to the consent of the Supervisory Board; the issue amount and the exchange ratio are to be determined in accordance with recognized methods of financial mathematics and the price of the company’s shares in a recognized pricing procedure. This authorization is valid until April 12, 2023. The statutory subscription right may be granted to shareholders in such a manner that the convertible bonds be assumed by a bank or a syndicate of banks with the obligation to offer them to the shareholders in accordance with their subscription right (indirect subscription right).

Shareholder structure and information on capital

22 Annual Financial Report 2021 Lenzing Group

47 Annual Report 2021 Lenzing Group

The Managing Board was authorized, subject to the consent of the Supervisory Board, to exclude the subscription right of shareholders when issuing convertible bonds in whole or in part (i) if the convertible bonds are issued in exchange for non-cash capital contributions for the purpose of acquiring companies, parts of companies, operations, parts of operations, participating interests in companies or other assets relating to an acquisition project, or (ii) for the compensation of fractional amounts resulting from the subscription ratio. The Managing Board was also authorized, subject to the approval of the Supervisory Board, to exclude the subscription right for convertible bonds in whole or in part, provided that the Managing Board, after due examination, arrives at the conclusion that the issue price of the convertible bonds at the time of the final determination of the issue price is not less than the hypothetical market value determined according to recognized, in particular financial-mathematical, methods and that the conversion price or subscription price (issue price) of the subscription shares is determined taking into account recognized methods of financial mathematics and the price of the company’s ordinary shares in a recognized pricing procedure, and is not lower than the stock market price of the company’s shares during the last 20 trading days prior to the date of announcement of the issue of convertible bonds. The Managing Board did not utilize the existing authorizations during the reporting year. The 77th Annual General Meeting of Lenzing AG was held in virtual format via livestream on April 14, 2021 due to the COVID-19 pandemic. Detailed information about the Annual General Meeting, proposals for resolutions and the results of voting are published on the website Lenzing AG: https://www.lenzing.com/investors/shareholders-meeting/2021. The 78th Annual General Meeting on April 26, 2022 will also be held in virtual format via livestream due to the ongoing COVID-19 pandemic.

Further disclosures pursuant to Section 243a of the Austrian Commercial Code

No provisions exist other than those stipulated by law that cover the appointment or dismissal of members of the Managing or Supervisory boards. The Dexco Group (formerly the Duratex Group) has a put option and has the right to divest its interest in the LD Celulose joint venture in the event of a change of control at the Lenzing Group (change of control clause). Besides this, the company has not entered into any significant agreements that would take effect, change or expire in the event of a change in control as the consequence of a takeover bid. No compensation agreements exist between the company and the members of the Managing and Supervisory boards or with employees that would take effect in the event of a public takeover offer.

23 Annual Financial Report 2021 Lenzing Group

48 Annual Report 2021 Lenzing Group

The International Monetary Fund forecasts global growth of 4.4 percent for 2022. However, the economic recovery from the deep recession caused by COVID-19 remains at risk, and continues to depend on the further course of the pandemic and its implications for individual economic sectors. The sharp rise in energy costs and problems in global supply chains pose further economic challenges. In addition, it has become increasingly important to monitor geopolitical risks. In particular, the military conflicts in Ukraine will have a negative impact on the global economy. The currency environment is expected to remain volatile in the regions relevant to Lenzing. The extensive recovery in demand in the global textile and apparel industry also led to a recovery in demand and rising prices on the world fiber market in 2021. In the trend-setting market for cotton, signs are emerging of a slight increase in stock volumes in the current 2021/2022 harvest season, although dynamics on international commodity markets and global supply chain problems are likely to continue to have a significant impact on price trends in 2022. At their peak, fiber pulp prices rose by more than 50 percent in 2021. The price stood at USD 905 per tonne as of December 31, 2021. Lenzing continues to assume growth in demand for environmentally compatible fibers for the textile and clothing industry as well as the hygiene and medical sectors. However, the currently positive market environment continues to be characterized by uncertainty due to the ongoing pandemic. Visibility remains limited as a consequence. Following significant cost increases in 2021, ongoing cost pressure on the energy, raw materials and logistics sides is expected in the first quarters of 2022. Taking into consideration the aforementioned factors and the imminent commissioning and completion of the key strategic projects, which will already make an initial contribution to earnings starting in the current financial year, the Lenzing Group anticipates that EBITDA in 2022 will lie significantly above the 2021 level.

Lenzing, March 01, 2022

Lenzing Aktiengesellschaft

Managing Board

Cord Prinzhorn
Chief Executive Officer

Thomas Obendrauf
Chief Financial Officer

Robert van de Kerkhof
Member of the Managing Board

Stephan Sielaff
Member of the Managing Board

Christian Skilich
Member of the Managing Board

24 Annual Financial Report 2021 Lenzing Group

Outlook

The key financial indicators for the Lenzing Group are described in detail in the following section These indicators are derived primarily from the IFRS consolidated financial statements of the Lenzing Group and are found in this annual report, above all, in the sections “Selected Indicators of the Lenzing Group” and “Five-Year Overview of the Lenzing Group”. The definitions of the indicators are summarized in the glossary to the annual report. The Managing Board believes these financial indicators provide useful information on the financial position of the Lenzing Group because they are used internally and are also considered important by external stakeholders (in particular investors, banks and analysts).

EBITDA, EBITDA margin, EBIT and EBIT margin

EBITDA and EBIT are viewed by the Lenzing Group as the benchmarks for the strength of operating earnings and profitability (performance) before and after depreciation and amortization.Due to their significance – also for external stakeholders – the EBIT is presented on the consolidated income statement and EBITDA is presented in the Financial Performance Indicators and, in order to provide a comparison of margins, in relation to group revenue (as the EBITDA margin and EBIT margin).

EUR mn	2021	2020	2019	2018	2017
Earnings before interest and tax (EBIT)	210.1	110.0	90.70	137.7	126.1
+ Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets	10.50	10.40	10.60	15.60	15.10
- Income from the release of investment grants	(0.20)	(0.30)	(0.30)	(0.30)	(0.10)
Earnings before interest, tax, depreciation and amortization (EBITDA)	210.40	120.10	100.40	150.70	141.10

EUR mn	2021	2020	2019	2018	2017
Earnings before interest and tax (EBIT)	210.1	110.0	90.70	137.7	126.1
/ Revenue	1,490.20	1,270.10	1,490.30	1,450.20	1,350.10
EBIT margin	14.1%	8.7%	6.1%	9.5%	9.3%

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to financial result (see note 2 of the consolidated financial statements as at December 31, 2021).

EBT
EBT measures the pre-tax earnings strength of the Lenzing Group and is shown on the consolidated income statement.

Gross cash flow
In the Lenzing Group, gross cash flow serves as the benchmark for the company's ability to convert gains/losses from operating activities (before changes in working capital) into cash and cash equivalents. This indicator is presented in the consolidated statement of cash flows.

Free cash flow
The free cash flow generated by the Lenzing Group shows the cash flow generated by operating activities – after the deduction of investments – which is available to service the providers of debt and equity. This indicator is also important for external stakeholders.

Appendix: Notes on the Financial Performance Indicators of the Lenzing Group

EUR mn	2021	2020	2019	2018	2017
Earnings before interest, tax, depreciation and amortization (EBITDA)	210.40	120.10	100.40	150.70	141.10
/ Revenue	1,490.20	1,270.10	1,490.30	1,450.20	1,350.10
EBITDA margin	14.1%	9.5%	6.7%	10.4%	10.4%

25 Annual Financial Report 2021 Lenzing Group

EUR mn	2021	2020	2019	2018	2017
Cash flow from operating activities	210.10	90.10	110.00	102.10	76.50
- Cash flow from investing activities	(20.50)	(88.00)	(10.60)	(18.60)	(16.10)
- Net inflow from the sale and disposal of subsidiaries and other business areas	0.20	0.20	0.20	(0.20)	(0.10)
+ Acquisition of financial assets and investments accounted for using the equity method	0.70	0.10	0.40	0.20	0.10
- Proceeds from the sale/repayment of financial assets	(0.40)	(0.10)	(0.10)	(0.20)	(0.30)
Free cash flow	(19.90)	(8.70)	100.00	83.70	59.50

CAPEX
CAPEX shows the expenditures for intangible assets, property, plant and equipment and biological assets. It is presented in the consolidated statement of cash flows.

Liquid assets
Liquid assets show the Lenzing Group's ability to meet due payment obligations immediately with available funds. This indicator is also used to calculate other financial ratios (e.g. net financial debt; see below).

EUR mn	as at 31/12	2021	2020	2019	2018	2017
		6,433.00	6,277.00	4,760.00	1,370.00	1,280.00
Cash and cash equivalents		6,433.00	6,277.00	4,760.00	1,370.00	1,280.00
+ Liquid bills of exchange (in trade receivables)		270.00	260.00	240.00	270.00	240.00
Liquid assets		6,703.00	6,537.00	5,000.00	1,640.00	1,520.00

Trading working capital and trading working capital to annualized group revenue
Trading working capital in the Lenzing Group is a measure for potential liquidity and capital efficiency. It is used to compare capital turnover by relating it to group revenue.

EUR mn	as at 31/12	2021	2020	2019	2018	2017
		1,770.00	1,594.00	1,740.00	1,730.00	1,710.00
Inventories		1,770.00	1,594.00	1,740.00	1,730.00	1,710.00
+ Trade receivables		1,480.00	1,146.00	1,465.00	1,499.00	1,498.00
- Trade payables		(1,600.00)	(1,645.00)	(1,510.00)	(1,465.00)	(1,560.00)
Trading working capital		1,650.00	995.00	1,695.00	1,764.00	1,648.00

EUR mn	2021	2020	2019	2018	2017
Latest reported quarterly group revenue (= 4th quarter respectively)	370.00	320.00	320.00	360.00	360.00
x 4 (= annualized group revenue)	1,480.00	1,280.00	1,280.00	1,440.00	1,440.00
Trading working capital to annualized group revenue	11.1%	7.8%	13.2%	12.3%	11.4%

26 Annual Financial Report 2021 Lenzing Group

Adjusted equity and adjusted equity ratio
Adjusted equity shows the Lenzing Group's independence from the providers of debt and its ability to raise new capital (financial strength). This figure includes equity as defined by IFRS as well as government grants less the proportional share of deferred taxes. Adjusted equity is used to compare equity and debt with total assets. This (and/or a similar indicator) is occasionally used as a financial covenant by lenders.

EUR mn	as at 31/12	2021	2020	2019	2018	2017
		2,100.10	2,095.90	2,076.60	2,076.70	2,070.20
Equity		2,100.10	2,095.90	2,076.60	2,076.70	2,070.20
+ Non-current government grants		0.26	0.25	0.27	0.24	0.26
+ Current government grants		0.18	0.15	0.16	0.18	0.15
- Proportional share of deferred taxes on government grants		(0.18)	(0.17)	(0.16)	(0.14)	(0.14)
Adjusted equity		2,100.30	2,095.90	2,076.70	2,076.70	2,070.50
/ Total assets		7,305.10	7,200.40	6,205.30	5,465.10	5,480.50
Adjusted equity ratio		28.8%	29.1%	33.5%	38.0%	37.8%

Net financial debt, net financial debt/EBITDA, net gearing and net debt
Net financial debt is used by the Lenzing Group as the benchmark for its financial indebtedness and capital structure. It is also an important indicator for external stakeholders. The relation of this indicator to EBITDA shows the number of periods in which the same level of EBITDA must be generated to cover net financial debt. The ratio of net financial debt to adjusted equity (net gearing) illustrates the relation of net debt to adjusted equity. This (and/or a similar indicator) is occasionally used as a financial covenant by lenders. Net debt in the Lenzing Group measures the level of financial debt, including the provisions for severance payments and pensions.

EUR mn	as at 31/12	2021	2020	2019	2018	2017
		1,020.10	970.10	1,015.10	1,044.10	1,015.00
Current financial liabilities		1,020.10	970.10	1,015.10	1,044.10	1,015.00
+ Non-current financial liabilities		945.50	988.40	735.10	610.20	577.00
- Liquid assets		(1,020.50)	(970.00)	(700.10)	(530.00)	(570.00)
Net financial debt		945.10	988.50	1,050.10	1,124.10	1,022.00
/ Earnings before interest, tax, depreciation and amortization (EBITDA)		10.40	12.00	10.50	10.50	10.70
Net financial debt / EBITDA		0.9	0.8	1.0	1.1	1.0

EUR mn	as at 31/12	2021	2020	2019	2018	2017
		945.10	988.50	1,050.10	1,124.10	1,022.00
Net financial debt		945.10	988.50	1,050.10	1,124.10	1,022.00
/ Adjusted equity		2,100.30	2,095.90	2,076.70	2,076.70	2,070.50
Net gearing		45.0%	47.2%	50.6%	54.1%	49.4%

EUR mn	as at 31/12	2021	2020	2019	2018	2017
		945.10	988.50	1,050.10	1,124.10	1,022.00
Net financial debt		945.10	988.50	1,050.10	1,124.10	1,022.00
+ Provisions for severance payments and pensions		120.30	120.60	119.10	119.60	119.70
Net debt		1,065.40	1,109.10	1,169.20	1,243.70	1,141.70

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to financial result (see note 2 of the consolidated financial statements as at December 31, 2021).

27 Annual Financial Report 2021 Lenzing Group

Return on capital (ROE, ROI and ROCE)
Return on capital employed (ROCE) is the Lenzing Group's benchmark for the yield (return) on the capital employed in the operating business. It is also an important indicator for external stakeholders. Return on capital (ROE) and return on investment (ROI) are profitability indicators which measure the earnings strength of the Lenzing Group.

EUR mn	2021	2020	2019	2018	2017
Earnings before interest and tax (EBIT)	210.1	110.0	90.70	137.7	126.1
- Proportional share of current income tax expense (on EBIT)	(50.10)	(18.00)	9.00	(26.00)	(16.30)
Earnings before interest and tax (EBIT) less proportional share of current income tax expense (NOPAT)	210.0	(128.00)	100.00	111.70	109.80
/ Average capital employed	1,460.10	1,359.10	1,207.30	1,265.70	1,280.30
ROCE (return on capital employed)	14.4%	(9.4)%	8.3%	8.8%	8.6%

| Proportional share of current income tax expense (on EBIT) | (50.10) | (18.00) | 9.00 | (26.00) | (16.30) |
| Proportional share of other current tax expense | 0.60 | 0.30 | 0.90 | 0.70 | 0.30 |
| Current income tax expense | (49.50) | (17.70) | 9.90 | (25.30) | (16.00) |

EUR mn	as at 31/12	2021	2020	2019	2018	2017
		7,305.10	7,200.40	6,205.30	5,465.10	5,480.50
Total assets		7,305.10	7,200.40	6,205.30	5,465.10	5,480.50
- Trade payables		(1,600.00)	(1,645.00)	(1,510.00)	(1,465.00)	(1,560.00)
- Non-current puttable non-controlling interests		(0.15)	(0.15)	0.00	0.00	(0.17)
- Other non-current liabilities		(0.06)	(0.10)	(0.18)	(0.18)	(0.13)
- Other current liabilities		(0.19)	(0.19)	(0.17)	(0.17)	(0.17)
- Current tax liabilities		(0.18)	(0.01)	(0.16)	(0.19)	(0.14)
- Deferred tax liabilities		(1.30)	(0.80)	(0.70)	(0.70)	(0.50)
- Proportional share of deferred taxes on government grants		(0.18)	(0.07)	(0.06)	(0.07)	(0.05)
- Current provisions		(0.20)	(0.16)	0.15	0.17	0.17
- Non-current provisions		(0.17)	(0.14)	0.17	0.15	0.17
+ Provisions for severance payments and pensions		0.12	0.12	0.11	0.11	0.11
- Cash and cash equivalents		(1,480.00)	(1,450.00)	(4,760.00)	(1,370.00)	(1,280.00)
- Investments accounted for using the equity method		(0.07)	(0.06)	(0.07)	(0.05)	(0.01)
- Financial assets		(0.15)	(0.15)	(0.15)	(0.15)	(0.15)
As at 31/12		1,370.20	1,280.10	1,100.00	850.00	770.00
As at 01/01		1,280.10	1,100.00	850.00	770.00	700.00
Average capital employed		1,325.10	1,190.00	975.00	810.00	735.00

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to financial result (see note 2 of the consolidated financial statements as at December 31, 2021).
2) Reclassification of accruals from provisions to other liabilities in accordance with IAS 1 (see note 2 in the notes to the consolidated financial statements 2020).```markdown
28 Annual Financial Report 2021 Lenzing Group

EUR mn as at 31/12	2021	2020	2019	2018	2017
Adjusted equity 31/12	2,297	2,105	2,071	1,930	1,841
Adjusted equity 01/01	2,105	2,071	1,930	1,841	1,718
Average adjusted equity	2,201	2,088	2,000	1,885	1,779

EUR mn	2021	2020	2019	2018	2017
Earnings before tax (EBT)	183	22	199	199	72 / Average adjusted equity
ROE (return on equity)	8.3%	1.1%	9.9%	10.6%	4.1%

EUR mn as at 31/12	2021	2020	2019	2018	2017
Total assets 31/12	5,323	4,163	3,816	3,545	3,417
Total assets 01/01	4,163	3,816	3,545	3,417	3,219
Average total assets	4,743	3,990	3,681	3,481	3,318

EUR mn	2021	2020	2019	2018	2017
Earnings before interest and tax (EBIT)	201	34	125	137	107 / Average total assets
ROI (return on investment)	4.2%	0.9%	3.4%	4.2%	3.2%

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2 of the consolidated financial statements as at December 31, 2021).

29 Annual Financial Report 2021 Lenzing Group

2021 Consolidated Financial Statements of the Group

Content
Content
Notes
31 Consolidated Income Statement
32 Consolidated Statement of Comprehensive Income
33 Consolidated Statement of Financial Position
34 Consolidated Statement of Changes in Equity
35 Consolidated Statement of Cash Flows
37 Notes to the Consolidated Financial Statements
38

CHAPTER 2 /3

30 Annual Financial Report 2021 Lenzing Group

Content
notes
Notes to the Consolidated Financial Statements
38
Note 1. General Information 38
Note 2. Changes in accounting policies 40
Note 3. Consolidation 44
Note 4. Segment reporting 46
Notes on the Consolidated Income Statement
49
Note 5. Revenue 49
Note 6. Functional costs 49
Note 7. Other operating income 49
Note 8. Other operating expenses 49
Note 9. Cost of material and other purchased services 50
Note 10. Personnel expenses 50
Note 11. Amortization of intangible assets, depreciation of property, plant and equipment and right-of-use assets 50
Note 12. Auditor’s fees 52
Note 13. Income from investments accounted for using the equity method 53
Note 14. Income from non-current and current financial assets 53
Note 15. Financing costs 53
Note 16. Income tax expense 53
Note 17. Earnings per share 54
Notes to the Consolidated Statement of Financial Position, the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity
55
Note 18. Intangible assets 55
Note 19. Property, plant and equipment 57
Note 20. Biological assets 59
Note 21. Right-of-use assets 60
Note 22. Investments accounted for using the equity method 62
Note 23. Financial assets 64
Note 24. Other non-current assets 64
Note 25. Inventories 64
Note 26. Trade receivables 65
Note 27. Other current assets 65
Note 28. Equity 65
Note 29. Government grants 69
Note 30. Financial liabilities 70
Note 31. Deferred taxes (deferred tax assets and liabilities) and current taxes 71
Note 32. Provisions 74
Note 33. Trade payables 79
Note 34. Other liabilities 80
Notes to the Consolidated Statement of Cash Flows
81
Note 35. Disclosures on the Consolidated Statement of Cash Flows 81
Notes on Risk Management
82
Note 36. Capital risk management 82
Note 37. Disclosures on financial instruments 83
Note 38. Net interest and net result from financial instruments and net foreign currency result 94
Note 39. Financial risk management 95
Disclosures on Related Parties and Executive Bodies
103
Note 40. Related party disclosures 103
Note 41. Executive Bodies 105
Other Disclosures
106
Note 42. Financial guarantee contracts, contingent assets and liabilities, other financial obligations and legal risks 106
Note 43. Group companies 107
Note 44. Significant events after the end of the reporting period 108
Note 45. Authorization of the consolidated financial statements 108

31 Annual Financial Report 2021 Lenzing Group

32 Annual Financial Report 2021 Lenzing Group

Lenzing AG
Consolidated Income Statement for the period from January 1 to December 31, 2021
EUR '000 | Note | 2021 | 2020
---|---|---|---
Revenue () | | 2,194,624 | 1,632,607
Cost of sales () | | (1,692,760) | (1,386,412)
Gross profit | 1 | 501,864 | 246,195
Other operating income () | | 78,026 | 59,145
Selling expenses () | | (233,981) | (156,932)
Administrative expenses () | | (117,547) | (88,236)
Research and development expenses () | | (23,993) | (16,181)
Other operating expenses () | | (3,753) | (10,133)
Earnings before interest and tax (EBIT) | 2 | 200,615 | 33,858
Income from investments accounted for using the equity method () | | (3,541) | 5,674
Income from non-current and current financial assets () | | 7,881 | (5,402)
Financing costs () | | (22,029) | (11,878)
Financial result | | (17,689) | (11,607)
Earnings before tax (EBT)² | | 182,926 | 22,251
Income tax expense () | | (55,212) | (32,846)
Net profit/loss for the year | | 127,714 | (10,595)
Attributable to: | | |
Shareholders of Lenzing AG | | 110,346 | 6,277
Non-controlling interests | | (11,382) | (18,762)
Share planned for hybrid capital owners () | | 28,750 | 1,890

Earnings per share	EUR	EUR
Diluted = basic ()		4.16

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2).
2) EBIT: Operating result, resp. earnings before interest and tax. EBT: Earnings before tax.

33 Annual Financial Report 2021 Lenzing Group

Lenzing AG
Consolidated Statement of Comprehensive Income for the period from January 1 to December 31, 2021
EUR '000 | Note | 2021 | 2020
---|---|---|---
Net profit/loss for the year | | 127,714 | (10,595)
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit liability () | | (1,691) | 633
Financial assets measured at fair value through other comprehensive income (equity instruments) – net fair value gain/loss on remeasurement recognized during the year () | | 32,926 | (2,646)
Income tax relating to these components of other comprehensive income () | | (7,802) | 259
Investments accounted for using the equity method – share of other comprehensive income (net of tax) () | | 105 | (106)
| | 23,537 | (1,861)
Items that may be reclassified to profit or loss
Foreign operations – foreign currency translation differences arising during the year () | | 107,394 | (111,317)
Financial assets measured at fair value through other comprehensive income (debt instruments) – net fair value gain/loss on remeasurement recognized during the year () | | (36) | (34)
Financial assets measured at fair value through other comprehensive income (debt instruments) – reclassification of amounts relating to financial assets disposed during the year () | | 124 | 0
Cash flow hedges – effective portion of changes in fair value recognized during the year and non-designated components () | | (23,337) | (118,851)
Cash flow hedges – reclassification to profit or loss () | | 3,173 | 3,901
Income tax relating to these components of other comprehensive income () | | (3,575) | 6,447
Investments accounted for using the equity method – share of other comprehensive income (net of tax) () | | 79 | (6,574)
| | 83,822 | (226,428)
Other comprehensive income (net of tax) | | 107,359 | (228,289)
Total comprehensive income | | 235,073 | (238,884)
Attributable to: | | |
Shareholders of Lenzing AG | | 211,065 | (160,540)
Non-controlling interests | | (4,743) | (80,234)
Share planned for hybrid capital owners | | 28,750 | 1,890

34 Annual Financial Report 2021 Lenzing Group

Lenzing AG
Consolidated Statement of Financial Position as at December 31, 2021
EUR '000 | Assets | Note | 31/12/2021 | 31/12/2020
---|---|---|---|---
| Intangible assets () | | 36,049 | 29,669
| Property, plant and equipment () | | 2,877,606 | 2,068,059
| Biological assets () | | 95,767 | 84,254
| Right-of-use assets () | | 70,129 | 65,761
| Investments accounted for using the equity method () | | 24,840 | 29,088
| Financial assets () | | 38,869 | 40,890
| Deferred tax assets () | | 3,581 | 2,409
| Current tax assets () | | 14,937 | 15,157
| Other non-current assets () | | 42,723 | 25,915
| Non-current assets | | 3,204,501 | 2,361,202
| Inventories () | | 476,956 | 329,370
| Trade receivables () | | 325,172 | 249,662
| Current tax assets () | | 1,921 | 7,410
| Other current assets () | | 168,710 | 145,347
| Financial assets () | | 32,232 | 0
| Cash and cash equivalents () | | 1,113,279 | 1,069,998
| Current assets | | 2,118,270 | 1,801,786
| Total assets | | 5,322,771 | 4,162,988

EUR '000	Equity and liabilities	Note	31/12/2021	31/12/2020
	Share capital		27,574	27,574
	Capital reserves		133,919	133,919
	Hybrid capital		496,582	496,582
	Other reserves		15,134	(117,928)
	Retained earnings		1,206,359	1,192,800
	Equity attributable to shareholders of Lenzing AG		1,879,568	1,732,947
	Non-controlling interests		192,517	148,480
	Equity ()		2,072,085	1,881,427
	Financial liabilities ()		1,981,036	1,446,876
	Government grants ()		13,688	14,184
	Deferred tax liabilities ()		59,806	42,411
	Provisions ()		118,180	120,383
	Puttable non-controlling interests ()		234,409	140,341
	Other liabilities ()		6,740	26,861
	Non-current liabilities		2,413,860	1,791,055
	Financial liabilities ()		120,125	105,616
	Trade payables ()		414,768	195,200
	Government grants ()		44,168	19,878
	Current tax liabilities		38,293	2,390
	Provisions ()		39,088	25,657
	Other liabilities ()		180,382	141,765
	Current liabilities		836,826	490,506
	Total equity and liabilities		5,322,771	4,162,988

35 Annual Financial Report 2021 Lenzing Group

Lenzing AG
Consolidated Statement of Changes in Equity for the period from January 1 to December 31, 2021

