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Notes to the financial statements of Sulzer Ltd

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1 General information 

Sulzer Ltd, Winterthur, Switzerland (the company), is the parent company of the Sulzer Group. Its financial statements are prepared in accordance with Swiss law and serve as complementary information to the consolidated financial statements.

These financial statements were prepared according to the provisions of the Swiss Law on Accounting and Financial Reporting (32nd title of the Swiss Code of Obligations). Where not prescribed by law, the significant accounting and valuation principles applied are described below.

2 Key accounting policies and principles

Treasury shares

Treasury shares are recognized at acquisition cost and deducted from shareholders’ equity at the time of acquisition. In case of a resale, the gain or loss is recognized through the income statement as financial income or financial expenses.

Investments in subsidiaries and third parties

The participations are valued at acquisition cost or if the value is lower, at value in use, using generally accepted valuation principles.

Non-current interest-bearing liabilities

Non-current interest-bearing liabilities are recognized in the balance sheet at amortized cost. Discounts and issue costs for bonds are amortized on a straight-line basis over the bond’s maturity period.

Share-based payments

Sulzer Ltd operates a share-based payment program that covers the Board of Directors. Restricted share units (RSU) are granted annually. The plan features graded vesting over a three-year period. One RSU award is settled with one Sulzer share at the end of the vesting period. Awards automatically vest with the departure from the Board. The fair value of the Sulzer share at vesting date is recognized as compensation to the Board of Directors.

Foregoing a cash flow statement and additional disclosures in the notes

As Sulzer Ltd has prepared its consolidated financial statements in accordance with a recognized accounting standard (IFRS), it has decided to forego presenting additional information on audit fees and interest-bearing liabilities in the notes as well as a cash flow statement in accordance with the law.

3 Cash and cash equivalents

Sulzer Ltd arranged a CHF 500 million syndicated credit facility with maturity date May 2022. The facility is available for general corporate purposes including financing of acquisitions. The facility is subject to financial covenants based on net financial indebtedness and EBITDA, which were adhered to throughout the reporting period. As of December 31, 2019 and 2018, the syndicated facility was not used.

4 Investments in subsidiaries

A list of the major subsidiaries held directly or indirectly by Sulzer Ltd is included in note 36 of the consolidated financial statements.

5 Registered share capital

The share capital amounts to CHF 342’623.70, made up of 34’262’370 shares with dividend entitlement and a par value of CHF 0.01. All shares are fully paid in and registered.

Shareholders holding more than 3%

 

Dec 31, 2019

Dec 31, 2018

 

Number of shares

in %

Number of shares

in %

Viktor Vekselberg (direct shareholder: Tiwel Holding AG)

16’728’414

48.82

16’728’414

48.82

Treasury shares held by Sulzer Ltd

 

2019

2018

millions of CHF

Number of shares

Total transaction amount

Number of shares

Total transaction amount

Balance as of January 1

311’871

34.0

219’277

22.1

Purchase

110’400

11.1

5’159’149

563.7

Sale

–5’000’000

–544.8

Share-based remuneration

–181’347

–19.6

–66’555

–7.0

Balance as of December 31

240’924

25.6

311’871

34.0

The total number of treasury shares held by Sulzer Ltd as of December 31, 2019, amounted to 240’924 (December 31, 2018: 311’871 shares), which are mainly held for the purpose of issuing shares under the management share-based payment programs.

6 Interest-bearing liabilities

 

2019

2018

millions of CHF

Book value

Nominal

Book value

Nominal

0.375% 07/2016–07/2022

325.2

325.0

325.3

325.0

0.875% 07/2016–07/2026

125.0

125.0

125.0

125.0

0.250% 07/2018–07/2020

109.9

110.0

109.8

110.0

1.300% 07/2018–07/2023

289.5

290.0

289.3

290.0

0.625% 10/2018–10/2021

209.7

210.0

209.5

210.0

1.600% 10/2018–10/2024

249.8

250.0

249.8

250.0

Total as of December 31

1’309.1

1’310.0

1’308.7

1’310.0

– thereof non-current

1’199.2

1’200.0

1’308.7

1’310.0

– thereof current

109.9

110.0

-

-

All the outstanding bonds are traded at the SIX Swiss Exchange.