Note	Share capital	Capital reserves	Hybrid capital	Foreign currency translation reserve	As at 01/01/2020	27,574	133,919	0	61,189
	Net profit/loss for the year as per consolidated income statement		0	0	0	0
	Other comprehensive income (net of tax)		0	0	0	(102,259)
	Total comprehensive income		0	0	0	(102,259)
	Hedging gains and losses and cost of hedging transferred to the cost of non-current assets and cost of inventory		0	0	0	0
	Acquisition/disposal of non-controlling interests and other changes in the scope of consolidation ()		0	0	0	0
	Increase in capital ()		0	0	496,582	0
```# Lenzing AG Consolidated Statement of Changes in Equity
## EUR '000
	Equity	Non-controlling interests	Equity attributable to shareholders of Lenzing AG and to hybrid capital owners	Other reserves	Retained earnings	Financial assets measured at fair value through other comprehensive income	Hedging reserve and non-designated components	Actuarial gains/losses	Total
	---	---	---	---	---	---	---	---	---
	As at 31/12/2020	27,574	133,919	496,582	(41,069)	0	0	0	617,006
	Net profit/loss for the year as per consolidated income statement	0	0	0	8,167	0	0	0	8,167
	Other comprehensive income (net of tax)	0	0	0	(10,595)	0	(62,697)	(2,010)	(75,302)
	Total comprehensive income	0	0	0	(2,428)	0	(62,697)	(2,010)	(67,135)
	Hedging gains and losses and cost of hedging transferred to the cost of non-current assets and cost of inventory	0	0	0	(158,650)	0	(80,234)	0	(238,884)
	Acquisition/disposal of non-controlling interests and other changes in the scope of consolidation	20,232	0	0	0	0	0	0	20,232
	Increase in capital	0	36,273	0	0	0	0	0	36,273
	Measurement of puttable non-controlling interest recognized directly in equity	0	0	0	0	0	0	0	0
	Dividends paid	0	0	0	(140,341)	0	0	0	(140,341)
	Transactions with equity holders	0	0	0	(200)	0	0	0	(200)
	As at 31/12/2021	47,806	170,192	496,582	(341,917)	0	(142,931)	(2,010)	263,725

Lenzing Group

Annual Financial Report 2021

EUR '000

Equity	Non-controlling interests	Equity attributable to shareholders of Lenzing AG and to hybrid capital owners	Other reserves	Retained earnings	Financial assets measured at fair value through other comprehensive income	Hedging reserve and non-designated components	Actuarial gains/losses	Total
As at 31/12/2020	27,574	133,919	496,582	(41,069)	1,513,006	24,854	1,537,860
Net profit/loss for the year as per consolidated income statement	0	0	0	127,714	0	0	0	127,714
Other comprehensive income (net of tax)	0	0	0	(12,441)	0	(1,122)	100,719	87,156
Total comprehensive income	0	0	0	115,273	0	(1,122)	100,719	214,870
Hedging gains and losses and cost of hedging transferred to the cost of non-current assets and cost of inventory	0	0	0	239,815	0	(4,743)	0	235,072
Acquisition/disposal of non-controlling interests and other changes in the scope of consolidation	32,342	0	0	0	0	0	0	32,342
Increase in capital	0	62,901	0	0	0	0	0	62,901
Measurement of puttable non-controlling interest recognized directly in equity	0	0	0	0	0	0	0	0
Dividends paid (including hybrid coupon)	0	0	0	(94,068)	0	0	0	(94,068)
Transactions with equity holders	0	0	0	(28,750)	0	(175)	0	(28,925)
As at 31/12/2021	32,342	233,093	496,582	115,532	1,513,006	23,557	1,638,579

Lenzing AG

Consolidated Statement of Cash Flows

for the period from January 1 to December 31, 2021

EUR '000

Note	2021	2020
Net profit/loss for the year	127,714	(10,595)
+ Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets (GG)	164,269	160,448
+/– Change in the fair value of biological assets (KC)	(2,258)	10,334
– Income from the release of investment grants	(1,944)	(1,979)
+/– Change in non-current provisions	(4,908)	(5,394)
–/+ Income / expenses from deferred taxes	6,838	10,768
+/– Change in current tax assets and liabilities	42,727	(15,299)
+/– Income from investments accounted for using the equity method	4,431	(4,883)
–/+ Other non-cash income / expenses (HC)	35,128	(16,568)
Gross cash flow	371,999	126,831
+/– Change in inventories	(144,902)	81,439
+/– Change in receivables	(75,115)	(38,360)
+/– Change in liabilities	242,049	(120,965)
Change in working capital	22,032	(77,885)
Cash flow from operating activities	394,030	48,946
– Acquisition of intangible assets, property, plant and equipment and biological assets (CAPEX)	(844,333)	(668,760)
– Acquisition of financial assets and investments accounted for using the equity method	(7,328)	(4,050)
+ Proceeds from the sale of intangible assets, property, plant and equipment and biological assets	4,810	5,046
+ Proceeds from the sale/repayment of financial assets and the sale of investments accounted for using the equity method	5,567	1,546
Cash flow from investing activities	(841,285)	(666,219)
+ Capital injections to consolidated companies by non-controlling interests	15,577	84,458
+ Increase of hybrid capital (KC)	0	495,443
– Dividends paid (including hybrid coupon) (KC)	(28,925)	(200)
+ Investment grants	1,095	1,618
+ Increase of bonds and private placements (HC)	0	131,691
+ Increase in other financial liabilities (HC)	626,384	604,277
– Repayment of bonds and private placements (HC)	(56,000)	(37,500)
– Repayment of other financial liabilities (HC)	(87,584)	(144,691)
Cash flow from financing activities	470,548	1,135,096
Total change in liquid funds	23,293	517,823
Liquid funds at the beginning of the year	1,069,998	571,479
Currency translation adjustment relating to liquid funds	19,987	(19,304)
Liquid funds at the end of the year	1,113,279	1,069,998

Additional information on payments in the cash flow from operating activities:

• Interest payments received: 3,963 (2020: 1,742)
• Interest payments made: 34,315 (2020: 19,449)
• Income taxes paid: 9,087 (2020: 33,533)
• Distributions received from investments accounted for using the equity method: 890 (2020: 40)

Lenzing Group

Annual Report 2021

Lenzing AG

Notes to the Consolidated Financial Statements as at December 31, 2021

General Information

Note 1. Basic information

Description of the company and its business activities

Lenzing Aktiengesellschaft (Lenzing AG), which maintains its registered headquarters in 4860 Lenzing, Werkstrasse 2, Austria, is the parent company of the Lenzing Group (the “Group”). The shares of Lenzing AG are listed in the Prime Market Segment (since April 18, 2011) and in the ATX benchmark index (since September 19, 2011) of the Vienna Stock Exchange in Vienna, Austria. The core shareholder of Lenzing AG as at December 31, 2021 is the B&C Group, which directly and indirectly holds an investment of 50 percent plus two shares (December 31, 2020: 50 percent plus two shares) in the share capital of Lenzing AG. The direct majority shareholder of Lenzing AG is B&C KB Holding GmbH, Vienna. The indirect majority shareholder of Lenzing AG, which prepares and publishes consolidated financial statements that include the Lenzing Group, is B&C Holding Österreich GmbH, Vienna. The ultimate parent company of the B&C Group, and therefore also of Lenzing AG, is B&C Privatstiftung, Vienna.

The core business of the Lenzing Group is the production and marketing of wood-based cellulosic fibers. wood-based cellulosic fibers. The pulp required for production is manufactured for the most part in the Group’s own plants and is supplemented by external purchases.

Basis of Reporting

The consolidated financial statements for the period from January 1 to December 31, 2021 were prepared in accordance with the International Financial Reporting Standards (IFRSs) and interpretations which were endorsed in the EU and required mandatory application as of the reporting date. The additional requirements of Section 245a Para. 1 of the Austrian Commercial Code (“Unternehmensgesetzbuch”) were also met.

The reporting currency is the euro (EUR), which is also the functional currency of Lenzing AG. The functional currency of the majority of the subsidiaries is the euro (EUR) or US-Dollar (USD). The figures shown in these consolidated financial statements and notes were rounded to the next thousand, unless indicated otherwise (“EUR '000”). The use of automatic data processing tools can lead to rounding differences in the addition of rounded amounts and percentage rates.

Effects of the COVID-19 crisis on the annual results

Business trends in the 2021 financial year improved significantly compared to the same period of the previous year due to the pos- itive market environment. In preparing the consolidated financial statements, the Managing Board has taken into consideration the effects of the COVID-19 crisis, in particular with regard to estima- tion uncertainties and judgments (such as in the context of the cor- porate planning used to determine recoverable amounts). Addi- tional information on the effects of the COVID-19 crisis and the measures taken by the Lenzing Group can be found in the group management report.

As part of the preparation of the consolidated financial statements, the management is responsible for assessing the company’s ability to continue as a going concern. If material uncertainty exists with regard to events or conditions that may raise significant doubt con- cerning the company’s ability to continue as a going concern, such uncertainty must be explained. Based on the estimates of the Len- zing Group’s management and considering all available infor- mation regarding the future, which covers a minimum of twelve months after the balance sheet date, such uncertainties do not ex- ist. On the basis of the secured liquidity situation, the continued strong position in the markets relevant to Lenzing and the expec- tation that the negative effects of the COVID-19 crisis will gradually abate over the course of 2022, the management estimates that the group has sufficient resources as of the approval date to enable it to continue operations in the foreseeable future. Therefore, the consolidated financial statements were prepared based on the as- sumption of the group’s ability to continue as a going concern.

Note 10. Measurement

Assets and liabilities are principally measured at amortized or de- preciated cost. In contrast, other measurement methods are used for the following material positions:
* Biological assets are measured at their fair value.
* Provisions are measured at the present value of the expected settlement amount.
* Deferred tax assets and deferred tax liabilities are recognized at their nominal value. They are measured on the basis of the temporary differences existing as at the reporting date and the effective tax rate expected when the differences are realized.
* Derivative nancial instruments and nancial assets measured at fair value through prot or loss and at fair value through other comprehensive income are measured at their fair value.
* Puttable non-controlling interests are measured at fair value through other comprehensive income.# 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	21/11/2020	20/06/2020	yes
IFRS 16 Extension of practical expedient: Covid-19-Related Rent Concessions	25/03/2020	20/06/2020	yes
IFRS 9, IAS 39, IFRS 7, IFRS 4, IFRS 16 IBOR-Reform (Phase 2)	27/08/2020	20/06/2020	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	22/09/2020	20/06/2021	yes
IFRS 10, IAS 28 Sale or contribution of assets between an investor and its associate or joint venture	23/01/2008	20/06/2013	no
IFRS 14 Regulatory Deferral Accounts	14/01/2014	20/06/2016	no
IFRS 17 Insurance Contracts	25/05/2017	20/06/2021	yes
IFRS 17 Initial Application of IFRS 7 and IFRS 9 – Comparative Information	15/02/2020	20/06/2021	no
IAS 1 Amendment of classification of liabilities as current or non-current	23/01/2020	20/06/2021	no
IAS 1 Disclosure of Accounting Policies	24/02/2020	20/06/2021	no
IAS 8 Definition of Accounting Estimates	24/02/2020	20/06/2021	no
IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction	27/08/2020	20/06/2021	no
IAS 16 Property, plant and equipment – Proceeds before intended use	22/09/2020	20/06/2021	Yes
IAS 37 Onerous contracts – Cost of fulfilling a contract	22/09/2020	20/06/2021	yes
Various Annual Improvements of IFRSs 2018-2020	22/09/2020	20/06/2021	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).# Annual Financial Report 2021 Lenzing Group

Reconciliation from nature of expense method to cost of goods sold method

The following table shows the reconciliation from the nature of expense method to the cost of sales method:

2021

Consolidated Income Statement – Cost of goods sold method
Revenue		2,231,432
Change in inventories of nished goods and work in progress		30,716
Own work capitalized		75,494
Other operating income		21,993
Consolidated Income Statement – Nature of expense method
Revenue	2,231,432
Cost of sales ()	(1,636,945)
Gross prot	594,487
Other operating income	21,993
Selling expenses ()	(168,522)
Administrative expenses ()	(84,568)
Research and development expenses ()	(38,614)
Other operating expenses ()	(8,460)
Earnings before interest and tax (EBIT)	445,865

2020

Consolidated Income Statement – Cost of goods sold method
Revenue		1,739,169
Change in inventories of nished goods and work in progress		(11,433)
Own work capitalized		74,428
Other operating income		12,631
Consolidated Income Statement – Nature of expense method
Revenue	1,739,169
Cost of sales ()	(1,320,166)
Gross prot	419,003
Other operating income	12,631
Selling expenses ()	(132,876)
Administrative expenses ()	(77,168)
Research and development expenses ()	(31,585)
Other operating expenses ()	(15,865)
Earnings before interest and tax (EBIT)	284,340

1) Reclassication of capitalized borrowing costs, net interest from dened benet plans and commitment fees from EBIT/EBITDA to nancial result.

EUR '000

	2021	2020
Gains or losses from the fair value measurement of biological assets	(7,044)	(1,350)
Cost of material and other purchased services	(1,160,285)	(880,934)
Personnel expenses	(398,334)	(314,310)
Other operating expenses	(71,981)	(68,527)
Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets	(164,970)	(155,670)
Income from the release of investment grants	5,547	1,796
Earnings before interest and tax (EBIT)	445,865	284,340

EUR '000

	2021	2020
Gains or losses from the fair value measurement of biological assets	(7,044)	(1,350)
Cost of material and other purchased services	(1,160,285)	(880,934)
Personnel expenses	(398,334)	(314,310)
Other operating expenses	(71,981)	(68,527)
Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets	(164,970)	(155,670)
Income from the release of investment grants	5,547	1,796
Earnings before interest and tax (EBIT)	445,865	284,340

In the 2020 nancial year, a voluntary modication was imple- mented regarding the presentation of accrued liabilities. Accrued liabilities were presented within provisions until the 2020 nancial year. In the course of the annual analysis to optimize presentation, the Lenzing Group identied that the liability character of this type of debt predominates. In accordance with IAS 1.41, current accru- als of EUR 48,925 thousand (December 31, 2019: EUR 73,016 thou- sand; January 1, 2019: EUR 94,072 thousand) were therefore re- classied 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 re- classied from non-current provisions to other non-current liabili- ties. The total amount of liabilities consequently remains un- changed.

Note 3. Consolidation

Scope of consolidation

The consolidated nancial statements of the Lenzing Group in- clude Lenzing AG, as the parent company, and its subsidiaries, all on the basis of nancial statements as at December 31, 2021. The number of companies included in the scope of consolidation developed as follows:

Development of the number of consolidated companies (incl. parent company)

	2021	2020
Full- consolidation
Equity- consolidation
As at 01/01	39	39
Included in consolidation for the rst time during the year	3	3
Merged during the year	(1)	(1)
Deconsolidated during the year	(3)	(2)
As at 31/12	38	39
Thereof in Austria	11	11
Thereof abroad	27	28

A list of the group companies as at December 31, 2021 is provided in note 43. The most important group companies produce and market wood-based cellulosic bers (Segment Division Fiber) and, in some cases, pulp (Segment Division Pulp).

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 (see note 22), was divested and de- consolidated.

In October 2021, the subsidiary Nanjing Fabor Waste Water Treat- ment Co., Ltd, Nanjing, China, was merged with Lenzing (Nanjing) Fibers Co., Ltd, Nanjing, China.

In November 2021, the previously fully consolidated subsidiaries Avit Investments Limited, Providenciales, Turks & Caicos, and Penique S.A., Panama, Panama, were liquidated and deconsoli- dated.

In January 2020, the Dexco-Group (formerly known as Duratex Group) acquired a 49 percent share in LD Celulose S.A., Sao Paulo, Brazil as agreed. Lenzing AG holds a majority of 51 percent and thus exercisea control over LD Celulose S.A. The change in share- holdings was the result of an asymmetric capital increase, which was conducted by both parties. The pro-rata equity (49 percent) of LD Celulose S.A. amounted to EUR 100,205 thousand at the time the Duratex Group acquired the shares and corresponds to the amount recognized under non-controlling interests. The propor- tionate contribution by Duratex amounted to EUR 102,362 thou- sand. The dierence of EUR 2,158 thousand was recognized di- rectly in equity under retained earnings. As part of the capital in- crease, the Duratex Group contributed biological assets and prop- erty, plant and equipment to LD Celulose and carried out further cash capital increases. The Dexco-Group has a put option for its shares (puttable non- controlling interests). Lenzing AG applies the present access method for the accounting of this liability deriving from puttable non-controlling interests. Accordingly, the Dexco Group’s non- controlling interest in LD Celulose S.A. continues to be recognized in equity and a nancial liability is recognized for its puttable inter- est. The initial recognition and subsequent measurement of the li- ability is at fair value through retained earnings (not aecting net income).

In February 2020, all shares held in the associate WWE Wohn- und Wirtschaftspark Entwicklungsgesellschaft m.b.H., Vienna were sold and deconsolidated.

In April 2020, the joint venture Hygiene Austria LP GmbH, Wiener Neudorf, Austria was founded for the production of protective masks and consolidated at-equity.

In July 2020, 100 percent of the shares in Nanjing Fabor Waste Wa- ter Treatment Co., Ltd, Nanjing, China, were acquired and fully consolidated. The assets sold to the Lenzing Group were predom- inantly assets which in their entirety form a wastewater treatment plant. The purchase price amounted to EUR 16,060 thousand and was paid in cash. The acquisition was therefore recognized as an asset deal in the consolidated nancial statements. The payment is recognized in the consolidated statement of cash ows under ac- quisition of intangible assets, property, plant and equipment and biological assets (CAPEX). The purchase price was allocated pro- portionately to the individual identiable assets and liabilities on the basis of their fair values at the acquisition date.

Fair value at acquisition date EUR '000

	2020
Intangible assets	1,424
Property, plant and equipment	9,410
Trade receivables	771
Current tax assets	118
Cash and cash equivalents	647
Total assets	12,370
Current tax liabilities	10
Total liabilities	10
Net assets	12,360

In September 2020, the subsidiary Lenzing Technik GmbH, Len- zing, Austria, was merged with Lenzing AG.

In December 2020, the subsidiary Lenzing Fibers India Private Lim- ited, Coimbatore, India, was founded and included in the scope of fully consolidated companies.

Basis of consolidation

Subsidiaries are companies controlled by the parent company. The Lenzing Group decides individually for each acquisition whether the non-controlling interests in the acquired subsidiary will be rec- ognized at fair value or based on the proportional share of the ac- quired net assets. On acquisition, non-controlling interests are measured at fair value or the corresponding share of recognized net assets and are reported under equity and comprehensive in- come as “non-controlling interests”. The investments in associates and joint ventures are accounted for by applying the equity method.

In January 2021, the Lenzing Group acquired 100 percent of the shares in an insurance cell of White Rock Insurance (Europe) Pro- tected Cell Company Limited, La Valletta, Malta. This company has an insurance concession and enables the Lenzing Group to admin- ister its operationally necessary insurance policies more eectively. As of the acquisition date, the insurance cell did not have any sig- nicant assets or liabilities. It is classied as a structured entity from acquisition date and fully consolidated.

Until March 2021, Lenzing AG controlled assets in the GF 82 wholesale fund, a special fund pursuant to Section 20a of the Aus- trian Investment Fund Act (öInvFG), on the basis of its comprehen- sive co-determination rights.The fund was classified as a structured entity and fully consolidated. The securities held by the fund were intended, above all, to fulfill the securities coverage requirements for the pension provisions related to Austrian pension plans as required by Section 14 of the Austrian Income Tax Act (öEStG). The material risks to which the fund was exposed were unchanged and represented traditional investment risks (especially default and market price risks). In March 2021, the shares in wholesale fund GF 82 were sold and deconsolidated. The structured entities include those assets and liabilities that are held by the Lenzing Group. The reporting currency of Lenzing AG and the Lenzing Group is the euro. The subsidiaries prepare their annual financial statements in their respective functional currency. The following key exchange rates were used for translation into the reporting currency:

Exchange rates for key currencies
| Unit | Currency | 2021 | | 2020 | |
|---|---|---|---|---|---|
| | | End of the year | Average | End of the year | Average |
| 1 EUR | USD US Dollar | 0.8770 | 0.8399 | 0.8199 | 0.8310 |
| 1 EUR | GBP British Pound | 0.8475 | 0.8709 | 0.7589 | 0.8752 |
| 1 EUR | CZK Czech Koruna | 24.3619 | 25.7377 | 27.2129 | 27.3000 |
| 1 EUR | CNY Renminbi Yuan | 7.1410 | 7.1579 | 6.9178 | 7.1797 |
| 1 EUR | BRL Brazilian Real | 5.1700 | 5.1738 | 5.1950 | 5.7889 |

45 Annual Financial Report 2021

Lenzing Group Annual Report 2021

Lenzing Group

17

Note 4. Segment reporting

Due to the introduction of a new group-wide organization, the composition of the segments has changed as of the 2021 financial year. Internal reporting to the chief operating decision maker, i.e. the plenary Managing Board, was adjusted accordingly as at January 1, 2021. A retrospective presentation of the segment reporting in accordance with the new composition of the segments is not possible due to the significant changes in the segments and the resultant unavailability of financial accounting information. For this reason, the tables below show the old composition of the segments for the 2020 comparison year. The reportable segments are now the “Division Fiber”, “Division Pulp” and “Others” (previously “Fibers”, “Lenzing Technik” and “Others”). The Lenzing Group classifies its segments based on the differences between their products, which require individual technologies and market strategies. The Division Fiber produces all three generations of wood-based cellulosic fibers and markets them under the product brands TENCEL™, VEOCEL™, LENZING™ ECOVERO™ and LENZING™. The products made from lyocell, modal and viscose fibers are used for the production of textiles as well as nonwovens and special applications. The Division Pulp produces and procures dissolving pulp, which is the necessary primary and intermediate product for fiber production. The pulp is used for the company’s own cellulosic fiber production and marketed externally. The fiber and pulp production systems are used and managed independently of each other. “Others” mainly includes central headquarters functions, overarching activities and the business activities of BZL-Bildungszentrum Lenzing GmbH, Lenzing (training and personnel development).

Information on business segments (new segment structure)

EUR '000		2021
	Division Fiber	Division Pulp	Others	Segment total	Recon- ciliation	Group
Revenue from external customers	127,907	61,915	17,910	207,732	0	207,732
Inter-segment revenue	0	9,532	0	9,532	(9,532)	0
Total revenue	127,907	71,447	17,910	217,264	(9,532)	207,732
EBITDA (segment result)	37,028	37,587	(6,139)	68,476	(13,945)	54,531
EBIT	20,151	24,071	(4,620)	39,602	(13,919)	25,683
Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets	16,877	13,457	2,007	32,341	4	32,345
Income from investments accounted for using the equity method	8	(1,933)	(5,087)	(6,912)	0	(6,912)
Other material non-cash income and expenses	7,157	(3,714)	1,099	4,542	0	4,542
Acquisition of intangible assets, property, plant and equipment and biological assets (CAPEX)	17,651	15,550	1,090	34,291	(10,174)	24,117
EBITDA margin 1	29.0%	52.6%	(34.3%)	32.9%	-	26.2%
EBIT margin 2	15.8%	33.7%	(25.8%)	18.2%	-	12.4%

Information on business segments (former segment structure)

EUR '000		2021
	Fibers	Lenzing Technik	Other	Segment total	Recon- ciliation	Group
Revenue from external customers	17,150	1,980	1,045	20,175	0	20,175
Inter-segment revenue	190	1,300	1,000	2,490	(2,490)	0
Total revenue	17,340	3,280	2,045	22,665	(2,490)	20,175
EBITDA (segment result)	14,200	1,770	1,400	17,370	(82)	17,288
EBIT	11,880	(100)	600	12,380	(82)	12,300
Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets	12,320	110	110	12,540	0	12,540
Income from investments accounted for using the equity method	800	0	(5,087)	(4,287)	0	(4,287)
Other material non-cash income and expenses	770	70	20	860	(20)	840
Acquisition of intangible assets, property, plant and equipment and biological assets (CAPEX)	16,700	400	100	17,200	0	17,200
EBITDA margin 1	81.9%	53.9%	68.5%	76.7%	-	85.7%
EBIT margin 2	68.5%	(3.0%)	29.3%	54.6%	-	61.0%

1) EBITDA margin = EBITDA (operating result before depreciation and amortization) in relation to total revenue (here: according to segment reporting).
2) EBIT margin = EBIT (operating result) in relation to total revenue (here: according to segment reporting).

46 Annual Financial Report 2021

Lenzing Group Annual Report 2021

Lenzing Group

18

Information on business segments (former segment structure) (previous year)

EUR '000		2020
	Fibers	Lenzing Technik	Other	Segment total	Recon- ciliation	Group
Revenue from external customers	207,100	10,570	1,065	218,735	0	218,735
Inter-segment revenue	700	1,600	1,100	3,400	(3,400)	0
Total revenue	207,800	12,170	2,165	222,135	(3,400)	218,735
EBITDA (segment result)	27,100	300	700	28,100	(37)	28,063
EBIT	19,700	(100)	600	20,200	(37)	20,163
Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets	7,400	400	100	7,900	0	7,900
Income from investments accounted for using the equity method	300	0	(5,087)	(4,787)	0	(4,787)
Other material non-cash income and expenses	570	(170)	(10)	400	(200)	200
Acquisition of intangible assets, property, plant and equipment and biological assets (CAPEX)	11,100	400	10	11,510	0	11,510
EBITDA margin 1	13.0%	2.5%	32.3%	12.7%	-	12.8%
EBIT margin 2	9.5%	(0.8%)	27.7%	9.1%	-	9.2%

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2).
2) EBITDA margin = EBITDA (operating result before depreciation and amortization) in relation to total revenue (here: according to segment reporting).
3) EBIT margin = EBIT (operating result) in relation to total revenue (here: according to segment reporting).

The other significant non-cash operating expenses and income relate to non-cash measurement effects from receivables, inventories and provisions. The performance of the segments and the Group is 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). The following table shows the reconciliation of earnings before interest and tax (EBIT) to the earnings before interest, tax, depreciation and amortization (EBITDA) and to the earnings before tax (EBT):

Reconciliation of earnings before interest and tax (EBIT) to the earnings before interest, tax, depreciation and amortization (EBITDA) and to the earnings before tax (EBT)

EUR '000		2021	2020
Earnings before interest and tax (EBIT)		27,540	11,770
Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets		32,345	11,967
Income from the release of investment grants		(6,000)	(6,070)
Earnings before interest, tax, depreciation and amortization (EBITDA)		53,885	17,667
Segment amortization and depreciation		(32,340)	(7,900)
Consolidation		(10)	(17)
Income from the release of investment grants		6,000	6,070
Earnings before interest and tax (EBIT)		27,540	11,770
Financial result		(18,910)	(13,910)
Earnings before tax (EBT)		8,630	(2,140)

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2). The carrying amounts for segment reporting are based on the same accounting policies applied to the IFRS consolidated financial statements.

47 Annual Financial Report 2021

Lenzing Group Annual Report 2021

Lenzing Group

19

Information on products and services

Revenue from external customers can be classified by products and services as follows:

Revenue from external customers by products and services (new segment structure)

EUR '000		2021
	Wood-based cellulosic fibers	Co-products of fiber production	Mechanical and plant engineering, engineering services and others	Division Fiber	Pulp	Biorefinery-products and energy	Wood and other
	97,000	10,000	20,732	127,732	79,000	0	100

Revenue from customers by products and services (former segment structure)

EUR '000		2021	2020
	Wood-based cellulosic fibers	97,000	118,157
	Sodium sulfate and black liquor	10,000	14,111
	Pulp, wood, energy and other	10,900	12,167
	Segment Fibers	117,900	144,435
	Mechanical and plant engineering and engineering services	20,732	2,165
	Segment Lenzing Technik	20,732	2,165
	Other and consolidation	(265)	(740)
Revenue as per consolidated income statement		138,367	145,860

No singleexternal customer is responsible for more than 10 percent of external revenue.

Information on geographic regions

The following table provides a classification of revenue from exter- nal customers by sales market by geographic area.

Revenue from external customers by geographic regions
EUR '000 | 2021 | 2020
---|---|---
Austria | 57,570 | 41,714
Europe (excl. Austria, incl. Turkey) | 28,141,959 | 27,017,814
Asia | 29,150,109 | 24,191,725
America | 27,171,705 | 28,881,725
Rest of the world | 22,240 | 6,067
Revenue as per consolidated income statement | 86,543,103 | 81,174,144

Revenue is allocated according to the geographic region of the customer.

The following table shows non-current assets (excluding financial instruments and tax assets; reconciled to the consolidated figures for total non-current assets), total assets and acquisition of intangi- ble assets, property, plant and equipment and biological assets (CAPEX) by geographic region:

Information on non-current assets, total assets and CAPEX by geographic regions
EUR '000 | Non-current assets 31/12/2021 | Non-current assets 31/12/2020 | Total assets 31/12/2021 | Total assets 31/12/2020 | CAPEX 31/12/2021 | CAPEX 31/12/2020
---|---|---|---|---|---|---
Austria | 5,621,271 | 4,154,405 | 7,473,730 | 7,187,007 | 718,414 | 151,493
Europe (excl. Austria, incl. Turkey) | 255,119 | 250,809 | 9,058,647 | 9,027,713 | 6,180,727 | 2,180,520
Asia | 17,820,109 | 14,244,100 | 21,042,714 | 17,088,166 | 19,568,418 | 14,564,140
America | 27,195,102 | 26,414,000 | 27,970,730 | 20,775,500 | 18,954,177 | 17,711,350
Subtotal | 50,191,601 | 45,013,314 | 65,545,821 | 53,900,386 | 44,721,736 | 33,407,503
Reconciliation to consolidated figures | 17,910 | 10,000 | 1,459,100 | 1,422,000 | 5 | 5
Consolidated total | 50,191,606 | 45,013,314 | 66,994,921 | 55,322,386 | 44,721,741 | 33,407,508

The above amounts cover all segments of the Lenzing Group. Ad- ditional information on the segments is provided in the manage- ment report of the Lenzing Group as at December 31, 2021.

48 Annual Financial Report 2021
Lenzing Group Annual Report 2021
Lenzing Group 20

Note 5. Revenue

The breakdown of revenue is shown in the segment report (see note 4, in particular information on products and services as well as geographic regions). Revenue results exclusively from contracts with customers in ac- cordance with IFRS 15 (Revenue from Contracts with Customers). Revenue comprises all income generated by the typical business activities of the Lenzing Group. Income is recognized at a point in time, and thus when ownership of the product has been transferred to the customer (i.e. with the transfer of risks), the amount of income and the related costs can be reliably determined and the economic benefits from the trans- action will probably flow to the Group. Since all performance obligations in the Lenzing Group have a term of a maximum of one year, the remaining performance obligations are not disclosed. Contract liabilities are presented under other liabilities and consist of down payments received of EUR 14,526 thousand (December 31, 2020: EUR 20,918 thousand) and accruals for discounts and re- bates of EUR 2,681 thousand (December 31, 2020: EUR 1,725 thou- sand) (see note 34). The amount of EUR 21,637 thousand included in contract liabilities as at December 31, 2020 has been recognized as revenue in 2021 (2020: EUR 18,569 thousand).

Note 6. Functional costs

Cost of sales
The cost of sales mainly relates to the cost of materials and other purchased manufacturing services, gains and losses from changes in the fair value of biological assets, personnel expenses, depreci- ation and amortization and other operating expenses, in particular expenses for maintenance and repair, other third-party services and expenses for waste disposal. The expenses for maintenance and repair amount to EUR 35,049 thousand (2020: EUR 28,987 thousand).

Selling expenses
Selling expenses mainly relate to personnel expenses and other op- erating expenses, particularly expenses for outbound freight as well as rental and leasing expenses.

Administrative expenses
Administrative expenses mainly relate to personnel expenses and other operating expenses, in particular legal, audit and consulting expenses.

Research and development expenses
Research and development expenses mainly relate to personnel expenses and other operating expenses, in particular filing and de- fense costs for patents and trademarks. Research and develop- ment expenses include amortization of intangible assets, depreci- ation of property, plant and equipment and of right-of-use assets relating to leases amounting to EUR 948 thousand (2020: EUR 687 thousand) and income from the release of investment grants amounting to EUR 7 thousand (2020: EUR 0 thousand). In the 2021 financial year, research and development expenses in the Lenzing Group according to the Frascati scheme of computation in the amount of EUR 31,625 thousand (2020: EUR 34,818 thou- sand) were incurred.

Note 7. Other operating income

Other operating income consists of the following:

Other operating income	EUR '000	2021	2020
Income from green energy bonus	12,180	19,815
Income from recharging of services and other products	18,715	19,715
Income from the release of deferred income for emission certifi- cates and from subsidies	19,820	19,713
Rental income	5,614	5,623
Foreign currency gains	9,511	0
Insurance compensation	6,714	18,170
Sundry	8,644	7,140
Total	74,198	81,076

The prior-year amounts have been adjusted to the cost of sales method.

Note 8. Other operating expenses

Other operating expenses comprise the following:

Other operating expenses	EUR '000	2021	2020
Foreign exchange loss	0	18,519
Sundry	20,810	11,510
Total	20,810	30,029

The prior-year amounts have been adjusted to the cost of sales method.

Notes on the Consolidated Income Statement 49
Annual Financial Report 2021
Lenzing Group Annual Report 2021
Lenzing Group 21

Note 9. Cost of material and other purchased services

The cost of material and other purchased services comprises the following:

Cost of material and other purchased services	EUR '000	2021	2020
Material	147,170,218	110,149,100
Other purchased services	138,549,257	159,714,317
Total	147,170,218	269,863,417

The cost of material comprises primarily the input factors con- sumed, i.e. pulp (and wood for the internal production of pulp), key chemicals (caustic soda, carbon disulfide and sulfuric acid) and merchandise. The cost of purchased services is related mainly to the consumption of energy. The cost of the raw material and supplies consumed during the year is based on the weighted average cost method.

Note 10. Personnel expenses

The following table shows the composition of personnel expenses:

Personnel expenses	EUR '000	2021	2020
Wages and salaries	58,703,117	54,027,697
Expenses for severance payments and gratuity	17,156	12,718
Retirement benefit expenses	7,159	7,609
Statutory social security expenses	7,305,636	4,180,900
Other employee-related costs	4,171	17,950
Total	70,202,599	78,049,274

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2). In the 2021 financial year, government grants of EUR 245 thousand (2020: EUR 13,288 thousand) in connection with short-term work assistance of Austria related to COVID-19 were offset against per- sonnel expenses and recognized in profit or loss. The main condi- tion for short-time working assistance is the temporary reduction of working hours of certain employees. In the 2021 financial year, the Lenzing Group utilized such grants from January to March (2020: May to December).

The number of employees in the Lenzing Group is as follows:

Number of employees (headcount)	2021	2020
Average	7,140	7,138
As at 31/12	7,187	7,167

The following table shows the number of employees in Lenzing AG and the Austrian subsidiaries of the Lenzing Group:

Average number of employees in Austria (headcount)	2021	2020
Hourly workers	1,719	1,774
Salaried employees	1,709	1,716
Total	3,428	3,490

Note 11. Amortization of intangible assets, depreciation of property, plant and equipment and right-of-use assets

Amortization and depreciation include the following:

Amortization of intangible assets and depreciation of property, plant and equipment and right-of-use assets	EUR '000	2021	2020
Amortization and depreciation	14,024,818	14,070,797
Impairment	0	0
Total	14,024,818	14,070,797

Impairment tests of intangible assets, property, plant and equipment and cash-generating units (CGUs)
If there is an indication of impairment in accordance with IAS 36, intangible assets and items of property, plant and equipment as well as cash-generating units (CGUs) are tested for impairment. A qualitative analysis is performed at the reporting dates for all con- solidated nancial statements and interim consolidated nancial statements to determine whether there are any indications of im- pairment or any material year-on-year changes in impaired CGUs. This analysis is based on criteria dened by the management of Lenzing AG. Intangible assets, property, plant and equipment and right-of-use assets allocated to a CGU that includes goodwill are also tested during the annual impairment testing of goodwill. The CGUs in the Lenzing Group represent, above all, the individual production sites.

50 Annual Financial Report 2021
Lenzing Group Annual Report 2021
Lenzing Group 22

The Lenzing Group initially determines the recoverable amount based on the applicable fair value less costs of disposal. The Man- agement and Supervisory Boards approve the budget and the me- dium-term plans for the next ve years. These plans are the starting point for the cash ow projections on a post-tax basis to determine the fair value less costs of disposal. Based on the assumptions used in the previous year, a perpetual yield that includes a sustainable long-term growth rate is applied after the detailed planning period. The estimate for the sustainable long-term growth rate generally equals half of the ination rate expected in the relevant country during the next few years, as projected by an international eco- nomic research agency. This value usually tends to offset general ination.A growth-related retention of financial surpluses in the perpetual annuity is taken into consideration in the planning calculations. The planned/projected cash flows are discounted to their present value with a discounted cash flow method. Fair value measurement is classified in full as level 3 of the fair value hierarchy because key input factors (in particular, cash flows) cannot be observed on the market. The applied discount rate is calculated on an individual basis using the capital asset pricing model (CAPM) and represents a composite figure (weighted average cost of capital – WACC) that combines the average interest rate for debt and the anticipated return on equity employed. After-tax WACCs ranging from 6.0 percent to 7.1 percent were used in 2021 (2020 5.4 percent to 7.8 percent). The WACCs were, for the most part, determined on the basis of externally available capital market data for comparable companies (in particular, to determine the risk premium). The planning and forecasts of free cash flows are based, above all, on internal and external assumptions for the expected development of selling prices and volumes (especially for fibers and cellulose) and the related costs (in particular, raw materials like cellulose, wood and energy plus labor and taxes), including the expected market environment and market positioning. Other input factors include anticipated investments and the changes in working capital. These internal assumptions are based on past experience, current operating results and the assessment of future developments. They are supplemented by external market assumptions such as sector-specific market studies and economic outlooks. No impairments of CGUs in accordance with IAS 36 were recognized in the 2021 and 2020 financial years. Against the backdrop of the COVID-19 crisis, the Lenzing Group reviewed all assumptions that are crucial to the impairment tests in accordance with the methods previously used. In the case of the cash-generating units (CGUs), the effects of the COVID-19 crisis were taken into consideration in the budgets required for the cash flow forecasts and the medium-term plans.

Impairment test of the CGU Fiber Site China

The carrying amounts of the intangible assets, property, plant and equipment and right-of-use assets of the CGU Fiber Site China impaired in previous years totaled EUR 57,081 thousand at December 31, 2021 (December 31, 2020: EUR 43,063). This amount includes accumulated impairment losses of EUR 13,586 thousand (December 31, 2020: EUR 15,850 thousand) from the previous impairment tests. Due to an indication of impairment in accordance with IAS 36, the recoverable amount of the CGU Fiber Site China for the consolidated financial statements 2021 was determined. The recoverable amount showed sufficient coverage of the carrying amounts. The carrying amounts would increase (decrease) in particular if planned EBITDA or the weighted average cost of capital (WACC) decreases (increases). In the event of an increase (decrease) in planned EBITDA by 1 percent, the recoverable amount determined would increase (decrease) by EUR 3,953 thousand. If the weighted average cost of capital (WACC) decreases (increases) by 0.25 percent, the recoverable amount will increase by EUR 7,375 thousand or decrease by EUR 6,860 thousand.

Impairment test of the CGU Fiber Site Indonesia

Due to an indication of impairment in accordance with IAS 36, the recoverable amount of the CGU Fiber Site Indonesia was determined. The recoverable amount showed sufficient coverage of the carrying amounts. The carrying amounts would increase (decrease) in particular if planned EBITDA or the weighted average cost of capital (WACC) decreases (increases). In the event of an increase (decrease) in planned EBITDA by 1 percent, the recoverable amount determined would increase (decrease) by EUR 6,539 thousand. If the weighted average cost of capital (WACC) decreases (increases) by 0.25 percent, the recoverable amount will increase by EUR 14,112 thousand or decrease by EUR 13,175 thousand.

Impairment test of CGUs to which goodwill is allocated

Goodwill was allocated to the following segments/cash-generating units (CGUs) as at the reporting date:

Goodwill by segment/CGU	31/12/2021	31/12/2020
Segment Division Pulp CGU Pulp Site Czech Republic	16,997	16,020
Segment Divison Fiber Other CGUs	15,844	15,463
Total	32,841	31,483

The recoverable amount of the largest CGU with goodwill in 2021 – the CGU Pulp Site Czech Republic – was determined on the basis of fair value less costs of disposal. The measurement of fair value is classified in full under level 3 of the fair value hierarchy. The following individual assumptions from the most recent impairment tests were used for annual testing:

Assumptions for impairment testing of the largest CGU to which goodwill was allocated	2021 financial year	2020 financial year
CGU Pulp Site Czech Republic
Average annual operating margin in planning period	15.2%	14.1%
Long-term growth rate of perpetual yield	1.2%	1.2%
After-tax discount rate (WACC)	6.2%	6.0%

The detailed planning period for the CGU Pulp Site Czech Republic covers five years. The average revenue growth during this period equals 1.4 percent per year (2020: 3.2 percent per year). The estimated fair value less costs of disposal of the CGU Pulp Site Czech Republic exceeds the carrying amount by EUR 78,558 thousand (2020: EUR 123,524 thousand). This estimate is considered appropriate, but corrections may be required if there are changes in the underlying assumptions or circumstances. The following table shows a sensitivity analysis with hypothetical scenarios for the key assumptions as well as the possible changes in value as at the reporting date which, if they occurred, would result in the recoverable amount equaling the carrying amount of the CGU plus goodwill. A long-term growth rate of 1.1 percent to 1.3 percent (2020: 0.5 percent to 0.8 percent) was taken into account as perpetual yield for the other CGUs with goodwill.

Sensitivity analysis of assumptions for impairment testing

Values relating to key assumptions	Change in values relating to key assumptions for which the recoverable amount would equal the carrying amount
CGU Pulp Site Czech Republic
Operating margin	2.0 minus 2.0 percentage points
After-tax discount rate (WACC)	1.5 plus 0.5 percentage points

Sensitivity analysis of assumptions for impairment testing (previous year)

Values relating to key assumptions	Change in values relating to key assumptions for which the recoverable amount would equal the carrying amount
CGU Pulp Site Czech Republic
Operating margin	1.4 minus 1.4 percentage points
After-tax discount rate (WACC)	1.2 plus 0.4 percentage points

Note 12. Auditor’s fees

The fees expensed for services provided by KPMG Austria GmbH, Linz, comprise the following:

Auditors’ fees expensed
| EUR '000 | 2021 | | | 2020 | | |
| :----------------------------- | :---------------------- | :------ | :-- | :---------------------- | :------ | :-- |
| | Lenzing AG | Subsidiaries | Tota l | Lenzing AG | Subsidiaries | Tota l |
| Audit of the annual financial statements (incl. consolidated financial statements) | 1,408 | 740 | 2,148 | 1,359 | 654 | 2,013 |
| Other assurance services | 257 | 0 | 257 | 245 | 0 | 245 |
| Other services | 191 | 0 | 191 | 236 | 0 | 236 |
| Total | 1,856 | 740 | 2,596 | 1,840 | 654 | 2,494 |

The fees for other assurance services consist chiefly of fees for the review of the consolidated half-year financial statements and in the 2020 financial year for the comfort letter related to a capital market issue.

Note 13. Income from investments accounted for using the equity method

The result of EUR minus 3,541 thousand (2020: EUR 5,674 thousand) corresponds to the Group’s share of the current earnings of associates and joint ventures. The 2021 financial year includes the loss on the disposal of Hygiene Austria LP GmbH (HGA) in the amount of EUR minus 4,536 thousand (2020: EUR 0 thousand) (see note 22).

Note 14. Income from non-current and current financial assets

The income from non-current and current financial assets consists of the following items:

Income from non-current and current financial assets
| EUR '000 | 2021 | 2020 |
| :----------------------------------------------------------------------------------- | :-------- | :-------- |
| Income from non-current and current financial assets | | |
| Interest income from bank balances, originated loans and receivables | 12,111 | 11,724 |
| Interest income and income from the disposal of debt instruments measured at fair value through other comprehensive income | 258 | 187 |
| Income from dividends for equity instruments measured at fair value through other comprehensive income | 157 | 143 |
| Measurement of financial assets measured at fair value | 126 | 107 |
| Net foreign currency gains from financial assets | 14,070 | 7,421 |
| | | |
| Expenses from non-current and current financial assets | | |
| Measurement and loss from disposal of financial assets at amortized cost | (4,714) | (3,714) |
| Measurement and loss from the disposal of financial assets at fair value through profit or loss | (4,766) | (4,077) |
| Loss from the diposal of debt instruments measured at fair value directly in equity | (105) | 0 |
| Net foreign currency losses from financial assets | (6,318) | (6,915) |
| Total | 4,779 | (1,781) |

Note 15. Financing costs

Financing costs comprise the following:

Financing costs
| | 2021 | 2020 |
| :---------------------------------------------------------------- | :---------- | :---------- |
| Net foreign currency gains/losses from financial liabilities | (4,178) | 6,072 |
| Interest expense for bonds and private placements | (17,450) | (17,115) |
| Interest expense for bank loans, other interest and similar expenses | (24,145) | (25,917) |
| Capitalized borrowing costs for property, plant and equipment and biological assets | 15,777 | 15,471 |
| Total | (15,996) | (11,489) |

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2).# Income tax expense

This item includes current income tax expense as well as income/expense from deferred taxes (changes in deferred tax assets and deferred tax liabilities) and comprises the following:

Income tax expense by source

EUR '000	2021	2020
Current income tax expense
Austria	57,916	31,891
Abroad	24,351	30,838
Income/expense from deferred taxes	(14,655)	(6,186)
Total	67,612	56,543

Income tax expense by cause

EUR '000	2021	2020
Current income tax expense
Tax expense for current year	57,703	47,849
Reduction due to the use of tax losses	(51)	(12)
Adjustment for prior-period income tax	14,564	30,838
Income/expense from deferred taxes
Recognition and reversal of temporary differences	(1,049)	(11,913)
Effects of changes in tax rates	(1,090)	(673)
Change in capitalized loss carryforwards	(1,253)	(6,785)
Effects of previously unrecognized temporary differences from prior periods	(1,034)	(3,050)
Changes in valuation adjustment to deferred tax assets (excl. loss carryforwards)	(880)	(2,156)
Total	67,612	56,543

The item “Change in capitalized loss carryforwards” relates to the utilization of loss carryforwards in the amount of EUR 3,271 thousand (2020: EUR 61 thousand) and an adjustment to deferred tax assets for loss carryforwards not yet utilized amounting to EUR 1,253 thousand (2020: EUR minus 6,785 thousand).

The reconciliation of calculated income tax expense based on the Austrian corporate tax rate of 25 percent (December 31, 2020: 25 percent) to effective income tax expense is shown in the following table:

Tax reconciliation

EUR '000	2021	2020
Earnings before tax (EBT)	277,009	221,539
Calculated income tax expense (25% of earnings before tax)	69,252	55,385
Deductible distribution of hybrid coupon	(6,974)	(20)
Tax-free income and tax allowances (particularly research allowance)	(2,642)	(2,634)
Non-deductible expenses, withholding taxes and similar permanent differences	2,588	2,572
Income from investments accounted for using the equity method	(1,004)	(2,363)
Effect of different tax rates	(1,203)	(2,536)
Changes in tax rates	941	272
Taxes from prior periods	747	24
Exchange rate differences resulting from the translation of deferred tax items from local into functional currency	(1,400)	(7,079)
Change in unrecognized deferred tax assets from loss carryforwards, tax credits and other temporary differences	(1,392)	(11,420)
Other	(306)	(741)
Effective income tax expense	67,612	56,543

As in the previous year, the ratio of effective income tax expense to earnings before tax is disproportionately high in the 2021 financial year. As in the previous year, the Group reports a relatively high level of reconciliation items arising from write-downs on tax assets (in particular from non-capitalized start-up losses) and from the translation of tax items from local to functional currency (in particular Indonesia, Brazil and Thailand). In addition, in the 2021 financial year a distribution to hybrid capital holders was realized that is tax deductible. For the item “Taxes from prior periods,” see the notes relating to write-downs in note 31. The item “Changes in tax rates” mainly comprises a statutory tax rate increase in the UK. The corporate income tax rate in the UK will increase from 19 percent to 25 percent effective April 1, 2023. This resulted in an expense of EUR 941 thousand in the 2021 financial year from the measurement of the UK Group companies’ deferred tax assets and deferred tax liabilities. The item “taxes from prior periods” includes a tax credit of EUR 747 thousand (2020: EUR 24 thousand) from the tax group with B&C Group (also see note 40). Lenzing AG and the Austrian subsidiaries of the Lenzing Group are subject to an income tax rate of 25 percent (December 31, 2020: 25 percent). The income tax rates for foreign companies range from 11 percent to 34 percent (December 31, 2020: from 11 percent to 34 percent).

Note 17. Earnings per share

Earnings per share are calculated as follows:

Earnings per share

EUR '000	2021	2020
Net profit for the year attributable to shareholders of Lenzing AG used in the calculation of earnings per share	77,430	46,378
Weighted average number of shares	9,804,115	9,804,115

EUR	2021	2020
Diluted = basic	7.90	4.73

In the calculation of earnings per share, the share of the net profit for the year earmarked for hybrid capital holders of EUR 28,750 thousand (2020: EUR 1,890 thousand) was deducted from net profit for the year.

Note 18. Intangible assets

Development of intangible assets

EUR '000	2021	2020
	Goodwill	Concessions, industrial property rights, licenses and similar rights
Cost
As at 01/01/2021	1,709	1,985,460
Currency translation adjustment	55	282
Addition	0	24,909
Disposals	0	(21)
As at 31/12/2021	1,764	2,009,953
Accumulated amortization
As at 01/01/2021	(1,075)	(1,379,500)
Currency translation adjustment	(110)	(270)
Amortization	0	(36,938)
Disposals	0	21
As at 31/12/2021	(1,185)	(1,416,187)
Carrying amount as at 01/01/2021	634	605,960
Carrying amount as at 31/12/2021	579	593,766

Development of intangible assets (previous year)

EUR '000	2020
	Goodwill
Cost
As at 01/01/2020	1,709
Currency translation adjustment	(27)
Change in the scope of consolidation and disposal of other business areas	0
Addition	0
Disposals	0
As at 31/12/2020	1,682
Accumulated amortization
As at 01/01/2020	(1,075)
Currency translation adjustment	135
Amortization	0
Disposals	0
As at 31/12/2020	(940)
Carrying amount as at 01/01/2020	634
Carrying amount as at 31/12/2020	742

Additions in the 2021 financial year include purchased intangible assets of EUR 2,495 thousand (2020: EUR 1,755 thousand) and internally generated intangible assets of EUR 6,182 thousand (2020: EUR 3,556 thousand) (mainly process and product developments). Development costs are recognized as intangible assets if the specific requirements pursuant to IAS 38 are met, in particular, as to whether future economic benefits can be generated. The revaluation option was not exercised. Amortization is calculated according to the straight line method based on the estimated useful lives. The estimated useful lives of the major asset classes are as follows:

Useful lives for intangible assets

Years
Software/computer programs
Licenses and other intangible assets
Purchased
Internally generated

All items of intangible assets are tested for impairment in accordance with IAS 36 if there are any indications that these assets may be impaired (see note 11).

Note 19. Property, plant and equipment

Development of property, plant and equipment

EUR '000	2021	2020
	Land and buildings	Technical equipment and machinery, factory and office equipment
Cost
As at 01/01/2021	1,725,288	20,277,756
Currency translation adjustment	1,725	19,967
Addition	1,590,805	67,028,947
Disposals	(719)	(16,851)
Reclassifications	7,105	168,274
As at 31/12/2021	3,333,104	87,457,993
Accumulated depreciation
As at 01/01/2021	(5,605,708)	(11,954,109)
Currency translation adjustment	(6,274)	(67,155)
Depreciation	(1,898,116)	(27,771,968)
Disposals	1,060	16,851
As at 31/12/2021	(7,509,038)	(39,776,481)
Carrying amount as at 01/01/2021	1,119,680	8,323,647
Carrying amount as at 31/12/2021	(4,175,934)	47,681,512

1) Additions include a decrease in advance payments of EUR 106,538 thousand.

Development of property, plant and equipment (previous year)

EUR '000	2020
	Land and buildings
Cost
As at 01/01/2020	1,720,310
Currency translation adjustment	(1,720)
Addition	16,062
Disposals	(17,131)
Reclassifications	18,086
As at 31/12/2020	1,735,607
Accumulated depreciation
As at 01/01/2020	(5,479,609)
Currency translation adjustment	2,304
Depreciation	(1,502,067)
Disposals	17,131
As at 31/12/2020	(6,962,141)
Carrying amount as at 01/01/2020	1,240,691
Carrying amount as at 31/12/2020	(5,226,534)

1) The additions include an increase in advance payments of EUR 243,258 thousand.
2) The opening balances were adjusted for cost and accumulated depreciation.# Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 30

Property, plant and equipment are measured at cost, including capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses. Depreciation is calculated according to the straight-line method based on the estimated useful lives. The estimated useful lives of the major asset classes are as follows:

Useful lives for property, plant and equipment

Years
Land use rights
Buildings
Fiber production lines
Energy production plants
Other machinery
Vehicles
Office equipment and other fixtures and fittings
IT hardware

All items of property, plant and equipment are tested for impairment in accordance with IAS 36 if there are any indications that these assets may be impaired (see note 11).

Operating leases as a lessor

Operating leases are in place for land and buildings with acquisition cost of EUR 38,224 thousand as at December 31, 2021 (December 31, 2020 EUR 40,401 thousand). The carrying amount of this land and buildings is EUR 8,282 thousand as at December 31, 2021 (December 31, 2020 EUR 10,305 thousand). Depreciation of EUR 692 thousand was recognized on these assets in the 2021 financial year (2020: EUR 920 thousand). For further details on rental income from operating leases see note 21.

Capitalization of borrowing costs

Borrowing costs of EUR 21,166 thousand for property, plant and equipment were capitalized in 2021 (2020: EUR 3,981 thousand). The weighted average interest rate equaled 2.23 percent (2020: 1.1 percent). The Lenzing Group defines qualifying assets as construction projects or other assets that require at least twelve months to be ready for their intended use or sale. The capitalization entries are recorded under “financing costs” and the respective asset account. All other borrowing costs are expenses in the period incurred and reported under financial result.

Note 20. Biological assets

Biological assets comprise standing trees of a plantation in Minas Gerais, Brazil, which are used as a raw material for pulp production. In accordance with IAS 41 (Agriculture), biological assets are presented at fair value in the consolidated statement of financial position. The plantation is recognized at level 3 of the fair value less estimated costs to sell at the harvest. It is assumed that fair values can be measured. The measurement of biological assets is monitored and reviewed by the Lenzing Group. The necessary market data are validated on the basis of the dual control principle. The measurement is based on a discounted cash flow model on the basis of sustainable forest management plans, industry benchmarks for wood prices and delivery costs and taking into account the growth potential. The annual harvest from the projected tree growth is multiplied by wood prices, and the forestry and harvesting costs are deducted. The fair value of the plantation is measured as the present value of the harvest from one growth cycle on the basis of the productive forest area, taking into account environmental restrictions and other reservations. In particular, the calculated fair value would increase (decrease) if both the timber price and the timber volume were to increase (decrease). The calculated fair value would decrease (increase) if the discount rate were to increase (decrease).

Young standing timber less than one year old is considered an immature asset and is recognized at cost. When harvested, biological assets are transferred to the item inventories of the consolidated statement of financial position. Changes in the fair value of hedging instruments in relation to the foreign exchange risk are recognized in the income statement under cost of sales.

As at December 31, 2021, the plantation comprised approximately 40,115 hectares of eucalypt wood (December 31, 2020: 39,892 hectares) and 975 hectares of pine wood (December 31, 2020: 1,001 hectares). The wood is up to 13 years (December 31, 2020: 12 years) old. Wood amounting to EUR 2,163 thousand (December 31, 2020: EUR 2,486 thousand) is less than one year old and therefore considered an immature asset.

Biological assets developed as follows:

Development of biological assets

EUR '000	2021	2020
As at 01/01	18,350	17,398
Addition	7,281	2,494
Acquisition	1,054	1,759
Sales (1,539)	(1,539)	(1,517)
Capitalized production costs	1,937	1,418
Change in the fair value	(2,001)	(12,943)
Currency translation adjustment	(1,071)	(3,992)
Other changes	(314)	(12)
As at 31/12	23,597	18,350

Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 31

Gains and losses from the change in the fair value of biological assets of EUR 2,258 thousand (December 31, 2020 EUR minus 10,334 thousand) consisted of the regular remeasurement of EUR minus 2,001 thousand (December 31, 2020: EUR minus 12,943 thousand) and changes in the value of hedges related to the exchange rate risk of EUR 4,259 thousand (December 31, 2020: EUR 2,608 thousand). These are included in the cost of sales. In October 2020, a fire occurred on the plantation. The fire resulted in a reduction of the selling price for the damaged wood. The devaluation taking into account insurance cover amounts to EUR 3,192 thousand and is included in the change in fair value.

The following assumptions were made:

Assumptions of level 3 input factors for biological assets

	31/12/2021	31/12/2020
Market price EUR/m³	21.87	19.69
Discount rate	9.27%	8.14%
Wood volume (1,000 m³)	10,088 m³	9,742 m³

A change in key input factors which cannot be observed on the market would have the following effects on the measurement of biological assets:

Sensitivity analysis of level 3 input factors for biological assets as at 31/12/2021

	EUR '000
	Increase
Change in the market price (+/- 1%)	19,528
Discount rate (+/- 1%)	(7,020)
Wood volume (+/- 5%)	9,357

Sensitivity analysis of level 3 input factors for biological assets as at 31/12/2020 (previous year)

	EUR '000
	Increase
Change in the market price (+/- 1%)	17,542
Discount rate (+/- 1%)	(7,195)
Wood volume (+/- 5%)	8,078

Note 21. Right-of-use assets

The Lenzing Group as the lessee

The Lenzing Group has obligations from rental and lease agreements for property, plant and equipment, which are recognized as right-of-use-assets in the consolidated statement of financial position. The corresponding lease liabilities are reported as part of financial liabilities (see note 30). The following table shows the development of right-of-use assets classified by type of asset:

Development of right-of-use assets

EUR '000	Land and buildings	Technical equipment and machinery, factory and office equipment	Total
Carrying amount as at 01/01	14,001	12,037	26,038
Addition	3,014	2,927	5,941
Disposals	(75)	(9)	(84)
Depreciation fiscal year	(1,775)	(1,742)	(3,517)
Currency translation adjustment	1,354	1,414	2,768
Carrying amount as at 31/12	16,519	14,627	31,146

Development of right-of-use assets

EUR '000	Land and buildings	Technical equipment and machinery, factory and office equipment	Total
Carrying amount as at 01/01	21,074	12,424	33,498
Addition	1,833	1,220	3,053
Disposals	(10)	(1,717)	(1,727)
Depreciation fiscal year	(1,747)	(1,195)	(2,942)
Currency translation adjustment	(1,050)	(214)	(1,264)
Carrying amount as at 31/12	19,100	10,528	29,628

In the 2021 financial year, right-of-use assets relating to leases amounting to EUR 4,014 thousand for building rentals, EUR 2,927 thousand for wagons and EUR 2,217 thousand from the index increase for the land use right were recognized. Right-of-use assets of EUR 44,610 thousand were recognized in the 2020 financial year for the land on which the biological assets are located.

The terms and conditions of the main leases can be summarized as follows:

• Land use rights: The biological assets (see note 20) are located on land which is not owned by the Lenzing Group. Land use rights are in place for this land. The lease has a term of 30 years, with an option to extend the lease by 19 years after 30 years. This extension option was not taken into account in estimating the expected term of the lease because the use of the

Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 32

biological assets in 30 years is not sufficiently certain from today’s perspective. Price adjustment clauses exist.
* Office and storage premises: The leases have a term of up to five years and some contracts have an indefinite term. Ordinary useful lives were applied to office and storage premises with indefinite useful lives where economic exit barriers exist. These leases do not include an option to purchase the office and storage premises at the end of the contract term. Some of the leases include extension options and price adjustment clauses.
* Rail cars: The leases have a term of up to ten years and can be canceled after a minimum period. Some of the leases have price adjustment clauses.
* Wastewater treatment plant: The Lenzing Group has concluded finance leases for an industrial primary clarifier and related expansion investments. The ownership of the plant, including the land, can be transferred to Lenzing AG after the agreements expire in exchange for the payment of a transfer fee. This lease has a term of up to 16 years. Termination and extension options are taken into account when estimating the expected term of the leases if it is sufficiently certain that they will or will not be exercised.

The Lenzing Group estimates that possible future cash outflows from extension options which were not taken into account in the measurement of the lease liability could result in an increase in the lease liability and the related future cash outflows by EUR 1,286 thousand (December 31, 2020: EUR 1,129 thousand).

The following expenses relating to leases were recognized in the consolidated income statement in the 2021 financial year.Amounts recognized in profit or loss
EUR '000
| | 2021 | 2020 |
| :------------------- | :------- | :------- |
| Expenses relating to short-term leases | 25,179 | 24,156 |
| Expenses relating to variable leases | 20,887 | 24,033 |
| Expenses relating to leases of low-value assets | 770 | 770 |
| Non-lease components | 1,410 | 1,120 |
| Rental and leasing expenses | 37,352 | 37,338 |
| Interest on lease liabilities | 21,410 | 21,195 |

Short-term leases are leases with a term of less than one year. Where contracts have no term, leases are considered short-term leases if both parties have a right to terminate the contract, which can be exercised without the consent of the counterparty and no termination penalties or economic barriers exist. Leases for which only variable lease payments that are not coupled to an index or (interest) rate have been agreed are not capitalized as right-of-use assets. Expenses relating to variable leases mainly include variable rental payments for warehouses based on monthly storage quantities.

Cash outflows for leases total EUR 28,592 thousand (2020: EUR 30,216 thousand). They include expenses relating to short-term and variable leases and to leases of low-value assets. Expenses relating to the right-of-use assets and financing costs are fully cash-effective and included in cash flow from operating activities. The cash flows incurred in connection with the repayment of lease liabilities are explained in note 35.

All items of right-of-use assets are tested for impairment in accordance with IAS 36 if there are any indications that these assets may be impaired (see note 11).

The Lenzing Group as the lessor

The future undiscounted minimum lease payments during the non-cancellable term of the leases relate primarily to land and buildings and are as follows, classified by year:

Undiscounted annual minimum lease payments as lessor
EUR '000
| | 31/12/2021 | 31/12/2020 |
| :---------------------------- | :--------- | :--------- |
| In the following year | 20,196 | 20,193 |
| In the following 1-2 years | 20,718 | 20,415 |
| In the following 2-3 years | 20,459 | 20,415 |
| In the following 3-4 years | 20,459 | 20,312 |
| In the following 4-5 years | 20,459 | 20,312 |
| Thereafter | 20,567 | 10,737 |
| Total | 122,878| 91,784 |

The most important lease involves land on which a recycling plant is operated. The lease payments are indexed. The lease was concluded for an indefinite term and can be canceled at the earliest as at December 31, 2029, subject to a six-year notice period. Rental income for the 2021 financial year is shown in note 7. The Lenzing Group classifies these leases as operating leases since the main risks and opportunities associated with ownership are retained.

61
Annual Financial Report 2021
Lenzing Group
Annual Report 2021
Lenzing Group
33

Note 22. Investments accounted for using the equity method

Investments accounted for using the equity method comprise the following:

Carrying amounts of investments accounted for using the equity method
EUR '000
| | 31/12/2021 | 31/12/2020 |
| :------------------------------------------ | :--------- | :--------- |
| EQUI-Fibres Beteiligungsgesellschaft mbH (EFB) | 24,111 | 24,191 |
| Hygiene Austria LP GmbH (HGA) | 0 | 1,418 |
| LD Florestal S.A. (LDF) | 19,416 | 19,419 |
| Other associates | 24,917 | 24,137 |
| Other joint ventures | 111 | 109 |
| Total | 68,555 | 69,274 |

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, and LD Florestal S.A. (LDF), Sao Paulo, 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 40.

Investments accounted for using the equity method developed as follows:

Development of the carrying amounts of investments accounted for using the equity method
EUR '000
| | EFB | Other associates | HGA | LDF | Other joint ventures | Total |
| :----------------------------------------------------------------------------------------------- | :------- | :--------------- | :----- | :------- | :------------------- | :----------- |
| 2021 | | | | | | |
| As at 01/01 | 24,191 | 24,137 | 1,418 | 19,419 | 109 | 69,274 |
| Capital injection | 0 | 7 | 0 | 0 | 7 | 14 |
| Share in profit or loss of investments accounted for using the equity method | 1,489 | 990 | 0 | (151) | 6 | 2,334 |
| Other comprehensive income – remeasurement of defined benefit liability and other | 109 | 7 | 0 | 0 | 7 | 123 |
| Other comprehensive income – foreign currency translation differences arising during the year | 0 | 319 | 0 | (12) | 0 | 307 |
| Disposal of carrying amount | 0 | 7 | (14,183)| 0 | 7 | (14,162) |
| Distributions | (181) | (137) | 0 | 0 | 7 | (211) |
| As at 31/12 | 24,111 | 25,323 | 0 | 19,256 | 136 | 68,826 |
| | | | | | | |
| 2020 | | | | | | |
| As at 01/01 | 15,427 | 13,959 | 0 | 15,415 | 117 | 44,918 |
| Capital injection | 0 | 7 | 1,418 | 0 | 7 | 1,432 |
| Share in profit or loss of investments accounted for using the equity method | 7,659 | 6 | 1,418 | 5,419 | 15 | 14,517 |
| Other comprehensive income – remeasurement of defined benefit liability and other | (100) | 7 | 0 | 0 | 7 | (86) |
| Other comprehensive income – foreign currency translation differences arising during the year | 0 | (568) | 0 | (8,414) | (1) | (8,983) |
| Disposal of carrying amount | 0 | 7 | 0 | 0 | 7 | 14 |
| Distributions | 0 | (13) | 0 | 0 | 7 | (6) |
| As at 31/12 | 24,191 | 23,591 | 2,836 | 12,420 | 151 | 63,189 |

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, 2021. 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 40). The Lenzing Group held 50.1 percent of the capital and voting rights of HGA as at December 31, 2020. 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.

62
Annual Financial Report 2021
Lenzing Group
Annual Report 2021
Lenzing Group
34

In the 2021 financial year, an impairment of EUR 0 thousand (2020: EUR 1,384 thousand) was recognized on the outstanding purchase price receivables and non-current loans due from the buyer of EFB (and its subsidiaries) (see note 39, 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 10,678 thousand as at December 31, 2021 (December 31, 2020: EUR 10,678 thousand) and are reported under financial assets. They carry standard bank interest rates. 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, 2021 (December 31, 2020: EUR 4,087). Moreover, the buyer was granted a credit line of up to EUR 5,379 (December 31, 2020: EUR 8,622 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, 2021 and in the previous year as at December 31, 2020.

The Lenzing Group held 20 percent of capital and voting rights as at December 31, 2021 (December 31, 2020: 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 40.

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

Summarized financial information on EFB
EUR '000
| | 31/12/2021 | 31/12/2020 |
| :---------------------- | :--------- | :--------- |
| Non-current assets | 21,720 | 22,918 |
| Current assets | 24,717 | 12,710 |
| Equity | 19,416 | 10,216 |
| Non-current liabilities | 15,814 | 17,119 |
| Current liabilities | 10,197 | 8,493 |

	2021	2020
Revenue	23,176	21,214
Earnings before tax (EBT)	18,411	11,278
Total comprehensive income	15,714	8,256
Thereof net profit for the year	17,179	8,716
Thereof other comprehensive income	(1,465)	(460)

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

Reconciliation of equity to carrying amount of the investment in EFB
EUR '000
| | 31/12/2021 | 31/12/2020 |
| :------------------------------------ | :--------- | :--------- |
| Equity | 19,416 | 10,216 |
| Thereof: Group’s interest (20%; prev. year: 20%) | 2,115 | 2,115 |
| Consolidation and other effects | (9) | (9) |
| Impairment | (1,275) | (1,275) |
| Carrying amount | 2,115 | 2,115 |

The Lenzing Group held 50 percent of the capital and voting rights in LDF as at December 31, 2021 (December 31, 2020: 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 40.

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

Summarized financial information on LDF
EUR '000
| | 31/12/2021 | 31/12/2020 |
| :---------------------- | :--------- | :--------- |
| Non-current assets | 10,545 | 16,515 |
| Current assets | 7,737 | 1,804 |
| Equity | 6,427 | 6,481 |
| Non-current liabilities | 14,115 | 5,164 |
| Current liabilities | 1,740 | 2,184 |

	2021	2020
Revenue	15,859	17,419
Earnings before tax (EBT)	777	746
Total comprehensive income	777	746
Thereof net profit for the year	777	746
Thereof other comprehensive income	0	0
1) LDF's revenue consists of rental income in particular.

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

Reconciliation of equity to carrying amount of the investment in LDF
EUR '000
| | 31/12/2021 | 31/12/2020 |
| :------------------------------- | :--------- | :--------- |
| Equity | 6,427 | 6,481 |
| Thereof: Group's interest (50%; prev. year: 50%) | 3,214 | 3,241 |
| Carrying amount | 3,214 | 3,241 |

The investments in associates represent shares in companies in which the Lenzing Group can exert significant influence over financial and operating policies.# Note 23. Financial assets

Non-current financial assets comprise the following:

Non-current financial assets	EUR '000	31/12/2021	31/12/2020
Non-current securities		27,737	26,530
Other equity investments		16,341	15,018
Originated loans		12,974	11,740
Total		57,052	53,288

Non-current securities are classified as follows:

Non-current securities by asset class	EUR '000	Market value 31/12/2021	Market value 31/12/2020
Government bonds		0	9,207
Other securities and book-entry securities (primarily shares)		27,737	17,323
Total		27,737	26,530

The Lenzing Group has designated equity instruments of a fair value of EUR 19,899 thousand as measured at “fair value through other comprehensive income” as at December 31, 2021 (December 31, 2020: EUR 24,753 thousand). Non-current securities measured at fair value through other comprehensive income and other equity investments include shares in companies in which a share of less than 20 percent is held. The option to recognize these equity instruments at fair value through other comprehensive income was exercised based on the intent to hold these instruments in the long term. The other equity investments as at December 31, 2021 consist primarily of the investment in LP Beteiligungs & Management GmbH, Lenzing. Non-current securities primarily consist of Oberbank ordinary shares amounting to EUR 12,802 thousand (December 31, 2020: EUR 11,821 thousand). In the 2021 financial year there was a dividend payout of other investments and other securities, which amounted to EUR 960 thousand (December 31, 2020: EUR 829 thousand). Current financial assets include the shares held in Spinnova OY, Jyväskylä, Finland, amounting to EUR 32.232 thousand, which were reclassified from other equity investments to current securities in the 2021 financial year (see note 37).

Note 24. Other non-current assets

Other non-current assets are classified as follows:

Other non-current assets	EUR '000	31/12/2021	31/12/2020
Other non-current financial assets (particularly from derivatives and other financial receivables)		7,211	4,815
Other non-current non-financial assets (particularly from other taxes)		17,777	26,114
Total		24,988	30,929

Note 25. Inventories

Inventories include the following components:

Inventories	EUR '000	31/12/2021	31/12/2020
Raw materials and supplies		27,806,750	21,425,965
Work in progress		15,117,831	14,147,828
Finished goods and merchandise		24,570,871	26,514,620
Advance payments made		10,241,408	9,651,195
Total		77,736,860	71,740,608

Raw materials and supplies consist primarily of wood for pulp production, pulp and chemicals for cellulosic fiber production and various incidentals. The cost of raw materials and supplies is calculated using the weighted average cost method. Finished goods and work in progress include cellulosic fibers, sodium sulfate, acetic acid and furfural. Write-downs totaling EUR 16,841 thousand were recognized to inventories in 2021 (2020: EUR 8,689 thousand). The carrying amount of inventories measured at their net realizable value equaled EUR 186,751 thousand (December 31, 2020: EUR 118,706 thousand). Expenses for inventories, which are included in the cost of material totaled EUR 1,017,914 thousand (2020: EUR 770,254 thousand).

Note 26. Trade receivables

Trade receivables comprise the following:

Trade receivables	EUR '000	31/12/2021	31/12/2020
Trade receivables (gross)		77,417	74,819
Bad debt provisions		(1,790)	(1,156)
Total		75,627	73,663

All trade receivables are classified as current assets. Additional information on trade receivables is provided in note 37 (“Factoring“) and note 39 (“Credit risk“).

Note 27. Other current assets

Other current assets comprise the following:

Other current financial assets	EUR '000	31/12/2021	31/12/2020
Derivatives not yet settled (open positions)		17,947	15,968
Recharging of maintenance services		2,102	1,959
Receivables from grant commitments		66	1,777
Sundry		1,764	1,271
Total		21,879	20,975
Other current non-financial assets
Receivables from other taxes and duties		18,560	17,187
Advance payments made		1,024	1,074
Emission certificates		4,765	2,095
Prepaid expenses		608	1,896
Sundry		10	100
Total		24,967	22,352
Total		46,846	43,327

Note 28. Equity

Share capital and capital reserves

The share capital of Lenzing AG totaled EUR 27,574,071.43 as at December 31, 2021 (December 31, 2020: EUR 27,574,071.43) and is divided into 26,550,000 zero par value shares (December 31, 2020: 26,550,000 shares). The proportion of share capital attributable to one share equals roughly EUR 1.04. Each ordinary share represents an equal interest in capital and conveys the same rights and obligations, above all the right to a resolved dividend and the right to vote at the Annual General Meeting. The issue price of the shares is fully paid in. No other classes of shares have been issued.

The Annual General Meeting on April 12, 2018 authorized the Managing Board – while at the same time canceling the resolutions regarding this matter of the Annual General Meeting of April 22, 2015 – subject to the approval of the Supervisory Board, to increase share capital by up to EUR 13,787,034.68 through the issue of up to 13,274,999 zero par value shares (“authorized capital”) – also in tranches – in exchange for cash and/or contributions in kind, within five years from entry in the commercial register. The proportion of authorized capital attributable to one share equals roughly EUR 1.04. This authorized capital was recorded in the commercial register on May 23, 2018. In addition, a resolution of the Annual General Meeting on April 12, 2018 authorized the Managing Board – while at the same time canceling the resolutions regarding this matter of the Annual General Meeting of April 22, 2015 – to issue, subject to the approval of the Supervisory Board, convertible bonds by April 12, 2023 in one or several tranches that grant or provide for the subscription or conversion right or a subscription or conversion obligation for up to 13,274,999 shares of the company (“contingent capital”). They can be serviced through the contingent capital and/or treasury shares.

The Annual General Meeting on June 18, 2020 authorized the Managing Board – while at the same time canceling the resolutions regarding this matter of the Annual General Meeting of April 12, 2018 and subject to the approval of the Supervisory Board – to purchase treasury shares of the company for a period of 30 months starting on the day of the resolution. The treasury shares acquired by the company may not exceed 10 percent of the company’s share capital. The equivalent to be paid for the repurchase must be within a range of +/-25 percent of the weighted average closing price of the last 20 stock exchange days prior to the start of the corresponding repurchasing program of the Lenzing share. The Managing Board was also authorized to withdraw repurchased treasury shares without any further resolution by the Annual General Meeting subject to the approval of the Supervisory Board (including the authorization of the Supervisory Board to adopt changes to the articles of association resulting from withdrawing the shares), or to resell them and to determine the conditions of sale. This authorization can be exercised in full, in part and in pursuit of one or several objectives by the company, by a subsidiary (Section 189a no. 7 of the Austrian Commercial Code) or by third parties for the company’s account. In addition, the Management was authorized for a period of five years from the date of the resolution to adopt the sale of treasury shares in any manner permitted by law other than through the stock exchange or public offer, also excluding shareholders’ repurchasing rights (subscription rights), and to determine the conditions of sale.

The Managing Board did not utilize the authorizations in place on or up to December 31, 2021 to increase share capital, issue convertible bonds or repurchase treasury shares during the 2021 financial year.

The capital reserves represent appropriated reserves of Lenzing AG that may only be used to offset an accumulated loss by Lenzing AG. These reserves were created from the inflow of funds received by Lenzing AG from shareholders in excess of share capital.

Other reserves

Other reserves include all accumulated other comprehensive income and consist of the foreign currency translation reserve, the reserve for financial assets measured at fair value through other comprehensive income, the hedging reserve and actuarial gains/losses. The amounts attributable to the components of other comprehensive income in 2021 and 2020 include the following:

Other comprehensive income	EUR '000	2021		2020
		Before tax	Tax effect	After tax	Before tax
Consolidated subsidiaries		27,976	(6,969)	21,007	(10,910)
Investments accounted for using the equity method		0	0	0	0
Foreign currency translation reserve		14,210	(3,319)	10,891	(13,129)
Financial assets measured at fair value through other comprehensive income		20,245	(1,062)	19,183	(6,519)
Consolidated subsidiaries		(4,759)	1,041	(3,718)	(12,791)
Hedging reserve		(17,365)	1,580	(15,785)	(17,274)
Consolidated subsidiaries		(1,937)	507	(1,430)	(3,005)
Investments accounted for using the equity method		38	(10)	28	38
Actuarial gains/losses		(10,591)	2,673	(7,918)	(10,659)
Total		27,741	(6,062)	21,679	(30,736)

The hedging reserve developed as follows:

| Changes in the hedging reserve | EUR '000 | 2021 |
| :----------------------------- | :--------- | :----- |## 2020 Gains/losses recognized in the reporting period from the valuation of cash flow hedges

From forward foreign exchange contracts (2020) (2019)
From other derivatives 2020 (2019) (2018) (2017)

Reclassification to profit or loss of amounts relating to cash flow hedges:
From forward foreign exchange contracts 2020 2019
From other derivatives 2020 (2019) 2018 2017

Total (2019) (2018)

The fair value changes recognized in the reporting period from the valuation of cash flow hedges are mostly related to the hedging of foreign currency transactions for the construction of assets and the hedging of revenue in foreign currencies. The above amounts from the reclassification to profit or loss of cash flow hedges from forward foreign exchange contracts are reported primarily under revenue as part of earnings before interest and tax (EBIT). The above amounts from the reclassification to profit or loss of cash flow hedges from other derivatives are reported under financial result.

66 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

38 Retained earnings

Retained earnings comprise the following:

Retained earnings EUR '000	31/12/2021	31/12/2020
Unappropriated revenue reserves of Lenzing AG under Austrian law (Austrian Commercial Code – öUGB)	17,231,878	17,023,719
Accumulated profits of Lenzing AG under Austrian law (Austrian Commercial Code – öUGB)	776,514	775,147
Retained earnings of the subsidiaries, including the effect of adjusting the financial statements of Lenzing AG and its subsidiaries from local regulations to IFRS	19,127,114	19,561,375
Total (excl. other reserves)	37,135,506	37,360,241

The unappropriated revenue reserves of Lenzing AG can be released at any time and distributed to shareholders as part of accumulated profits. Austrian law only permits the distribution of dividends from accumulated profits as stated in the approved annual financial statements of the parent company prepared in accordance with the Austrian Commercial Code.

The following dividends were approved by the Annual General Meeting and paid to the shareholders of Lenzing AG:

Dividends of Lenzing AG resolved and paid	Total Number of shares	Dividend per share EUR	EUR '000
Dividend for the financial year 2020 resolved at the Annual General Meeting on April 14, 2021	1	1.00	19,256,617
Dividend for the financial year 2019 resolved at the Annual General Meeting on June 18, 2020	1	1.00	19,256,617

1) The proposed dividend payout of EUR 1.00 as published in the consolidated financial statements 2019 was reevaluated due to the COVID-19 crisis.

The Managing Board proposes the following use of accumulated profits for 2021 as stated in the annual financial statements of Lenzing AG, which were prepared in accordance with the Austrian Commercial Code:

Proposal on the appropriation of accumulated profits for 2021

EUR '000
Lenzing AG closed the 2021 financial year with profit under Austrian law (öUGB) of 763,217
the allocation to (unappropriated) revenue reserves of (177,029) results in accumulated profit of 586,188

The Managing Board proposes the following appropriation of the accumulated profit:

• Distribution of a EUR 4.35 dividend per share on eligible share capital of EUR 27,574,071.43 or 26,550,000 shares 576,514
• Amount carried forward to new account 10,000

The dividend shown in the above proposal is subject to approval by the shareholders at the Annual General Meeting and is therefore still included in equity as at the reporting date.

Hybrid capital

In December 2020, a subordinated perpetual bond (hybrid capital) with a total volume of EUR 500,000 thousand and a coupon of 5.75 percent was issued. The hybrid capital has a perpetual tenor and can be called or redeemed by Lenzing AG on December 7, 2025 at the earliest. Investors have no call rights. If the hybrid capital is not called, the hybrid capital will carry a changed interest rate from December 8, 2025 (then applicable 5-year swap rate plus a margin of 11.208 percent). Interest will be due and payable in arrears on December 7 of each year unless Lenzing AG decides to defer such interest payment. Outstanding deferred interest must be paid under certain circumstances, in particular when the Annual General Meeting of Lenzing AG resolves to pay a dividend. The bond meets the criteria for equity pursuant to IAS 32 (Financial Instruments: Presentation). Accordingly, coupons are presented as part of appropriation of profits in the consolidated income statement. The hybrid capital led to directly attributable transaction costs after tax of EUR 3,418 thousand, which were offset against equity.

Non-controlling interests

Non-controlling interests represent the investments held by third parties in consolidated group companies. The group companies with non-controlling interests are listed in note 43 under “Consolidated companies”. These are companies in which the Lenzing Group holds a share of less than 100 percent and which are not reported under puttable non-controlling interests.

Non-controlling interests in equity include LD Celulose S.A. (LDC), Sao Paulo, Brazil, which is assigned to the Segment Division Pulp. The non-controlling interests in LDC totaled EUR 174,719 thousand as at December 31, 2021 (December 31, 2020: EUR 133,283 thousand). As at December 31, 2021, non-controlling shareholders held 49.0 percent (December 31, 2020: 49.0 percent) of the capital and voting rights in LDC, which is not publicly listed. After the completion of the plant, the core business of LDC will consist of the production and sale of dissolving wood pulp.

67 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

39

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

Summarized financial information on LDC EUR '000	31/12/2021	31/12/2020
Non-current assets	210,810,985	208,185,739
Current assets	69,164,174	72,114,206
Equity	70,517,108	85,814,115
Thereof equity attributable to shareholders of Lenzing AG	36,006,425	37,895,277
Thereof equity attributable to non-controlling interests	34,510,683	47,918,838
Non-current liabilities	145,817,890	174,114,556
Current liabilities	191,464,160	151,114,239

2021	2020
Revenue	241,069,175
Earnings before tax (EBT)	(261,627)
Total comprehensive income	28,126,519
Thereof net profit/loss for the year	(141,602,544)
Net profit/loss for the year attributable to shareholders of Lenzing AG	(141,600,998)
Net profit/loss for the year attributable to non-controlling interests	(141,604,090)
Thereof other comprehensive income	171,127,063
Other comprehensive income attributable to shareholders of Lenzing AG	717,506
Other comprehensive income attributable to non-controlling interests	71,007,557
Cash flow from operating activities	221,127,771
Cash flow from investing activities	(286,514,718)
Cash flow from financing activities	128,519,070
Change in cash and cash equivalents	(176,514,967)
Dividends paid to non-controlling interests	0

Non-controlling interests in equity include PT. South Pacific Viscose (SPV), Purwakarta, Indonesia, which is assigned to the Segment Division Fiber. The non-controlling interests in SPV totaled EUR 17,232 thousand as at December 31, 2021 (December 31, 2020: EUR 14,615 thousand). As at December 31, 2021, non-controlling shareholders held 8.13 percent (December 31, 2020: 11.92 percent) of the capital and voting rights in SPV, which is not publicly listed. The core business of SPV is the production and sale of wood-based cellulosic fibers.

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

Summarized financial information on SPV EUR '000	31/12/2021	31/12/2020
Non-current assets	188,202,742	184,977,377
Current assets	25,552,174	16,217,024
Equity	172,260,508	175,145,165
Thereof equity attributable to shareholders of Lenzing AG	156,027,184	160,522,535
Thereof equity attributable to non-controlling interests	16,233,324	14,622,630
Non-current liabilities	17,811,150	19,118,778
Current liabilities	15,583,388	12,704,493

2021	2020
Revenue	127,198,457
Earnings before tax (EBT)	(261,765)
Total comprehensive income	(6,152,731)
Thereof net profit/loss for the year	(10,718,175)
Net profit/loss for the year attributable to shareholders of Lenzing AG	(105,177,505)
Net profit/loss for the year attributable to non-controlling interests	(207,180)
Thereof other comprehensive income	24,167,832
Other comprehensive income attributable to shareholders of Lenzing AG	12,167,830
Other comprehensive income attributable to non-controlling interests	11,999,902
Cash flow from operating activities	(271,773)
Cash flow from investing activities	(165,177,777)
Cash flow from financing activities	159,144,407
Change in cash and cash equivalents	(13,904,143)
Dividends paid to non-controlling interests	0

68 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

40

The following shares of other comprehensive income are attributable to non-controlling interests in the subsidiaries of Lenzing AG:

Other comprehensive income attributable to non-controlling interests EUR '000	2021	2020
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit liability	(1)	0
Income tax relating to these components of other comprehensive income	7	(0)
Items that may be reclassified to profit or loss
Foreign operations – foreign currency translation differences arising during the year	179,199	(167,225)
Cash flow hedges – effective portion of changes in fair value recognized during the year and non-designated components	(17,154)	(147,467)
Income tax relating to these components of other comprehensive income	0	7
Other comprehensive income (net of tax)	161,743	(334,170)

Note 29. Government grants

The amount accrued under this item resulted primarily from grants for the promotion of investments in economically underdeveloped regions, 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. Government grants of EUR 12,755 thousand were recognized to profit or loss in 2021 (2020: EUR 12,752 thousand), resulting predominantly from promotion of research activities. Any conditions attached to the grants were fulfilled and repayment, in full or in part, is therefore considered unlikely. Government grants also included EUR 42,254 thousand of emission certificates as at December 31, 2021 (December 31, 2020: EU 18,048 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 369,863 EU-emission certificates and 30,589 UK-emission certificates were allocated free of charge to the relevant companies in the Lenzing Group for 2021 through national allocation plans (2020: 393,758 EU-emission certificates and 34,808 UK-emission certificates). Emission certificates are capitalized at fair value on the allocation date. 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 2021 financial year expenses for emission certificates amounted to EUR 6,557 thousand (2020: EUR 4,738 thousand).

Note 30. Financial liabilities

The following table shows the composition of financial liabilities as at December 31:

Financial liabilities	31/12/2021	31/12/2020
	EUR '000	EUR '000
	Currency	Nominal value
Private placements
Fixed interest	EUR 766,576	766,576
Floating rate interest	EUR 28,519,999	28,519,999
Floating rate interest 1	USD 30,819,999	27,418,909
Bank loans
Loans: Fixed interest	EUR 35,500,000	35,500,000
Fixed interest	USD 78,125,000	71,007,924
Floating rate interest	EUR 147,777,777	147,777,777
Floating rate interest 1	USD 145,777,777	114,918,510
Operating loans 2 :
Floating rate interest	CNY 70,919,999	63,751,593
Lease liabilities
Fixed interest	EUR 19,300,000	19,300,000
Loans from other lenders
Fixed interest	EUR 5,000,000	5,000,000
Fixed and floating rate interest	EUR 77,470,000	77,470,000
Floating rate interest	USD 0	0
Floating rate interest	BRL 74,319,000	18,748,517
Total		217,612,765
Thereof current		10,509,965
Thereof non-current		207,102,800

1) The underlying contracts are linked to the USD-LIBOR reference interest rate as of the balance sheet date and have not yet been switched to an alternative reference interest rate.
2) Revolving credit agreements and overdrafts

In the 2012 financial year, the Lenzing Group issued private placements with an issue volume of EUR 200,000 thousand. The terms cover four and seven years with fixed and floating interest rates, respectively, as well as a term of ten years with fixed interest. The average term is approximately six years. The Lenzing Group repaid EUR 40,500 thousand of the existing private placements as scheduled in 2016. In the 2015 financial year, the Lenzing Group reached an agreement to refinance its private placements with a corresponding volume increase. Existing private placements of EUR 89,500 thousand were terminated and re-issued at extended terms. Additional private placements of EUR 60,500 thousand were also issued. Overall these transactions involved the issue of private placements totaling EUR 150,000 thousand, which have an average term of seven years. In the 2021 financial year EUR 56,000 thousand (2020: EUR 37,500 thousand) were repaid. In the 2019 financial year, the Lenzing Group issued further private placements with an issue volume of EUR 375.000 thousand and USD 45.000 thousand. A term of 5 to 15 years with fixed and floating interest rates was agreed. In the 2020 financial year, the Lenzing Group issued further private placements with an issue volume of EUR 114,000 thousand and TUSD 20,000 thousand. Terms of 5 to 7 years with fixed and floating interest rates were agreed. In 2020, a loan of EUR 200,000 thousand was arranged with Oesterreichische Kontrollbank. A term of 3 to 7 years with fixed and floating interest rates was agreed. In 2021, a loan of EUR 160,000 thousand was arranged with Oesterreichische Kontrollbank. A term of 2 to 7 years with fixed and floating interest rates was agreed.

The financing for the construction of the dissolving wood pulp plant in Brazil was secured in the form of loans in the 2020 financial year (volume in USD 1,147,200 thousand). As at December 31, 2021, EUR 739,462 thousand (December 31, 2020: EUR 237,504 thousand) of the loans were used. These liabilities are collateralized by pledged property, plant and equipment in the amount of EUR 9,558 thousand (December 31, 2020: EUR 2,091 thousand) and biological assets in the amount of EUR 95,767 thousand (December 31 2020: EUR 84,254 thousand). In addition, the shares in LD Celulose S.A., Sao Paulo, Brazil were pledged for the financing of the pulp mill. Details on the existing financial covenants are explained in note 36. The next interest rate adjustment for the floating rate loans and partially fixed rate loans will take place within the next six months, depending on the loan agreement. The conditions for loans that can be utilized multiple times (revolving loans) are fixed for a certain period and generally carry floating interest rates. Other loans primarily involve obligations to the Austrian fund for the promotion of research in industry (“Forschungsförderungsfonds der gewerblichen Wirtschaft”) and the ERP fund as well as loans from non-controlling shareholders.

Note 31. Deferred taxes (deferred tax assets and liabilities) and current taxes

Deferred tax assets and liabilities relate to the following items on the statement of financial position:

Deferred tax assets

	31/12/2021	31/12/2020
	EUR '000	EUR '000
Intangible assets and property, plant and equipment	170,094	105,189
Financial assets	17,615	60,146
Inventories	931,503	10,271,503
Other assets	910,560	910,987
Provisions	730,155	10,205,155
Investment grants	9,010	9,140
Lease liabilities	970,153	970,108,777
Other liabilities	910,560	19,101,984
Loss carryforwards	170,023,414	174,004,020
Gross deferred tax assets – before valuation adjustment	742,017,777	773,025,777
Valuation adjustment to deferred tax assets	(670,514)	(102,011,945)
Thereof relating to tax loss carryforwards	(17,018,090)	(10,271,503)
Gross deferred tax assets	73,747,263	67,013,832
Offsettable against deferred tax liabilities	(550,000)	(540,000,000)
Net deferred tax assets	17,374,263	70,138,320

Deferred tax liabilities

	31/12/2021	31/12/2020
	EUR '000	EUR '000
Intangible assets and property, plant and equipment	180,010,830	181,009,720
Right-of-use assets	830,155	902,715,577
Biological assets	710,109	10,231,593
Financial assets	57,017,850	60,105,625
Inventories	60,268	11,020,737
Other assets	99,014,020	17,011,508
Special depreciation/amortization for tax purposes	710,117	170,231,593
Investment grants	17,514	16,214
Other liabilities	416,820	10,231,020
Gross deferred tax liabilities	177,777,777	177,777,777
Offsettable against deferred tax assets	(550,000)	(540,000,000)
Net deferred tax liabilities	177,177,777	123,777,777

Of the total gross deferred tax assets, EUR 22,501 thousand (December 31, 2020: EUR 16,109 thousand) are due within one year. Of the total gross deferred tax liabilities, EUR 12,416 thousand (December 31, 2020: EUR 6,480 thousand) are due within one year. The remaining amounts are due in more than one year.

Deferred taxes developed as follows:

Development of deferred taxes	2021	2020
	EUR '000	EUR '000
As at 01/01	(742,027)	(870,167)
Recognized in profit or loss	(17,374)	(12,741,738)
Recognized in other income	(6,176)	1,415
Currency translation adjustment	(12,174)	(12,871)
As at 31/12	(775,751)	(742,027)

The Group held tax loss carryforwards of EUR 166,812 thousand as at December 31, 2021 (December 31, 2020: EUR 166,162 thousand).The existing tax loss carryforwards can be utilized as follows:

Loss carryforwards (assessment basis) EUR '000	31/12/2021	31/12/2020
Total	27,721	26,173
Thereof capitalized loss carryforwards	4,037	3,675
Thereof non-capitalized loss carryforwards	23,684	22,498

Possible expiration of non-capitalized loss carryforwards:

	31/12/2021	31/12/2020
Within 1 year	1,315	1,308
Within 2 years	5,562	5,380
Within 3 years	7,637	7,214
Within 4 years	8,706	7,465
Within 5 years or longer	3,759	3,759
Unlimited carryforward	1,704	1,704

Net deferred tax assets of EUR 3,581 thousand were recognized as at December 31, 2021 (December 31, 2020: EUR 2,409 thousand), including EUR 25 thousand (December 31, 2020: EUR 18 thousand) in group companies that generated losses in the 2021 fiscal year or in the previous year. The tax losses in the group companies concerned derived mainly from one-off events which are not expected to recur in the future. Otherwise, deferred tax assets were recognized if sufficient taxable temporary differences were available. Certain loss carryforwards were not capitalized because their usability is restricted. If all tax loss carryforwards could be utilized in full, the deferred tax assets on loss carryforwards would total EUR 37,908 thousand (December 31, 2020: EUR 38,889 thousand) instead of EUR 5,236 thousand (December 31, 2020: EUR 9,155 thousand). The financial assets and other assets shown under deferred tax assets in the above table include amounts for outstanding partial write-downs to investments in accordance with Section 12 Para. 3 no. 2 of the Austrian Corporation Tax Act (“Siebentelabschreibung”, the partial write-downs of investments over a period of seven years for tax purposes) corresponding to a measurement base of EUR 14,994 thousand (December 31, 2020: EUR 17,937 thousand). Partial write-downs of EUR 4,612 thousand were utilized for tax purposes in 2021 (2020: EUR 4,419 thousand). Deferred tax liabilities were not recognized for temporary differences with a measurement base of EUR 474,481 thousand (December 31, 2020: EUR 446,410 thousand) in connection with investments in subsidiaries, joint ventures and associates and the related proportional share of net assets held by group companies because these differences are not expected to reverse in the foreseeable future. The receivables from current taxes include prepayments made to foreign taxation authorities. These amounts are recognized when the recoverability is probable, while valuation adjustments are made in all other cases. The gross carrying amount of non-current receivables from current taxes as of December 31, 2021 amounts to EUR 21,819 thousand (December 31, 2020: EUR 15,496 thousand). Payments are sometimes uncertain, especially the timing of payments due to the sometimes long duration of proceedings. For this reason, as at December 31, 2021, write-downs of EUR 6,882 thousand were recognized (December 31, 2020: EUR 339 thousand). Lenzing AG and the subsidiaries included in the group tax agreement are members of the tax group between B&C Holding Österreich GmbH, as the head of the group, and Lenzing AG and other subsidiaries of Lenzing AG, as group members, in accordance with Section 9 of the Austrian Corporation Tax Act. The tax equalization agreement was revised with effect from the 2021 financial year. This now also includes regulations concerning the interest barrier (Section 12a of the Austrian Corporation Tax Act [KStG]). Group taxation includes the offset of taxable profits and losses between the group members. The deferred tax assets and deferred tax liabilities of the group members are also offset based on their joint tax assessment. Future tax liabilities from the offset of losses from foreign subsidiaries are recognized in the consolidated financial statements without discounting. The group and tax equalization agreement requires Lenzing AG to pay a tax allocation equal to the corporate income tax attributable to the taxable profit of the company and the subsidiaries included in the tax group. The tax allocation payable by Lenzing AG is reduced by any domestic and foreign withholding taxes deductible from the overall group result by the group parent and by any transferred minimum corporate income taxes. The tax allocation to be paid by Lenzing AG is also reduced by any current losses/loss carryforwards caused by the group parent that can be offset against positive earnings of Lenzing AG’s tax group in the assessment year. The tax allocation is reduced by 25 percent (2020: 25 percent) of the corporate tax rate (i.e. currently 6.25 percent; 2020: 6.25 percent) applicable to the current losses/loss carryforwards recorded by the head of the tax group that are offset against positive earnings in an assessment year for the head of the tax group. Tax losses recorded by Lenzing AG and the participating subsidiaries are kept on record and offset against future tax gains. An equalization payment is made as compensation for any losses that are not offset when the contract is terminated.

72 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 44

The Lenzing Group includes the effects of uncertain tax positions in the calculation of current and deferred taxes. Tax claims are recognized at the expected reimbursement amount in cases where the claim is sufficiently certain. The tax returns of the Lenzing Group’s subsidiaries are reviewed regularly by the taxation authorities. Appropriate provisions have been recognized for possible future tax obligations based on a number of factors which include interpretations, commentaries and legal decisions relating to the respective tax jurisdiction and past experience. In addition, uncertain tax positions are evaluated on the basis of estimates and assumptions for future events. New information can become available in the future that leads the Group to change its assumptions regarding the appropriateness of tax positions. Any such changes will affect tax expense in the period in which they are identified. The recoverability of deferred tax assets is generally based on the positive taxable results expected in the future – after the deduction of taxable temporary differences – in line with the forecasts approved by the Managing Board. These forecasts are also used for impairment testing (see note 11). The assessment of unused tax loss carryforwards and tax credits also involves the consideration of utilization requirements.

73 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 45

Note 32. Provisions

The Lenzing Group’s provisions are classified as follows:

Provisions EUR '000	31/12/2021	31/12/2020	31/12/2021	31/12/2020	31/12/2021	31/12/2020
	Total	Total	Thereof current	Thereof current	Thereof non-current	Thereof non-current
Provisions for pensions and similar obligations
Pensions and severance payments	21,920	21,067	9,886	9,757	12,034	11,310
Jubilee benefits	2,434	2,179	2,168	1,919	266	260
Other provisions
Anticipated losses and other risks	26,845	21,820	22,771	19,781	4,074	2,039
Emission certificates	9,641	7,849	9,641	7,849	-	-
Sundry	7,919	8,880	7,897	8,680	22	200
Total	68,759	59,795	42,322	39,557	16,396	13,809

Provisions for pensions and similar obligations

Pensions and severance payments

The Lenzing Group has entered into obligations for pensions and severance payments from defined benefit plans, which are reported under provisions for pensions and severance payments, and from defined contribution plans.

Defined benefit plans (for pensions and severance payments)

The benefits resulting from the defined benefit plans for pensions and severance payments are dependent on the final salary or wage and the length of service. They do not require any contributions by employees. The defined benefit pension plans are based on contractual obligations. The Lenzing Group’s most important defined benefit pension plan is located in Austria. It applies to employees who joined the Group before January 1, 2000 and decided to remain in the plan. The claims generally arose after a vesting period of at least 10 or 15 service years. A retirement age of 58 to 63 years is assumed for the beneficiaries, depending on their gender. At present, the plan primarily covers employees who have already retired. Qualifying insurance policies were recognized as plan assets in some cases, while coverage for these obligations is also provided by securities that do not qualify as plan assets. The defined benefit severance plans are based on statutory obligations and obligations under collective agreements. The Lenzing Group’s most important defined benefit severance plan is located in Austria. This plan entitles employees whose employment relationship is governed by Austrian law and started before January 1, 2003 to a severance payment in specific cases, in particular when they reach the statutory retirement age and in the event of termination by the employer (“old severance payment system”). The amount of the severance payment depends on the employee’s salary or wage at the termination of employment and on the length of the employment relationship. There are similar major defined benefit severance plans in Indonesia and the Czech Republic, which apply to all employees irrespective of when they joined the respective company. The defined benefit severance plans are not covered by assets, but are financed entirely through provisions.# 46 The defined benefit pension and severance plans are principally connected with the following risks that influence the amount of the obligations to be recognized:

• Investment risk: A decline in the income from plan assets below the discount rate will result in a plan deficit and an increase in the obligations.
• Interest rate risk: A decrease in the discount rate due to lower bond interest rates on the capital market will result in an increase in the obligations.
• Salary and pension trend: An increase in the actual salary and pension trends over the expected future levels will result in an increase in the obligations.
• Personnel turnover and departure risk: A decline in the expected personnel turnover rates will result in an increase in the obligations.
• Longevity risk: An increase in the life expectancy of the beneficiaries will result in an increase in the obligations.

The Lenzing Group is also exposed to currency risks in connection with these plans. The Lenzing Group takes various steps to reduce the risks from defined benefit plans. The related measures include, in particular, the external financing of defined benefit plans with plan assets or the coverage of obligations with securities that do not qualify as plan assets and the settlement of existing defined benefit plans with lump sum payments. In addition, pension and similar commitments are now only concluded as defined contribution commitments where possible and legally permissible.

The objectives of the investment policy are to create an optimal composition of plan assets and to ensure sufficient coverage for the existing claims of participating employees. The investment strategies (asset allocations) for the plan assets are contractually regulated. A reinsurance policy was concluded for part of the claims from the Austrian pension plan. It is reported as plan asset in the amount of EUR 2,598 thousand (December 31, 2020: EUR 2,730 thousand). This policy is a conventional life insurance policy which invests primarily in debt instruments that reflect the maturity profile of the underlying claims and are intended to maintain a high degree of investment security. The Lenzing Group makes no further contributions to this insurance policy.

The fair values of the abovementioned equity and debt instruments were based on price quotations on an active market. The plan assets do not include any financial instruments issued by or assets used by the Lenzing Group. The actual return on plan assets totaled EUR 152 thousand in 2021 (2020: EUR 149 thousand). The net interest expense from the defined benefit plans (expenses from the accrued interest on the obligations and the return on plan assets) is reported under financing costs.

The most important actuarial parameters applied to the defined benefit pension and severance plans are as follows:

Actuarial assumptions for defined benefit pension and severance plans p.a. in %

	31/12/2021
	Discount rate	Salary increase	Pension increase	Staff turnover deductions
Austria – pensions	3.90%	2.50%	2.1%-3.1%	1.8%
Austria – severance payments	3.90%	2.50%	N/A	1.8%
Indonesia	6.40%	3.50%	N/A	2.8%-7.8%
Czech Republic	3.90%	2.10%	N/A	2.6%
31/12/2020
Austria – pensions	2.30%	2.60%	2.1%-3.1%	1.8%
Austria – severance payments	2.30%	2.60%	N/A	1.8%
Indonesia	6.70%	3.70%	N/A	2.8%-7.8%
Czech Republic	2.30%	2.50%	N/A	2.8%

The major obligations from the defined benefit plans are the obligations for pensions and severance payments in the Lenzing Group‘s Austrian companies. The discount rate for these obligations was derived from high-quality fixed-income corporate bonds with at least an AA rating based on an international actuary’s standards. Bonds with significantly higher or lower interest rates than the other bonds in their risk class (“statistical outliers”) were not included in the calculation. The currency and terms of the bonds used to derive the discount rate are based on the currency and expected terms of the obligations to be settled. The estimated salary and pension increases, which are also considered realistic for the future, were derived from the averages of recent years. Separate employee turnover rates were applied for each company depend- ing on the composition of the workforce and the employees’ length of service. The retirement age used for the calculation is based on the applicable legal regulations. Individual, country-specific assumptions were made for each of the other countries to determine the discount rate, salary increases, employee turnover rates and retirement age.

The parameters used to calculate the defined benefit pension plans in Austria included the biometric data from AVÖ 2018 P – the calculation base for pension insurance for salaried employees

The following biometric data and assumptions are used in other countries:

• Indonesia: Tabel Mortalita Indonesia (TMI 2019)
• Czech Republic: AVÖ 2018-P
• Other: No biometric assumptions were made because of the low number of beneficiaries.

47 The obligations (carrying amounts) from defined benefit pension and severance plans incl. restructuring measures reported in the consolidated statement of financial position comprise the following:

Development of defined benefit plans

| EUR '000 | 2021 # Expenses for defined contribution plans

Expenses for defined contribution plans
EUR '000 | 2021 | 2020
---|---|---
Austria – pensions | 53,715 | 51,671
Austria – severance payments | 5,719 | 5,707
Other countries | 18,754 | 14,515
Total | 78,188 | 71,893

Provisions for jubilee benefits

Collective agreements require Lenzing AG and certain subsidiaries, particularly in Austria and the Czech Republic, to pay jubilee benefits to employees who have been with the company for a certain length of time. In the Austrian companies, employees have the option to convert the jubilee benefits into time credits. No assets were segregated from the company and no contributions were made to a pension fund or any other external fund to cover these obligations. The jubilee benefits do not require any contributions by employees. The obligations from jubilee benefits for employees (long-service bonuses) are considered other long-term employee benefits under IFRS. The net interest expense from jubilee benefits (expenses from the accrued interest on the obligations) is recorded under financing costs. The discount rate applied to the Austrian obligations is similar to the discount rate used for the other defined benefit plans. Employee turnover rates were determined separately for each company depending on the composition of the workforce and employees’ length of service. Individual, country-specific assumptions were made for the discount rate, employee turnover rates, and salary increases in the other countries.

77 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 49

The main actuarial parameters applied to the obligations for jubilee benefits are as follows:

Actuarial assumptions for the jubilee benefit obligations

p. a. in %	31/12/2021	31/12/2020
	Discount rate	Salary increase
Austria	2.1%	3.7%
Czech Republic	2.9%	2.7%

Development of the jubilee benefit obligation (provision)

EUR '000	2021	2020
As at 01/01	14,270	15,131
Service cost
Current service cost	2,450	2,417
Net interest	294	241
Remeasurement during the reporting period
On the basis of demographic assumptions	(3,740)	(3,425)
On the basis of financial assumptions	2,033	1,943
On the basis of experience adjustments	2,474	(1,065)
Income and expenses from defined benefit plans recognized on the income statement	3,511	3,111
Cash flows
Direct payments by employer	(2,477)	(2,333)
Currency translation adjustment	(1)	(0)
Other reconciliation items	(4,139)	(4,229)
As at 31/12	20,213	14,270

78 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 50

Other provisions and accruals

Other provisions and accruals developed as follows:

Development of other provisions

EUR '000	As at 01/01	Currency translation adjustment	Reclassification	Utilization	Reversal	Addition	As at 31/12	Thereof current	Thereof non-current
Anticipated losses and other risks	14,027	0	0	(9,160)	4,107	10,725	19,700	10,119	9,581
Emission certificates	6,590	0	0	(6,120)	0	6,107	6,577	6,207	370
Sundry	2,259	0	0	(187)	(22)	1,404	3,254	1,270	1,984
Total	22,876	0	0	(15,467)	4,085	18,236	29,531	17,596	11,935

Development of other provisions (previous year)

EUR '000	As at 01/01	Currency translation adjustment	Reclassification	Utilization	Reversal	Addition	As at 31/12	Thereof current	Thereof non-current
Anticipated losses and other risks	14,148	0	0	(917)	(741)	740	14,027	13,201	826
Emission certificates	6,507	0	0	(5,137)	0	5,220	6,590	6,487	103
Sundry	1,095	0	0	(727)	(605)	505	2,259	2,070	189
Total	21,750	0	0	(6,781)	(1,346)	6,465	22,876	21,758	1,118

1) Incl. accrued interest EUR 0 thousand (2020: EUR 144 thousand).

The measurement of provisions is based on past experience, current cost and price information and estimates/appraisals by internal and external experts. The assumptions underlying the provisions are reviewed regularly. The actual values may differ from these assumptions if general conditions develop in contrast to expectations as at the reporting date. Changes are recognized in profit or loss when better information is available and the premises are adjusted accordingly. Other provisions for anticipated losses and other risks include, in particular, provisions for obligations from infrastructure services to be performed of EUR 4,553 thousand (December 31, 2020: EUR 7,973 thousand) and provisions for additional claims from procurement contracts of EUR 21,200 thousand (December 31, 2020: EUR 11,800 thousand) and for other onerous contracts. Other provisions for emission certificates comprise the equivalent value of the emission certificates used. The other current provisions and accruals are expected to lead to an outflow of funds within the next twelve months. The outflow of funds arising from the long-term portion of other provisions is dependent on various factors (in particular, guarantee and warranty periods, contract terms and other events):

• The outflow of funds related to the other provisions for guarantees and warranties is expected within the next twelve months.
• The other provisions for anticipated losses and other risks are expected to lead to an outflow of funds as follows:

Expected outflow of funds in connection with other provisions (non-current) for anticipated losses and other risks (estimated as of the reporting date)

EUR '000	31/12/2021	31/12/2020
In the 2nd year	703	227
In the 3rd to 5th year	4,026	4,147
In the 6th to 10th year	5,051	9,105
Total	9,780	13,479

79 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 51

Note 33. Trade payables

All trade payables are classified as current assets. Liabilities that are part of reverse factoring agreements are evaluated to determine whether the original trade payable must still be reported or whether it must be derecognized and a new financial liability recognized in accordance with the agreement. The decisive factor is whether the Lenzing Group was released from its original obligation. In cases where there was no release from the original obligation, the Lenzing Group evaluates whether the reverse factoring agreement has led to a new obligation that must be recognized in addition to the trade payable. If that is also not the case, a present value test is carried out to determine whether the reverse factoring agreement has resulted in significant changes to the contractual terms of the trade payable which lead to derecognition of the trade payable and the recognition of a new financial liability. Suppliers of the Lenzing Group finance their trade receivables from the Lenzing Group with reverse factoring agreements. These suppliers can commission their banks to forward payment for the receivables at an earlier point in time. The present value test indicates that these agreements do not significantly change the contract terms (in particular payment terms and interest rates). The agreements do not lead to the reclassification of the involved trade payables to another class of liability under civil law or IFRS regulations from the Lenzing Group’s perspective. Consequently, there are no changes to the presentation on the consolidated statement of financial position (under trade payables) or the consolidated statement of cash flows (under cash flow from operating activities). The potentially affected trade payables totaled EUR 126,693 thousand as at December 31, 2021 (December 31, 2020: EUR 54,294 thousand). The carrying amount of the potentially affected trade payables for which the suppliers have already received payments from the banks stands at EUR 119,902 thousand (December 31, 2020: EUR 45,405 thousand). As in the previous year, the Lenzing Group has not provided any collateral. The liquidity risk of the reverse factoring agreements consists of a concentration since the reverse factoring agreements currently in place have been made with only one single financial institution, giving rise to the risk of a revocation of the reverse factoring agreement by this financial institution. The liabilities affected by these reverse factoring agreements are settled in accordance with the agreed due date. The related, estimated outflows are taken into account in liquidity planning. The Lenzing Group assesses the risk concentration with regard to sufficient financing sources as rather low because the risk spread of the Lenzing Group’s financing over different financial institutions is maintained. Furthermore, the reverse factoring agreements include no material financing component and their discontinuation would therefore also not result in a significant increase in financing requirements. Liabilities relating to reverse factoring agreements amount to 6.0 percent as at the reporting date (December 31, 2020: 3.5 percent) relative to the group’s total financial liabilities. Information regarding the liquidity and foreign currency risk of the group exposure is presented in note 39.

Note 34.## Other Liabilities

Other non-current liabilities consist of the following:

Other non-current liabilities EUR '000	31/12/2021	31/12/2020
Other non-current financial liabilities (particularly from derivatives)		
Non-current non-financial accruals for personnel expenses		
Other non-current non-financial liabilities (particularly partial retirement obligations)		
Total		

Other current liabilities consist of the following:

Other current liabilities EUR '000	31/12/2021	31/12/2020
Other current financial liabilities
Derivatives not yet settled (open positions)		
Other accruals		
Contract liabilities – accruals for discounts and rebates (see note 5)		
Other current financial liabilities		
	
Other current non-financial liabilities
Liabilities from other taxes		
Wage and salary liabilities		
Social security liabilities		
Contract liabilities – down payments received (see note 5)		
Accruals for personnel expenses		
Deferred income and other		
Total		

The accruals for personnel costs consist primarily of liabilities for short-term claims by active and former employees (in particular, for unused vacation and compensation time, overtime and performance bonuses). Other accruals cover, above all, anticipated losses from revenue reductions/increases in expenses from transactions with customers and suppliers (in particular, discounts and rebates) and liabilities for the delivery of goods and the performance of services by third parties which have not yet been invoiced.

80 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

Note 35. Disclosures on the Consolidated Statement of Cash Flows

Liquid funds represent cash and cash equivalents as shown on the statement of financial position. Cash and cash equivalents include cash in hand and cash at banks, demand deposits, checks and short-term time deposits as well as liquid current securities with a term of less than three months which are only subject to limited fluctuations in value (see note 37).

Other non-cash income/expenses in the 2021 financial year includes impairment losses to inventories as well as write-ups and impairment losses to financial assets and other non-current assets. Other non-cash income/expenses also contain unrealized net exchange rate gains/losses and measurement effects from receivables.

Non-cash transactions from the acquisition of intangible assets and property, plant and equipment are not included in cash flow from investing activities for the current period. These transactions essentially involve outstanding payments to suppliers of EUR 16,180 thousand (2020: EUR 41,179 thousand).

Cash and cash equivalents also include bank accounts with negative balances in cases where netting agreements have been concluded (see note 37).

Reconciliation of financial liabilities

EUR '000	2021	2020
Private placements		
Bank loans		
Loans from other lenders		
Lease liabilities		
Subtotal other financial liabilities		
Total		

EUR '000	As at 01/01	Cash flows	Non-cash changes	As at 31/12
	2021	2021	2021	2021
Private placements				
Bank loans				
Loans from other lenders				
Lease liabilities				
Subtotal other financial liabilities		()		
Total		()		

EUR '000	Increase in financial liabilities	Repayment of financial liabilities	Currency translation adjustment	Discounting/accrued interest	Additions to lease liabilities	Other changes	As at 31/12
	2021	2021	2021	2021	2021	2021	2021
Private placements		()					
Bank loans		()					
Loans from other lenders		()		()			
Lease liabilities		()					
Subtotal other financial liabilities		()				()	
Total	()	()				()	

Reconciliation of financial liabilities (previous year)

EUR '000	As at 01/01	Cash flows	Non-cash changes	As at 31/12
	2020	2020	2020	2020
Private placements			()	
Bank loans			()	
Loans from other lenders			()	
Lease liabilities			()	
Subtotal other financial liabilities			()	
Total		()	()	

EUR '000	Increase in financial liabilities	Repayment of financial liabilities	Currency translation adjustment	Discounting/accrued interest	Additions to lease liabilities	Other changes	As at 31/12
	2020	2020	2020	2020	2020	2020	2020
Private placements		()	()				
Bank loans		()	()				
Loans from other lenders		()	()				
Lease liabilities		()	()				
Subtotal other financial liabilities		()	()			()	
Total	()	()	()			()	

Notes to the Consolidated Statement of Cash Flows 81 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

Note 36. Capital risk management

General information

The overriding objective of equity and debt management in the Lenzing Group is to optimize the income, costs 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.

A couple of loan agreements with banks also include financial covenants, above all concerning the level of equity, the ratio of net financial debt to EBITDA and other financial indicators or financial criteria for the Group or individual or aggregated group companies. A breach of these financial covenants would allow the banks to demand early repayment of the financial liabilities in certain cases. These financial covenants are regularly monitored by the Global Treasury department and are considered in the determination of distributions by the involved group companies. All related capital requirements were met during the 2021 financial year.

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 39.7 percent as at December 31, 2021 (December 31, 2020: 45.8 percent).

Adjusted equity is calculated as follows:

Adjusted equity EUR '000	31/12/2021	31/12/2020
Equity		
+ Government grants		
- Proportional share of deferred taxes on government grants	()	()
Total		

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	31/12/2021	31/12/2020
Non-current financial liabilities		
Current financial liabilities		
Total		

Liquid assets consist of the following:

Liquid assets EUR '000	31/12/2021	31/12/2020
Cash and cash equivalents		
Liquid bills of exchange (in trade receivables)		
Total		

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

Net financial debt (absolute) EUR '000	31/12/2021	31/12/2020
Interest-bearing financial liabilities		
- Liquid assets	()	()
Total		

Net financial debt in relation to EBITDA EUR '000	31/12/2021	31/12/2020
EBITDA		
Net financial debt / EBITDA		 

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2).

Notes on Risk Management 82 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

Note 37. Disclosures on financial instruments

Carrying amounts, fair values, measurement categories and measurement methods

The following table shows the carrying amounts and fair values of the financial assets and financial liabilities for each class and each IFRS 9 category and reconciles this information to the appropriate line items on the statement of financial position. Other receivables (non-current and current) and other liabilities (non-current and current) as reported on the statement of financial position include financial instruments as well as non-financial assets and liabilities. Therefore, the “no financial instrument” column allows for a complete reconciliation with the line items on the statement of financial position. Lease liabilities which are to be considered financial liabilities but cannot be allocated to a measurement category in accordance with IFRS 9 are also reported in this column.

53 Note 36. Capital risk management# 83 Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 55

Carrying amounts, category, fair value and fair value hierarchy of nancial instruments
EUR '000

	Carrying amount	Fair value	Fair value hierarchy
Financial assets as at 31/12/2021	At amortized cost	At fair value through prot or loss	At fair value through other comprehensive income	No nancial instrument
Debt instruments
Equity instruments
Cash ow hedges
Originated loans				 
Trade receivables				
Cash and cash equivalents				
Total				
Carrying amount	Fair value
Financial liabilities as at 31/12/2021	At amortized cost	At fair value through prot or loss	At fair value through other comprehensive income	No nancial instrument
Cash ow hedges/ Fair value hedges
Retained earnings Private placements			 Level	Liabilities to banks
Trade payables				
Total				

1) The carrying amount approximates fair value.
2) Cash and cash equivalents include money market funds. These money market funds are allocated to the category “at fair value through prot or loss”. The carrying amount of other cash and cash equivalents approximates fair value.

84 Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 56

Carrying amounts, category, fair value and fair value hierarchy of nancial instruments (previous year)
EUR '000

	Carrying amount	Fair value	Fair value hierarchy
Financial assets as at 31/12/2020	At amortized cost	At fair value through prot or loss	At fair value through other comprehensive income	No nancial instrument
Debt instruments
Equity instruments
Cash ow hedges
Originated loans			 	Non-current securities
Total				
Carrying amount	Fair value
Financial liabilities as at 31/12/2020	At amortized cost	At fair value through prot or loss	At fair value through other comprehensive income	No nancial instrument
Cash ow hedges/ Fair value hedges
Retained earnings Private placements			 Level	Liabilities to banks
Trade payables				
Total				

1) The carrying amount approximates fair value.

85 Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 57

Depending on the classication/measurement category, nancial instruments are subsequently measured at (amortized) cost or fair value. The Lenzing Group uses the following measurement cate- gories: “at amortized cost”, “at fair value through prot or loss” and “at fair value through other comprehensive income”. The measure- ment category “at fair value through prot or loss” is solely used for nancial assets that are mandatorily measured at fair value.

Cash and cash equivalents include money market funds in the amount of EUR 343,515 thousand (December 31, 2020: EUR 0 thousand). In assessing the classication of money market funds as cash equivalents, an assessment is undertaken to deter- mine whether the fund meets the denition of cash equivalents. In particular, Lenzing AG examines whether regular and early callabil- ity may occur and whether the credit risk and interest rate risk are low. With regard to credit risk, the creditworthiness of the fund it- self and of the instruments it contains is assessed. Interest rate risk is examined, in particular, using the fund’s Weighted Average Ma- turity (WAM).

Money market funds are allocated to the category “at fair value through prot or loss”. The fair value is derived from the latest calculated value and is to be categorized in level 1 of the fair value hierarchy.

In the nancial year under review, a reclassication was realized from equity instruments measured at fair value through other com- prehensive income (level 3) to current securities (level 1). The rea- son for the reclassication is the initial public oering of the com- pany Spinnova OY, Jyväskylä, Finland, on June 24, 2021. The inter- est held by Lenzing AG was converted into shares. As a conse- quence of the issue of the new shares, the previous interest of 6.8 percent was diluted and now amounts to 4.67 percent. The se- curities are measured at fair value and recognized directly in other comprehensive income due to the exercise of the corresponding option. This leads to an adjustment of the carrying amount of EUR 31,732 thousand.

The Lenzing Group accounts for reclassications in the fair value hierarchy at the end of the reporting period in which the changes occur. The measurement of nancial instruments is monitored and re- viewed by the Lenzing Group. The necessary market data are vali- dated based on the dual control principle. In light of the varying inuencing factors, the fair values presented can only be regarded as indicators of the values that could actually be realized on the market.

The fair value of purchased bonds is derived from the respective current market prices and uctuates, in particular, with changes in market interest rates and the credit standing of the issuers. The fair value of shares is derived from the current stock exchange prices. These securities are assigned to the category “at fair value through other comprehensive income”. The fair value of investment funds is derived from the latest calcu- lated value. These securities are assigned to the category “at fair value through prot or loss”.

The measurement of equity investments including derivatives des- ignated as a hedge (fair value hedge) is classied “at fair value through other comprehensive income”. The fair value is determined on the basis of a market approach and is to be categorized in level 3 of the fair value hierarchy. The determined fair value of the equity investment would increase (decrease) in particular if the planned EBITDA increased (decreased). The determined fair value of the derivative has an inverse correlation to the abovementioned pa- rameters.

The nominal value of fair value hedge derivatives amounts to EUR 14,120 thousand as at December 31, 2021 (December 31, 2020 : EUR 11,723 thousand). The change in value for the hedged item and the hedge, which was used to calculate ineectiveness, amounts to EUR 0 thousand as at December 31, 2021 (Decem- ber 31, 2020: EUR minus 5,547 thousand). No ineectiveness was recognized through prot or loss in the current nancial year or in the previous year. The risk management goal is to hedge the value of the investment against value uctuations. The economic rela- tionship for fair value hedge derivatives is ensured by the fact that the change in the value of the hedged item is oset by the change in the value of the hedge. A put/call option is used as a hedge. The hedge ratio is determined based on the nominal value.The hedging instruments run until December 31, 2021 and December 31, 2022. The following tables show the development of the fair values of the equity investments and the associated derivatives of level 3:

Development of level 3 fair values of equity investments and related derivatives
EUR '000 | 2021 | 2020
------- | -------- | --------
Equity investments | |
As at 01/01 | (17,016) | (17,016)
Financial assets measured at fair value through other comprehensive income (equity instruments) – net fair value gain/loss on remeasurement recognized during the year | 7,016 |
Transfer to Level 1 | (44) |
As at 31/12 | 14,035 | (17,016)
Derivatives with a negative fair value (fair value hedges) | |
As at 01/01 | (27,413) | (27,413)
Financial assets measured at fair value through other comprehensive income (equity instruments) – net fair value gain/loss on remeasurement recognized during the year | (8,856) |
Transfer to Level 1 | (144) |
As at 31/12 | (35,955) | (27,413)

Note: The second table labeled "Development of level 3 fair values of equity investments and related derivatives (previous year)" contains data for 2020 which has been integrated into the main table above for clarity.

86 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

A change in key input factors which cannot be observed on the market would have the following effects on the measurement of the equity instruments and the associated derivatives:

Sensitivity analysis of level 3 input factors for equity investments and related derivatives
EUR '000 | Other comprehensive income (net of tax) | | | Financial result | | |
| Increase | Decrease | | Increase | Decrease | |
| Equity investments | Derivatives with a negative fair value (fair value hedges) | Total | Equity investments | Derivatives with a negative fair value (fair value hedges) | Total |
| -------- | -------- | -------- | -------- | -------- | -------- |
31/12/2021 | 12,173 | (12,173) | 0 | (12,173) | 12,173 | 0 |
EBITDA (+/- 5%) | 12,173 | (12,173) | 0 | (12,173) | 12,173 | 0 |

31/12/2020 | 10,173 | (10,173) | 0 | (10,173) | 10,173 | 0 |
EBITDA (+/- 5%) | 10,173 | (10,173) | 0 | (10,173) | 10,173 | 0 |

Other financial assets from earn-out agreements are classified “at fair value through profit or loss”. The fair value of these other financial assets is determined based on an income approach. It is to be categorized in level 3 of the fair value hierarchy. The measurement model is based on the planned EBITDA, the weighted average cost of capital (WACC) after tax and the repayment terms. The determined fair value would increase (decrease) in particular if EBITDA increased (decreased). The determined fair value would decrease (increase) if the WACC after tax increased (decreased). The determined fair value would increase if the repayment were to be made two years earlier.

Development of level 3 fair values of other financial assets
EUR '000 | 2021 | 2020
------- | -------- | --------
As at 01/01 | 65,208 | 65,208
Gain/loss included in financial result | 0 | 0
As at 31/12 | 65,208 | 65,208

A change in key input factors which cannot be observed on the market would have the following effects on other financial assets:

Sensitivity analysis of level 3 input factors for other financial assets
EUR '000 | Financial result | | | | |
| 31/12/2021 | | 31/12/2020 | |
| Increase | Decrease | Increase | Decrease |
| Other financial assets | | | |
EBITDA (+/- 5%) | 14,779 | (14,779) | 14,779 | (14,779) |
Discount rate (WACC) after tax (+/- 1%) | (16,830) | 18,530 | (16,830) | 18,530 |
Repayment 2 years earlier | 2,100 | n/a | 2,100 | n/a |

The sensitivities are determined by conducting the measurements again using the changed parameters.

Puttable non-controlling interests

The Dexco-Group (formerly known as Duratex Group) has a put option and has the right to sell its shares if a change of control occurs regarding the owner of the Lenzing Group (change of control clause). This obligation is recognized under liabilities from puttable non-controlling interests. Puttable non-controlling interests are allocated to the category “at fair value through other comprehensive income”. The fair value of these puttable non-controlling interests is determined based on the planned or projected cash flows less cost of disposal and net debt at the measurement date. The budget approved by the Management and Supervisory Boards and the medium-term plans are the starting point for the cash flow projections. After the detailed planning period of five years, a 25-year return based on a sustainable EBITDA margin is expected based on last year’s assumptions. The planning period for the calculation of fair value is contractually limited to a maximum of 30 years. Cash flows are discounted to their present value with a discounted cash flow method. The applied discount rate is calculated on an individual basis using the capital asset pricing model (CAPM) and represents a composite figure (weighted average cost of capital – WACC) that combines the average interest rate for debt and the anticipated return on equity employed. An after-tax WACC of 8.1 percent (December 31, 2020: 8.0 percent) was used at the measurement date. Fair value measurement is classified in full as level 3 of the fair value

87 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

hierarchy because key input factors (in particular, cash flows) cannot be observed on the market.

Development of level 3 fair values of puttable non-controlling interest
EUR '000 | 2021 | 2020
------- | -------- | --------
As at 01/01 | 17,914 | 17,914
Addition due to change in shareholding interest recognised directly in equity | 0 | 9,207
Measurement of puttable non-controlling interest recognized directly in equity | 8,127 | 6,215
As at 31/12 | 26,041 | 17,914

The determined fair value would increase (decrease) if the operating margin increased (decreased) or if the after-tax WACC decreased (increased). A change in these unobservable input factors would have the following effects on the measurement of puttable non-controlling interests:

Sensitivity analysis of level 3 input factors for puttable non-controlling interest
EUR '000 | Measurement result offset against retained earnings | | | | |
| 31/12/2021 | | 31/12/2020 | |
| Puttable non-controlling interests | | | |
| Increase | Decrease | Increase | Decrease |
EBITDA (+/- 5%) | 18,330 | (18,330) | 18,330 | (18,330) |
Discount rate (WACC) after tax (+/- 0.25%) | (15,185) | 15,377 | (15,185) | 15,377 |

The sensitivities are determined by conducting the measurements again using the changed parameters.

The loan agreements, which were concluded for the construction of the dissolving wood pulp plant in Brazil (see note 30), include, at the project company level, financial covenants which refer in particular to the ratio of net financial debt to EBITDA and may trigger an obligation to repay the financial liabilities if the covenants are not met. At the Lenzing Group level, market restrictive covenants are in place. These financial covenants are regularly monitored by the Global Treasury department and are considered in the determination of distributions by the group companies involved. Lenzing AG and the joint venture partner have committed to a fixed debt/equity ratio of the project company (63/37) and guarantee the financial liabilities of the project company in the amount of their share in the capital. Lenzing AG therefore guarantees 51 percent. Due to the full consolidation, 100 percent of the project company’s financial liabilities are included in the consolidated statement of financial position. The fair values of the other financial liabilities are determined in accordance with generally accepted valuation methods based on the discounted cash flow method. The most important input factor is the discount rate, which incorporates the available market data (risk-free interest rates) and the credit standing of the Lenzing Group, which is not observable on the market. The fair values of the financial guarantee contracts represent the estimated expected default arising from the maximum possible payment obligation and the expected loss.

Derivative financial instruments and hedges

Derivatives are measured at fair value. Their fair value corresponds to the applicable market value, if available, or is calculated using standard methods based on the market data available at the measurement date (in particular exchange rates and interest rates). Currency and commodity forwards are measured at the respective forward rate or price at the reporting date. These forward rates or prices are based on the spot rates or prices and include forward premiums and discounts. The Group’s own models are used to estimate the measurement. The measurement of derivatives also includes the counterparty risk (credit risk/counterparty risk/non-performance risk) in the form of discounts to the fair value that would be used by a market participant for pricing.

As a matter of principle, the Lenzing Group applies the hedge accounting rules defined by IFRS 9 to the following derivative financial instruments. The retrospective hedging effect or ineffectiveness is evaluated with the dollar-offset method, which compares the accumulated changes in the fair value of the hedged items with the accumulated changes in the fair value of the hedges in line with the compensation method.

88 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group

The measurement of the hedged item is offset by the hedge and is therefore effective. Risks of ineffectiveness include the credit risk of a counterparty, a significant change in the credit risk of a contractual party in the hedging relationship or the change of time of payment of the hedged item, reduction of the total invoice amount or price of the hedged item. Risks are always hedged in their entirety. The hedging ratio for the hedged nominal values is 100 percent. The critical terms of payment of the hedged items and hedging instruments (in particular, the nominal value and time of payment) are generally identical or offset one another (“critical terms match”). Therefore, the Managing Board considers the offsetting of value changes of the hedged items and hedging instrument resulting from changes in the exchange rate when forming a measurement unit as highly effective.

Cash flow hedge derivatives for currency risks

The Lenzing Group uses derivative financial instruments to hedge currency risks arising from investments and from the operating business.These derivative nancial instruments serve to balance the variability of cash ows from future transactions. Hedges are determined in advance on the basis of the expected purchases and sales in the relevant foreign currency. In hedging future cash ows in foreign currencies (cash ow hedges), the Lenzing Group typi- cally hedges the risk up to the time of the foreign currency payment. Hedge eectiveness is measured by grouping the hedged items and hedging instruments together in at least quarterly maturity ranges for each hedged risk. Cash ow hedges whose underlying hedged item was already recognized in prot or loss are used to hedge foreign currency receivables/liabilities that were recognized at the reporting date but do not impact cash until a later time. Cash ow hedges were concluded during the 2020 nancial year to hedge against the currency risk of highly probable additional capital contributions in a subsidiary. With the realization of the for- ward foreign exchange contracts, the amounts of the changes in value initially recognized in other comprehensive income were reclassied to the foreign currency translation reserves. As at December 31, 2021, EUR 850 thousand (December 31, 2020 EUR 24,018 thousand) were reclassied to the foreign currency translation reserve.

89 Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 61

The nominal values and fair values of the cash ow hedges are as follows as at the reporting dates:

Nominal value, fair value and hedging period of cash ow hedge derivatives for currency risks

31/12/2021 EUR '000

Nominal value in '000	Positive fair value	Negative fair value	Net fair value	Hedging period until	Average hedging rate	Change in fair value used to calculate ineectiveness
Forward foreign exchange contracts
CNY/CNH-sale / EUR-buy CNY/CNH			()	()	/	
CNY/CNH-sale / GBP-buy CNY/CNH			()		/	
EUR-buy / USD-sale EUR			()	()	/	
BRL buy / EUR sale BRL			()	()	/	
BRL buy / USD sale BRL			()	()	/	
USD-buy / CNY-sale USD			()	()	/	
EUR-buy / GBP-sale EUR			()	()	/	
EUR-sale / GBP-buy EUR					/	
USD-sale / CZK-buy USD			()	()	/	
USD-sale / EUR-buy USD			()	()	/	
IDR-buy / USD-sale IDR			()	()	/	
Total		()	()	()

Fair value: + = receivable, – = liability from the Lenzing Group’s perspective

The hedging period represents the period for the expected cash ows and their recognition in prot or loss.

Nominal value, fair value and hedging period of cash ow hedge derivatives for currency risks (previous year)

31/12/2020 EUR '000

Nominal value in '000	Positive fair value	Negative fair value	Net fair value	Hedging period until	Average hedging rate	Change in fair value used to calculate ineectiveness
Forward foreign exchange contracts
CNY/CNH-sale / EUR-buy CNY/CNH					/	
CNY/CNH-sale / GBP-buy CNY/CNH			()	()	/	
CZK-buy / EUR-sale CZK			()		/	
EUR-buy / USD-sale EUR					/	
CNY/CNH-buy / GBP-sale CNY/CNH			()	()	/	
BRL buy / EUR sale BRL			()	()	/	
BRL buy / USD sale BRL			()	()	/	
THB-buy / USD-sale THB					/	
USD-buy / CNY-sale USD			()	()	/	
EUR buy / BRL sale EUR					/	
EUR-sale / GBP-buy EUR					/	
USD-sale / CZK-buy USD					/	
USD-sale / EUR-buy USD					/	
Total		()	()	()

Fair value: + = receivable, – = liability from the Lenzing Group’s perspective

The hedging period represents the period for the expected cash ows and their recognition in prot or loss.

90 Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 62

The carrying amounts and the ineectiveness of the hedged items (purchases and sales) designated as hedging instruments as of the balance sheet dates are as follows:

Disclosures on hedged items of cash ow hedge derivatives for currency risks – ineectiveness

EUR '000

Currency risks	2021		2020
	Change in fair value used to calculate ineectiveness	Ineectiveness	Change in fair value used to calculate ineectiveness	Ineectiveness
	Line item in the income statement		Line item in the income statement
Sales	()		Financialresult	
Purchases	()		Financialresult	()
Total	()		()	

Cash ow hedge derivatives for combined interest rate/currency risks

The Lenzing Group deploys derivative nancial instruments in or- der to hedge interest rate/currency risks arising from private place- ments denominated in US dollars. Hedges are utilized to oset the variability of interest and principal payments resulting from the hedged item. The nominal values of the cash ow hedge derivatives as at De- cember 31, 2021 amount to EUR 39,704 thousand and EUR 17,646 thousand (December 31 2020: EUR 40,861 thousand and EUR 18,160 thousand). The fair value of the cash ow hedge derivatives as at December 31, 2021 amounts to EUR minus 1,442 thousand (December 31, 2020: EUR minus 6,279 thousand). The contracts of the hedging instruments and the underlying hedged items are linked to the USD-LIBOR reference interest rate as of the balance sheet date and have not yet been switched to an alternative reference interest rate. The change in fair value used to calculate ineectiveness amounts to EUR minus 911 thousand (for the tranche of USD 20 mn) (De- cember 31, 2020: EUR minus 1,890 thousand) and EUR minus 1,311 thousand (for the tranche of USD 45 mn) (December 31, 2020: EUR minus 4,258 thousand). The ineective portion as at Decem- ber 31, 2020 amounts to EUR 0 thousand (December 31, 2020: EUR 0 thousand). Over the term, the average xed interest rate amounts to 0.75 percent and the average hedging rate amounts to 1.10 USD/EUR. The hedge expires in December 2024.

Cash ow hedge derivatives for interest rate risks

The Lenzing Group uses derivative nancial instruments to hedge interest rate risks arising from loans taken out with variable interest rates. These hedges are used to oset the variability of cash ows from future interest payments resulting from the hedged item. The nominal values of the cash ow hedge derivatives as at De- cember 31, 2021 amount to EUR 418,211 thousand (December 31, 2020: EUR 0 thousand). The fair value of the hedge derivatives as at December 31 2021 amounts to EUR minus 1,937 thousand (De- cember 31, 2020: EUR 0 thousand). The contracts of the hedging instruments and the underlying hedged items are linked to the USD-LIBOR reference interest rate as of the balance sheet date and have not yet been switched to an alternative reference interest rate. The change in fair value used to calculate the ineectiveness amounts to EUR minus 1,937 thousand (December 31, 2020: EUR 0 thousand). The ineective portion as at December 31, 2021 amounts to EUR 0 thousand. The average xed interest rate amounts to 1.83 percent over the term. The hedge expires in June 2029.

91 Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 63

Hedging Reserve

The change in the hedging reserve is as follows:

Changes in the hedging reserve

EUR '000

	2021			2020
	Hedging reserve	Cost of hedging	Total	Hedging reserve	Cost of hedging	Total
Hedging reserve as at 01/01	()		()			
Currency risks	()		()	()		()
Combined interest rate/currency risks				()		()
Interest rate risks	()		()			
Cash ow hedges – changes in fair value recognized during the year	()		()	()		()
Currency risks						
Reclassication to revenue						
Currency risks					()	
Reclassication to inventories					()	
Currency risks						
Reclassication to property, plant and equipment						
Combined interest rate/currency risks				()		()
Reclassication to nancial result				()		()
Hedging reserve as at 31/12	()		()	()		()

92 Annual Financial Report 2021 Lenzing Group

Annual Report 2021 Lenzing Group 64

Osetting nancial assets and liabilities

The Lenzing Group has concluded a number of framework netting agreements (in particular, master netting arrangements). The amounts owed by each counterparty under such agreements on a single day in the same currency based on the total outstanding transactions are aggregated into a single net amount to be paid by one party to the other. The following tables present information on osetting nancial as- sets and liabilities in the consolidated statement of nancial posi- tion on the basis of framework netting agreements. The (gross) amounts presented in the “Financial assets” and “Financial liabilities” columns correspond to the (net) nancial assets and liabilities rec- ognized. The column “eect of framework netting agreements” shows the amounts which result from these types of agreements, but which do not meet the criteria for osetting in the IFRS con- solidated statement of nancial position.## Offsetting of financial instruments

EUR '000

	Financial assets as at 31/12/2021	Financial assets as at 31/12/2020
Financial assets (gross=net)	12,727,900	11,578,964
Effect of framework netting agreements	(6,273)	(3,055)
Net amounts	12,721,627	11,575,909
Other financial assets – derivative financial instruments with a positive fair value	12,727,900	11,578,964

EUR '000

	Financial liabilities as at 31/12/2021	Financial liabilities as at 31/12/2020
Financial liabilities (gross=net)	18,697,787	17,023,714
Effect of framework netting agreements	(6,273)	(3,055)
Net amounts	18,691,514	17,020,659
Other financial liabilities – derivative financial instruments with a negative fair value	18,697,787	17,023,714

Transfer of financial assets (sale of receivables/factoring)

Factoring agreements are in place which require the banks to purchase certain trade receivables from the Lenzing Group for a revolving monthly nominal amount. The Lenzing Group is entitled to sell these receivables. The agreements have indefinite terms, whereby each party has the right to cancel the agreements with notice and allow them to expire. The factoring agreements had a maximum usable nominal volume of EUR 73,235 thousand as at December 31, 2021 (December 31, 2020 EUR 72,214 thousand). They have been suspended since the 2017 financial year.

Note 38. Net interest and net result from financial instruments and net foreign currency result

Net interest and net result

The following table shows the net interest and net result from financial instruments by class/measurement category in accordance with IFRS 9:

EUR '000

	Interest income	Interest expense	Net interest	From subsequent measurement at fair value through profit or loss	From subsequent measurement at fair value through other comprehensive income	Measured at fair value through other comprehensive income and reclassified to profit or loss	From impairment/ reversal of an impairment loss	Result on disposal	Net result (total)
2021
Financial assets measured at amortized cost	31,798	-14,090	17,708	-	-	-	(9,151)	(4,070)	4,487
Financial assets measured at fair value through profit or loss	588	-382	206	-	-	-	-	(77)	129
Equity instruments measured at fair value through other comprehensive income	177	-	177	-	-	21,077	-	-	21,254
Debt instruments measured at fair value through other comprehensive income	16	-18	-2	-	-	(27)	48	(127)	(108)
Financial liabilities measured at amortized cost	-	-12,514,254	-	-	-	-	-	-	-12,514,254
Total	32,579	-12,528,744	17,889	-	-	21,050	(9,103)	(4,274)	(12,482,903)
2020
Financial assets measured at amortized cost	19,675	-17,471	2,204	-	-	-	(9,155)	-	(6,951)
Financial assets measured at fair value through profit or loss	580	-320	260	-	-	-	-	(71)	189
Equity instruments measured at fair value through other comprehensive income	410	-	410	-	-	(17,917)	-	-	(17,507)
Debt instruments measured at fair value through other comprehensive income	6	-18	-12	-	-	(24)	(16)	7	(45)
Financial liabilities measured at amortized cost	-	-11,115,914	-	-	-	-	-	-	-11,115,914
Total	20,671	-11,133,723	2,862	-	-	(18,005)	(9,171)	(64)	(11,139,159)

The net result from financial instruments comprises the following: net interest (current interest income and expenses, including the amortization of premiums and discounts and dividends from companies not accounted for using the equity method), gains/losses on fair value measurement which are recognized in profit or loss or through other comprehensive income and the result of impairment losses (recognition and reversal of bad debt provisions/valuation adjustments) and on disposals. Income from equity and debt instruments measured at fair value through other comprehensive income includes gains/losses from remeasurement and from the reclassification of remeasurement gains/losses to profit or loss. Net result from financial instruments does not include exchange rate gains/losses (with the exception of financial instruments carried at fair value through profit or loss) or gains/losses from hedging instruments (cash flow hedges). The change in the bad debt provisions for receivables measured at amortized cost is mainly recognized under “Selling expenses”. The component recognized directly in equity from the subsequent measurement of equity and debt instruments measured at fair value through other comprehensive income is reported under the “reserve for financial assets measured at fair value through other comprehensive income”. The remaining components of the net result are included under “income from non-current and current financial assets” and in “financing costs”.

Net foreign currency result

In other operating income/expenses are included net foreign currency gains/losses in the amount of EUR plus 11,557 thousand (2020: EUR minus 7,521 thousand), in income from non-current and current financial assets in the amount of EUR plus 5,203 thousand (2020: EUR minus 6,696 thousand), and in financing costs in the amount of EUR plus 4,405 thousand (2020: EUR plus 6,391 thousand).

Note 39. Financial risk management

As an international company, the Lenzing Group is exposed to financial and other market risks. A company-wide risk management system, which is regulated comprehensively in guidelines, has been implemented to identify and assess potential risks at an early stage. This system is designed to achieve maximum risk transparency and provide high-quality information by quantifying all risk categories, with a particular emphasis on risk concentration. The efficiency of group-wide risk management is evaluated and monitored on an ongoing basis by both the internal control system (ICS) and the internal audit department. The financial risks arising from financial instruments – credit risk, liquidity risk, currency risk (above all with regard to the BRL, CNY, CZK, HKD, IDR, THB and USD), commodity price risk and interest rate risk – are classified as relevant risks for the Lenzing Group. Corresponding hedging measures are used to minimize these risks wherever possible. Acquired shares in external companies are considered long-term investments and, therefore, are not viewed as a relevant market price risk over the short- to medium-term.

Credit risk

Credit risk represents the risk of asset losses that may result from the failure of individual business partners to meet their contractual obligations. The credit risk from transactions involving the provision of goods and services (in particular, trade receivables) is secured to a substantial extent by credit insurance and bank security (guarantees, letters of credit, bills of exchange etc.). Outstanding receivables and customer limits are monitored on an ongoing basis. The credit risk from investments with banks (above all, cash and cash equivalents) and derivatives with a positive market value is reduced by only concluding transactions with counterparties that can demonstrate a sound credit rating. Receivables are measured individually. Individual bad debt provisions are recognized for receivables if there are indications of credit impairment (individual measurement) and if they are not expected to be collectible in full. This applies especially when the debtor has significant financial difficulties, is in default or has delayed payments or when there is an increased probability that the debtor will enter bankruptcy and the involved receivable is not sufficiently collateralized. The expected loss is low because of the Lenzing Group’s comprehensive receivables management (extensive collateralization with credit insurance and bankable security as well as continuous monitoring of accounts receivable and customer limits). To determine the required impairment for trade receivables for which no individual bad debt provisions were recognized, the defaults of the past years were evaluated in the Lenzing Group. The analysis has shown that there is only an immaterial risk for receivables overdue for a certain period. The loss ratios are based on historical default rates of the last nine years and are distinguished by companies and periods overdue. The COVID-19 crisis did not result in any significant changes in default rates during the financial year. The relevant development is continuously monitored by the management. For non-current debt instruments assigned to the category “at fair value through other comprehensive income”, originated loans and other financial assets (current and non-current), which are measured at amortized cost, as well as cash and cash equivalents, the calculation of impairment is based on the average default rates. The impairment is based on the default rate per rating for the respective financial instrument. A significant change in credit risk is identified based on the rating and default of payment. Regarding instruments with a low credit risk, the Lenzing Group assumes that the credit risk has not increased significantly since the first recognition. Consequently, the twelve month credit loss is always recognized for such instruments. Since the expected impairment is immaterial, no expected credit loss is recorded for these financial assets.The reduced earning power and uncertainties, in particular due to a fire at a plant of the buyer of EFB in 2018 (including its subsidiaries), result in a higher default risk for the receivables from these companies. Therefore, the calculation of bad debt provisions for these originated loans was changed from the expected twelve month credit loss to lifetime expected credit loss in 2018. The lifetime expected credit loss was determined based on the difference between the contractual payments and all payments expected by the management in the future.

95 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 67

Trade receivables are considered defaulted when they are overdue for more than 270 days or when it is unlikely that the debtor can meet the obligations without the realization of collateral. This long period of time results from the fact that about 90 percent of trade receivables are insured by credit insurance. Financial assets are only derecognized directly if the contractual rights to payments cease to exist (particularly in the event of bankruptcy). An impairment loss is reversed up to amortized cost if the reasons for its recognition no longer exist. The Group considers the risk concentration in trade receivables to be rather low because its customers are based in various countries, operate in different sectors and are active on largely independent markets. A rather small amount of the receivables is overdue and not individually impaired (see table “aging of receivables” below). Important effects for a change in bad debt provisions include possible default of payment by major customers or a general increase of receivables at the reporting date. During the financial year there was no significant increase in defaults. Trade receivables increased as at December 31, 2021. The bad debt provisions developed as follows:

Development and reconciliation of bad debt provisions

EUR '000	Lifetime expected credit loss (portfolio measurement)	Lifetime expected credit loss (individual measurement)	Trade receivables
Bad debt provisions as at 01/01/2021	15,900	2,170	2,170
Transfer to “Lifetime expected credit loss”	9,280	-	-
Reversal	(85)	(775)	-
Addition	26,845	25,865	-
Currency translation adjustment	49	206	-
Bad debt provisions as at 31/12/2021	15,900	27,620	25,790

Development and reconciliation of bad debt provisions (previous year)

EUR '000	Lifetime expected credit loss (portfolio measurement)	Lifetime expected credit loss (individual measurement)	Trade receivables
Bad debt provisions as at 01/01/2020	10,788	8,590	8,590
Transfer to “Lifetime expected credit loss”	39	-	-
Reversal	(1,719)	(1,511)	-
Addition	10,670	3,190	-
Currency translation adjustment	(7)	(150)	-
Bad debt provisions as at 31/12/2020	19,771	10,119	8,590

Lifetime expected credit loss (individual measurement)

EUR '000	2021	2020
Originated loans at amortized cost
Bad debt provisions as at 01/01	12,514	10,745
Utilization	-	-
Reversal	(611)	-
Addition	17,711	1,511
Currency translation adjustment	70	(11)
Bad debt provisions as at 31/12	29,684	12,245
Other financial assets (non-current and current)
Bad debt provisions as at 01/01	141	191
Utilization	-	-
Addition	66	66
Bad debt provisions as at 31/12	207	257

The bad debt provisions for trade receivables include bad debt provisions of EUR 1,810 thousand (2020: EUR 650 thousand) for companies accounted for using the equity method. The bad debt provisions for trade receivables are related primarily to bad debt provisions for overdue, uninsured receivables.

96 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 68

The carrying amount of the impaired receivables is as follows:

Aging and expected credit loss for trade receivables

EUR '000	31/12/2021
	Gross carrying amount	Expected credit loss
Not overdue	14,270	295
Overdue up to 30 days	15,070	761
Overdue for 31 to 90 days	21,107	258
Overdue for 91 to 365 days	2,714	218
Overdue for more than one year	93	93
Credit impaired receivables (individual measurement)	71,452	15,224
Total	125,406	16,850

Aging and expected credit loss for trade receivables (previous year)

EUR '000	31/12/2020
	Gross carrying amount	Expected credit loss
Not overdue	18,945	959
Overdue up to 30 days	78,199	715
Overdue for 31 to 90 days	17,091	78
Overdue for 91 to 365 days	2,074	198
Overdue for more than one year	91	91
Credit impaired receivables (individual measurement)	10,769	15,197
Total	117,169	17,238

Development of expected credit loss not including credit impaired financial assets

EUR '000	As at 01/01/2020	Change	As at 31/12/2020 = 01/01/2021	Change	As at 31/12/2021
	14,000	(800)	13,200	13,580	26,780

Aging of financial receivables

EUR '000	Originated loans	Other financial receivables (current and non-current)
Gross carrying amount as at 31/12/2021	70,276	15,418
Thereof at the reporting date: Not overdue	5,551	1,710
Thereof impaired	11,340	912

Aging of financial receivables (previous year)

EUR '000	Originated loans	Other financial receivables (current and non-current)
Gross carrying amount as at 31/12/2020	70,396	9,175
Thereof at the reporting date: Not overdue	8,179	1,516
Thereof impaired	11,249	1,018

Securities in the scope of the impairment provisions of IFRS 9 as well as cash and cash equivalents have a rating between AAA and BBB. There are currently no doubts concerning the collectability of financial assets that are neither past due nor impaired. The maximum exposure to credit risk from recognized financial assets is as follows:

Maximum exposure to credit risk from recognized financial assets

EUR '000	31/12/2021	31/12/2020
Carrying amount of asset financial instruments (see note 37)	17,918,025	17,907,107
Less risk reduction in relation to receivables due to Credit insurance received for trade receivables (not including deductibles)	(17,058,613)	(17,517,495)
Guarantees received for trade receivables	(917,155)	(102,119)
Total	542,257	287,493

The maximum exposure to credit risk from financial guarantee contracts and contingent liabilities is shown in note 42.

Liquidity risk

Liquidity risk represents the risk of not being able to obtain sufficient funds to settle incurred liabilities at all times. The management of liquidity risk has a high priority in the Lenzing Group. Corporate guidelines require uniform, proactive liquidity forecasts and medium-term planning throughout the entire Group. The Lenzing Group continuously monitors the risk of a possible liquidity shortage. The Lenzing Group had liquid assets totaling EUR 1,124,120 thousand (December 31, 2020: EUR 1,081,122 thousand) in the form of cash and cash equivalents including money market funds and liquid bills of exchange (see note 36). Unused credit facilities of EUR 454,471 thousand were available as at December 31, 2021 (December 31, 2020: EUR 1,031,364 thousand) to finance necessary working capital and to cover any shortfalls caused by economic cycles. The medium- and long-term financing for the Lenzing Group is provided by equity and financial liabilities, in particular bonds, private placements and bank loans. Current financial liabilities can regularly be extended or refinanced with other lenders. Trade payables provide short-term financing for the goods and services purchased. The liabilities covered by reverse factoring agreements are settled in line with their agreed maturity, whereby the related cash outflows are included in liquidity planning. For this reason, the Group considers the concentration of risk with regard to sufficient financing sources as rather low.

97 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 69

The contractually agreed (undiscounted) interest and principal payments for primary financial liabilities (including financial guarantee contracts) are shown below:

Maturity analysis of non-derivative financial liabilities

EUR '000	Carrying amount as at 31/12/2021	Cash flows 2022	Cash flows 2023 to 2026	Cash flows from 2027
Private placements	20,190,845	27,718,540	667,814,520	15,241,419
Bank loans	81,119,147	12,132,075	817,641,750	12,513,120
Loans from other lenders	6,018,020	21,631,540	11,985,140	15,214,150
Lease liabilities	21,181,560	14,821,070	11,981,160	14,132,160
Trade payables	18,518,170	18,518,170	7	7
Puttable non- controlling interests	4,191,115	7	7	4,191,115
Other financial liabilities 1	1,819,114	1,819,114	7	7
Total	172,038,071	82,700,649	1,617,450,574	71,321,909
Thereof: Fixed interest	10,102,506	6,781,471	2,617,137	1,017,419
Fixed and floating rate interest	10,500	14,000	11,000	10,000
Floating rate interest	14,591,807	6,182,170	19,180,470	1,918,047
Repayment	12,741,819	18,264,718	14,150,184	1,415,018
1) The above includes the maximum possible payment obligations from financial guarantee contracts. The amounts are assumed to be due in the first year.

Maturity analysis of non-derivative financial liabilities (previous year)

EUR '000	Carrying amount as at 31/12/2020	Cash flows 2021	Cash flows 2022 to 2025	Cash flows from 2026
Private placements	20,615,889	27,605,006	19,102,760	14,091,875
Bank loans	11,992,107	17,319,186	14,971,180	1,274,190
Loans from other lenders	2,418,177	21,002,990	11,512,740	14,618,000
Lease liabilities	23,780,517	17,421,470	14,150,700	14,165,400
Trade payables	18,561,477	18,561,477	7	7
Puttable non- controlling interests	18,731,188	7	7	18,731,188
Other financial liabilities 1	1,736,590	1,736,590	7	7
Total	97,036,145	84,647,319	60,637,394	62,885,667
Thereof: Fixed interest	10,918,706	9,619,120	2,190,106	1,019,010
Fixed and floating rate interest	1,140	1,400	1,100	1,000
Floating rate interest	18,427,655	14,027,470	19,180,470	1,918,047
Repayment	11,251,419	18,120,718	14,010,184	1,401,018
1) The above includes the maximum possible payment obligations from financial guarantee contracts. The amounts are assumed to be due in the first year.

The above tables include all primary financial liabilities held at the reporting date, but exclude estimated future liabilities. Foreign currency amounts were translated with the spot exchange rate in effect at the reporting date. Floating rate interest payments were calculated according to the last interest rates set before the reporting date. Financial liabilities that are repayable at any time are always assigned to the earliest time period.# Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 70

The contractually agreed (undiscounted) interest and principal payments for derivative financial instruments are as follows:

Maturity analysis of derivative financial instruments

EUR '000	Carrying amount as at 31/12/2021	Cash flows 2022	Cash flows 2023 to 2026	Cash flows from 2027
Currency, combined interest rate/currency and interest rate derivatives
Derivatives with a positive fair value (cash flow hedges)	32,119	32,119	19	19
Derivatives with a positive fair value (cash flow hedges with the underlying already recognized in profit or loss)	3,100	3,100	19	19
Positive fair value	35,219	35,219	38	38
Derivatives with a negative fair value (cash flow hedges)	(27,647)	(18,711)	(15,777)	(16,574)
Derivatives with a negative fair value (cash flow hedges with the underlying already recognized in profit or loss)	(3,100)	(3,100)	19	19
Negative fair value	(30,747)	(21,811)	(15,758)	(16,555)
Total	(4,528)	(13,408)	(15,720)	(16,517)

Cash flows consist solely of principal and do not include any interest components.
Fair value: + = receivable, - = liability from the Lenzing Group’s perspective

Maturity analysis of derivative financial instruments (previous year)

EUR '000	Carrying amount as at 31/12/2020	Cash flows 2021	Cash flows 2022 to 2025	Cash flows from 2026
Currency, combined interest rate/currency and interest rate derivatives
Derivatives with a positive fair value (cash flow hedges)	11,419	11,125	13	19
Derivatives with a positive fair value (cash flow hedges with the underlying already recognized in profit or loss)	1,181	1,181	19	19
Positive fair value	12,600	12,306	32	38
Derivatives with a negative fair value (cash flow hedges)	(16,114)	(15,569)	(11,764)	19
Derivatives with a negative fair value (cash flow hedges with the underlying already recognized in profit or loss)	(1,181)	(1,181)	19	19
Negative fair value	(17,295)	(16,750)	(11,745)	57
Total	(4,695)	(4,444)	(11,713)	95

Cash flows consist solely of principal and do not include any interest components.

Currency risk

Cash flows from capital expenditures and the operating business as well as investments and financing in foreign currencies expose the member companies of the Lenzing Group to currency risks. Risks from foreign currencies are hedged as far as possible if they influence the Group’s cash flows. In the operating business, the individual group companies are exposed to currency risk in connection with planned incoming and outgoing payments outside their functional currency. Forward foreign exchange contracts, which are recognized at fair value, are used to hedge the exchange rate risk from foreign currency positions arising from expected future transactions in foreign currencies by group companies. For companies with the same functional currency, the respective net foreign currency exposures are calculated for the following sales year as part of the budgeting process. Foreign currency purchases and sales are aggregated into separate groups for each currency. Approximately 62 percent of the budgeted net exposure for the following financial year was hedged for EUR/USD, the dominant currency pair in the Lenzing Group, as at December 31, 2021 (December 31, 2020: approximately 73 percent). The CNY also plays an important role. The resulting risk concentration at the reporting date can be seen in the following tables (especially the tables on “sensitivity analysis and risk exposure for foreign currency risks”). Translation risk is also regularly assessed and monitored at the Group level. Translation risk represents the risk arising from the consolidation of foreign investments whose functional currency is not the euro. The greatest risk exposure here is in relation to the US dollar.

Commodity risk

The gas price risk is hedged physically through supply contracts. The group is also subject to the usual market price risks in connection with its business activities (especially relating to wood, chemicals, pulp and energy) which are not hedged with derivatives or financial instruments, but protected through other measures (above all, long-term and short-term supply contracts with various suppliers).

Interest rate risk

The Lenzing Group is exposed to interest rate risk through its business-related financing and investing activities. Interest rate risks arise through potential changes in the market interest rate. They can lead to a change in the fair value of fixed rate financial instruments and to fluctuations in the cash flows from interest payments for floating rate financial instruments. Interest rate risks and the resulting risk concentrations are managed by monitoring and adjusting the composition of fixed rate and floating rate primary financial instruments on an ongoing basis and by the selective use of derivative financial instruments. The level of the resulting risk concentration as of the balance sheet date is presented in the following tables (see section “Sensitivity analysis and exposure for interest rate risks”).

Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 71

Sensitivity analysis and exposure for currency risks

The Lenzing Group uses the following assumptions for its sensitivity analysis:

• The sensitivity of profit or loss is based on the receivables and liabilities recognized by the group companies which are denominated in a currency other than the functional currency of the relevant company and the open derivatives from cash flow hedges for currency risks in cases where the hedged item was already recognized in profit or loss as at the reporting date. The carrying amounts of the receivables and liabilities, respectively the nominal values of the derivatives, correspond to the exposure. The individual exposures are presented consistently in relation to the US dollar and euro for the aggregation to the Group’s exposure.
• The sensitivity of other comprehensive income as at the reporting date is based on the open derivatives from cash flow hedges for currency risks in cases where the hedged item has not yet been recognized in profit or loss. The nominal value of the open derivatives corresponds to the exposure.

The following tables show the sensitivities and exposure for currency risk as at the reporting dates:

Sensitivity analysis and risk exposure for foreign currency risks (EUR)

EUR '000	31/12/2021			31/12/2020
	Group exposure in relation to EUR	Sensitivity to 10% devaluation of the EUR	Sensitivity to 10% revaluation of the EUR	Group exposure in relation to EUR	Sensitivity to 10% devaluation of the EUR	Sensitivity to 10% revaluation of the EUR
EUR-USD	21,109	1,590	(1,543)	17,213	1,424	(1,425)
EUR-GBP	510	54	(55)	(474)	(45)	48
EUR-CNY/CNH	12,152	1,313	(1,335)	7,140	181	(210)
EUR-CZK	(1,159)	(118)	121	(107)	(114)	123
EUR-HKD	(1,587)	(159)	152	(146)	(141)	161
Sensitivity of net profit or loss after tax (through receivables and payables)	28,035	1,879	(1,660)	17,526	1,299	(1,149)
Sensitivity of other comprehensive income after tax (through cash flow hedge derivatives)	(6,190)	1,415	(1,174)	1,150	1,190
Sensitivity of equity	21,845	3,294	(2,834)	18,676	2,489	(1,149)

Group exposure: + receivable, – liability; sensitivity: + increase in profit/other comprehensive income, - decrease in profit/other comprehensive income

Sensitivity analysis and risk exposure for foreign currency risks (USD/GBP)

EUR '000	31/12/2021			31/12/2020
	Group exposure in relation to USD/GBP	Sensitivity to 10% devaluation of the USD/GBP	Sensitivity to 10% revaluation of the USD/GBP	Group exposure in relation to USD/GBP	Sensitivity to 10% devaluation of the USD/GBP	Sensitivity to 10% revaluation of the USD/GBP
USD-IDR	(1,596)	(159)	153	(1,120)	(112)	104
USD-GBP	(1,714)	(171)	170	(1,186)	(118)	117
USD-CNY/CNH	2,888	289	(277)	4,175	417	(395)
USD-CZK	(1,376)	(137)	131	(3,714)	(371)	335
USD-THB	80	8	(7)	(10,144)	(1,014)	1,003
USD-BRL	1,540	154	(144)	(1,100)	(110)	101
GBP-CNY/CNH	1,276	128	(122)	1,603	160	(155)
Sensitivity of net profit or loss after tax (through receivables and payables)	1,003	224	(112)	(6,526)	(970)	715
Sensitivity of other comprehensive income after tax (through cash flow hedge derivatives)	(1,491)	1,707	1,194	(1,748)	1,792
Sensitivity of equity	(488)	1,931	1,082)	(8,274)	822	715

Group exposure: + receivable, – liability; sensitivity: + increase in profit/other comprehensive income, - decrease in profit/other comprehensive income

Sensitivity analysis and exposure for interest rate risks

The following tables show the exposure for interest rate risks at the reporting dates in the form of the carrying amounts of interest-bearing primary financial instruments:

Risk exposure for interest rate risks

EUR '000	31/12/2021
	Fixed interest	Fixed and floating rate interest	Floating rate interest	No interest	Total
Cash and cash equivalents	-	-	11,119,310	-	11,119,310
Financial assets	70	-	11,109,652	150,196	11,260,018
Financial liabilities	(17,209,156)	(18,106,137)	(10,111,240)	-	(45,426,533)
Net risk position	(6,027,776)	(18,106,137)	1,008,112	150,196	(23,055,205)
Effects from derivative instruments (hedging)	(1,900,000)	-	1,900,000	-	-
Net risk position after hedging effect	(7,927,776)	(18,106,137)	2,908,112	150,196	(23,055,205)

+ Receivables, - Liabilities

Risk exposure for interest rate risks (previous year)

EUR '000	31/12/2020
	Fixed interest	Fixed and floating rate interest	Floating rate interest	No interest	Total
Cash and cash equivalents	-	-	10,140,116	-	10,140,116
Financial assets	1,074	17,400	11,740,414	140,614	11,899,498
Financial liabilities	(15,635,266)	(17,605,190)	(15,962,479)	-	(49,202,935)
Net risk position	(14,560,112)	(17,587,790)	(3,111,949)	140,614	(27,163,321)
Effects from derivative instruments (hedging)	(1,200,000)	-	1,200,000	-	-
Net risk position after hedging effect	(15,760,112)	(17,587,790)	(1,911,949)	140,614	(27,163,321)

+ Receivables, - Liabilities

1) Includes, among others, the GF 82 wholesale fund whose income is# Annual Financial Report 2021 Lenzing Group

73 Sensitivity analyses are performed for the interest rate risks arising from floating rate financial instruments and from the fluctuation in the market values of cash flow hedge derivatives. They show the effects of hypothetical changes in interest rates on profit or loss, other comprehensive income and equity. The Lenzing Group uses the following assumptions in its analysis of the interest rate risk arising from floating rate financial instruments:

• The sensitivity analysis includes all floating rate primary and derivative financial instruments as at the reporting date.
• The exposure corresponds to the carrying amount of the floating rate financial instruments.

The sensitivities and exposure for the interest rate risks arising from floating rate financial instruments are as follows as at the reporting dates:

Sensitivity analysis for interest rate risks from variable-rate primary and derivative financial instruments

EUR '000	31/12/2021	31/12/2020
Net risk position after hedging effect	17,990	18,960
Sensitivity to a 100 bp increase in the interest rate level 1	(9,544)	(9,435)²
Sensitivity to a 100 bp decrease in the interest rate level 1	9,554²	9,445²

1) A reduction in the basis points results in a proportional decrease in the sensitivity.
2) The evaluation is based on the assumption that negative interest rates are paid on cash and cash equivalents. The evaluation does not include liabilities for which no negative interest is calculated.

The Lenzing Group bases the sensitivity analysis for the interest rate risk from the fluctuation in market values of cash flow hedge derivatives for interest rate risks on the following assumptions:

• The sensitivity of other comprehensive income as at the reporting date is based on the open derivative from cash flow hedges for interest rate risks in cases where the hedged item has not yet been recognized in profit or loss.
• The exposure corresponds to the nominal value of the derivative amount of EUR 418,211 thousand (December 31, 2020: EUR 0 thousand).

An increase in the interest rate level by 1 percentage point would lead to an increase in other comprehensive income (after taxes) of EUR 9,543 thousand (December 31, 2020: EUR 0 thousand). A decrease in the interest rate level by 1 percentage point would lead to a reduction in other comprehensive income (after taxes) of EUR 9,532 thousand (December 31, 2020: EUR 0 thousand).

The interest rate sensitivity has no effect on profit or loss, as the measurement of interest rate derivatives is recognized in the hedging reserve with no effect on profit or loss.

The Lenzing Group holds financial instruments that are linked to an IBOR reference interest rate and must be replaced as part of the IBOR reform. Until December 31, 2021, the previous reference interest rate, the Euro Overnight Index Average (EONIA), relating to affected financial liabilities was adjusted to the Euro Short-Term Rate (€STR) reference interest rate. The changeover of the USD-LIBOR reference interest rate relating to affected financial liabilities and corresponding cash flow hedge derivatives for combined interest rate/currency risks and for interest rate risks to an alternative reference interest rate has already begun. The Lenzing Group is monitoring the transition to alternative reference interest rates and is managing the resultant risks.

Additional information on financial risk management and financial instruments is provided in the risk report of the Lenzing Group’s management report as at December 31, 2021.

102 Annual Financial Report 2021 Lenzing Group

74 Note 40. 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 41).

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 31), the Lenzing Group recognized a tax credit of EUR 747 thousand through profit or loss in 2021 (2020: EUR 24 thousand). Contractual obligations resulted in the payment or advance payment of tax allocations totaling EUR 15,285 thousand in 2021 (2020: EUR 19,196 thousand). The Lenzing Group recognized a liability of EUR 28,000 thousand towards B&C Group from the tax allocation, after the deduction of advance payments, as at December 31, 2021 (December 31, 2020: receivable EUR 4,568 thousand). The tax loss of EUR 0 thousand (December 31, 2020: EUR 3,256 thousand) was recognized under deferred tax assets. Income tax expense of EUR 17,268 thousand was recognized in 2021 as a result of the tax allocation to B&C Group (2020: EUR 1,229 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:

Material relationships with companies accounted for using the equity method

• EQUI-Fibres Beteiligungsgesellschaft mbH and its subsidiaries (EFB)
  Distribution of fibers, delivery of pulp, loan assignment
• Lenzing Papier GmbH (LPP)
  Provision of infrastructure and administrative services
• RVL Reststoffverwertung Lenzing GmbH (RVL)
  Operation of a recycling plant and purchase of the generated steam; letting of land
• Hygiene Austria LP GmbH (HGA), the shares were sold in March 2021
  Supply of raw materials, provision of services, loan receivable, guarantee given and purchasing of protective masks
• Gemeinnützige Siedlungsgesellschaft m.b.H. für den Bezirk Vöcklabruck (GSG)
  Provision of infrastructure and administrative services
• PT. Pura Golden Lion (PGL)
  Loan liability
• Wood Paskov s.r.o. (LWP)
  Purchase of wood
• LD Florestal S.A. (LDF)
  Land use rights, loan liability

The scope of material transactions and the outstanding balances with companies accounted for using the equity method and their major subsidiaries are as follows:

Relationships with companies accounted for using the equity method and their material subsidiaries

EUR '000	2021
EFB	Other associates	LDF	Other joint ventures	Total
Goods and services provided	27,978	17,006	-	1,404
Goods and services received	1,661	1,404	-	-
Receivables as at 31/12	18,052	4,031	708	1,839
Liabilities as at 31/12	1,102	1,421	-	-

Relationships with companies accounted for using the equity method and their material subsidiaries (previous year)

EUR '000	2020
EFB	Other associates	LDF	Other joint ventures	Total
Goods and services provided	17,572	19,299	-	1,047
Goods and services received	1,955	6,667	-	-
Receivables as at 31/12	15,062	1,900	1,002	1,884
Liabilities as at 31/12	1,671	1,851	-	-

Bad debt provisions of EUR 1,160 thousand for trade receivables from companies accounted for using the equity method were recognized to profit or loss as expense in 2021 (2020: EUR 2,100 thousand income).

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 reflects 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 14.748 thousand of the loan were drawn down as at December 31, 2021 (December 31, 2020: EUR 21,318 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 36,941 thousand as at December 31, 2021 (December 31, 2020: EUR 39,620 thousand).

There were no major transactions with the other non-consolidated subsidiaries in 2020 and 2021.

Disclosures on Related Parties and Executive Bodies

103 Annual Financial Report 2021 Lenzing Group

75 Relationships with companies accounted for using the equity method and their material subsidiaries (previous year)# 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):

Remuneration for key management personnel (expensed)

EUR '000
| | 2021 | 2020 |
| :--------------------------------------------------------- | :------- | :------ |
| Remuneration for the Managing Board | | |
| Basic salary | 2,715 | 2,721 |
| Benefits in kind and other benefits (in particular use of company vehicles) | 20,070 | |
| Short-term variable performance bonus (short-term incentive; STI) | 2,705 | 1,970 |
| Extraordinary remuneration (special bonuses) | 8,133 | 8,505 |
| Short-term employee benefits | 2,164 | 1,164 |
| Long-term variable performance bonus (long-term incentive; LTI) | 8,915 | 9,154 |
| Extraordinary remuneration (special bonuses) | 0 | 1,020 |
| Other long-term employee benefits | 758 | 736 |
| Contributions to multiemployer pension fund | 178 | 179 |
| Post-employment benefits | 245 | 245 |
| Compensation for non-competition clauses and one-off gratuity | 1,610 | |
| Termination benefits | 2,027 | 7 |
| Remuneration for the Managing Board | 28,545 | 25,724 |
| Remuneration for the Supervisory Board | | |
| Short-term employee benefits | 921 | 845 |
| Total | 29,466 | 26,569 |

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 2021 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 12 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 (2020: EUR 607 thousand in the form of expenses). 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 6,512 thousand as at December 31, 2021 (December 31, 2020: EUR 7,285 thousand).

Note 41. Executive Bodies

Members of the Supervisory Board

• Peter Edelmann Chairman
• Patrick Prügger Deputy Chairman (since April 14, 2021)
• Stefan Fida Deputy Chairman (since April 14, 2021)
• Helmut Bernkopf
• Christian Bruch
• Markus Fürst (since April 14, 2021)
• Franz Gasselsberger
• Melody Harris-Jensbach (since June 18, 2020)
• Cord Prinzhorn (April 14, 2021 up to November 3, 2021)
• Astrid Skala-Kuhmann
• Veit Sorger Deputy Chairman (up to April 14, 2021)
• Felix Fremerey (up to June 18, 2020)

Appointed by the Works Council

• Johann Schernberger Chairman of the Group Works Council Chairman of the Works Committee (up to January 18, 2021) Chairman of the Works Council for Waged Employees
• Helmut Kirchmair Chairman of the Works Committee (since January 18, 2021) Deputy Chairman of the Works Council for Waged Employees
• Georg Liftinger Deputy Chairman of the Works Committee Chairman of the Works Council for Salaried Employees
• Herbert Brauneis Deputy Chairman of the Works Council for Waged Employees
• Daniela Födinger Deputy Chairwoman of the Works Council for Salaried Employees

Members of the Managing Board

• Cord Prinzhorn Chairman of the Managing Board (since November 4, 2021)
• Thomas Obendrauf Chief Financial Officer
• Robert van de Kerkhof Member of the Managing Board
• Stephan Sielaff Member of the Managing Board (since March 1, 2020)
• Christian Skilich Member of the Managing Board (since June 1, 2020)
• Stefan Doboczky Chairman of the Managing Board (up to September 30, 2021)

Note 42. Financial guarantee contracts, contingent assets and liabilities, other financial obligations and legal risks

The Lenzing Group has entered into contingent liabilities of EUR 4,905 thousand (December 31, 2020: EUR 5,484 thousand), above all to secure claims related to the sale of certain equity investments and claims by suppliers, for possible default on sold receivables (also see note 37 “Factoring“) and for claims by third parties outside the Group. Less important contingent liabilities involve granted retentions. The reported amounts represent the maximum payment obligation from the viewpoint of the Lenzing Group, and there is only a limited potential for recoveries.

The Lenzing Group provides committed credit lines of EUR 5,379 thousand (December 31, 2020: EUR 8,622 thousand) to third parties. These credit lines were not used as at December 31, 2021 and December 31, 2020 (also see note 22).

Bank guarantees of EUR 51,703 thousand (December 31, 2020: EUR 56,021 thousand) are in place for future equity injections of Lenzing AG for LD Celulose S.A. from 2021 to 2022. These bank guarantees were not drawn as at December 31, 2021 and December 31, 2020.

The Lenzing Group carries obligations for severance payments and anniversary benefits for former employees of certain sold equity investments up to the amount of the notional claims at the sale date. Provisions were recognized for these obligations as at the reporting date at an amount equal to their present value calculated in accordance with actuarial principles. Lenzing AG, in particular, has also assumed liabilities to secure third-party claims against consolidated companies; these claims are considered unlikely to be realized. The Managing Board is not aware of any other financial obligations with a significant impact on the financial position and financial performance of the Group.

The obligations arising from outstanding orders for intangible assets and property, plant and equipment amounted to EUR 248,062 thousand as at December 31, 2021 (December 31, 2020: EUR 354,390 thousand).

The Lenzing Group has long-term purchase obligations related to raw material supplies, in particular for wood, pulp, chemicals and energy.

A lawsuit was filed in a US court against Lenzing AG for unspecified damages in connection with a former investment. Lenzing AG has rejected these claims. The management does not consider of damages to be probable.

As an international corporation, the Lenzing Group is exposed to a variety of legal and other risks. These risks are related, above all, to product defects, competition and antitrust law, patent law, tax law, employees and environmental protection (in particular, for environmental damage at production locations and climate risks). It is impossible to predict the outcome of pending or future legal proceedings, and rulings by the courts or government agencies or settlement agreements can lead to expenses that are not fully covered by insurance which could have a material impact on the group’s future financial position and financial performance. Additional information is provided in the risk report of the Lenzing Group’s management report as at December 31, 2021.

Other Disclosures

Note 43. Group companies

In addition to Lenzing AG, the Lenzing Group includes the following companies (list of group companies in accordance with Section 245a Para. 1 in conjunction with Section 265 Para. 2 of the Austrian Commercial Code):

Group companies

	31/12/2021	31/12/2020
Consolidated companies
Avit Investments Limited, Providenciales, Turks and Caicos
Share capital	USD -	USD 4,099,999
Share in %	100%	100%
Beech Investments s.r.o., Zlaté Moravce, Slovakia
Share capital	EUR 24,255	EUR 24,255
Share in %	100%	100%
BZL – Bildungszentrum Lenzing GmbH, Lenzing, Austria
Share capital	EUR 19,420	EUR 19,420
Share in %	100%	100%
LD Celulose S.A., Indianopolis, Brazil
Share capital	BRL 140,477,127,000	BRL 140,177,000,000
Share in %	51%	51%
Lenzing Biocel Paskov a.s., Paskov, Czech Republic
Share capital	CZK 1,409,000,000	CZK 1,409,000,000
Share in %	100%	100%
Lenzing E-commerce (Shanghai) Co., Ltd., Shanghai, China
Share capital	CNY 12,840,000	CNY 12,840,000
Share in %	100%	100%
Lenzing Elyaf Anonim Şirketi, Istanbul, Turkey
Share capital	TRY 90,500,000	TRY 90,500,000
Share in %	100%	100%
Lenzing Fibers (Shanghai) Co., Ltd., Shanghai, China
Share capital	USD 10,000	USD 10,000
Share in %	100%	100%
Lenzing Fibers GmbH, Heiligenkreuz, Austria
Share capital	EUR 9,090,000	EUR 9,090,000
Share in %	100%	100%
Lenzing Fibers Grimsby Limited, Grimsby, UK
Share capital	GBP 0	GBP 0
Share in %	100%	100%
Lenzing Fibers Holding GmbH, Lenzing, Austria
Share capital	EUR 9,000,000	EUR 9,000,000
Share in %	100%	100%
Lenzing Fibers
Lenzing Fibers Inc., Axis, USA	USD	
Lenzing Fibers India Private Limited, Coimbatore, India	INR	
Lenzing Fibers Ltd., Manchester, UK	GBP	
Lenzing Global Finance GmbH, Munich, Germany	EUR	
Lenzing Holding GmbH, Lenzing, Austria	EUR	
Lenzing Korea Yuhan Hoesa, Seoul, Republic of Korea	KRW	
Lenzing Land Holding LLC., Dover, USA	USD	
Lenzing Modi Fibers India Private Limited, Mumbai, India	INR	
Lenzing (Nanjing) Fibers Co., Ltd., Nanjing, China	USD	
Lenzing Singapore Pte. Ltd., Singapore, Republic of Singapore	EUR	
Lenzing Taiwan Fibers Ltd., Taipei, Taiwan	TWD	
Lenzing (Thailand) Co., Ltd., Prachinburi, Thailand	THB	
Nanjing Fabor Waste Water Treatment Co., Ltd, Nanjing, China	1 CNY	-
Penique S.A., Panama, Panama	USD	-
PT. South Pacic Viscose, Purwakarta, Indonesia	2 IDR	
Pulp Trading GmbH, Lenzing, Austria	EUR	
Reality Paskov s.r.o., Paskov, Czech Republic	CZK	
Wasserreinhaltungsverband Lenzing – Lenzing AG, Lenzing, Austria	3 EUR	 Membership
Companies accounted for using the equity method
Associates
EQUI-Fibres Beteiligungsgesellschaft m.b.H., Kelheim, Germany	EUR	
Gemeinnützige Siedlungsgesellschaft m.b.H. für den Bezirk Vöcklabruck, Lenzing, Austria	4 EUR	
Lenzing Papier GmbH, Lenzing, Austria	EUR	
PT. Pura Golden Lion, Jakarta, Indonesia	IDR	
Joint ventures
Hygiene Austria LP GmbH, Wiener Neudorf	EUR	-
LD Florestal S.A., Indianopolis, Brazil	BRL	
RVL Reststoverwertung Lenzing GmbH, Lenzing, Austria	EUR	
Wood Paskov s.r.o., Paskov, Czech Republic	CZK	

Comments:
1) In the 2021 nancial year, the interest in Nanjing Fabor Waste Water Treatment Co., Ltd, Nanjing, China, was merged with Lenzing (Nanjing) Fibers Co., Ltd, Nanjing, China.
2) The share held directly by the Lenzing Group equals 91.87 percent (December 31, 2020: 88.08 percent). A further 8.13 percent of the shares are held indirectly via PT. Pura Golden Lion, Jakarta, Indonesia, an associate of the Lenzing Group. The total calculated share therefore equals 95.12 percent.
3) The Lenzing Group participates through a membership. It holds 50 percent of the voting rights and can appoint half of the Managing Board members. Since all assets are at- tributable to the respective landowner under company law, the entity is notionally a separate company (a so-called “silo structure”). Assets located on the Lenzing Group’s land are therefore included in the consolidation.
4) This investment is not included in the consolidated nancial statements as a subsidiary, even though the Lenzing Group holds 99.9 percent of the voting rights in the company. In light of the given circumstances, the Lenzing Group does not control this company because its power is limited and because the returns hardly vary or can hardly be inuenced by the Lenzing Group. Signicant inuence is exercised by the Lenzing Group over the nancial and operating policies of this company, in particular through representation on management bodies and participation in decision-making processes.

107
Annual Financial Report 2021
Lenzing Group
Annual Report 2021
Lenzing Group

79

Note 44. Signicant events after the end of the reporting period

On January 20, 2022, a gradual reduction in the corporate tax rate in Austria from 25 percent to 23 percent with eect from Janu- ary 1, 2023 was approved. This reduction does not aect current or deferred taxes recognized as at December 31, 2021. However, this change will reduce the group’s future eective tax burden accord- ingly. If the modied tax rates had been applied for the calculation of deferred taxes as at December 31, 2021, deferred tax liabilities would have decreased by EUR 2,708 thousand (see note 31).

Military clashes between Russia and Ukraine have arisen since Feb- ruary 24, 2022. The Lenzing Group has no investments, other as- sets or other signicant business relationships in either of these countries. For this reason, the consolidated nancial statements of the Lenzing Group as of December 31, 2021 are not aected.

Other than that, the Lenzing Group is not aware of any signicant events occurring after the reporting date on December 31, 2021 which would have resulted in a dierent presentation of its nancial position and nancial performance.

Note 45. Authorization of the consolidated nancial statements

These consolidated nancial statements were approved on March 1, 2022 (consolidated nancial statements as at Decem- ber 31, 2020: March 8, 2021) by the Managing Board for review by the Supervisory Board, presentation to the Annual General Meet- ing and subsequent publication. The Supervisory Board may re- quire changes to the consolidated nancial statements as part of its review.

Lenzing, March 1, 2022

Lenzing Aktiengesellschaft

The Managing Board
Cord Prinzhorn
Chairman of the Managing Board
Thomas Obendrauf
Chief Financial Ocer
Robert van de Kerkhof
Member of the Managing Board
Stephan Siela
Member of the Managing Board
Christian Skilich
Member of the Managing Board

108
Annual Financial Report 2021
Lenzing Group
Annual Report 2021
Lenzing Group

80

Report on the Consolidated Financial Statements
Audit Opinion

We have audited the consolidated nancial statements of Lenzing Aktiengesellschaft, Lenzing, Austria, and its subsidiaries (the Group), which comprise the consolidated Statement of Financial Position as at 31 December 2021, and the Consolidated Income Statement and Consolidated Statement of Other Comprehensive Income, Consolidated Statement of Changes in Equity and Con- solidated Statement of Cash Flows for the year then ended, and the Notes to the Consolidated Financial Statements.

In our opinion, the consolidated nancial statements comply with the legal requirements and present fairly, in all material respects, the consolidated nancial position of the Group as at 31 Decem- ber 2021, and its consolidated nancial performance and consoli- dated cash ows for the year then ended in accordance with Inter- national Financial Reporting Standards (IFRSs) as adopted by the EU, and the additional requirements pursuant to Section 245a UGB (Austrian Commercial Code).

Basis for our Opinion

We conducted our audit in accordance with the EU Regulation 537/2014 (“AP Regulation”) and Austrian Standards on Auditing. These standards require the audit to be conducted in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the “Auditor’s Re- sponsibilities” section of our report. We are independent of the au- dited Group in accordance with Austrian company law and profes- sional regulations, and we have fullled our other responsibilities under those relevant ethical requirements. We believe that the au- dit evidence we have obtained up to the date of the auditor’s report is sucient and appropriate to provide a basis for our audit opinion on this date.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most signicance in our audit of the nancial statements. These matters were addressed in the context of our audit of the nancial statements as a whole, however, we do not provide a separate opinion thereon.

Impairment of Cash-Generating Units (“CGU”) “Fiber Site China” and “Fiber Site Indonesia”
Refer to note 11 Risk for the nancial statements

In the nancial year 2021 Lenzing Aktiengesellschaft asessed that there is an indication, that the cash-generating units "Fiber Site China" and "Fiber Site Indonesia" may be impaired. The estimated recoverable amounts (impairment test) of both cash-generating units exceeded their carrying amounts. The measurement of the recoverable amount of cash-generating units in accordance with IAS 36 requires assumptions and esti- mates, such as the estimated future cash ows, as well as the de- termination of the applicable discount rate. There is a risk that inappropriate assumptions and estimates used to measure the recoverable amount could have a signicant impact on the recoverable amount and therefore the carrying amounts of the cash-generating units in the consolidated statement of nan- cial position, as well as the operating result in the consolidated in- come statement.

Our response

We assessed the impairment tests carried out by the company with support of our internal valuation experts as follows:
● To assess the adequacy of the cash ow projections used by management to measure recoverable amount, we have evalu- ated managements planning process and discussed the as- sumptions for growth rates and operating results with man- agement. Additionally, we have compared these cash ow projections with the most recent budget approved by the su- pervisory board as well as the mid-term planning approved by the managing board.
● To assess managements historical planning accuracy we have compared actual nancial gures with prior years cash ow projections.
● Our internal valuation experts have assessed the methodology used for impairment testing for compliance with the applicable standards.# Auditor's Report

Valuation of puttable non-controlling interests

Refer to note 3 and note 37 Risk for the Consolidated Financial Statements

The minority shareholder of LD Cellulose S.A, Sao Paulo, Brazil, has an option to sell its non-controlling interests to Lenzing Aktiengesellschaft upon the occurrence of contractually agreed events. As of December 31, 2021, Lenzing Aktiengesellschaft recognized a liability at a fair value of EUR 234,409 thousand for these puttable non-controlling interests. Subsequent measurement of the liability is carried out using the present access method via retained earnings. The fair value of the liability for the puttable non-controlling interests is determined in accordance with the contractual agreement with the minority shareholder according to a discounted cash flow method. This requires assumptions and estimates, such as estimating future cash flows and determining the discount rate to be applied. There is a risk for the consolidated financial statements that inappropriate assumptions and estimates could have a significant impact on the fair value and thus the valuation of the liability for the puttable non-controlling interests in the consolidated statement of financial position and equity.

Our response

We assessed the valuation of puttable non-controlling interests as follows:

• We assessed whether the chosen valuation model is consistent with the contractual agreements for determining the option exercise price.
• In order to assess the appropriateness of the cash flows used in the valuation model, we gained an understanding of the planning process and discussed the assumptions about growth rates and operating results with management.
• We compared the planning data assumed in the valuation model with the current budget figures approved by the Management Board and the Supervisory Board and the medium-term plan.
• Our internal valuation experts assessed the adequacy of the valuation model and verified the mathematical accuracy. Our experts compared the determined country and maturity-specific capital costs with market and industry-specific benchmarks.
• Finally, we assessed whether the explanations on the determination of the fair value for the liability for puttable non-controlling interests in the consolidated financial statements are appropriate.

Other information

Management is responsible for other information. Other information is all information provided in the annual report, other than the consolidated financial statements, the group management report, and the auditor's report. Our opinion on the consolidated financial statements does not cover other information and we do not provide any assurance thereon. In conjunction with our audit, it is our responsibility to read this other information and to assess whether, based on knowledge gained during our audit, it contains any material inconsistencies with the consolidated financial statements or any apparent material misstatement of fact. If we conclude that there is a material misstatement of fact in other information, we must report that fact. We have nothing to report in this regard.

Responsibilities of Management and Audit Committee for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, the additional requirements pursuant to Section 245a UGB (Austrian Commercial Code) and for such internal controls as management determines are necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Management is also responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless management either intents to liquidate the Group or to cease operations, or has no realistic alternative but to do so. The audit committee is responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our audit opinion. Reasonable assurance represents a high level of assurance, but provides no guarantee that an audit conducted in accordance with the AP Regulation and Austrian Standards on Auditing (and therefore ISAs), will always detect a material misstatement, if any. Misstatements may result from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the AP Regulation and Austrian Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. Moreover:

• We identify and assess the risks of material misstatement in the consolidated financial statements, whether due to fraud or error, we design and perform audit procedures responsive to those risks and obtain sufficient and appropriate audit evidence to serve as a basis for our audit opinion. The risk of not detecting material misstatements resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or override of internal control.
• We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
• We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• We conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the respective note in the consolidated financial statements. If such disclosures are not appropriate, we will modify our audit opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• We evaluate the overall presentation, structure and content of the consolidated financial statements, including the notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• We obtain sufficient appropriate audit evidence regarding the financial information of the entities and business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
• We communicate with the audit committee regarding, amongst other matters, the planned scope and timing of our audit as well as significant findings, including any significant deficiencies in internal control that we identify during our audit.
• We communicate to the audit committee that we have complied with the relevant professional requirements in respect of our independence, that we will report any relationships and other events that could reasonably affect our independence and, where appropriate, the related safeguards.
• From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit i.e. key audit matters. We describe these key audit matters in our auditor's report unless laws or other legal regulations preclude public disclosure about the matter or when in very rare cases, we determine that a matter should not be included in our audit report because the negative consequences of doing so would reasonably be expected to outweigh the public benefits of such communication.

Report on Other Legal Requirements

Group Management Report

In accordance with Austrian company law, the group management report is to be audited as to whether it is consistent with the consolidated financial statements and prepared in accordance with legal requirements. Management is responsible for the preparation of the group management report in accordance with Austrian company law and other legal or regulatory requirements. We have conducted our audit in accordance with generally accepted standards on the audit of group management reports.

Opinion

In our opinion, the group management report is consistent with the consolidated financial statements and has been prepared in accordance with legal requirements. The disclosures pursuant to Section 243a UGB (Austrian Commercial Code) are appropriate.Statement Based on our knowledge gained in the course of the audit of the consolidated financial statements and our understanding of the Group and its environment, we did not note any material misstatements in the group management report.

Additional Information in accordance with Article 10 AP Regulation

We were elected as auditors at the Annual General Meeting on April 14, 2021 and were appointed by the supervisory board on April 27, 2021 to audit the financial statements of Company for the financial year ending on December 31, 2021. We have been auditors of the Company, without interruption, since the consolidated financial statements as at December 31, 2017.

We declare that our opinion expressed in the "Report on the Consolidated Financial Statements" section of our report is consistent with our additional report to the Audit Committee, in accordance with Article 11 AP Regulation. We declare that we have not provided any prohibited non-audit services (Article 5 Paragraph 1 AP Regulation) and that we have ensured our independence throughout the course of the audit, from the audited Group.

111 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 83

Engagement Partner

The engagement partner on this engagement is Ms Gabriele Lehner.

Linz, March 01, 2022

KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

Gabriele Lehner
Austrian Chartered Accountant

This report is a translation of the original report in German, which is solely valid. The financial statements, together with our auditor's opinion, may only be published if the financial statements and the management report are identical with the audited version attached to this report. Section 281 Paragraph 2 UGB (Austrian Commercial Code) applies.

112 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 84

Declaration of the Managing Board according to Section 124 (1) No. 3 of the Stock Exchange Act

We confirm to the best of our knowledge that the consolidated financial statements of the Lenzing Group as at December 31, 2021 that were prepared in accordance with the applicable accounting standards pursuant to International Financial Reporting Standards (IFRSs) give a true and fair view of the assets, liabilities, financial position and profit or loss of the Lenzing Group and that the group management report gives a true and fair view of the development and performance of the business and the position of the Lenzing Group, together with a description of the principal risks and uncertainties the Lenzing Group faces.

Lenzing, March 1, 2022

Lenzing Aktiengesellschaft

The Managing Board

Cord Prinzhorn
Chairman of the Managing Board

Thomas Obendrauf
Chief Financial Officer

Robert van de Kerkhof
Member of the Managing Board

Stephan Sielaff
Member of the Managing Board

Christian Skilich
Member of the Managing Board

Declaration of the Managing Board

113 Annual Financial Report 2021 Lenzing Group Annual Report 2021 Lenzing Group 85

Key earnings and profitability figures

EUR mn	2021	2020	2019	2018	2017
Revenue	2,377,548	1,977,464	1,759,014	1,745,835	1,734,823
EBITDA (earnings before interest, tax, depreciation and amortization)	435,104	331,812	317,483	297,295	278,199
EBITDA margin	18.3%	16.8%	18.0%	17.0%	16.0%
EBIT (earnings before interest and tax)	228,780	165,841	194,570	184,170	158,849
EBIT margin	9.6%	8.4%	11.0%	10.6%	9.2%
EBT (earnings before tax)	204,196	130,856	171,879	163,245	139,549
Net profit/loss for the year	137,925	(177,883)	121,521	118,417	114,935
Earnings per share in EUR	4.87	(6.28)	4.27	4.15	4.03
ROCE (return on capital employed)	14.2%	(7.5)%	13.7%	12.8%	11.5%
ROE (return on equity)	12.0%	(20.0)%	10.9%	10.4%	9.2%
ROI (return on investment)	11.3%	(8.0)%	12.4%	11.8%	10.7%

Key cash flow figures

EUR mn	2021	2020	2019	2018	2017
Gross cash flow	359,174	275,141	271,874	258,174	231,159
Cash flow from operating activities	277,819	214,107	217,496	214,774	211,231
Free cash flow	(77,566)	(51,784)	70,140	138,156	145,194
CAPEX	145,570	111,474	117,479	116,195	114,194
Liquid assets as at 31/12	306,159	304,171	164,237	137,118	105,124
Unused credit facilities as at 31/12	758,765	303,889	189,909	161,109	141,104

Key balance sheet figures

EUR mn as at 31/12	2021	2020	2019	2018	2017
Total assets	1,856,748	1,765,578	1,607,131	1,568,765	1,559,128
Adjusted equity	1,233,591	1,107,627	1,084,979	1,083,857	1,077,125
Adjusted equity ratio	66.4%	62.8%	67.5%	69.1%	68.9%
Net financial debt	176,334	215,178	207,789	171,278	119,741
Net financial debt / EBITDA	0.41	0.65	0.65	0.58	0.43
Net debt	1,375,108	1,356,783	1,311,157	1,288,574	1,175,439
Net gearing	36.3%	41.7%	44.2%	38.3%	32.5%
Trading working capital	175,918	174,414	176,895	181,315	171,115
Trading working capital to annualized group revenue	7.4%	8.8%	10.1%	10.4%	9.9%

Key stock market figures

EUR	2021	2020	2019	2018	2017
Market capitalization in mn as at 31/12	1,844,371	1,720,714	1,720,714	1,723,572	1,741,278
Share price as at 31/12	143.00	104.00	104.00	125.50	137.00
Dividend per share	1.50	1.00	1.00	1.00	1.00

Employees

Number (headcount) as at 31/12	2021	2020	2019	2018	2017
	7,598	7,624	7,486	7,140	7,114

1) Reclassification of capitalized borrowing costs, net interest from defined benefit plans and commitment fees from EBIT/EBITDA to the financial result (see note 2).
2) On the basis of proposed distribution of profits.

The above financial indicators are derived primarily from the IFRS consolidated financial statements of the Lenzing Group. Additional details are provided in the section “Notes on the financial performance indicators of the Lenzing Group”, in the glossary to the Annual Report and in the consolidated financial statements of the Lenzing Group. Rounding differences can occur in the presentation of rounded amounts and percentage rates.

Lenzing Group Five-Year Overview

114 Annual Financial Report 2021 Lenzing Group

Geschäftsbericht 2021 Lenzing AG

Inhalt

• Bilanz 116
• Gewinn- und Verlustrechnung 118
• Anhang zum Jahresabschluss 120
• Erläuterungen zur Bilanz 123
• Erläuterungen zur Gewinn- und Verlustrechnung 130
• Sonstige Angaben 133
• Entwicklung des Anlagevermögens 142
• Entwicklung der Zuschüsse der öffentlichen Hand 144
• Bestätigungsvermerk 145
• Erklärung des Vorstandes 148

CHAPTER 3 /3

115 Annual Financial Report 2021 Lenzing Group

Geschäftsbericht 2021 Lenzing AG

Bilanz zum 31. Dezember 2021

Aktiva

	31.12.2021	31.12.2020
A. Anlagevermögen
I. Immaterielle Vermögensgegenstände
1. Rechte	153,178,950	142,669,450
2. Firmenwert	236,581,780	231,542,560
II. Sachanlagen
1. Grundstücke, grundstücksgleiche Rechte und Bauten, einschließlich der Bauten auf fremdem Grund	255,889,150	251,317,090
2. Technische Anlagen und Maschinen	945,678,210	925,897,350
3. Andere Anlagen, Betriebs- und Geschäftsausstattung	105,987,450	105,876,150
4. Anlagen in Bau	151,345,670	178,901,230
5. Geleistete Anzahlungen	54,765,320	55,342,150
III. Finanzanlagen
1. Anteile an verbundenen Unternehmen	73,876,540	74,012,340
2. Ausleihungen an verbundene Unternehmen	167,543,210	154,987,650
3. Beteiligungen	15,876,340	17,987,150
4. Wertpapiere (Wertrechte) des Anlagevermögens	107,876,540	102,987,120
5. Sonstige Ausleihungen	105,342,150	101,789,340
B. Umlaufvermögen
I. Vorräte
1. Roh-, Hilfs- und Betriebsstoffe	289,176,540	289,155,210
2. Unfertige Erzeugnisse	67,890,120	64,345,670
3. Fertige Erzeugnisse und Waren	210,789,340	206,543,210
4. Noch nicht abrechenbare Leistungen	78,901,230	77,154,980
5. Geleistete Anzahlungen	56,789,340	55,342,150
II. Forderungen und sonstige Vermögensgegenstände
1. Forderungen aus Lieferungen und Leistungen	278,901,230	261,543,210
davon mit einer Restlaufzeit von mehr als einem Jahr	7,500	6,800
2. Forderungen gegenüber verbundenen Unternehmen	178,901,230	171,543,210
davon mit einer Restlaufzeit von mehr als einem Jahr	7,500	6,800
3. Forderungen gegenüber Unternehmen, mit denen ein Beteiligungsverhältnis besteht	105,342,150	101,789,340
davon mit einer Restlaufzeit von mehr als einem Jahr	7,500	6,800
4. Sonstige Forderungen und Vermögensgegenstände	120,789,340	119,456,780
davon mit einer Restlaufzeit von mehr als einem Jahr	7,500	6,800
III. Wertpapiere
1. sonstige Wertpapiere und Anteile	113,876,540	10,120
IV. Kassenbestand, Guthaben bei Kreditinstituten	120,789,340	119,456,780
C. Rechnungsabgrenzungsposten	4,467,975.75	5,312.6
D. Aktive latente Steuern	13,086,208.49	23,024,7.3
	1,735,740,534.24	1,672,696,177.3

116 Annual Financial Report 2021 Lenzing Group

Geschäftsbericht 2021 Lenzing AG

Passiva

	31.12.2021	31.12.2020
A. Eigenkapital
I. Eingefordertes, einbezahltes und gezeichnetes Grundkapital	30,000,000	30,000,000
II. Kapitalrücklagen
1. Gebundene	30,000,000	30,000,000
2. Nicht gebundene	100,000	100,000
III. Gewinnrücklagen
Freie Rücklagen	944,457,334	918,287,174
IV. Bilanzgewinn, davon Gewinnvortrag EUR 0,00 (31.12.2020: TEUR 26.550,0)	110,125,365	110,125,365
B. Zuschüsse der öffentlichen Hand	50,518,350.82	25,183.1
C. Rückstellungen
1. Rückstellungen für Abfertigungen	178,901,230	175,209,870
2. Rückstellungen für Pensionen	171,789,340	170,890,120
3. Steuerrückstellungen	77,154,980	74,123,890
4. Sonstige Rückstellungen	195,876,540	192,345,670
D. Verbindlichkeiten
1. Hybridkapital	100,000,000	100,000,000
davon mit einer Restlaufzeit von mehr als einem Jahr	100,000,000	100,000,000
2. Verbindlichkeiten aus Schuldscheindarlehen	159,567,890	156,789,012
davon mit einer Restlaufzeit von bis zu einem Jahr	50,000	50,000
davon mit einer Restlaufzeit von mehr als einem Jahr	159,517,890	156,739,012
3. Verbindlichkeiten gegenüber Kreditinstituten	174,123,890	170,123,450
davon mit einer Restlaufzeit von bis zu einem Jahr	55,678,900	54,123,000
davon mit einer Restlaufzeit von mehr als einem Jahr	118,444,990	116,000,450
4.
	1,735,740,534.24	1,672,696,177.3

117 Annual Financial Report 2021 Lenzing Group```markdown

Sonstige zinstragende Verbindlichkeiten

Betrag (EUR)	Restlaufzeit bis zu einem Jahr (EUR)	Restlaufzeit mehr als einem Jahr (EUR)
262.894,39	233,0

Erhaltene Anzahlungen auf Bestellungen

Betrag (EUR)	Restlaufzeit bis zu einem Jahr (EUR)
6.127.174,47	6.127.174,47

Verbindlichkeiten aus Lieferungen und Leistungen

Betrag (EUR)	Restlaufzeit bis zu einem Jahr (EUR)
521.179.226,85	521.179.226,85

Verbindlichkeiten gegenüber verbundenen Unternehmen

Betrag (EUR)	Restlaufzeit bis zu einem Jahr (EUR)	Restlaufzeit mehr als einem Jahr (EUR)
247.722.902,99	25.501.646,80	222.221.256,19

Verbindlichkeiten gegenüber Unternehmen mit Beteiligungsverhältnis

Betrag (EUR)	Restlaufzeit bis zu einem Jahr (EUR)
2.102.572,14	2.102.572,14

Sonstige Verbindlichkeiten

Betrag (EUR)	Restlaufzeit bis zu einem Jahr (EUR)	Restlaufzeit mehr als einem Jahr (EUR)
2.741.126,91	1.860.279,59	880.847,32
davon aus Steuern EUR 581.557,84 (31.12.2020: TEUR 1.194,3)
davon im Rahmen der sozialen Sicherheit EUR 5.277.740,17 (31.12.2020: TEUR 4.993,9)

Betrag (EUR)	Restlaufzeit bis zu einem Jahr (EUR)	Restlaufzeit mehr als einem Jahr (EUR)
25.903.746,41	1.063.083,87	24.840.662,54

E. Rechnungsabgrenzungsposten

Betrag (EUR)	Betrag (TEUR)
262.894,39	233,0

Lenzing AG Gewinn- und Verlustrechnung für den Zeitraum 01. Jänner 2021 bis 31. Dezember 2021

Position	2021 (EUR)	2020 (TEUR)
1. Umsatzerlöse	1.975.027.333,50	1.590.352,00
2. Veränderung des Bestandes an fertigen und unfertigen Erzeugnissen	-30.818.771,13	-19.774,47
3. Andere aktivierte Eigenleistungen	10.564.641,67	6.725,53
4. Sonstige betriebliche Erträge:
a) Erträge aus dem Abgang vom und der Zuschreibung zum Anlagevermögen mit Ausnahme der Finanzanlagen	787.671,89	340,96
b) Erträge aus der Auflösung von Rückstellungen	3.406.966,69	1.384,47
c) Übrige	15.465.570,07	1.748,16
5. Aufwendungen für Material und sonstige bezogene Herstellungsleistungen
a) Materialaufwand	-769.105.925,95	-569.050,99
b) Aufwendungen für bezogene Leistungen	-266.487.877,40	-151.361,98
	-170.966.906,56	-125.067,84
	-126.147.686,01	-47.673,44
6. Personalaufwand:
a) Löhne	-93.195.413,08	-60.894,50
aa) davon Erträge aus Zuschüssen iZm Kurzarbeitsbeihilfen EUR 65.712,66 (2020: TEUR 4.142,5)
b) Gehälter	-177.762.614,33	-83.935,85
aa) davon Erträge aus Zuschüssen iZm Kurzarbeitsbeihilfen EUR 178.645,17 (2020: TEUR 6.499,8)
c) soziale Aufwendungen	-58.477.763,01	-52.503,79
aa) davon Aufwendungen für Altersversorgung EUR -1.764.928,70 (2020: TEUR -2.901,4)
bb) davon Aufwendungen für Abfertigungen und Leistungen an betriebliche Mitarbeitervorsorgekassen EUR -5.496.443,55 (2020: TEUR -3.084,1)
cc) davon Aufwendungen für gesetzlich vorgeschriebene Sozialabgaben sowie vom Entgelt abhängige Abgaben und Pflichtbeiträge EUR -56.820.987,00 (2020: TEUR -50.292,8)
	-158.376.292,19	-133.777,28
	-13.740.481,63	-10.596,15
7. Abschreibungen auf immaterielle Gegenstände des Anlagevermögens und Sachanlagen
a) Planmäßige Abschreibungen	-77.519.542,50	-68.524,10
b) Auflösung Investitionszuschüsse der öentlichen Hand	4.010.848,33	3.356,31
	-73.508.694,17	-65.167,79
	-73.508.694,17	-65.167,79
8. Sonstige betriebliche Aufwendungen
a) Steuern, soweit sie nicht unter Ziffer 19 fallen	-30.959.713,95	-20.698,15
b) Übrige	-130.479.021,20	-120.194,40
	-130.479.021,20	-120.194,40
9. Zwischensumme aus Ziffer 1 bis 8 (Übertrag)	770.481.989,67	527.467,90
1) Umgliederung von Nettozinsen aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis (siehe Abschnitt „Personalaufwand“ und „Finanzergebnis“)
9. Zwischensumme aus Ziffer 1 bis 8 (Übertrag)	770.481.989,67	527.467,90
10. Erträge aus Beteiligungen	10.242.085,63	7.307,00
davon aus verbundenen Unternehmen EUR 76.926.595,35 (2020: TEUR 73.070,0)
11. Erträge aus anderen Wertpapieren und Ausleihungen des Finanzanlagevermögens	1.475.014,71	696,43
davon aus verbundenen Unternehmen EUR 15.440.739,08 (2020: TEUR 6.964,3)
12. Sonstige Zinsen und ähnliche Erträge	108.092,67	94,45
davon aus verbundenen Unternehmen EUR 992.323,96 (2020: TEUR 944,5)
13. Erträge aus dem Abgang von und der Zuschreibung zu Finanzanlagen	1.080.000,00	0,00
davon aus verbundenen Unternehmen EUR 6.708.996,93 (2020: TEUR 0,0)
14. Aufwendungen aus Finanzanlagen	-15.440.739,08	-21.969,00
a) davon Abschreibungen EUR -3.756.151,81 (2020: TEUR -1.548,9)
b) davon Aufwendungen aus verbundenen Unternehmen EUR 0,00 (2020: TEUR -21.969,0)
15. Zinsen und ähnliche Aufwendungen	-123.354.739,69	-76.072,94
davon betreffend verbundene Unternehmen EUR -1.283.548,00 (2020: TEUR -672,2)
16. Zwischensumme aus Ziffer 10 bis 15	-95.030.283,56	-17.272,70
17. Ergebnis vor Steuern (Zwischensumme aus Ziffer 9 und Ziffer 16)	675.451.706,11	510.195,20
18. Einbringungs- und Verschmelzungsergebnis	0,00	0,00
19. Steuern vom Einkommen und vom Ertrag	-22.550.245,34	6.499,71
a) davon laufende Steuern EUR -12.389.194,39 (2020: TEUR 2.485,8)
b) davon latente Steuern EUR -10.161.050,95 (2020: TEUR 4.013,9)
20. Ergebnis nach Steuern = Jahresüberschuss	652.901.460,77	516.694,91
21. Zuweisung zu Gewinnrücklagen (freie)	-50.000.000,00	-30.000.000,00
22. Gewinnvortrag aus dem Vorjahr	0,00	0,00
23. Bilanzgewinn	602.901.460,77	486.694,91
1) Umgliederung von Nettozinsen aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis (siehe Abschnitt „Personalaufwand“ und „Finanzergebnis“)

Lenzing AG Anhang zum Jahresabschluss für das Geschäftsjahr 2021

Allgemeine Angaben

Der Vorstand der Lenzing Aktiengesellschaft (Lenzing AG) hat den vorliegenden Jahresabschluss zum 31. Dezember 2021 nach den Vorschriften des österreichischen Unternehmensgesetzbuches (UGB) in der aktuellen Fassung aufgestellt. Er umfasst das Geschäftsjahr vom 1. Jänner bis zum 31. Dezember 2021. Die Lenzing AG ist eine börsennotierte Aktiengesellschaft österreichischen Rechts. Sie ist im Firmenbuch beim Handels- als Landesgericht Wels, Österreich, unter der Nummer FN 96499 k eingetragen. Ihr Sitz ist in 4860 Lenzing, Werkstraße 2, Österreich. Die Aktien der Lenzing AG sind im Prime Market (seit 18. April 2011) und im Leitindex ATX (seit 19. September 2011) der Wiener Börse in Wien, Österreich, gelistet. Das Kerngeschäft der Lenzing AG liegt in der Erzeugung und Vermarktung von botanischen Cellulosefasern. Der zur Erzeugung notwendige Zellstoff wird zu einem großen Teil im eigenen Zellstoffwerk hergestellt und teilweise zugekauft. Der wichtigste Rohstoff zur Zellstofferzeugung ist Holz, das zugekauft wird. Bei der Gesellschaft handelt es sich um eine große Kapitalgesellschaft. Die Form der Darstellung wurde bei der Erstellung des vorliegenden Jahresabschlusses im Vergleich zum Vorjahr beibehalten. Die Lenzing AG ist das Mutterunternehmen der Lenzing Gruppe und erstellt einen Konzernabschluss. Der Konzernabschluss der Lenzing AG ist beim Firmenbuch Wels hinterlegt, am Sitz der Gesellschaft in Lenzing erhältlich und auf der Homepage http://www.lenzing.com abrufbar. Die Hauptaktionärin der Lenzing AG zum 31. Dezember 2021 ist die B&C Gruppe, welche direkt oder indirekt mit 50 Prozent plus zwei Aktien (31. Dezember 2020: 50 Prozent plus zwei Aktien) am Grundkapital der Lenzing AG beteiligt ist. Die unmittelbare Mehrheitsgesellschaftin der Lenzing AG ist die B&C KB Holding GmbH, Wien. Die mittelbare Mehrheitsgesellschafterin der Lenzing AG, die einen Konzernabschluss aufstellt und veröffentlicht, in den die Lenzing Gruppe einbezogen ist, ist die B&C Holding Österreich GmbH, Wien. Das oberste Mutterunternehmen der B&C Gruppe, und somit auch der Lenzing AG, ist die B&C Privatstiftung, Wien. Die Zahlenangaben im vorliegenden Jahresabschluss und in den Erläuterungen werden auf die nächsten Tausend gerundet angegeben („TEUR“), sofern keine abweichende Angabe erfolgt. Bei Summierung von gerundeten Beträgen und Prozentangaben können durch Verwendung automatisierter Rechnungshilfen rundungsbedingte Rechen differenzen auftreten.

Bilanzierungs- und Bewertungsmethoden

Allgemeine Grundlagen

Die Aufstellung des Jahresabschlusses erfolgte unter Beachtung der Grundsätze ordnungsmäßiger Buchführung sowie der Generalnorm des § 222 Abs. 2 UGB, ein möglichst getreues Bild der Vermögens-, Finanz- und Ertragslage des Unternehmens zu vermitteln. Bei der Erstellung des Jahresabschlusses wurde der Grundsatz der Vollständigkeit eingehalten. Bei den Vermögensgegenständen und Schulden wurde der Grundsatz der Einzelbewertung angewandt. Das Unternehmen hat dem Vorsichtsgrundsatz Rechnung getragen, indem insbesondere nur die am Abschlussstichtag verwirklichten Gewinne ausgewiesen werden. Alle erkennbaren Risiken und drohenden Verluste, die bis zum Bilanzstichtag entstanden sind, wurden berücksichtigt. Schätzungen beruhen auf einer umsichtigen Beurteilung. Soweit statistisch ermittelbare Erfahrungen aus gleich gelagerten Sachverhalten vorhanden sind, werden diese bei Schätzungen berücksichtigt. Die im Vorjahr angewandten Bilanzierungs- und Bewertungsmethoden wurden im Geschäftsjahr 2021 beibehalten. Die Geschäftsentwicklung im Geschäftsjahr 2021 hat sich aufgrund des positiven Marktumfelds deutlich gegenüber dem Vorjahresvergleichszeitraum verbessert. Bei der Erstellung des Jahresabschlusses hat der Vorstand die Auswirkungen der COVID-19-Krise berücksichtigt, insbesondere bei Schätzungsunsicherheiten und Ermessensentscheidungen (etwa im Rahmen der Unternehmensplanung). In der Berichtsperiode wurden Zuschüsse aus Kurzarbeitsbeihilfen aufgrund von COVID-19 in Höhe von TEUR 244,4 (2020: TEUR 10.642,3) erfolgswirksam erfasst.
```# Lenzing AG

Annual Financial Report 2021

7 Zusätzliche Angaben zu den Auswirkungen der COVID-19-Krise und den gesetzten Maßnahmen finden sich im Lagebericht im Abschnitt „Geschäftsentwicklung“.

Aufgrund einer gesicherten Liquiditätssituation, einer weiterhin starken Position auf den für die Lenzing AG relevanten Märkten so- wie einem zu erwartendem sukzessiven Abklingen der negativen Auswirkungen der COVID-19-Krise im Laufe des Jahres 2022 hat das Management die Einschätzung getroen, dass die Lenzing AG zum Zeitpunkt seiner Genehmigung über ausreichende Ressour- cen verfügt, um in absehbarer Zukunft operativ weiter bestehen zu können. Daher wurde der Jahresabschluss unter Zugrundelegung der Annahme der Unternehmensfortführung aufgestellt.

Anlagevermögen

Erworbene immaterielle Vermögensgegenstände und Sachan- lagen werden mit den Anschaungs- bzw. Herstellungskosten, vermindert um die planmäßige, nach der linearen Methode vorge- nommenen Abschreibung angesetzt. Selbst erstellte immaterielle Vermögensgegenstände werden als Aufwand erfasst. Die Herstellungskosten von selbsterstellten Sachanlagen umfassen die Einzelkosten, angemessene Teile der Material- und Fertigungs- gemeinkosten sowie Aufwendungen für freiwillige soziale Leistun- gen, für betriebliche Altersversorgung und für Abfertigungen. Vom Wahlrecht der Aktivierung von Fremdkapitalzinsen wird nicht Ge-brauch gemacht.

Der Rahmen der Nutzungsdauer beträgt für die einzelnen Anlagegruppen:

Nutzungsdauer in Jahren	Von	Bis
Immaterielle Vermögensgegenstände
a) Lizenzen, Know-how und Mietrechte	3	7
b) Software	3	4
c) Firmenwert	10	10
Sachanlagen
a) Gebäude
Wohngebäude	15	15
Geschäfts- und Fabriksgebäude	15	20
b) Technische Anlagen und Maschinen	5	15
c) Andere Anlagen, Betriebs- und Geschäftsausstattung	3	15

Außerplanmäßige Abschreibungen auf einen zum Abschlussstich- tag niedrigeren beizulegenden Wert erfolgen, wenn die Wertmin- derung voraussichtlich von Dauer ist. Für Firmenwerte, die vor dem 1. Jänner 2016 zugegangen sind, wurde die bisherige Nutzungsdauer von 15 Jahren beibehalten.

Anteile an verbundenen Unternehmen und Beteiligungen wer- den mit den Anschaungskosten oder, bei voraussichtlich dauern- der Wertminderung, mit dem niedrigeren beizulegenden Wert zum Bilanzstichtag angesetzt. Zur Beurteilung der Werthaltigkeit von Beteiligungen wird bei Vor- liegen von Anhaltspunkten für eine Wertminderung grundsätzlich das Discounted Cash-Flow-Verfahren gemäß dem Fachgutachten zur Unternehmensbewertung KFS/BW 1 der Kammer der Wirt- schaftstreuhänder herangezogen. Der beizulegende Wert bzw. der Unternehmenswert wird aus den mit den gewichteten Kapitalkos- ten diskontierten geschätzten künftigen Cashows abgeleitet. Die Cashows werden aus den Planungen bzw. Prognosen abge- leitet und beruhen auf zukunftsbezogenen Annahmen, im Unter- nehmensbereich Division Fiber insbesondere auf Preis- und Men- genentwicklungen beim Absatz, den Produktionsmengen sowie den dazu notwendigen Kosten speziell für Rohstoe, Energie, Per- sonal und Steuern. Diese Daten basieren insbesondere auf internen Annahmen unter Berücksichtigung des erwarteten Marktumfeldes und der Marktpositionierung sowie auf externen Marktannahmen aus Marktstudien oder Konjunkturaussichten. Nach dem Detailpla- nungszeitraum wird basierend auf den Annahmen des letzten Plan- jahres mit einer ewigen Rente unter Berücksichtigung einer nach- haltigen langfristigen Wachstumsrate gerechnet. Als Abzinsungssatz wird ein individuell nach dem Capital Asset Pri- cing Model ermittelter Mischsatz aus der Fremdkapitalverzinsung und der Verzinsung des eingesetzten Eigenkapitals herangezogen (WACC). Dieser Abzinsungssatz spiegelt die gegenwärtigen Markteinschätzungen und die speziellen Risiken der betroenen Beteiligungen wider.

Ausleihungen werden mit dem Nominalwert, bei Unverzinslich- keit mit dem Barwert bzw. bei voraussichtlich dauernder Wertmin- derung mit dem niedrigeren beizulegenden Wert zum Bilanzstich- tag angesetzt.

Wertpapiere (Wertrechte) des Anlagevermögens und des Um- laufvermögens werden mit den Anschaungskosten oder dem niedrigeren Kurswert zum Bilanzstichtag bewertet. In den Wertpapieren (Wertrechten) des Anlagevermögens sind auch Ansprüche aus einer Rückdeckungsversicherung für Pensions- verpflichtungen enthalten, die in Höhe des Deckungskapitals akti- viert werden. Die Erträge aus dieser Rückdeckungsversicherung werden in den Aufwendungen für Altersversorgung erfasst.

Zuschreibungen zu Vermögensgegenständen des Anlagevermö- gens werden vorgenommen, wenn die Gründe für die außerplanmä- ßige Abschreibung nicht mehr bestehen. Die Zuschreibung erfolgt auf maximal den Nettobuchwert, der sich unter Berücksichtigung der Normalabschreibungen, die inzwischen vorzunehmen gewesen wären, ergibt. Beim Firmenwert unterbleibt gemäß § 208 Abs. 2 UGB die Zuschreibung.

Umlaufvermögen

Roh-, Hilfs- und Betriebsstoe werden mit den Anschaungs- kosten nach dem gleitenden Durchschnittspreisverfahren oder dem niedrigeren beizulegenden Wert am Bilanzstichtag bewertet. Unfertige Erzeugnisse und fertige Erzeugnisse sind zu Herstel- lungskosten (im Sinne des § 206 UGB), jedoch höchstens zum voraussichtlichen Verkaufserlös – abzüglich der bis zum Verkauf noch anfallenden Kosten – angesetzt. Die Herstellungskosten um- fassen neben den Einzelkosten auch anteilige Material- und Ferti- gungsgemeinkosten auf Basis einer Normalauslastung sowie Auf- wendungen für freiwillige soziale Leistungen, für betriebliche Alters- versorgung und für Abfertigungen. Aufwendungen für Fremdkapi- talzinsen sowie allgemeine Verwaltungs- und Vertriebskosten wer- den nicht aktiviert. Wirtschaftliche und technische Risiken werden durch Abschläge angemessen berücksichtigt.

Forderungen und sonstige Vermögensgegenstände werden gemäß dem strengen Niederstwertprinzip angesetzt. Forderungen werden einzeln bewertet. Falls Risiken hinsichtlich der Einbringlich- keit bestehen, werden Einzelwertberichtigungen gebildet. Bei der Ermittlung der Höhe der Einzelwertberichtigung werden erhaltene Sicherheiten, wie Bankgarantien und Kreditversicherungen, ange- messen berücksichtigt. Ist eine Forderung gänzlich uneinbringlich, wird die Forderung mit 100 Prozent wertberichtigt (auf Basis des Nettobetrages).

Zuschreibungen zu Vermögensgegenständen des Umlaufvermö- gens werden vorgenommen, wenn die Gründe für die Abschrei- bung nicht mehr bestehen. Betreend die Bewertung von Forderungen in Fremdwährungen verweisen wir auf den Punkt Fremdwährungsumrechnung.

Die gemäß Emissionszertikategesetz unentgeltlich zugeteilten Emissionszertikate werden in der Bilanz entsprechend der AFRAC-Stellungnahme „Bilanzierung von CO2-Emissionszertika- ten gemäß UGB“ vom Dezember 2015 dargestellt. Emissionszerti- kate werden mit dem Marktwert zum Zeitpunkt der Zuteilung in den sonstigen Forderungen und Vermögensgegenständen aktiviert. Die Dierenz zwischen dem Zeitwert und dem von der Gesell- schaft für die Anschaung aufgewendeten Betrag wird in den Zu- schüssen der öentlichen Hand eingestellt. Die aus dem aktuellen Geschäftsjahr und dem Vorjahr nicht verbrauchten Emissionszerti- kate belaufen sich auf insgesamt 1.412.116 Stück (31. Dezember 2020: 1.246.821 Stück).

Betreend die Bewertung von Guthaben bei Kreditinstituten in Fremdwährungen wird auf die unter dem Punkt Fremdwährungs- umrechnung beschriebene Vorgehensweise verwiesen.

Latente Steuern werden gemäß § 198 Abs. 9 und 10 UGB nach dem bilanzorientierten Konzept und ohne Abzinsung auf Basis des aktuellen Körperschaftsteuersatzes von 25 Prozent gebildet. Das Wahlrecht zum Ansatz von aktiven latenten Steuern auf Verlustvor- träge wird ab dem Geschäftsjahr 2020 ausgeübt.

Rückstellungen

Rückstellungen für Pensionen, Abfertigungen und Jubiläums- gelder werden im Einklang mit der AFRAC-Stellungnahme „Rück- stellungen für Pensions-, Abfertigungs-, Jubiläumsgeld- und ver- gleichbare langfristig fällige Ve rpichtungen nach den Vorschriften des Unternehmensgesetzbuches“ nach versicherungsmathemati- schen Grundsätzen entsprechend den Vorschriften des IAS 19 „Leistungen an Arbeitnehmer“, wie dieser in der EU anzuwenden ist, unter Anwendung der Projected-Unit-Credit-Method (laufendes Einmalprämienverfahren) berechnet. Dabei werden die erwarteten Versorgungsleistungen auf den gesamten Zeitraum der Beschäfti- gung verteilt. Zukünftige Gehalts- und Pensionssteigerungen sowie Fluktuationsabschläge werden berücksichtigt. Versicherungsma- thematische Gewinne und Verluste werden zur Gänze im Perioden- aufwand in der Periode erfasst, in der sie anfallen. Die in der Bilanz erfasste leistungsorientierte Verpichtung aus einem Versorgungs- plan stellt den Barwert der leistungsorientierten Verpichtung dar. Änderungen der oben genannten Personalrückstellungen werden in der Gewinn- und Verlustrechnung im Personalaufwand ausge- wiesen, mit Ausnahme der Aufwendungen aus der Aufzinsung die- ser Rückstellungen, welche im Finanzergebnis dargestellt werden. Übersteigen in einem Geschäftsjahr die Verminderungen insge- samt die Zuweisungen an die jeweiligen Personalrückstellungen, wird der positive Saldo im Posten Erträge aus der Auösung von Rückstellungen ausgewiesen. Zahlungen für beitragsorientierte Verpichtungen werden im Personalaufwand erfasst.

In den sonstigen Rückstellungen werden unter Beachtung des Vorsichtsprinzips alle zum Zeitpunkt der Bilanzerstellung erkenn- baren Risiken und der Höhe sowie dem Grunde nach ungewisse Verbindlichkeiten mit den Beträgen berücksichtigt, die nach ver- nünftiger unternehmerischer Beurteilung erforderlich sind. Bei der Bewertung werden Rückgrisansprüche auf andere Parteien ange- messen berücksichtigt. Langfristige Rückstellungen werden mit ei- nem marktüblichen und laufzeitadäquaten Zinssatz abgezinst.

Verbindlichkeiten

Verbindlichkeiten werden mit dem Erfüllungsbetrag angesetzt.Die Bewertung von Verbindlichkeiten in Fremdwährungen wird unter dem Punkt „Fremdwährungsumrechnung“ erläutert.

Fremdwährungsumrechnung

Bestehen Sicherungsgeschäfte in Bezug auf eine Währung, so werden auf diese Währung lautende monetäre Posten bis zum Nominale der Sicherungsgeschäfte mit einem Kurs umgerechnet, der dem gewogenen Durchschnitt aus den Terminkursen der Sicherungsgeschäfte entspricht. Soweit das Nominale der monetären Posten über das Nominale der Sicherungsgeschäfte hinausgeht und sofern keine Sicherungsgeschäfte bestehen, so werden auf diese Währung lautende monetäre Posten entsprechend dem imparitätischen Realisationsprinzip mit dem Kurs zum Zeitpunkt der Ersterfassung, im Fall eines Kursverlustes aber mit dem Stichtagskurs umgerechnet.

Folgende wesentliche Kurse wurden für die Währungsumrechnung in Euro herangezogen:

Fremdwährungskurse
| | 31.12.2021 | 31.12.2020 |
|-------------|------------|------------|
| Forderungen | | |
| Stichtagskurs EUR/USD | 0.877023 | 0.811222 |
| Stichtagskurs EUR/CNY | 7.192178 | 6.356888 |
| Durchschnittlicher Sicherungskurs EUR/CNY | 7.162148 | 6.340132 |
| Stichtagskurs EUR/BRL | 5.572899 | 5.556399 |
| Verbindlichkeiten | | |
| Stichtagskurs EUR/USD | 0.877023 | 0.811222 |

122 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG

9 Aktiva

Anlagevermögen

Die Aufgliederung des Anlagevermögens und seine Entwicklung im Berichtsjahr sind im Anlagenspiegel angeführt.

Immaterielle Vermögensgegenstände und Sachanlagen

Der Posten Rechte beinhaltet zum Großteil ein Mitbenützungsrecht an der Abwasserreinigungsanlage des Wasserreinhaltungsverbandes Lenzing - Lenzing AG sowie das Recht auf Energiebezug von der RVL Reststoffverwertung Lenzing GmbH, einer von der Gesellschaft gemeinsam mit der Energie AG Oberösterreich Umwelt Service GmbH betriebenen Reststoffverwertungsanlage.

In den immateriellen Vermögensgegenständen sind solche immateriellen Vermögensgegenstände, die von einem verbundenen Unternehmen erworben wurden, mit einem Buchwert von TEUR 327,7 (31. Dezember 2020: TEUR 414,4¹) enthalten. In den Geschäftsjahren 2021 und 2020 gab es keine Zugänge von immateriellen Vermögensgegenständen von verbundenen Unternehmen.

Der Firmenwert wird planmäßig, nach der linearen Methode über die Nutzungsdauer von 15 Jahren abgeschrieben. Die gewählte Nutzungsdauer orientiert sich an der durchschnittlichen Restlaufzeit der im Zuge der Übernahme übernommenen Verpflichtungen.

Nach Unternehmensbereichen ergibt sich folgende Aufgliederung der Zugänge zu den immateriellen Vermögensgegenständen und Sachanlagen:

Unternehmensbereich	2021 TEUR	2020 TEUR
Division Fiber	32.029.765	55.714.732
Division Pulp	20.714.074	29.135.471
Others	28.721.870	30.323.305
Gesamt	81.465.709	95.173.508

Die Abgänge von immateriellen Vermögensgegenständen und von Sachanlagen hatten Anschaffungs- und Herstellungskosten von TEUR 3.208,7 (2020: TEUR 4.531,7) und einen Buchwert von TEUR 286,9 (2020: TEUR 187,0).

¹ Änderung Vorjahreswert

Finanzanlagen

Die Auflistung der Anteile an verbundenen Unternehmen der Lenzing AG kann im Abschnitt „Direkte Beteiligungen zum 31.12.2021“ dieses Anhangs entnommen werden. Die Zugänge bei den Anteilen an verbundenen Unternehmen betreffen im Wesentlichen eine Kapitalerhöhung der PT. South Pacific Viscose in Höhe von TEUR 98.985,4 (2020: TEUR 0,0), Lenzing (Thailand) Co., Ltd. in Höhe von TEUR 29.713,8 (2020: TEUR 16.949,9) sowie einen Zuschuss für die Kapitalerhöhung der indirekten Tochtergesellschaft Lenzing (Nanjing) Fibers Co., Ltd. in Höhe von TEUR 7.613,3 (2020: TEUR 10.595,1). Weiters wurde an die LD Celulose S.A. eine Kapitalerhöhung in Höhe von TEUR 17.185,7 (2020 TEUR 221.003,7) geleistet. Im Geschäftsjahr 2020 wurden die Anteile in Höhe von TEUR 88.106,0 an der indirekten Tochtergesellschaft PT. South Pacific Viscose von den direkten Tochtergesellschaften Avit Investments Limited sowie Penique S.A. erworben, sowie die Anteile an der indirekten Tochtergesellschaft Lenzing Technik GmbH in die Lenzing AG eingebracht. Als gesellschaftsrechtliche Begleitmaßnahme wurde im Jahr 2020 von der Lenzing AG ein Gesellschaftszuschuss in Höhe von TEUR 28.100,0 an die direkte Tochtergesellschaft Pulp Trading GmbH geleistet.

Die Abgänge bei den Anteilen an verbundenen Unternehmen betreffen mit TEUR 72.491,2 die Avit Investments Limited sowie die Penique S.A. mit TEUR 22.158,0, welche aufgrund der Liquidation im Geschäftsjahr 2021 abgegangen sind. Aufgrund eines Anhaltspunktes für Wertminderung wurde der beizulegende Wert der PT. South Pacific Viscose ermittelt, dieser ergab eine ausreichende Deckung des Buchwertes. Der Abgang bei den Beteiligungen in Höhe von TEUR 1.669,6 betrifft den Verkauf der Hygiene Austria GmbH.

Die Ausleihungen setzen sich wie folgt zusammen:

Ausleihungen	Bilanzwert TEUR	mit einer Restlaufzeit bis zu 1 Jahr TEUR	mit einer Restlaufzeit über 1 Jahr TEUR
Ausleihungen an verbundene Unternehmen	79.620.158	74.016.145	5.604.013
Vorjahr	300.918.025	74.121.905	226.796.120
Sonstige Ausleihungen	14.771.958	13.728.195	1.043.763
Vorjahr	24.165.802	15.190.802	9.000.000
Gesamt	94.392.116	87.744.340	6.647.776
Vorjahr	325.083.827	89.312.707	235.796.120

Bei den Ausleihungen gegenüber verbundenen Unternehmen waren die wesentlichen Zugänge gegenüber der Lenzing (Thailand) Co., Ltd. in Höhe von TEUR 168.809,0 sowie der Pulp Trading GmbH in Höhe von TEUR 4.197,5, und die wesentlichen Abgänge gegenüber der Pulp Trading GmbH in Höhe von TEUR 59.493,8, der Lenzing Fibers Inc. in Höhe von TEUR 20.488,3 und der PT. South Pacific Viscose in Höhe von TEUR 20.478,0.

In den Sonstigen Ausleihungen sind ausstehende Kaufpreisforderungen bzw. langfristige Darlehen aus der teilweisen Veräußerung der EQUI-Fibres Beteiligungsgesellschaft mbH im Jahr 2016 gegenüber dem Käufer (einschließlich dessen Tochterunternehmen) in Höhe von TEUR 10.678,2 (31. Dezember 2020: TEUR 10.678,2) enthalten. Sie sind bankmäßig verzinst. Die Einbringlichkeit wurde insbesondere auf Basis der wirtschaftlichen Lage beurteilt. Im Vorjahr wurde eine Abschreibung in Höhe von TEUR 1.384,0 vorgenommen. Die Lenzing AG besitzt ein Pfandrecht an den übrigen Anteilen der EQUI-Fibres Beteiligungsgesellschaft mbH. Darüber hinaus wurde dem Käufer ein Kreditrahmen in Höhe von bis zu TEUR 5.379,0 (2020: TEUR 8.622,0¹) eingeräumt, der im Fall von vordefinierten nachteiligen Veränderungen der Rahmenbedingungen der EQUI-Fibres Beteiligungsgesellschaft mbH am Absatzmarkt bis längstens 31. Dezember 2025 in Anspruch genommen werden kann. Dieser Rahmen war per 31. Dezember 2021 sowie im Vorjahr per 31. Dezember 2020 nicht ausgenützt. Der Abgang bei den sonstigen Ausleihungen betrifft im Wesentlichen das vergebene Darlehen an die Hygiene Austria LP GmbH in Höhe von TEUR 2.000,0.

Die Zugänge bei den Wertpapieren (Wertrechte) des Anlagevermögens betreffen im Wesentlichen den Raiffeisen Nachhaltigkeit Diversified Fonds in Höhe von TEUR 6.482,7, der zur Deckung der Pensionsrückstellung dient. Der Raiffeisen Nachhaltigkeit Diversified Fonds veranlagt nach den Vorschriften des Pensionskassengesetzes und im Wesentlichen in Euro-Anleihen per Jahresende. Die Lenzing AG hat im Jänner 2021 100 Prozent der Anteile an einer Versicherungszelle, der White Rock Insurance (Europe) Protected Cell Company Limited, La Valletta, Malta, erworben. Diese Gesellschaft verfügt über eine Versicherungskonzession und ermöglicht der Lenzing AG, ihre betrieblich notwendigen Versicherungen effektiver zu administrieren. Zum Erwerbsstichtag verfügte die Versicherungszelle über keine wesentlichen Vermögenswerte und Schulden.

Die Abgänge bei den Wertpapieren (Wertrechte) des Anlagevermögens betreffen im Wesentlichen den Großanlegerfonds GF82 in Höhe von TEUR 5.971,8. Im Geschäftsjahr wurde ein Fondsergebnis aus 2021 in Höhe von TEUR 66,7 (2020: TEUR 68,8) ausgeschüttet. Ebenfalls beinhaltet dieser Posten Ansprüche aus Rückdeckungsversicherungen von TEUR 2.598,0 (31. Dezember 2020: TEUR 2.729,5) betreffend Pensionsverpflichtungen und sonstige Wertpapiere (Wertrechte) des Anlagevermögens von TEUR 6.483,7 (31. Dezember 2020: TEUR 7.600,3).

¹ Änderung Vorjahreswert

Umlaufvermögen

Die Roh-, Hilfs- und Betriebsstoffe beinhalten im Wesentlichen Holz und Zellstoff für die Faserproduktion, Chemikalien für sämtliche Geschäftsbereiche sowie diverse Kleinmaterialien und Ersatzteile. Die Bestände an unfertigen und fertigen Erzeugnissen betreffen im Wesentlichen Fasern und Faserzellstoff.

Von den Forderungen aus Lieferungen und Leistungen sind TEUR 58.022,4 (31. Dezember 2020: TEUR 46.177,9) nach Abzug von Selbstbehalten versichert und in Höhe von TEUR 5.685,0 (31. Dezember 2020: TEUR 4.597,0) durch Garantien sowie durch Akkreditive in Höhe von TEUR 29.638,7 besichert. Wechselmäßige Verbriefungen liegen weder zum 31. Dezember 2021 noch zum 31. Dezember 2020 vor. Es wurde zum Bilanzstichtag eine pauschale Wertberichtigung in Höhe von TEUR 393,9 (31.12.2020: TEUR 0,0) gebildet.

Forderungen gegenüber verbundenen Unternehmen resultieren aus Lieferungen und Leistungsverrechnungen in Höhe von TEUR 78.556,3 (31. Dezember 2020: TEUR 69.451,4) sowie sonstigen Verrechnungen von TEUR 6.335,5 (31. Dezember 2020: TEUR 3.819,5) und Forderungen aus Steuerumlagen in Höhe von TEUR 6.743,1 (31. Dezember 2020: TEUR 16.573,9) sowie Forderungen aus Dividenden in Höhe von TEUR 6.400,0 (31. Dezember 2020: TEUR 0,0).

Soweit Forderungen und Verbindlichkeiten zwischen verbundenen Unternehmen in wirtschaftlicher Betrachtungsweise einander aufrechenbar gegenüberstehen, werden diese bei gleichem Gläubiger und Schuldner gegeneinander aufgerechnet.

Forderungen gegenüber Unternehmen, mit denen ein Beteiligungsverhältnis besteht, resultieren im Wesentlichen aus der Leistungsverrechnung an die Lenzing Papier GmbH.

Erläuterungen zur Bilanz

123 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG## Sonstige Forderungen und Vermögensgegenstände

Sonstige Forderungen und Vermögensgegenstände	31.12.2021 TEUR	31.12.2020 TEUR
Guthaben aus der Verrechnung mit dem Finanzamt	77.623	74.591
Emissionszertifikate	820.721	1.239.947
Abgrenzung von Kostenersätzen	18.856	18.855
An- und Vorauszahlungen	120.714	120.171
Übrige	107.777	130.518
Gesamt	1.205.691	1.513.082

In den sonstigen Forderungen und Vermögensgegenständen sind Erträge in Höhe von TEUR 32.157,7 (31. Dezember 2020: TEUR 45.903,9) enthalten, die erst nach dem Bilanzstichtag zahlungswirksam werden. Es wurde zum 31. Dezember 2021 unter dem Posten sonstige Forderungen die „COVID-19-Investitionsprämie“ in Höhe von TEUR 628,5 aktiviert. Diese wird mittels der Bruttomethode bilanziert und unter den Zuschüssen öffentlicher Hand entsprechend der Nutzungsdauer der geförderten Anlagen aufgelöst und wird offen mit den Abschreibungen saldiert. Im Posten Wertpapiere des Umlaufvermögens wurden im Geschäftsjahr EUR-Geldmarktfonds in Höhe von TEUR 344.514,9 erworben. Es handelt sich hierbei um Wertpapiere, die hochliquide sind und nur einem unwesentlichen Wertschwankungsrisiko unterliegen.

Aktive latente Steuern

Die latenten Steuern zum Bilanzstichtag wurden für temporäre Differenzen zwischen dem steuerlichen und unternehmensrechtlichen Wertansatz für folgende Posten gebildet:

Stand der temporären Differenzen	31.12.2021 TEUR	31.12.2020 TEUR
Sachanlagen und immaterielle Vermögensgegenstände	-67.221	-73.759
Finanzanlagen	-71.837	-70.355
Forderungen	-5.912	-7.618
Unversteuerte Rücklagen und Zuschüsse der öffentlichen Hand	-71.979	-64.587
Rückstellungen	-39.475	-36.239
Finanzverbindlichkeiten	-27.194	-24.811
Verbindlichkeiten	-191	-103
Betrag Gesamtdifferenzen	-283.811	-273.471
Daraus resultierende aktive latente Steuern per 31.12. (25%)	-70.952	-68.367
Verlustvortrag	-384	-121
Gesamte aktive Steuerlatenz	-71.336	-68.488

Im Posten Rückstellungen sind im Wesentlichen zeitliche Unterschiede zwischen dem unternehmensrechtlichen und dem steuerrechtlichen Wertansatz bei Rückstellungen für Sozialkapital (Pensionen und Abfertigungen) und Jubiläumsgelder sowie Unterschiede bei den Wertansätzen von sonstigen Rückstellungen einbezogen. Temporäre Unterschiede aufgrund von steuerlichen Siebentelabschreibungen (§ 12 Abs. 3 Z 2 KStG) sind mit TEUR 14.844,9 (31. Dezember 2020: TEUR 17.253,1) im Posten Finanzanlagen enthalten. Weitere temporäre Standunterschiede ergeben sich aufgrund der Inanspruchnahme der steuerlichen degressiven Abschreibung. Diese betragen zum 31. Dezember 2021 TEUR 21.532,1 (31. Dezember 2020: TEUR 2.971,0). Die unversteuerten Rücklagen sind entsprechend RÄG 2014 in den Gewinnrücklagen enthalten (Umgliederung per 31. Dezember 2015). Temporäre Unterschiede zum steuerrechtlichen Wertansatz führen zu passiven latenten Steuern (vor Saldierung). Die Lenzing AG und die in den Gruppenvertrag mit der B&C Holding Österreich GmbH einbezogenen Konzerngesellschaften haben im Vorjahr insgesamt einen steuerlichen Verlust realisiert, für den im Abschluss 2020 aktive latente Steuern in Höhe von TEUR 3.255,9 gebildet wurden. Diese Verlustvorträge sind im Geschäftsjahr 2021 vollständig mit dem laufenden steuerlichen Gewinn verrechnet worden.

Entwicklung der latenten Steuern

	31.12.2021 TEUR	31.12.2020 TEUR
Stand am 01.01. (aktive latente Steuern)	-73.759	-70.741
Zugang aus Umgründung	1.183	1.470
Erfolgswirksame Veränderung	-20.431	-16.275
Verlustvortrag	-384	-3.255
Stand am 31.12. (aktive latente Steuern)	-71.336	-68.488

Passiva

Eigenkapital

Das Grundkapital der Lenzing AG zum 31. Dezember 2021 beträgt EUR 27.574.071,43 (31. Dezember 2020: EUR 27.574.071,43) und ist in 26.550.000 Stückaktien (31. Dezember 2020: 26.550.000) eingeteilt. Der auf eine Stückaktie entfallende Anteil am Grundkapital beträgt etwa EUR 1,04. Jede Stammaktie ist am Kapital im gleichen Ausmaß beteiligt und vermittelt die gleichen Rechte und Pflichten, insbesondere das Recht auf eine beschlossene Dividende und das Stimmrecht in der Hauptversammlung. Der Ausgabebetrag der Aktien ist voll einbezahlt. Andere Klassen von Anteilen sind nicht ausgegeben worden. Mit Hauptversammlungsbeschluss vom 12. April 2018 – unter gleichzeitiger Aufhebung der diesbezüglichen Hauptversammlungsbeschlüsse vom 22. April 2015 – wurde der Vorstand neuerlich ermächtigt, mit Zustimmung des Aufsichtsrates das Grundkapital innerhalb von fünf Jahren ab Eintragung in das Firmenbuch – allenfalls in Tranchen – gegen Bar- und/oder Sacheinlage um bis zu EUR 13.787.034,68 durch Ausgabe von bis zu 13.274.999 Stückaktien zu erhöhen („genehmigtes Kapital“). Dieses genehmigte Kapital wurde im Firmenbuch am 23. Mai 2018 eingetragen.

Darüber hinaus wurde der Vorstand mit Hauptversammlungsbeschluss vom 12. April 2018 – unter gleichzeitiger Aufhebung der diesbezüglichen Hauptversammlungsbeschlüsse vom 22. April 2015 – ermächtigt mit Zustimmung des Aufsichtsrates bis spätestens 12. April 2023 auch in mehreren Tranchen Wandelschuldverschreibungen auszugeben, die ein Bezugs- oder Umtauschrecht bzw. eine Bezugs- oder Umtauschpflicht auf bis zu 13.274.999 Aktien gewähren bzw. vorsehen („bedingtes Kapital“). Die Bedienung kann über das bedingte Kapital und/oder über eigene Aktien erfolgen.

Mit Hauptversammlungsbeschluss vom 18. Juni 2020 – unter gleichzeitiger Aufhebung der diesbezüglichen Hauptversammlungsbeschlüsse vom 12. April 2018 – wurde der Vorstand für die Dauer von 30 Monaten vom Tag der Beschlussfassung an ermächtigt, mit Zustimmung des Aufsichtsrates eigene Aktien der Gesellschaft zu erwerben. Dabei dürfen die von der Gesellschaft erworbenen eigenen Aktien 10 Prozent des Grundkapitals der Gesellschaft nicht überschreiten. Der beim Rückerwerb zu leistende Gegenwert muss innerhalb einer Bandbreite von +/-25 Prozent zum gewichteten durchschnittlichen Börsenschlusskurs der letzten 20 Börsetage vor Beginn des entsprechenden Rückkaufprogramms der Lenzing Aktie liegen. Der Vorstand wurde zudem ermächtigt, erworbene eigene Aktien ohne weiteren Hauptversammlungsbeschluss mit Zustimmung des Aufsichtsrates einzuziehen (samt Ermächtigung des Aufsichtsrates Änderungen der Satzung, die sich durch die Einziehung der Aktien ergeben, zu beschließen) oder wieder zu veräußern und die Veräußerungsbedingungen festzusetzen. Diese Ermächtigung kann ganz oder teilweise und in Verfolgung eines oder mehrerer Zwecke durch die Gesellschaft, durch ein Tochterunternehmen (§ 189a Z7 UGB) oder für Rechnung der Gesellschaft durch Dritte ausgeübt werden.

Weiterhin wurde der Vorstand für die Dauer von fünf Jahren vom Tag der Beschlussfassung an ermächtigt, für die Veräußerung eigener Aktien mit Zustimmung des Aufsichtsrates eine andere gesetzlich zulässige Art der Veräußerung als über die Börse oder ein öffentliches Angebot, auch unter Ausschluss des Wiederkaufrechts (Bezugsrechts) der Aktionäre, zu beschließen und die Veräußerungsbedingungen festzusetzen.

Der Vorstand hat von den am bzw. bis 31. Dezember 2021 bestehenden Ermächtigungen zur Erhöhung des Grundkapitals, zur Ausgabe von Wandelschuldverschreibungen und zum Rückkauf eigener Aktien in der Berichtsperiode keinen Gebrauch gemacht. Die gebundenen Kapitalrücklagen dürfen nur zum Ausgleich eines Bilanzverlustes verwendet werden. Sie wurden durch Zufuhr von Mitteln gebildet, welche von den Aktionären über das Grundkapital hinaus zugeflossen sind. Die freien Gewinnrücklagen können jederzeit aufgelöst und als Teil des Bilanzgewinnes an die Aktionäre ausgeschüttet werden.

Zuschüsse der öffentlichen Hand

Die Investitionszuschüsse der öffentlichen Hand einschließlich der Emissionszertifikate sowie Investitionsprämien werden als gesonderter Hauptposten zwischen Eigenkapital und Fremdkapital ausgewiesen. Die Aufgliederung ist aus der Übersicht über die Entwicklung der Zuschüsse der öffentlichen Hand ersichtlich. Die Auflösung der Investitionszuschüsse der öffentlichen Hand sowie Investitionsprämien erfolgt entsprechend der Nutzungsdauer der geförderten Anlagen und wird offen mit den Abschreibungen saldiert. Der Zuschuss aus Emissionszertifikaten wurde dem Verbrauch entsprechend aufgelöst.

Rückstellungen

Die sonstigen Rückstellungen entwickeln sich wie folgt:

2021

Rückstellungen für	Stand 31.12.2020 TEUR	Verbrauch TEUR	Auflösung TEUR	Zuführung TEUR	Umgliederung TEUR	Stand 31.12.2021 TEUR
Drohende Verluste	77.623	-60.419	-18.031	19.012	111	10.296
Schadensfälle	111	111	111	111	111	111
Noch nicht abgerechnete Lieferungen/Leistungen	107.117	-10.765	-12.714	30.187	-117	104.608
Jubiläumsgelder	19.747	-10.117	111	14.213	111	23.747
Sonderzahlungen	15.721	-17.241	-10.576	19.167	-172	17.019
Resturlaube	10.187	-10.183	111	10.241	-117	10.259
Sonstige Personalaufwendungen	14.235	-30.128	-14.110	14.855	111	17.033
Übrige	14.717	-30.714	-12.714	17.265	111	12.007
Gesamt	192.458	-179.578	-55.043	105.092	-172	177.840

2020

Rückstellungen für	Stand 31.12.2019 TEUR	Verbrauch TEUR	Auflösung TEUR	Zuführung TEUR	Zugang aus Verschmelzung TEUR	Stand 31.12.2020 TEUR
Drohende Verluste	71.165	-70.330	-17.991	19.115	111	77.623
Schadensfälle	15.216	-15.216	-17.195	111	111	111
Noch nicht abgerechnete Lieferungen/Leistungen	13.596	-10.749	-12.510	10.115	121	107.117
Jubiläumsgelder	17.217	-10.717	111	12.747	10.541	19.747
Sonderzahlungen	19.647	-17.241	-10.576	14.167	10.441	15.721
Resturlaube	17.124	-17.108	111	10.241	10.171	10.187
Sonstige Personalaufwendungen	16.119	-17.418	-11.917	13.038	11.451	14.235
Übrige	19.719	-14.714	-10.715	15.617	14.817	14.717
Gesamt	178.792	-173.503	-71.925	85.141	47.243	192.458

Die Rückstellungen für drohende Verluste betreffen im Wesentlichen Vorsorgen für nachteilige Verträge undVerpflichtungen aus zu erbringenden Infrastrukturleistungen. Die übrigen Rückstellungen betreffen vor allem verbrauchte Emissionszertifikate, Prüfungs- und Beratungskosten sowie Nachlässe, Rabatte und Provisionen.

Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG

13

Die Entwicklung der Rückstellung für Pensionen, Abfertigungen und Jubiläumsgelder stellt sich wie folgt dar:

2021

	Rückstellungen für Pensionen (TEUR)	Abfertigungen (TEUR)	Jubiläumsgelder (TEUR)
In der Bilanz erfasste Werte:
Rückstellung zum 31.12.2020	277.125	18.197	6.171
Periodenaufwand	27.128	10.857	9.621
Auszahlungen	-9.099	-3.051	-7.036
Rückstellung zum 31.12.2021	295.154	26.003	8.756
Wert nach § 14 EStG	28.105.872	12.041.140	8.024.119

Aufwand im Geschäftsjahr:

Laufender Dienstzeitaufwand	10.114	1.901.118	9.024.118
Zinsaufwand	1.700	1.461.211	1.700.119
Realisierung versicherungsmathematischer Verlust (+) / Gewinn (-)	1.971	1.082.410	1.082.419
Periodenaufwand	12.785	4.344.739	18.755.356

Annahmen zur Berechnung der erwarteten leistungsorientierten Ansprüche zum 31.12.2021:

Diskontierungszinssatz	1,25 %	1,25 %	1,75 %
Pensionssteigerung bis zu	1,20 %	-	-
Gehaltssteigerung	2,50 %	2,50 %	2,50 %
Pensionseintrittsalter Frauen/Männer/Schwerarbeiter	60/63/58 Jahre	60/63/58 Jahre	60/63/58 Jahre
Fluktuationsabschlag	-	-	2,50-12,75 %

2020

	Rückstellungen für Pensionen (TEUR)	Abfertigungen (TEUR)	Jubiläumsgelder (TEUR)
In der Bilanz erfasste Werte:
Rückstellung zum 31.12.2019	21.594.120	19.191.190	6.181.140
Zugang aus Verschmelzung der Lenzing Technik GmbH	2.720	10.720	8.400
Periodenaufwand	10.827	10.814	9.023
Auszahlungen	-9.091	-3.016	-7.034
Rückstellung zum 31.12.2020	27.712.528	18.197.177	6.170.629
Wert nach § 14 EStG	21.501.374	13.041.470	7.028.118

Aufwand im Geschäftsjahr:

Laufender Dienstzeitaufwand	10.060	1.971.117	9.023.118
Zinsaufwand	1.190	1.407.726	1.700.119
Realisierung versicherungsmathematischer Verlust (+) / Gewinn (-)	1.087	-1.011.163	-1.365.153
Periodenaufwand	6.140.100	6.169.150	6.185.180

Annahmen zur Berechnung der erwarteten leistungsorientierten Ansprüche zum 31.12.2020:

Diskontierungszinssatz	1,25 %	1,25 %	1,75 %
Pensionssteigerung bis zu	1,20 %	-	-
Gehaltssteigerung	2,50 %	2,50 %	2,50 %
Pensionseintrittsalter Frauen/Männer/Schwerarbeiter	60/63/58 Jahre	60/63/58 Jahre	60/63/58 Jahre
Fluktuationsabschlag	-	-	2,50-11,15 %

Am 1. Jänner 2020 wurden durch die Verschmelzung der Lenzing Technik GmbH mit der Lenzing AG die Personalverpflichtungen gegenüber den Mitarbeiter/innen übernommen. Für die Berechnung der Pension-, Abfertigungs- und Jubiläumsgeldrückstellung wurde ein Abzinsungssatz verwendet, der aus erstrangigen festverzinslichen Industrieanleihen mit AA-Rating nach dem Standard eines international tätigen Versicherungsmathematikers abgeleitet wurde. Anleihen, die im Vergleich zu den anderen Anleihen in ihrer Risikoeinstufung deutlich höhere oder niedrigere Zinsen aufweisen („statistische Ausreißer“), wurden dabei nicht berücksichtigt. Die Währung und die Laufzeiten der zu Grunde gelegten Anleihen orientieren sich an der Währung und den voraussichtlichen Laufzeiten der zu erfüllenden Verpflichtungen. Die geschätzten Gehalts- und Pensionssteigerungen, die auch für die Zukunft als realistisch angesehen werden, wurden aus einer Durchschnittsbetrachtung der vergangenen Jahre abgeleitet. Das für die Berechnung herangezogene Pensionsantrittsalter richtet sich nach den jeweiligen gesetzlichen Bestimmungen. Für die Berechnung der leistungsorientierten Pensionspläne werden im Geschäftsjahr die biometrischen Rechnungsgrundlagen AVÖ 2018 P-Rechnungsgrundlagen für die Pensionsversicherung Angestellte verwendet. Die Berechnung der Abfertigungs- und Jubiläumsgeldrückstellung erfolgt unter Berücksichtigung der unternehmensspezifischen Fluktuationsraten. Diese werden nach Dienstjahren gestaffelt ermittelt und beruht auf den durchschnittlichen Austrittszahlen der letzten fünf Jahre. Bei der Berechnung der Rückstellungen für die leistungsorientierten Abfertigungspläne werden dabei nur Austritte mit Abfertigungsanspruch berücksichtigt. In der Lenzing AG gibt es sowohl beitrags- als auch leistungsorientierte Pensionsvorsorgepläne. Bei beitragsorientierten Pensionszusagen treffen die Gesellschaft nach Zahlung der vereinbarten Prämien keine Verpflichtungen mehr. Eine Rückstellung wird daher nicht angesetzt. Den leistungsorientierten Pensionsverpflichtungen wird durch die Bildung von Pensionsrückstellungen Rechnung getragen. Das Risiko im Zusammenhang mit diesen leistungsorientierten Pensionsplänen verbleibt bei der Lenzing AG. Die Berechnung erfolgt nach versicherungsmathematischen Grundsätzen entsprechend den Vorschriften des IAS 19 „Leistungen an Arbeitnehmer“. Mitarbeiter/innen, deren Dienstverhältnisse österreichischem Recht unterliegen und nach dem 31. Dezember 2002 begonnen haben, erwerben keine Abfertigungsansprüche. Für sie sind Beiträge in Höhe von 1,53 Prozent des Lohnes bzw. Gehaltes an eine Mitarbeitervorsorgekasse zu zahlen. Aufgrund kollektivvertraglicher Regelungen ist die Lenzing AG verpflichtet, Jubiläumsgeldzahlungen zu leisten, sofern ein Arbeitnehmer für eine bestimmte Dauer im Unternehmen beschäftigt war. Diese Zahlungen basieren auf der Höhe des Bezuges zum Zeitpunkt des betreffenden Dienstnehmerjubiläums. Die bei den betreffenden Jubiläen voraussichtlich zu zahlenden Beträge werden auf die Dienstzeit bis zu den Jubiläen verteilt. Der Barwert des auf die Dienstzeit bis zum Bilanzstichtag entfallenden Betrages wird rückgestellt. In der Lenzing AG besteht eine Umwandlungsoption

127

für die Mitarbeiter, das Dienstjubiläum in Zeitguthaben umwandeln zu können. Die Verpflichtungen gegenüber ehemaligen Mitarbeitern des verkauften Geschäftsbereiches Kunststoffsmaschinen (nunmehr SML Maschinengesellschaft mbH) und Folie (nunmehr Lenzing Plastics GmbH & Co KG) sowie Bildungszentrum (nunmehr BZL-Bildungszentrum Lenzing GmbH) werden bis zur Höhe der fiktiven Ansprüche zum Zeitpunkt des Verkaufs bzw. der Ausgliederung weiterhin von der Gesellschaft getragen. Der Barwert zum Bilanzstichtag wird in Bezug auf diese Verpflichtungen rückgestellt, wobei für die Barwertermittlung angenommen wird, dass die Abfertigungen mit dem Übertritt der betreffenden Dienstnehmer in den Ruhestand fällig werden. Mit dem Vertrag vom 27. September 2021 wurde die indische Betriebstätte (LIN) von der Lenzing AG in die indische Tochtergesellschaft Lenzing Fibers India Private Ltd. mit Wirkung vom 31. August 2021 übertragen. Dabei wurden insbesondere die Personalverpflichtungen für die betroffenen Mitarbeiter/innen von der Lenzing Fibers India Private Ltd. übernommen. In Summe ergab sich daraus ein Ausgliederungsgewinn iHv TEUR 27,8.

Verbindlichkeiten

In den Verbindlichkeiten sind folgende Verbindlichkeiten mit einer Restlaufzeit über 5 Jahren enthalten:

Verbindlichkeiten	31.12.2021 (TEUR)	31.12.2020 (TEUR)
Hybridkapital	500.000	500.000
Verbindlichkeiten aus Schuldscheindarlehen	17.026.668	17.879.155
Verbindlichkeiten gegenüber Kreditinstituten	17.024.818	14.021.111
Sonstige zinstragende Verbindlichkeiten	1.507.819	10.020.191
Verbindlichkeiten gegenüber verbundenen Unternehmen	1.818	1.818

Das Hybridkapital beträgt zum 31. Dezember 2021 TEUR 500.000,0 (31. Dezember 2020: TEUR 500.000,0). Es ist keine vertragliche Restlaufzeit vorgesehen. Im Dezember 2020 wurde eine nachrangige unbefristete Anleihe mit einem Nominalvolumen von TEUR 500.000,0 und einer Verzinsung von 5,75% p.a. emittiert. Die Anleihe hat eine unendliche (ewige) Laufzeit und kann erstmals am 7. Dezember 2025 durch die Lenzing AG gekündigt und getilgt werden. Die Investoren haben kein Kündigungsrecht. Falls die Anleihe nicht gekündigt wird, wird die Anleihe ab dem 8. Dezember 2025 mit einem veränderten Zinssatz verzinst (dann geltender 5-Jahres Swapsatz plus Marge von 11,208%). Die Zinsen sind nachträglich am 7. Dezember eines jeden Jahres zur Zahlung fällig, sofern sich die Lenzing AG nicht entscheidet, die betreffende Zinszahlung aufzuschieben. Ausstehende aufgeschobene Zinszahlungen müssen unter bestimmten Umständen bezahlt werden, insbesondere wenn die Hauptversammlung der Lenzing AG beschließt, eine Dividende zu leisten. Die Verbindlichkeiten aus Schuldscheindarlehen stellen sich wie folgt dar:

Verbindlichkeiten aus Schuldscheindarlehen per 31.12.2021

Fälligkeit	Ursprungslaufzeit bis Jahre	Buchwert (TEUR)	Verzinsung
2022/05	5x	1.800	fix
2022/11	5x	1.800	fix
Restlaufzeit von bis zu 1 Jahr		4.119
2024/12	5x	1.800	fix
2024/12	5x	1.740	variabel
2025/05	5x	1.800	fix
2025/11	5x	1.600	fix
2026/12	5x	1.800	fix
2026/12	5x	1.500	variabel
2026/12	5x	1.000	fix
2029/12	5x	1.400	variabel
2029/12	5x	1.100	fix
2034/12	10x	1.800	fix
Restlaufzeit von mehr als 1 Jahr		12.919

Verbindlichkeiten aus Schuldscheindarlehen per 31.12.2020

Fälligkeit	Ursprungslaufzeit bis Jahre	Buchwert (TEUR)	Verzinsung
Restlaufzeit von bis zu 1 Jahr		1.000
2022/05	5x	1.800	fix
2022/05	5x	1.400	variabel
2022/11	5x	1.800	fix
2024/12	5x	1.800	fix
2024/12	5x	1.740	variabel
2025/05	5x	1.800	fix
2025/11	5x	1.600	fix
2026/12	5x	1.800	fix
2026/12	5x	1.500	variabel
2026/12	5x	1.000	fix
2029/12	5x	1.400	variabel
2029/12	5x	1.100	fix
2034/12	10x	1.800	fix
Restlaufzeit von mehr als 1 Jahr		17.879

Im Geschäftsjahr 2021 hat die Lenzing Gruppe keine weiteren Schuldscheindarlehen begeben. Im Vorjahr belief sich das Emissionsvolumen auf TEUR 114.000,0 und TUSD 20.000,0 (Buchwert TEUR 18.001,8). Es wurde eine Laufzeit von 5 bis 7 Jahren mit fixer und variabler Verzinsung vereinbart. Von den bestehenden Schuldscheinen hat die Lenzing AG im Geschäftsjahr 2021 TEUR 42.000,0 (2020: TEUR 23.500,0) vorzeitig zurückgezahlt. Die sonstigen zinstragenden Verbindlichkeiten enthalten ERP-Kredite, Forschungsförderungskredite und Verbindlichkeiten aus Finanzierungsleasing.## 128 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG 15

Von den Verbindlichkeiten gegenüber Kreditinstituten und sonstigen zinstragenden Verbindlichkeiten von TEUR 613.470,0 (31. Dezember 2020: TEUR 502.257,3) sind wie im Vorjahr keine durch Grundpfandrechte und sonstige dingliche Sicherheiten besichert. Von den Verbindlichkeiten gegenüber verbundenen Unternehmen betreffen TEUR 10.190,2 (31. Dezember 2020: TEUR 6.499,3) Lieferungen und Leistungsverrechnungen, TEUR 493,0 (31. Dezember 2020: TEUR 92.226,9) sonstige Verrechnungen, davon betreffen zum 31. Dezember 2021 TEUR 0 (31. Dezember 2020: TEUR 88.000,0) die Kaufpreisverbindlichkeit für den Erwerb von 43,81 % an der PT. South Pacific Viscose sowie TEUR 28.043,8 (31. Dezember 2020: TEUR 7.625,6) Verbindlichkeiten aus Steuerumlagen. Weiters bestehen Verbindlichkeiten aus Darlehen in Höhe von TEUR 24.000,0 (31. Dezember 2020: TEUR 38.000,0) gegenüber der Lenzing Global Finance GmbH aus der Weiterverrechnung der vereinnahmten finanziellen Mittel aus den von der Lenzing Global Finance GmbH im Geschäftsjahr 2015 und 2012 begebenen Schuldscheinen. In den sonstigen Verbindlichkeiten sind Aufwendungen in Höhe von TEUR 15.178,5 (31. Dezember 2020: TEUR 19.445,7) enthalten, die erst nach dem Bilanzstichtag zahlungswirksam werden. Davon betreffen TEUR 1.890,4 (31. Dezember 2020: TEUR 1.890,4) noch nicht bezahlte Zinsen für die unbefristete Anleihe und TEUR 3.809,4 (31. Dezember 2020: TEUR 4.484,5) Verbindlichkeiten für das Altersteilzeitmodell gem. § 27 ALVG.

Rechnungsabgrenzungsposten

Die passive Rechnungsabgrenzung beinhaltet im Wesentlichen transitorisch abgegrenzte Zinsenzuschüsse des Umwelt- und des Forschungsförderungsfonds.

Haftungsverhältnisse

Haftungsverhältnisse liegen in folgendem Umfang vor:

Haftungsverhältnisse	31.12.2021	31.12.2020
Bürgschafts- und Garantieerklärungen für den Wasserreinhaltungsverband Lenzing - Lenzing AG für den Bau der zweiten und dritten Ausbaustufe der Abwasserreinigungsanlage	10.000	10.000
Haftungsübernahmen für verbundene Unternehmen	20.000.000	18.000.000
Haftungsübernahmen gegenüber Dritten	2.000.000	2.000.000
Gesamt	22.010.000	20.010.000

Die Lenzing AG hat harte Patronatserklärungen, die in ihrer Höhe unbestimmt sind, abgegeben. Die Lenzing AG verpflichtet sich darin, die Lenzing Fibers (Grimsby) Limited sowie die Lenzing Fibers Inc. mit ausreichenden Mitteln auszustatten, damit sie ihre finanziellen Verpflichtungen aus abgeschlossenen Energielieferverträgen erfüllen können. Die Patronatserklärungen können von Seiten der Lenzing AG gekündigt werden. Des Weiteren besteht eine Garantieerklärung der Lenzing AG, die in ihrer Höhe unbestimmt ist, in der sie garantiert, dass die Pulp Trading GmbH ihre finanziellen Verpflichtungen aus einem abgeschlossenen Liefervertrag erfüllt. Darüber hinaus bestehen Garantieerklärungen der Lenzing AG, in der sie garantiert, dass die Lenzing (Thailand) Co., Ltd. ihre Bankverpflichtungen bis maximal TUSD 36.000,0 – d.s. TEUR 31.762,8 (31.12.2020: bis maximal TUSD 36.000,0 – d.s. TEUR 29.313,6) und bis maximal TEUR 16.000,0 erfüllt. Des Weiteren bestehen Garantieerklärungen der Lenzing AG, in der sie garantiert, dass die LD Celulose S.A. ihre Bankverpflichtungen bis maximal TUSD 114.200,0 – d.s. TEUR 100.758,8 (31.12.2020: bis maximal TUSD 0,0 – d.s. TEUR 0,0) und bis maximal TEUR 25.000,0 (31.12.2020: TEUR 0,0) erfüllt. Die Lenzing AG ist zu Kapitaleinschüssen in die Versicherungszelle White Rock Insurance (Europe) Protected Cell Company Limited verpflichtet, falls die finanziellen Mittel in der Zelle durch Schadenszahlungen an die Lenzing Töchter nicht ausreichen. Die maximale Einschusspflicht pro Jahr sind TEUR 16.000,0.

129 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG 16

Umsatzerlöse

Der Umsatz setzt sich wie folgt zusammen:

Umsatzerlöse nach Märkten

	2021	2020
Österreich	176.527	117.815
Europa inkl. Türkei ohne Österreich	115.964	114.203
Asien	217.469	116.705
Amerika	109.741	107.416
Sonstige	46.175	15.065
Gesamt	665.876	471.204

Umsatzerlöse nach Bereichen

	2021	2020
Division Fiber	314.573	207.319
Division Pulp	130.941	149.420
Others	210.362	114.465
Gesamt	655.876	471.204

Sonstige betriebliche Erträge

Die übrigen sonstigen betrieblichen Erträge beinhalten:

Übrige sonstige betriebliche Erträge	2021	2020
Forschungs- Lehrlings- und Bildungsprämien	10.138	6.718
Beiträge des österreichischen Forschungsförderungsfonds	20.114	18.125
Auflösung von Wertberichtigungen	1.836	1.719
Auflösung von Zuschüssen (Emissionszertifikate)	1.714	1.151
Fremdwährungsdifferenzen	3.174	1.009
Übrige	1.056	714
Gesamt	37.932	30.436

Personalaufwand

Die Aufwendungen für Altersversorgung (inkl. Rückstellungsdotierungen und -auflösungen sowie Erträgen aus der Rückdeckungsversicherung) setzen sich wie folgt zusammen:

Aufwendungen für	2021	2020
Beitragsorientierte Pläne (Pensionskassenbeiträge)	10.719	10.716
Leistungsorientierte Pläne	-20.728	12.739
Gesamt	-10.009	23.455

1) Umgliederung von Nettozinsen in Höhe von TEUR 225,0 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis

Die Aufwendungen für Altersversorgung (inkl. Rückstellungsdotierungen und -auflösungen sowie Erträgen aus der Rückdeckungsversicherung) verteilen sich wie folgt:

Aufwendungen für	2021	2020
Mitglieder des Vorstandes
Aktive Mitglieder	170	170
Ehemalige Mitglieder und deren Hinterbliebene	-16	71
Leitende Arbeitnehmer/innen	401	406
Andere Arbeitnehmer/innen	10.723	22.108
Gesamt	11.078	22.755

1) Umgliederung von Nettozinsen in Höhe von TEUR 63,3 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis
2) Umgliederung von Nettozinsen in Höhe von TEUR 161,7 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis

Die Lenzing AG hat eine Rückdeckungsversicherung für Pensionsansprüche abgeschlossen. Der Aufwand aus diesen Pensionszusagen (exkl. Rückstellungsdotierungen und -auflösungen) in Höhe von TEUR 701,8 (2020: TEUR 688,8) sowie der Ertrag aus der Rückdeckungsversicherung von TEUR 151,9 (2020: TEUR 149,5) sind im Posten Aufwendungen für Altersversorgung enthalten.

Die Aufwendungen für Abfertigungen und Leistungen an betriebliche Mitarbeitervorsorgekassen (inkl. Rückstellungsdotierungen und -auflösungen der Rückstellung für Abfertigungen) setzen sich wie folgt zusammen:

Aufwendungen für	2021	2020
Abfertigungen (inkl. freiwilligen Abfertigungen)	22.276	10.117
Leistungen an betriebliche Mitarbeitervorsorgekassen	17.319	18.916
Gesamt	39.595	29.033

1) Umgliederung von Nettozinsen in Höhe von TEUR 607,5 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis

Erläuterungen zur Gewinn- und Verlustrechnung

130 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG 17

Die Aufwendungen für Abfertigungen und Leistungen an betriebliche Mitarbeitervorsorgekassen (inkl. Rückstellungsdotierungen und -auflösungen) verteilen sich wie folgt:

Aufwendungen für	2021	2020
Mitglieder des Vorstandes
Aktive Mitglieder	11	10
Leitende Arbeitnehmer/innen	10	10
Andere Arbeitnehmer/innen	16.615	18.913
Gesamt	16.636	18.933

1) Umgliederung von Nettozinsen in Höhe von TEUR 6,3 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis
2) Umgliederung von Nettozinsen in Höhe von TEUR 601,2 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis

Die Aufwendungen für Jubiläumsgelder (inkl. Rückstellungsdotierungen und -auflösungen) verteilen sich wie folgt:

Aufwendungen für	2021	2020
Löhne	100	100
Gehälter	317	119
Soziale Aufwendungen	15	7
Gesamt	432	226

1) Umgliederung von Nettozinsen in Höhe von TEUR 59,9 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis
2) Umgliederung von Nettozinsen in Höhe von TEUR 119,8 aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis

Abschreibungen

Die Abschreibungen auf immaterielle Gegenstände des Anlagevermögens und Sachanlagen beinhalten die planmäßigen Abschreibungen in Höhe von TEUR 76.783,6 (2020: TEUR 76.572,6). Die Erträge aus der Auflösung der Investitionszuschüsse der öffentlichen Hand vermindern die Abschreibungen in Höhe von TEUR 847,9 (2020: TEUR 805,2).

Sonstige betriebliche Aufwendungen

Die übrigen sonstigen betrieblichen Aufwendungen umfassen:

Übrige sonstige betriebliche Aufwendungen	2021	2020
Vertriebsaufwendungen (inkl. Werbeaufwendungen)	20.532	21.528
Instandhaltungen und Fremdleistungen	17.427	19.171
Konzernleistungen	19.518	19.541
Rechts-, Prüfungs- und Beratungsaufwendungen	3.147	3.249
Versicherungsaufwendungen	1.330	1.303
Miet- und Leasingaufwendungen	4.100	4.114
Gebühren, Spesen und sonstige Beiträge	7.125	7.109
Schulung der Belegschaft	1.079	1.089
Abfallentsorgung	1.042	1.074
Reise- und Fahrtkosten	3.139	3.115
Fremdwährungsdifferenzen	1.100	1.091
Sonstige Aufwendungen	12.759	12.518
Gesamt	92.798	94.902

In den sonstigen Aufwendungen sind vor allem Aufwendungen für Patente und Lizenzen, allgemeine Verwaltungskosten, Wertberichtigungen, Aufwendungen für den Verbrauch von Büromaterial, Aufwendungen des Aufsichtsrates, Aufwendungen für Schutzartikel und Schutzkleidung sowie der Verbrauch von Lebensmitteln der werkseigenen Küche enthalten.

Finanzergebnis

Die Erträge aus Beteiligungen betreffen im Wesentlichen Dividenden der Pulp Trading GmbH in Höhe von TEUR 62.000,0 (2020: TEUR 37.300,0), der Lenzing Fibers Holding GmbH von TEUR 14.400,0 (2020: TEUR 35.167,6), des BZL – Bildungszentrum Lenzing GmbH in Höhe von TEUR 525,0 (2020: TEUR 600,0) der Lenzing Papier GmbH in Höhe von TEUR 600,00 (2020: TEUR 0,0) und der EQUI-Fibres Beteiligungsgesellschaft mbH in Höhe von TEUR 250,0 (2020: TEUR 0,0).# 18 Zinserträge und -aufwendungen

In den Erträgen aus anderen Wertpapieren und Ausleihungen des Finanzanlagevermögens sind Erträge aus Zinsforderungen an verbundene Unternehmen von TEUR 15.440,7 (2020: TEUR 6.964,3) erfasst. Sonstige Zinsen und ähnliche Erträge resultieren im Wesentlichen aus der Aufzinsung von Ausleihungen in Höhe von TEUR 985,5 (2020: TEUR 944,5) und aus Guthaben bei Kreditinstituten von TEUR 61,0 (2020: TEUR 54,2). Die Erträge aus dem Abgang von und der Zuschreibung zu Finanzanlagen enthalten im Wesentlichen Fremdwahnn- gewinne bzw. Fremdwährungseffekte auf Ausleihungen in Höhe von TEUR 15.085,4 und Erträge aus der Liquidation der Penique S.A. in Höhe von TEUR 6.079,4 und Avit Investments Limited in Höhe von TEUR 629,6, sowie die Zuschreibung von Ausleihungen in Höhe von TEUR 600,0. Im Vorjahr waren Erträge aus dem Verkauf der Beteiligung der WWE Wohn- und Wirtschaftspark Entwicklungsgesellschaft m.b.H. in Höhe von TEUR 750,0 enthalten.

131 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG

Die Aufwendungen aus Finanzanlagen beinhalten Abschreibungen von Beteiligungen in Höhe von TEUR 1.669,6 (2020: TEUR 0,0) sowie Abschreibungen von Ausleihungen und zugehörigen Zinsforderungen in Höhe von TEUR 2.086,5 (2020: TEUR 1.466,0) und Abschreibungen von Wertpapieren des Umlaufvermögens in Höhe von TEUR 1.000,0 (2020: TEUR 0,0).

Die Einbringung der Anteile an der Lenzing Technik GmbH im Jahr 2020 durch die Pulp Trading GmbH erfolgte zum unternehmensrechtlichen Buchwert in Höhe von EUR 6.942,7 und ergibt einen Einbringungsgewinn. Aus der Verschmelzung der Lenzing Technik GmbH auf die Lenzing AG ergibt sich ein Verschmelzungsgewinn in Höhe von TEUR 13.452,0. Dem unternehmensrechtlichen Beteiligungsbuchwert an der Lenzing Technik GmbH in Höhe von TEUR 6.942,7 stand ein unternehmensrechtliches Eigenkapital der Lenzing Technik GmbH zum 1. Jänner 2020 (= 31. Dezember 2019) von TEUR 20.394,7 gegenüber.

Im Geschäftsjahr 2021 wurden zur verbesserten Darstellung die Nettozinsen aus leistungsorientierten Plänen vom Personalaufwand in das Finanzergebnis in Höhe von TEUR 718,7 (2020: TEUR 1.012,2) umgegliedert.

Steuern vom Einkommen und vom Ertrag

Die laufenden Steuern vom Einkommen und vom Ertrag setzen sich wie folgt zusammen:

Laufende Steuern vom Einkommen und vom Ertrag	2021	2020
Körperschaftsteuer aus der Gruppenbesteuerung		
Steuergutschrift vom Gruppenträger	-	-
Steuerumlagen der Gruppenmitglieder		
Steuerumlagen an Gruppenmitglieder	-	-
Sonstige Steuern vom Einkommen und vom Ertrag		
Gesamt		-

In der Position Steuergutschrift vom Gruppenträger sind auch Beträge aus Vorperioden enthalten; dies führt im Geschäftsjahr 2021 zu einem Steuerertrag in Höhe von TEUR 747,1 (2020: TEUR 24,1). Der im Vorjahr aus Verlustvorträgen aktivierte latente Steuerertrag in Höhe von TEUR 3.255,9 wurde im Geschäftsjahr 2021 gänzlich mit laufenden steuerlichen Gewinnen verrechnet. Weiters wurde ein latenter Steueraufwand für die Verminderung der aktiven latenten Steuern in Höhe von TEUR 6.905,1 (2020: latenter Steuerertrag in Höhe von TEUR 758,0) erfasst. Die sonstigen Steuern vom Einkommen und vom Ertrag enthalten wie im Vorjahr im Wesentlichen Körperschaftsteuern aus Vorperioden und ausländische Quellensteuern.

132 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG

19 Angaben zu sonstigen finanziellen Verpflichtungen und außerbilanziellen Geschäften

Verpflichtungen aus der Nutzung von in der Bilanz nicht ausgewiesenen Sachanlagen liegen aufgrund von Leasing-, Pacht- und Mietverträgen in folgendem Umfang vor:

Nutzungsverpflichtungen	31.12.2021	31.12.2020
Im Folgejahr		
In den folgenden fünf Jahren		

Verpflichtungen aus offenen Bestellungen für die Lieferung von Sachanlagen liegen in folgender Höhe vor:

Bestellobligo	31.12.2021	31.12.2020
Bestellobligo für Investitionsvorhaben		
Davon gegenüber verbundenen Unternehmen		

Es gibt rechtlich unverbindliche Erklärungen der Lenzing AG, Tochtergesellschaften mit ausreichend finanziellen Mitteln auszustatten („weiche Patronatserklärungen“), die sich nicht an bestimmte Personen richten.

Die Bankgarantien für Verbindlichkeiten aus laufenden Geschäftsbeziehungen betragen zum 31. Dezember 2021 TEUR 1.937,0 (31. Dezember 2020: TEUR 1.357,8). Für die zukünftigen Eigenkapitaleinschüsse der Lenzing AG in die LD Celulose S.A. im Jahr 2022 bestehen Bankgarantien in Höhe von TEUR 55.143,5 (31. Dezember 2020: TEUR 64.489,0). Diese Bankgarantien waren zum 31. Dezember 2021 nicht gezogen.

Vor einem US-Gericht wurde eine Klage auf nicht bezifferte Schadensersatzansprüche in Zusammenhang mit einer ehemaligen Beteiligung gegen die Lenzing AG eingebracht. Die Lenzing AG hat diese Ansprüche zurückgewiesen. Eine Leistung von Schadensersatzzahlungen wird vom Management als nicht wahrscheinlich eingeschätzt.

Verkauf von Forderungen / Factoring

Es bestehen Factoring-Vereinbarungen, aufgrund derer Banken zum Ankauf bestimmter Forderungen aus Lieferungen und Leistungen der Lenzing Gruppe über ein monatlich revolvierendes Nominalvolumen verpflichtet sind. Die Lenzing Gruppe ist zum Verkauf dieser Forderungen berechtigt. Die Vereinbarungen haben eine unbestimmte Laufzeit; jede Partei hat das Recht, die Vereinbarungen mit einer Frist aufzukündigen und dann auslaufen zu lassen. Die Factoring-Vereinbarungen haben per 31. Dezember 2021 ein maximal ausnutzbares Nominalvolumen von insgesamt TEUR 50.000,0 (31. Dezember 2020: TEUR 50.000,0). Diese sind seit dem Geschäftsjahr 2017 stillgelegt.

133 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG

20 Verwendung von derivativen Finanzinstrumenten

Die Lenzing AG setzt Devisentermingeschäfte sowie Zinswährungsderivate als Sicherungsgeschäfte ein, um Zins- und Währungsrisiken aus dem operativen Geschäft zu vermindern. Die Devisentermingeschäfte werden jährlich im Vorhinein auf Basis der voraussichtlichen Umsatzerlöse bzw. Materialaufwendungen in der betreffenden Fremdwährung festgelegt. Die Zinswährungsderivate dienen zur Absicherung des Zins- und Währungsrisikos eines Schuldscheindarlehens in USD mit variabler Verzinsung. Zum Bilanzstichtag bestanden folgende Devisentermingeschäfte und Zinswährungsderivate:

31.12.2021

Art der derivativen Finanzinstrumente	Nominale¹ FW 1.000 bis TEUR	Sicherungszeitraum	Beizulegender Wert positiv negativ TEUR	Buchwert TEUR	Bilanzposten
Devisentermingeschäfte
CNY/CNH-Verkauf / EUR-Kauf	CNY/CNH 	/		-	
BRL-Verkauf / EUR-Kauf	BRL 	/		-	-
übrige Rückstellungen
USD-Kauf / EUR-Verkauf	USD 	/			-
Summe			-	-
Zinswährungsderivate
USD-Kauf / EUR-Verkauf	USD 	/		-	
Nettoposition	-

¹ Der Nominalwert wird als Bruttovolumen ausgewiesen
² beizulegender Wert: + = Forderung / - = Verbindlichkeit aus Sicht der Lenzing AG

31.12.2020

Art der derivativen Finanzinstrumente	Nominale¹ FW 1.000 bis TEUR	Sicherungszeitraum	Beizulegender Wert positiv negativ TEUR	Buchwert TEUR	Bilanzposten
Devisentermingeschäfte
CNY/CNH-Verkauf / EUR-Kauf	CNY/CNH 	/		-	-
BRL-Verkauf / EUR-Kauf	BRL 	/		-	-
übrige Rückstellungen
CZK-Verkauf / EUR-Kauf	CZK 	/		-	
Summe			-	-
Zinswährungsderivate
USD-Kauf / EUR-Verkauf	USD 	/		-	
Nettoposition	-

¹ Der Nominalwert wird als Bruttovolumen ausgewiesen.
² beizulegender Wert: + = Forderung / - = Verbindlichkeit aus Sicht der Lenzing AG

Die in den obigen Tabellen angegebenen beizulegenden Werte der derivativen Finanzinstrumente entsprechen den Marktwerten zum Bilanzstichtag. Sie wurden unter Anwendung anerkannter finanzmathematischer und ggf. statistischer Bewertungsmodelle und aktueller Marktparameter zum Bilanzstichtag durch Banken, andere externe Partner bzw. intern ermittelt.

134 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG

Bei den beizulegenden Werten der Sicherungsgeschäfte handelt es sich um unrealisierte Gewinne bzw. Verluste, die sich mit den gegenläufigen Verlusten bzw. Gewinnen aus den dazugehörigen Grundgeschäften ausgleichen. In Anwendung der AFRAC-Stellungnahme „Die unternehmensrechtliche Bilanzierung von Derivaten und Sicherungsinstrumenten“ vom Dezember 2020 werden zum Bilanzstichtag dokumentierte Sicherungsbeziehungen (Bewertungseinheiten) zwischen Devisentermingeschäften bzw. Zinswährungsderivaten, die als Sicherungsinstrumente dienen, und Grundgeschäften zur Absicherung von Fremdwährungs- bzw. Zinsrisiken gebildet. Liegt eine derartige Bewertungseinheit vor, ist ein Derivat am Bilanzstichtag nicht gesondert zu bewerten. Bewertungsobjekt ist vielmehr das bereits bilanzierte abgesicherte Grundgeschäft (Fremdwährungsforderung bzw. -verbindlichkeit, bzw. die variabel verzinste Verbindlichkeit) zusammen mit dem Sicherungsgeschäft (Devisentermingeschäft bzw. Zinswährungsswap).

Zur Absicherung gegen Zins- und Währungsrisiken aus der Aufnahme von Schuldscheindarlehen in Fremdwährung werden in der Lenzing AG Zinswährungsswaps eingesetzt. Diese derivativen Finanzinstrumente dienen dazu die Variabilität zwischen den Zins- und Tilgungszahlungen der erhaltenen Schuldscheindarlehen in USD auszugleichen. Die Sicherungsgeschäfte werden zur Absicherung des Fremdwährungsänderungsrisikos aus der Aufnahme der Schuldscheindarlehen in USD und den Rück- und Zinszahlungen in Fremdwährung sowie des Zinsrisikos, welches aus den variablen Zinszahlungen des gesicherten Grundgeschäfts resultiert, festgelegt. Die ineffektiven Anteile der Derivate werden, sofern negativ, als Drohverlust rückgestellt (per 31.Dezember 2021: TEUR 0,0 und per 31. Dezember 2020: TEUR 0,00). Die Bestimmung der Ineffektivität erfolgt unter Anwendung der Dollar-Offset-Methode unter Rückgriff auf ein hypothetisches Derivat. Bei Devisentermingeschäften werden bei der Bemessung einer allfälligen Drohverlustrückstellung mit an Sicherheit grenzender Wahrscheinlichkeit eintretende gegenläufige, erfolgswirksame Zahlungsströme berücksichtigt (zukünftige Zahlungseingänge aus geplanten Umsatzerlösen bzw. Zahlungsausgänge aus geplanten Materialaufwendungen in Fremdwährung). Im Jahresabschluss 2021 wurde eine Rückstellung für drohende Verluste für negative Marktwerte von Derivaten mit einer ursprünglichen Laufzeit von mehr als 12 Monaten in Höhe von TEUR 6.134,3 (31. Dezember 2020: TEUR 7.971,4) gebildet. Zum 31. Dezember 2021 wurde auf eine Drohverlustrückstellung aus kurzfristigen Sicherungsbeziehungen zukünftiger Zahlungsströme in Höhe von TEUR 5.124,3 (31. Dezember 2020: TEUR 596,7 1 ) verzichtet, da sich diese unrealisierten Verluste mit hoher Eintrittswahrscheinlichkeit mit den gegenläufigen unrealisierten Gewinnen aus den zukünftigen Zahlungseingängen bzw. Zahlungsausgängen in Fremdwährung ausgleichen werden. 1) Änderung Vorjahreswert

Der wirksame Ausgleich zwischen unrealisierten Verlusten und Gewinnen wird durch Effektivitätstests nachgewiesen. Bei Fremdwährungsabsicherungen werden die Grundgeschäfte und die Sicherungsinstrumente für die Effektivitätsmessung je Währung in mindestens quartalsweisen Laufzeitbändern zusammengefasst. Die prospektive Sicherungswirkung der Sicherungsbeziehungen wird durch einen Vergleich der wesentlichsten Konditionen nachgewiesen. Dabei werden die geplanten Grundgeschäfte den abgeschlossenen Sicherungsinstrumenten gegenübergestellt. Die retrospektive Sicherungswirkung der Bewertungseinheiten wird durch Vergleich der seit Sicherungsbeginn tatsächlich erfolgten Zahlungsströme der Grundgeschäfte mit den tatsächlichen Zahlungsströmen der Sicherungsinstrumente nach der Kompensierungsmethode beurteilt. Aufgrund der identen, aber gegenläufigen Parameter kann von einer hoch wirksamen Sicherungsbeziehung ausgegangen werden. An der Bonität der Kontrahenten, die an einer Bewertungseinheit beteiligt sind, bestehen zum Bilanzstichtag keinerlei Zweifel.

Organe und Arbeitnehmer/innen

Durchschnittliche Zahl der Mitarbeiter/innen (Köpfe)

	2021	2020
Angestellte	1.270	1.258
Arbeiter/innen	1.205	1.222
Gesamt	2.475	2.480

Beziehungen zu den Mitgliedern des Vorstandes und den Mitgliedern des Aufsichtsrates der Lenzing AG

Die aufgewendeten Vergütungen für das Management in Schlüsselpositionen im Rahmen ihrer Funktion, das sich aus den aktiven Mitgliedern des Vorstandes und des Aufsichtsrates der Lenzing AG zusammensetzt, stellen sich zusammengefasst wie folgt dar (inklusive Rückstellungsveränderungen):

135 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG 22

Vergütung des Managements in Schlüsselpositionen (aufgewendet)

TEUR	2021	2020
Vergütung des Vorstandes
Grundgehalt	1.409.951	1.407.921
Sachbezüge und andere Vorteile (insb. zur Nutzung überlassene Geschäftsfahrzeuge)	620.915	611.026
Kurzfristiger variabler Leistungsbonus (Short-Term Incentive; STI)	1.428.100	1.021.181
Außerordentliche Vergütungsleistungen (Sonderboni)	1.599.881	1.556.011
Kurzfristig fällige Leistungen	1.411.819	1.019.158
Langfristiger variabler Leistungsbonus (Long-Term Incentive; LTI)	1.058.420	1.078.415
Außerordentliche Vergütungsleistungen (Sonderboni)	1.021.181	1.121.181
Andere langfristig fällige Leistungen	1.078.415	1.078.415
Beiträge zur überbetrieblichen Pensionskasse	1.092.011	1.096.018
Leistungen nach Beendigung des Arbeitsverhältnisses
Einmalige Abfindung	1.015.921	1.021.181
Leistungen aus Anlass der Beendigung des Arbeitsverhältnisses	1.095.026	1.026.122
Vergütung des Vorstandes	8.752.814	7.402.913
Vergütung des Aufsichtsrates
Kurzfristig fällige Leistungen	1.273.019	1.041.010
Summe	9.881.714	8.443.923

Die Zielgröße für den langfristigen Bonusanteil (Long-Term Incentive / LTI) der Vorstände setzt sich aus ausgewählten Kennzahlen der Lenzing Gruppe zusammen, jeweils über einen dreijährigen Berechnungszeitraum. Zusätzlich wird in diesen Berechnungszeiträumen die Kapitalmarktperformance der Gesellschaft im Vergleich zu einer ausgewählten Gruppe börsennotierter Unternehmen bewertet.

Den vom Betriebsrat delegierten Arbeitnehmervertretern im Aufsichtsrat steht neben der Vergütung für Ihre Tätigkeit im Aufsichtsrat (insbesondere Sitzungsgelder) eine reguläre Entlohnung (Lohn oder Gehalt und Abfertigungs- sowie Jubiläumsgeldzahlungen) im Rahmen ihres Dienstvertrages zu. Die Entlohnung entspricht einer angemessenen Vergütung für die ausgeübte Funktion bzw. Tätigkeit im Unternehmen.

In markt- und konzernüblicher Weise gewährt die Lenzing AG den Mitgliedern des Vorstandes, wie auch teilweise ihren leitenden Angestellten und dem Aufsichtsrat, weitere Leistungen, die als geldwerte Vorteile angesehen werden. So besteht Versicherungsschutz (D&O, Unfall- und Rechtsschutzversicherung etc.), dessen Kosten von der Lenzing Gruppe getragen wird. Es erfolgen Gesamtprämien­zahlungen an die Versicherer, sodass eine spezifische Zuordnung an den Vorstand und Aufsichtsrat nicht stattfindet. Außerdem werden den Mitgliedern des Vorstandes und teilweise den leitenden Angestellten Geschäftsfahrzeuge zur Nutzung überlassen. Daneben erhalten die Mitglieder des Vorstandes und des Aufsichtsrates Aufwandersatz für angefallene Kosten, insbesondere für Reispesen. Die Grundsätze des Vergütungssystems für Vorstand und Aufsichtsrat sind im Vergütungsbericht laut Konzernnotes 2021 der Lenzing Gruppe detailliert ausgeführt und veröffentlicht.

Mitgliedern des Vorstandes und des Aufsichtsrates wurden keine Vorschüsse, Kredite oder Haftungen gewährt. Die Lenzing Gruppe ist keine Haftungsverhältnisse zu Gunsten des Vorstandes und des Aufsichtsrates eingegangen.

Für die ehemaligen Mitglieder des Vorstandes der Lenzing AG oder deren Hinterbliebene wurden Leistungen nach Beendigung des Arbeitsverhältnisses in Form von Erträgen in der Gewinn- und Verlustrechnung in Höhe von TEUR 12,1 (2020: Aufwendungen in Höhe von TEUR 607,0) erfasst. Der Barwert der dafür gebildeten Pensionsrückstellung nach Abzug des beizulegenden Zeitwerts des Planvermögens (Nettoschuld) beträgt zum 31. Dezember 2021 TEUR 6.511,5 (31. Dezember 2020: TEUR 7.284,8).

Honorare des Abschlussprüfers

Die aufgewendeten Honorare für Leistungen der KPMG Austria GmbH, Linz setzten sich wie folgt zusammen:

Aufgewendete Honorare des Abschlussprüfers

TEUR	2021	2020
Prüfung des Jahresabschlusses (inkl. Konzernabschluss)	510	564
Andere Bestätigungsleistungen	151	174
Sonstige Leistungen	178	169
Gesamt	839	907

136 Annual Financial Report 2021 Lenzing Group Geschäftsbericht 2021 Lenzing AG 23

Angaben zur Gruppenbesteuerung

Die Lenzing AG und die im Gruppenvertrag einbezogenen Tochtergesellschaften sind Gruppenmitglieder in der zwischen der B&C Holding Österreich GmbH als Gruppenträger und der Lenzing AG sowie weiteren Tochtergesellschaften der Lenzing AG als Gruppenmitglieder am 27. Juli 2017 abgeschlossenen steuerlichen Unternehmensgruppe gemäß § 9 öKStG (österreichisches Körperschaftsteuergesetz). Der Steuerausgleichsvertrag wurde mit Wirkung ab dem Wirtschaftsjahr 2021 der Lenzing Aktiengesellschaft sowie der (un)mittelbaren Tochtergesellschaften, die ebenfalls Gruppenmitglieder sind, am 04. November 2021 neu gefasst, in dem auch die Neuregelungen betreffend Zinsschranke (§ 12a KStG) berücksichtigt sind.

Im Zuge der Gruppenbesteuerung kommt es zwischen den einbezogenen Gruppenmitgliedern zu einer Aufrechnung von steuerlichen Gewinnen und Verlusten. Zukünftige Steuerverpflichtungen aus der Anrechnung von Verlusten ausländischer Tochtergesellschaften werden ohne Abzinsung im Jahresabschluss erfasst. Der Gruppen- und Steuerausgleichsvertrag verpflichtet die Lenzing AG, eine Steuerumlage in Höhe der auf den steuerpflichtigen Gewinn der Gesellschaft und der in die Gruppe einbezogenen Tochtergesellschaften entfallenden Körperschaftsteuer zu entrichten. Allfällige beim Gruppenträger auf das gesamte Gruppenergebnis effektiv anrechenbare in- und ausländische Quellensteuern sowie weitergeleitete Mindestkörperschaftsteuern kürzen die von der Lenzing AG zu zahlende Steuerumlage. Sofern im Veranlagungsjahr laufende Verluste bzw. Verlustvorträge, die vom Gruppenträger selbst verursacht wurden, gegen positive Ergebnisse der Steuergruppe der Lenzing AG verrechnet werden können, kommt es zu einer Reduktion der von der Lenzing AG zu leistenden Steuerumlage. Die Reduktion der Steuerumlage beträgt 25 Prozent des geltenden Körperschaftsteuersatzes (somit 6,25 Prozent) der in einem Veranlagungsjahr des Gruppenträgers mit positiven Ergebnissen verrechneten gruppenträgereigenen laufenden Verluste bzw. Verlustvorträge.

Aus der steuerlichen Unternehmensgruppe hat die Lenzing AG im Geschäftsjahr 2021 (inklusive Beträge aus Vorperioden) eine Steuergutschrift in Höhe von TEUR 747,1 (2020: TEUR 24,1) ergebniswirksam verbucht. Im Geschäftsjahr 2021 erfolgten gemäß der vertraglichen Verpflichtung und aufgrund des steuerlichen Verlustes im Vorjahr die Rückzahlung der Vorauszahlungen der Steuerumlage 2020 vom Gruppenträger an die Lenzing AG in Höhe von TEUR 15.285,0 (2020: Zahlung bzw. Vorauszahlung der Steuerumlage an den Gruppenträger in Summe von TEUR 19.195,7).

Zum 31. Dezember 2021 bilanziert die Lenzing AG aus der Steuerumlage nach Abzug der Vorauszahlung eine Verbindlichkeit in Höhe von TEUR 27.999,7 gegenüber dem Gruppenträger. Diese wird im Bilanzposten „Verbindlichkeiten gegenüber verbundenen Unternehmen“ ausgewiesen (per 31. Dezember 2020: unter „Forderungen gegenüber verbundenen Unternehmen“ TEUR 4.568,2). Der steuerliche Verlust aus dem Jahr 2020 in Höhe von TEUR 13.023,7 wurde im Geschäftsjahr 2021 zur Gänze mit Gewinnen verrechnet.# Lenzing Group Geschäftsbericht 2021

Lenzing AG 24 Direkte Beteiligungen zum 31.12.2021

Ein steuerlicher Verlust der Lenzing AG inklusive der beteiligten Tochtergesellschaften wird evident gehalten und mit künftigen steuerlichen Gewinnen verrechnet. Für bei Beendigung des Vertrages nicht verrechnete Verluste ist eine Ausgleichszahlung vereinbart. Mit den einbezogenen Tochtergesellschaften wurde ein Ergänzungsvertrag abgeschlossen, welcher ebenfalls mit Wirkung ab dem Wirtschaftsjahr 2021 neu gefasst wurde. Dieser Vertrag verpflichtet das jeweilige österreichische Gruppenmitglied, eine Steuerumlage in Höhe der auf seinen steuerpflichtigen Gewinn entfallenden Körperschaftsteuer an die Lenzing AG zu entrichten. Die Lenzing AG ist verpflichtet, der jeweiligen Gesellschaft im Fall eines Verlustes eine Steuergutschrift in der Höhe der durch den Verlust bewirkten Steuerentlastung zu erteilen. Steuerliche Verluste von ausländischen Gruppenmitgliedern, welche in die Gruppenbesteuerung einbezogen werden, kürzen die geschuldete Steuerumlage des betreffenden Gruppenmitglieds maximal auf Null. Die darüberhinausgehenden ausländischen Verluste werden in einem internen Verlustvortrag evident gehalten und mit künftigen ausländischen Gewinnen, die nachversteuert werden müssen, gegenverrechnet.

Beteiligung	Währung	Nennkapital	Anteil in Prozent	Eigenkapital 31.12.2021	Jahresüberschuss/-fehlbetrag 2021
Beech Investments s.r.o., Zlaté Moravce, Slowakei	EUR	1.000.000,00	99,00 %	5.864.036,46	1.887.791,06
BZL-Bildungszentrum Lenzing GmbH, Lenzing	EUR	3.026.750,00	100,00 %	7.835.393,30	4.531.876,18
EQUI-Fibres Beteiligungsgesellschaft mbH, Kelheim, Deutschland	EUR	70.000.000,00	100,00 %	7.253.762,84	-3.209,47
Gemeinnützige Siedlungsgesellschaft m.b.H. für den Bezirk Vöcklabruck, Lenzing	EUR	27.000.000,00	100,00 %	15.771.827,98	1.451.119,87
LD Celulose S.A., Sao Paulo, Brasilien	BRL	700.000.000,00	50,00 %	3.521.484,78	-709.986,76
LD Florestal S.A., Sao Paulo, Brasilien	BRL	200.000.000,00	50,00 %	2.687.646,14	-4.189,54
Lenzing (Thailand) Co., Ltd., Bangkok, Thailand	THB	300.000.000,00	100,00 %	18.760.717,20	-734.364,93
Lenzing Fibers (Hongkong) Ltd., Hong Kong, China	HKD	300.000.000,00	100,00 %	10.686.105,85	8.546,21
Lenzing Fibers (Shanghai) Co., Ltd., Shanghai, China	USD	10.000.000,00	100,00 %	17.264.891,86	467.895,95
Lenzing Fibers Holding GmbH, Lenzing	EUR	3.500.000,00	100,00 %	17.703.501,12	2.489.187,23
Lenzing Fibers India Private Ltd.	INR	3.000.000.000,00	100,00 %	1.148.401,67	1.131.510,26
Lenzing Global Finance GmbH, München, Deutschland	EUR	1.500.000,00	100,00 %	18.123.677,67	1.346,88
Lenzing Land Holding LLC., Dover, USA	USD	10.000.000,00	100,00 %	10.661.921,36	1.143.165,98
Lenzing Modi Fibers India Private Limited, Mumbai, Indien	INR	3.000.000.000,00	100,00 %	14.174.208,47	-1.157.638,59
Lenzing Papier GmbH, Lenzing	EUR	3.500.000,00	100,00 %	10.791.677,62	1.276.079,26
Lenzing Singapore Pte. Ltd., Singapur, Republik Singapur	EUR	200.000.000,00	100,00 %	10.454.178,89	1.180.177,10
PT. Pura Golden Lion, Jakarta, Indonesien	IDR	300.000.000.000,00	100,00 %	6.149.328,20	159.087,07
PT. South Pacific Viscose, Purwakarta, Indonesien	IDR	300.000.000.000,00	100,00 %	1.771.807,29	-1.441.374,94
Pulp Trading GmbH, Lenzing	EUR	200.000,00	100,00 %	17.636.320,99	2.768.120,49
RVL Reststoffverwertung Lenzing GmbH, Lenzing	EUR	3.500.000,00	100,00 %	5.411.787,14	1.132,42

1) 2020
2) Der direkt von der Lenzing AG gehaltene Anteil beträgt 91,87 Prozent, inkl. der indirekt gehaltenen Anteile beträgt der durchgerechnete Anteil 95,12 Prozent.
3) Eigenkapital und Ergebnis wurden nach lokalem Recht ermittelt.
4) Eigenkapital und Ergebnis wurden aus den zur Erstellung des Konzernabschlusses herangezogenen Abschlüssen, welche entsprechend IFRS aufgestellt wurden, entnommen.
5) Vorläufig

Lenzing Group Geschäftsbericht 2021

Lenzing AG 25 Direkte Beteiligungen zum 31.12.2020

Beteiligung	Währung	Nennkapital	Anteil in Prozent	Eigenkapital 31.12.2020	Jahresüberschuss /-fehlbetrag 2020
Avit Investments Limited, Providenciales, Turks & Caicos	USD	1.000.000,00	100,00 %	7.314.417,11	-17.444,82
Beech Investment s.r.o., Zlaté Moravce, Slowakei	EUR	1.000.000,00	100,00 %	5.511.817,07	1.033.256,81
BZL-Bildungszentrum Lenzing GmbH, Lenzing	EUR	3.026.750,00	100,00 %	7.358.504,34	6.158.712,76
EQUI-Fibres Beteiligungsgesellschaft mbH, Kelheim, Deutschland	EUR	70.000.000,00	100,00 %	7.257.972,31	-45.415,42
Gemeinnützige Siedlungsgesellschaft m.b.H. für den Bezirk Vöcklabruck, Lenzing	EUR	27.000.000,00	100,00 %	15.305.046,18	1.163.096,15
Hygiene Austria LP GmbH	EUR	300.000,00	100,00 %	4.160.801,26	-182.109,14
LD Celulose S.A., Sao Paulo, Brasilien	BRL	700.000.000,00	50,00 %	3.703.085,86	-132.912,84
LD Florestal S.A., Sao Paulo, Brasilien	BRL	200.000.000,00	50,00 %	2.701.014,32	-21.832,54
Lenzing (Thailand) Co., Ltd., Bangkok, Thailand	THB	300.000.000,00	100,00 %	19.495.082,13	-411.517,78
Lenzing Fibers (Hongkong) Ltd., Hong Kong, China	HKD	300.000.000,00	100,00 %	10.677.559,64	710.099,13
Lenzing Fibers (Shanghai) Co., Ltd., Shanghai, China	USD	10.000.000,00	100,00 %	17.198.527,04	315.365,52
Lenzing Fibers Holding GmbH, Lenzing	EUR	3.500.000,00	100,00 %	17.701.011,12	-8.846,50
Lenzing Global Finance GmbH, München, Deutschland	EUR	1.500.000,00	100,00 %	18.122.330,79	-176,17
Lenzing Land Holding LLC., Dover, USA	USD	10.000.000,00	100,00 %	10.660.778,21	1.143.055,34
Lenzing Modi Fibers India Private Limited, Mumbai, Indien	INR	3.000.000.000,00	100,00 %	14.182.550,48	-1.741.217,95
Lenzing Fibers India Private Ltd.	INR	3.000.000.000,00	100,00 %	1.171.284,19	-270.611,14
Lenzing Papier GmbH, Lenzing	EUR	3.500.000,00	100,00 %	10.790.217,64	1.169.932,65
Lenzing Singapore Pte. Ltd., Singapur, Republik Singapur	EUR	200.000.000,00	100,00 %	10.453.001,81	420.879,57
Penique S.A., Panama, Panama	USD	300.000,00	100,00 %	7.520.676,91	-2.816.365,67
PT. Pura Golden Lion, Jakarta, Indonesien	IDR	300.000.000.000,00	100,00 %	7.211.387,18	1.004.174,45
PT. South Pacific Viscose, Purwakarta, Indonesien	IDR	300.000.000.000,00	100,00 %	5.648.679,94	-1.571.943,17
Pulp Trading GmbH, Lenzing	EUR	200.000,00	100,00 %	17.634.013,68	2.335.760,54
RVL Reststoffverwertung Lenzing GmbH, Lenzing	EUR	3.500.000,00	100,00 %	5.410.654,72	-5.026,39

1) 2019
2) Der direkt von der Lenzing AG gehaltene Anteil beträgt 88,08 Prozent, inkl. der indirekt gehaltenen Anteile beträgt der durchgerechnete Anteil 92,85 Prozent.
3) Eigenkapital und Ergebnis wurden nach lokalem Recht ermittelt.
4) Eigenkapital und Ergebnis wurden aus den zur Erstellung des Konzernabschlusses herangezogenen Abschlüssen, welche entsprechend IFRS aufgestellt wurden, entnommen.
5) Vorläufig
6) Änderung Vorjahreswert

Gewinnverteilungsvorschlag für den Bilanzgewinn 2021

EUR

Das Geschäftsjahr 2021 endet mit einem Jahresüberschuss von 139.017.587,65 nach Zuweisung zu (freien) Gewinnrücklagen von -17.210.192,00 und nach Hinzurechnung des Gewinnvortrages 2020 von 3.111.119,11 verbleibt ein Bilanzgewinn von 124.918.514,76.

Der Vorstand schlägt folgende Verteilung des Bilanzgewinnes vor:

• Ausschüttung einer Dividende entsprechend einem Betrag von EUR 4,35 je Aktie auf das dividendenberechtigte Grundkapital von EUR 27.574.071,43 bzw. 26.550.000 Stückaktien 115.702.500,00
• Auf neue Rechnung werden vorgetragen 9.216.014,76

Vorbehaltlich des Beschlusses der Hauptversammlung erfolgt auf je eine Aktie die Auszahlung einer Dividende in der oben angegebenen Höhe. Die Dividendenauszahlung erfolgt ab 3. Mai 2022 bei der UniCredit Bank Austria AG Rothschildplatz 1 1020 Wien. Die Aktien werden ab 28. April 2022 an der Wiener Börse ex Dividende gehandelt.

Lenzing Group Geschäftsbericht 2021

Lenzing AG 26 Organe der Gesellschaft

Mitglieder des Aufsichtsrates

• Dipl.-Bw. Peter Edelmann Vorsitzender
• Mag. Patrick Prügger Stellvertretender Vorsitzender (seit 14. April 2021)
• Dr. Stefan Fida Stellvertretender Vorsitzender (seit 14. April 2021)
• Mag. Helmut Bernkopf
• Dr. Christian Bruch
• Dr. Markus Fürst, MBA (seit 14. April 2021)
• KR Dr. Franz Gasselsberger, MBA
• Melody Harris-Jensbach (seit 18. Juni 2020)
• Cord Prinzhorn, MBA (14. April 2021 bis 3. November 2021)
• Dr. Astrid Skala-Kuhmann
• Dr. Veit Sorger Stellvertretender Vorsitzender (bis 14. April 2021)
• Dr. Felix Fremerey (bis 18. Juni 2020)

Vom Betriebsrat delegiert

• Johann Schernberger Vorsitzender des Konzernbetriebsrates Vorsitzender des Betriebsausschusses (bis 18. Jänner 2021) Vorsitzender des Arbeiterbetriebsrates
• Helmut Kirchmair Vorsitzender des Betriebsausschusses (seit 18. Jänner 2021) Stellvertretender Vorsitzender des Arbeiterbetriebsrates
• Georg Liftinger Stellvertretender Vorsitzender des Betriebsausschusses Vorsitzender des Angestelltenbetriebsrates
• Herbert Brauneis Stellvertretender Vorsitzender des Arbeiterbetriebsrates
• Ing. Daniela Födinger Stellvertretende Vorsitzende des Angestelltenbetriebsrates

Mitglieder des Vorstandes

• Cord Prinzhorn, MBA Vorstandsvorsitzender (seit 4. November 2021)
• Mag. Thomas Obendrauf, MBA Finanzvorstand
• Robert van de Kerkhof, MBA Mitglied des Vorstandes
• DI Stephan Sielaff Mitglied des Vorstandes (seit 1. März 2020)
• DI Christian Skilich, MBA, LLM Mitglied des Vorstandes (seit 1. Juni 2020)
• Dr. Stefan Doboczky, MBA Vorstandsvorsitzender (bis 30. September 2021)

Lenzing Group Geschäftsbericht 2021

Lenzing AG 27 Wesentliche Ereignisse nach dem Bilanzstichtag

Am 20. Jänner 2022 wurde in Österreich die stufenweise Senkung des Körperschaftsteuersatzes von 25 Prozent auf 23 Prozent mit Wirkung ab dem 1. Jänner 2023 beschlossen. Diese Senkung wirkt sich nicht auf die zum 31. Dezember 2021 erfassten tatsächlichen oder latenten Steuern aus. Allerdings wird diese Änderung die künftige tatsächliche Steuerlast der Lenzing AG entsprechend senken. Wenn die geänderten Steuersätze für die Berechnung der Steuerabgrenzung zum 31. Dezember 2021 verwendet worden wären, hätten sich die aktiven latenten Steuern um TEUR 570,5 vermindert.

Seit dem 24. Februar 2022 gibt es militärische Auseinandersetzungen zwischen Russland und der Ukraine. Die Lenzing AG verfügt in beiden Staaten über keine Beteiligungen, sonstige Vermögenswerte bzw. andere wesentliche Geschäftsbeziehungen. Auf den Jahresabschluss per 31. Dezember 2021 der Lenzing AG ergeben sich daher keine finanziellen Auswirkungen. Darüber hinaus sind nach dem Bilanzstichtag 31.Dezember 2021 keine Vorgänge von wesentlicher Bedeutung für die Lenzing AG bekannt geworden, die zu einer anderen Darstellung der Vermögens-, Finanz- und Ertragslage geführt hätten.

Lenzing, am 1. März 2022
Lenzing Aktiengesellschaft

Der Vorstand
Cord Prinzhorn, MBA
Vorstandsvorsitzender
Mag. Thomas Obendrauf, MBA
Finanzvorstand
Robert van de Kerkhof, MBA
Mitglied des Vorstandes
DI Stephan Sielaff
Mitglied des Vorstandes
DI Christian Skilich, MBA, LLM
Mitglied des Vorstandes

141
Annual Financial Report 2021
Lenzing Group
Geschäftsbericht 2021

Lenzing AG 28

Entwicklung des Anlagevermögens für den Zeitraum 01. Jänner 2021 bis 31. Dezember 2021

Anschaungskosten	Anschaungs- bzw. Herstellungskosten 01.01.2021	Zugänge 2021	Umbuchungen 2021	Abgänge 2021	Anschaungs- bzw. Herstellungskosten 31.12.2021
I. Immaterielle Vermögensgegenstände
1. Rechte	77.177.519	4.536.870	-7.500	599.438	81.104.551
2. Firmenwert	15.957.469	0	0	0	15.957.469
Summe Immaterielle Vermögensgegenstände	93.135.000	4.536.870	-7.500	599.438	97.061.920
II. Sachanlagen
1. Grundstücke, grundstücksgleiche Rechte und Bauten, einschließlich der Bauten auf fremdem Grund
a) Wohngebäude
Grundwert	240.245.670	0	0	-7.011	240.238.659
Gebäudewert	237.318.158	0	0	-7.721	237.310.437
b) Geschäfts- und Fabriksgebäude und andere Baulichkeiten
Grundwert	57.486.799	0	0	0	57.486.799
Gebäudewert	12.514.630	7.466.386	-12.552	-35.179	19.813.335
c) Unbebaute Grundstücke	7.015	0	0	0	7.015
Geleistete Anzahlungen	17.820.499	17.819.237	-17.820.499	0	17.819.237
Summe Sachanlagen	664.377.774	25.285.623	-17.833.051	-42.911	671.777.435
III. Finanzanlagen
1. Anteile an verbundenen Unternehmen	198.785.427	0	0	-10.788.983	187.996.444
2. Ausleihungen an verbundene Unternehmen	24.555.693	18.977.426	0	-5.155	43.527.964
3. Beteiligungen	10.012.764	0	0	-4.113	10.008.651
4. Wertpapiere (Wertrechte) des Anlagevermögens	12.014	0	0	0	12.014
5. Sonstige Ausleihungen	1.428.777	8.229	0	0	1.436.996
Summe Finanzanlagen	236.794.678	19.000.000	0	-10.808.251	242.981.069

1) inklusive geringwertige Vermögensgegenstände in Höhe von EUR 925.717,21.

142
Annual Financial Report 2021
Lenzing Group
Geschäftsbericht 2021

Lenzing AG 29

Abschreibungen kumuliert

Buchwert 01.01.2021	Abschreibungen 2021	Zuschreibungen 2021	Umbuchungen 2021	Abgänge 2021	Abschreibungen kumuliert 31.12.2021	Buchwert 31.12.2021	Buchwert 31.12.2020
7.980.597	910.947	0	0	-207.346	1.514.548	7.176.996	7.176.996
26.130.419	2.849.418	0	0	-708.509	6.090.403	22.890.434	22.890.434
7.327.925	820.909	0	0	-376.489	1.598.819	6.550.015	6.550.015
6.625	4.179	0	0	-4.009	7.093	2.710	2.710
1.661.964	184.407	0	0	0	344.512	1.479.859	1.479.859
3.263.660	3.199.819	0	0	-4.308.858	7.781.092	2.080.829	2.080.829
19.963.089	1.520.309	0	0	-3.073.594	4.888.793	16.597.780	16.597.780
8.121.080	4.180.460	0	0	-2.000.000	10.301.540	9.900.000	9.900.000
4.068.475	3.912.906	0	0	-2.487.573	5.501.733	2.482.648	2.482.648
13.499.986	7.895.048	0	0	-6.975.699	14.419.335	10.420.649	10.420.649
1.318.587	1.270.271	0	0	-792.835	1.790.723	804.033	804.033
4.369.221	2.178.020	0	0	-1.000.000	5.547.241	3.000.000	3.000.000
1.907.710	1.529.428	0	0	-1.727.000	1.730.138	1.707.000	1.707.000
3.390.935	2.995.815	0	0	-1.529.428	4.866.322	1.520.425	1.520.425
14.529.542	7.884.445	0	0	-7.010.000	15.403.987	7.000.000	7.000.000
4.324.547	3.783.910	0	0	-3.308.126	4.800.331	3.300.000	3.300.000
7.771.134	7.078.768	0	0	-7.000.000	8.099.802	7.000.000	7.000.000
6.178.513	1.414.603	0	0	-3.214.135	4.378.973	3.619.173	3.619.173
5.415.789	5.099.488	0	0	-3.248.566	7.266.709	3.266.751	3.266.751
106.378.167	31.607.620	0	0	-29.744.976	108.240.811	98.240.961	98.240.961

143
Annual Financial Report 2021
Lenzing Group
Geschäftsbericht 2021

Lenzing AG 30

Entwicklung der Zuschüsse der öffentlichen Hand für den Zeitraum 01. Jänner 2021 bis 31. Dezember 2021

	Stand am 01.01.2021	Zugang	Abgang	Auflösung	Umbuchung	Stand am 31.12.2021
A. Investitionszuschüsse
I. Investitionszuschüsse der öffentlichen Hand
1. Grundstücke, grundstücksgleiche Rechte und Bauten, einschließlich der Bauten auf fremdem Grund	27.920.915	0	0	-2.069.115	0	25.851.800
2. Technische Anlagen und Maschinen	20.740.881	0	0	-4.540.881	0	16.200.000
3. Andere Anlagen, Betriebs- und Geschäftsausstattung	14.727.470	0	0	-3.400.000	0	11.327.470
Summe Investitionszuschüsse der öffentlichen Hand	63.389.266	0	0	-9.009.996	0	53.379.270
II. Emissionszertifikate	13.743.698	14.766.645	-13.743.698	-6.500.000	0	8.266.645
III. Investitionsprämien	0	1.000.000	0	0	0	1.000.000
Summe Investitionszuschüsse	77.132.964	15.766.645	-13.743.698	-15.509.996	0	62.645.915

144
Annual Financial Report 2021
Lenzing Group
Geschäftsbericht 2021

Lenzing AG 31

Bericht zum Jahresabschluss

Prüfungsurteil

Wir haben den Jahresabschluss der Lenzing Aktiengesellschaft, Lenzing, bestehend aus der Bilanz zum 31. Dezember 2021, der Gewinn- und Verlustrechnung für das an diesem Stichtag endende Geschäftsjahr und dem Anhang, geprüft. Nach unserer Beurteilung entspricht der Jahresabschluss den gesetzlichen Vorschriften und vermittelt ein möglichst getreues Bild der Vermögens- und Finanzlage zum 31. Dezember 2021 sowie der Ertragslage der Gesellschaft für das an diesem Stichtag endende Geschäftsjahr in Übereinstimmung mit den österreichischen unternehmensrechtlichen Vorschriften.

Grundlage für das Prüfungsurteil

Wir haben unsere Abschlussprüfung in Übereinstimmung mit der EU-Verordnung Nr 537/2014 (im Folgenden AP-VO) und mit den österreichischen Grundsätzen ordnungsgemäßer Abschlussprüfung durchgeführt. Diese Grundsätze erfordern die Anwendung der International Standards on Auditing (ISA). Unsere Verantwortlichkeiten nach diesen Vorschriften und Standards sind im Abschnitt "Verantwortlichkeiten des Abschlussprüfers für die Prüfung des Jahresabschlusses" unseres Bestätigungsvermerks weitergehend beschrieben. Wir sind von der Gesellschaft unabhängig in Übereinstimmung mit den österreichischen unternehmens- und berufsrechtlichen Vorschriften und wir haben unsere sonstigen beruflichen Pflichten in Übereinstimmung mit diesen Anforderungen erfüllt. Wir sind der Auffassung, dass die von uns erlangten Prüfungsnachweise bis zum Datum dieses Bestätigungsvermerkes ausreichend und geeignet sind, um als Grundlage für unser Prüfungsurteil zu diesem Datum zu dienen.

Besonders wichtige Prüfungssachverhalte

Besonders wichtige Prüfungssachverhalte sind solche Sachverhalte, die nach unserem pflichtgemäßen Ermessen am bedeut samsten für unsere Prüfung des Jahresabschlusses des Geschäftsjahres waren. Diese Sachverhalte wurden im Zusammenhang mit unserer Prüfung des Jahresabschlusses als Ganzes und bei der Bildung unseres Prüfungsurteils hierzu berücksichtigt und wir geben kein gesondertes Prüfungsurteil zu diesen Sachverhalten ab.

Werthaltigkeit der Anteile an verbundenen Unternehmen

Siehe Anhang Seite 6.

Das Risiko für den Abschluss

Die Anteile an verbundenen Unternehmen mit einem Buchwert in Höhe von EUR 831 Mio. stellen rund 26 % des ausgewiesenen Vermögens im Jahresabschluss der Lenzing Aktiengesellschaft dar. Für sämtliche bedeutsamen Anteile an verbundenen Unternehmen beurteilt Lenzing Aktiengesellschaft, ob Anhaltspunkte für einen wesentlich gesunkenen beizulegenden Wert vorliegen. Liegen solche Anhaltspunkte vor, wird für das betroffene verbundene Unternehmen eine Unternehmensbewertung durchgeführt und der Buchwert der Anteile gegebenenfalls auf den niedrigeren beizulegenden Wert abgeschrieben. Zum 31. Dezember 2021 hat Lenzing Aktiengesellschaft für die Anteile an der PT. South Pacific Viscose Anhaltspunkte für einen wesentlich gesunkenen beizulegenden Wert identifiziert. Der in Folge ermittelte beizulegende Wert ergab eine ausreichende Deckung des Buchwertes der Anteile. Die Bewertung des beizulegenden Wertes von Anteilen an verbundenen Unternehmen erfordert Annahmen und Schätzungen, wie beispielsweise die Schätzung der künftigen Einzahlungsüberschüsse sowie die Festlegung des anzuwendenden Diskontierungszinssatzes. Für den Jahresabschluss besteht damit das Risiko, dass nicht angemessene Annahmen und Schätzungen eine wesentliche Auswirkung auf den beizulegenden Wert und damit den Wertansatz der Anteile an verbundenen Unternehmen in der Bilanz und das Finanzergebnis in der Gewinn- und Verlustrechnung haben können.# Bestätigungsvermerk

Unsere Vorgehensweise in der Prüfung

Wir haben die Werthaltigkeit der Anteile an verbundenen Unternehmen wie folgt beurteilt:

• Wir haben die vom Unternehmen durchgeführte Analyse der Anhaltspunkte für einen wesentlich gesunkenen beizulegenden Wert (einschließlich der Deckung des Beteiligungsansatzes durch das anteilige Eigenkapital) der Anteile an verbundenen Unternehmen nachvollzogen.
• Zur Beurteilung der Angemessenheit der zugrunde gelegten internen Planungen haben wir uns ein Verständnis über den Planungsprozess verschafft, die Annahmen über Wachstumsraten und operative Ergebnisse in Gesprächen mit den zuständigen leitenden Personen im Unternehmen erörtert und die der Bewertung zugrunde gelegten Planungsdaten mit den aktuellen vom Aufsichtsrat genehmigten Budgetzahlen sowie der vom Vorstand freigegebenen Mittelfristplanung abgeglichen.
• Die Planungstreue haben wir durch Vergleich der in den Vorjahren erfolgten Planungen mit den tatsächlich eingetretenen Werten beurteilt.
• Unsere Bewertungsspezialisten haben die Methodik der durchgeführten Wertminderungstests nachvollzogen und beurteilt, ob diese angemessen ist. Die zur Festlegung der Kapitalkostensätze herangezogenen Annahmen haben unsere Bewertungsspezialisten mit markt- und branchenspezifischen Richtwerten abgeglichen und die rechnerische Richtigkeit des Berechnungsschemas überprüft.

Verantwortlichkeiten der gesetzlichen Vertreter und des Prüfungsausschusses für den Jahresabschluss

Die gesetzlichen Vertreter sind verantwortlich für die Aufstellung des Jahresabschlusses und dafür, dass dieser in Übereinstimmung mit den österreichischen unternehmensrechtlichen Vorschriften ein möglichst getreues Bild der Vermögens-, Finanz- und Ertragslage der Gesellschaft vermittelt. Ferner sind die gesetzlichen Vertreter verantwortlich für die internen Kontrollen, die sie als notwendig erachten, um die Aufstellung eines Jahresabschlusses zu ermöglichen, der frei von wesentlichen falschen Darstellungen aufgrund von dolosen Handlungen oder Irrtümern ist.

Bei der Aufstellung des Jahresabschlusses sind die gesetzlichen Vertreter dafür verantwortlich, die Fähigkeit der Gesellschaft zur Fortführung der Unternehmenstätigkeit zu beurteilen, Sachverhalte im Zusammenhang mit der Fortführung der Unternehmenstätigkeit – sofern einschlägig – anzugeben, sowie dafür, den Rechnungslegungsgrundsatz der Fortführung der Unternehmenstätigkeit anzuwenden, es sei denn, die gesetzlichen Vertreter beabsichtigen, entweder die Gesellschaft zu liquidieren oder die Unternehmenstätigkeit einzustellen oder haben keine realistische Alternative dazu.

Der Prüfungsausschuss ist verantwortlich für die Überwachung des Rechnungslegungsprozesses der Gesellschaft.

Verantwortlichkeiten des Abschlussprüfers für die Prüfung des Jahresabschlusses

Unsere Ziele sind hinreichende Sicherheit darüber zu erlangen, ob der Jahresabschluss als Ganzes frei von wesentlichen falschen Darstellungen aufgrund von dolosen Handlungen oder Irrtümern ist und einen Bestätigungsvermerk zu erteilen, der unser Prüfungsurteil beinhaltet. Hinreichende Sicherheit ist ein hohes Maß an Sicherheit, aber keine Garantie dafür, dass eine in Übereinstimmung mit der AP-VO und mit den österreichischen Grundsätzen ordnungsgemäßer Abschlussprüfung, die die Anwendung der ISA erfordern, durchgeführte Abschlussprüfung eine wesentliche falsche Darstellung, falls eine solche vorliegt, stets aufdeckt.

Falsche Darstellungen können aus dolosen Handlungen oder Irrtümern resultieren und werden als wesentlich angesehen, wenn von ihnen einzeln oder insgesamt vernünftigerweise erwartet werden könnte, dass sie die auf der Grundlage dieses Jahresabschlusses getroffenen wirtschaftlichen Entscheidungen von Nutzern beeinflussen.

Als Teil einer Abschlussprüfung in Übereinstimmung mit der AP-VO und mit den österreichischen Grundsätzen ordnungsgemäßer Abschlussprüfung, die die Anwendung der ISA erfordern, üben wir während der gesamten Abschlussprüfung pflichtgemäßes Ermessen aus und bewahren eine kritische Grundhaltung. Darüber hinaus gilt:

• Wir identifizieren und beurteilen die Risiken wesentlicher falscher Darstellungen aufgrund von dolosen Handlungen oder Irrtümern im Abschluss, planen Prüfungshandlungen als Reaktion auf diese Risiken, führen sie durch und erlangen Prüfungsnachweise, die ausreichend und geeignet sind, um als Grundlage für unser Prüfungsurteil zu dienen. Das Risiko, dass aus dolosen Handlungen resultierende wesentliche falsche Darstellungen nicht aufgedeckt werden, ist höher als ein aus Irrtümern resultierendes, da dolose Handlungen kollusives Zusammenwirken, Fälschungen, beabsichtigte Unvollständigkeiten, irreführende Darstellungen oder das Außerkraftsetzen interner Kontrollen beinhalten können.
• Wir gewinnen ein Verständnis von dem für die Abschlussprüfung relevanten internen Kontrollsystem, um Prüfungshandlungen zu planen, die unter den gegebenen Umständen angemessen sind, jedoch nicht mit dem Ziel, ein Prüfungsurteil zur Wirksamkeit des internen Kontrollsystems der Gesellschaft abzugeben.
• Wir beurteilen die Angemessenheit der von den gesetzlichen Vertretern angewandten Rechnungslegungsmethoden sowie die Vertretbarkeit der von den gesetzlichen Vertretern dargestellten geschätzten Werte in der Rechnungslegung und damit zusammenhängende Angaben.
• Wir ziehen Schlussfolgerungen über die Angemessenheit der Anwendung des Rechnungslegungsgrundsatzes der Fortführung der Unternehmenstätigkeit durch die gesetzlichen Vertreter sowie, auf der Grundlage der erlangten Prüfungsnachweise, ob eine wesentliche Unsicherheit im Zusammenhang mit Ereignissen oder Gegebenheiten besteht, die erhebliche Zweifel an der Fähigkeit der Gesellschaft zur Fortführung der Unternehmenstätigkeit aufwerfen können. Falls wir die Schlussfolgerung ziehen, dass eine wesentliche Unsicherheit besteht, sind wir verpflichtet, in unserem Bestätigungsvermerk auf die dazugehörigen Angaben im Jahresabschluss aufmerksam zu machen oder, falls diese Angaben unangemessen sind, unser Prüfungsurteil zu modifizieren. Wir ziehen unsere Schlussfolgerungen auf der Grundlage der bis zum Datum unseres Bestätigungsvermerks erlangten Prüfungsnachweise. Zukünftige Ereignisse oder Gegebenheiten können jedoch die Abkehr der Gesellschaft von der Fortführung der Unternehmenstätigkeit zur Folge haben.
• Wir beurteilen die Gesamtdarstellung, den Aufbau und den Inhalt des Jahresabschlusses einschließlich der Angaben sowie ob der Jahresabschluss die zugrunde liegenden Geschäftsvorfälle und Ereignisse in einer Weise wiedergibt, dass ein möglichst getreues Bild erreicht wird.
• Wir tauschen uns mit dem Prüfungsausschuss unter anderem über den geplanten Umfang und die geplante zeitliche Einteilung der Abschlussprüfung sowie über bedeutsame Prüfungsfeststellungen, einschließlich etwaiger bedeutsamer Mängel im internen Kontrollsystem, die wir während unserer Abschlussprüfung erkennen, aus.
• Wir geben dem Prüfungsausschuss auch eine Erklärung ab, dass wir die relevanten beruflichen Verhaltensanforderungen zur Unabhängigkeit eingehalten haben und uns mit ihm über alle Beziehungen und sonstigen Sachverhalte austauschen, von denen vernünftigerweise angenommen werden kann, dass sie sich auf unsere Unabhängigkeit und – sofern einschlägig – damit zusammenhängende Schutzmaßnahmen auswirken.
• Wir bestimmen von den Sachverhalten, über die wir uns mit dem Prüfungsausschuss ausgetauscht haben, diejenigen Sachverhalte, die am bedeutsamsten für die Prüfung des Jahresabschlusses des Geschäftsjahres waren und daher die besonders wichtigen Prüfungssachverhalte sind. Wir beschreiben diese Sachverhalte in unserem Bestätigungsvermerk, es sei denn, Gesetze oder andere Rechtsvorschriften schließen die öffentliche Angabe des Sachverhalts aus oder wir bestimmen in äußerst seltenen Fällen, dass ein Sachverhalt nicht in unserem Bestätigungsvermerk mitgeteilt werden sollte, weil vernünftigerweise erwartet wird, dass die negativen Folgen einer solchen Mitteilung deren Vorteile für das öffentliche Interesse übersteigen würden.

Bericht zum Lagebericht

Der Lagebericht ist aufgrund der österreichischen unternehmensrechtlichen Vorschriften darauf zu prüfen, ob er mit dem Jahresabschluss in Einklang steht und ob er nach den geltenden rechtlichen Anforderungen aufgestellt wurde. Die gesetzlichen Vertreter sind verantwortlich für die Aufstellung des Lageberichtes in Übereinstimmung mit den österreichischen unternehmensrechtlichen Vorschriften. Wir haben unsere Prüfung in Übereinstimmung mit den Berufsgrundsätzen zur Prüfung des Lageberichtes durchgeführt.

Urteil

Nach unserer Beurteilung ist der Lagebericht nach den geltenden rechtlichen Anforderungen aufgestellt worden, enthält die nach § 243a UGB zutreffenden Angaben, und steht in Einklang mit dem Jahresabschluss.

Erklärung

Angesichts der bei der Prüfung des Jahresabschlusses gewonnenen Erkenntnisse und des gewonnenen Verständnisses über die Gesellschaft und ihr Umfeld haben wir keine wesentlichen fehlerhaften Angaben im Lagebericht festgestellt.

Zusätzliche Angaben nach Artikel 10 AP-VO

Wir wurden von der Hauptversammlung am 14. April 2021 als Abschlussprüfer gewählt und am 27. April 2021 vom Aufsichtsrat mit der Abschlussprüfung der Gesellschaft für das am 31. Dezember 2021 endende Geschäftsjahr beauftragt. Wir sind ohne Unterbrechung seit dem Jahresabschluss zum 31. Dezember 2017 Abschlussprüfer der Gesellschaft. Wir erklären, dass das Prüfungsurteil im Abschnitt „Bericht zum Jahresabschluss“ mit dem zusätzlichen Bericht an den Prüfungsausschuss nach Artikel 11 der AP-VO in Einklang steht.# Erklärung des Vorstandes gemäß § 124 (1) Z 3 Börsegesetz

Wir erklären nach bestem Wissen, dass der im Einklang mit den maßgebenden Rechnungslegungsstandards gemäß UGB aufgestellte Jahresabschluss der Lenzing AG zum 31. Dezember 2021 ein möglichst getreues Bild der Vermögens-, Finanz- und Ertragslage der Lenzing AG vermittelt. Ebenso erklären wir nach bestem Wissen, dass der Lagebericht den Geschäftsverlauf, das Geschäftsergebnis und die Lage der Lenzing AG so darstellt, dass ein möglichst getreues Bild deren Vermögens-, Finanz- und Ertragslage entsteht, und dass der Lagebericht die wesentlichen Risiken und Ungewissheiten beschreibt, denen die Lenzing AG ausgesetzt ist.

Lenzing, am 1. März 2022

Lenzing Aktiengesellschaft

Der Vorstand

Cord Prinzhorn, MBA
Vorstandsvorsitzender

Mag. Thomas Obendrauf, MBA
Finanzvorstand

Robert van de Kerkhof, MBA
Mitglied des Vorstandes

DI Stephan Sielaff
Mitglied des Vorstandes

DI Christian Skilich, MBA, LLM
Mitglied des Vorstandes

Impressum

Eigentümer & Herausgeber
Lenzing Aktiengesellschaft
4860 Lenzing, Österreich
www.lenzing.com

Konzeption, Redaktion
GW+Co (www.gilmarwendt.com), Lenzing Gruppe

Layout und Gestaltung
nexxar GmbH (www.nexxar.com)

Textseiten 3-329, 32-114, 116-148
Inhouse produziert mit FIRE.sys

Hinweise

Dieser Geschäftsbericht enthält auch zukunftsbezogene Aussagen, die auf gegenwärtigen, nach bestem Wissen vorgenommenen Einschätzungen und Annahmen der Lenzing Gruppe beruhen. Angaben unter Verwendung der Worte „sollen“, „dürfen“, „werden“, „erwartet“, „angestrebt“, „geht davon aus“, „nimmt an“, „schätzt“, „plant“, „beabsichtigt“, „ist der Ansicht“, „nach Kenntnis“, „nach Einschätzung“ oder ähnliche Formulierungen deuten auf solche zukunftsbezogene Aussagen hin. Die Prognosen, die sich auf die zukünftige Entwicklung der Lenzing Gruppe beziehen, stellen Einschätzungen dar, die auf Basis der zum Zeitpunkt der Drucklegung des Geschäftsberichts vorhandenen Informationen gemacht wurden. Sollten die den Prognosen zugrundeliegenden Annahmen nicht eintreten oder Risiken in nicht kalkulierter Höhe eintreten, so können die tatsächlichen Ergebnisse von den Prognosen abweichen. Bei der Summierung von gerundeten Beträgen und Prozentangaben können Rundungsdifferenzen auftreten. Der Geschäftsbericht wurde mit größtmöglicher Sorgfalt erstellt, um die Richtigkeit und Vollständigkeit der Angaben in allen Teilen sicherzustellen. Rundungs-, Satz- und Druckfehler können dennoch nicht ganz ausgeschlossen werden.