7 Contingent liabilities

millions of CHF

2019

2018

Guarantees, sureties and comfort letters for subsidiaries

 

 

– to banks and insurance companies

1’317.3

1’336.1

– to customers

206.1

252.6

– to others

574.0

527.3

Guarantees for third parties

10.0

10.0

Total contingent liabilities as of December 31

2’107.4

2’126.0

As of December 31, 2019, CHF 309.9 million (2018: CHF 321.3 million) of guarantees, sureties and comfort letters for subsidiaries to banks and insurance companies were utilized.

8 Administrative expenses

millions of CHF

2019

2018

Compensation of Board of Directors

3.0

2.6

Other administrative expenses

73.2

42.9

Total administrative expenses

76.2

45.5

Sulzer Ltd does not have any employees. The compensation to the Board of Directors includes share-based payments and remuneration. Other administrative expenses contain management services, recharges from subsidiaries and cost related to the Sulzer Full Potential program. In 2019, the higher other administrative expenses are mainly related to recharges from subsidiaries.

9 Investment income and investment and loan expenses

In 2019, the investment income contains ordinary and extraordinary dividend payments from subsidiaries amounting to CHF 161.5 million (2018: CHF 125.1 million).

The investment and loan expenses contain allowances on investments and loans amounting to CHF 0.0 million in 2019 (2018: CHF 49.0 million).

10 Other income

During 2018, the company sold unquoted equity instruments previously measured at cost to Sulzer Vorsorgeeinrichtung, Sulzer’s pension fund. The transaction price was CHF 31.7 million and the resulting profit CHF 28.5 million. The transaction was priced on an arm’s length basis and was settled in cash prior to December 31, 2018.

The income from trademark license amounts to CHF 38.7 million (2018: CHF 36.2 million).

11 Share participation of the Board of Directors, Executive Committee and related parties

Restricted share units for members of the Board

The compensation of the Board of Directors consists of a fixed cash component and a restricted share unit (RSU) component with a fixed grant value. The number of RSU is determined by dividing the fixed grant value by the volume-weighted share price of the last ten days prior to the grant date. One-third of the RSU each vest after the first, second and third anniversaries of the grant date, respectively. Upon vesting, one vested RSU is converted into one share of Sulzer Ltd. The vesting period for RSU granted to the members of the Board of Directors ends no later than on the date on which the member steps down from the Board.

 

2019

 

Sulzer shares

Restricted share units (RSU) 1)

Performance share units (PSU) 2017 2)

Performance share units (PSU) 2018 3)

Performance share units (PSU) 2019 4)

Board of Directors

47’461

18’549

Peter Löscher

17’121

4’692

Matthias Bichsel

6’801

2’911

Hanne Birgitte Breinbjerg Sørensen

249

1’951

Lukas Braunschweiler

335

1’951

Mikhail Lifshitz

3’622

2’348

Marco Musetti

7’480

2’348

Gerhard Roiss

11’853

2’348

 

 

 

 

 

 

Executive Committee

68’838

25’292

28’133

54’251

Greg Poux-Guillaume

46’181

13’196

12’820

23’363

Daniel Bischofberger

2’562

3’024

2’938

6’491

Frédéric Lalanne

4’492

3’024

2’938

6’491

Jill Lee

7’945

3’561

6’491

Armand Sohet

4’204

3’024

2’938

5’355

Torsten Wintergerste

3’454

3’024

2’938

5’355

Girts Cimermans

705

1) Restricted share units assigned by Sulzer.

2) The average fair value of one performance share unit 2017 at grant date amounted to CHF 116.02.

3) The average fair value of one performance share unit 2018 at grant date amounted to CHF 143.62.

4) The average fair value of one performance share unit 2019 at grant date amounted to CHF 115.95.

 

2018

 

Sulzer shares

Restricted share units (RSU) 1)

Performance share units (PSU) 2016 2)

Performance share units (PSU) 2017 3)

Performance share units (PSU) 2018 4)

Board of Directors

38’114

16’516

Peter Löscher

14’607

4’647

Matthias Bichsel

5’241

2’884

Hanne Birgitte Breinbjerg Sørensen

1’005

Lukas Braunschweiler

1’005

Mikhail Lifshitz

1’449

2’325

Marco Musetti

6’222

2’325

Gerhard Roiss

10’595

2’325

 

 

 

 

 

 

 

Executive Committee

34’035

3’513

28’852

26’667

31’071

Greg Poux-Guillaume

21’381

18’641

13’196

12’820

Daniel Bischofberger

1’424

3’024

2’938

Frédéric Lalanne

2’237

3’513

2’314

3’024

2’938

Jill Lee

7’945

3’561

Armand Sohet

3’560

3’024

2’938

Michael Streicher

764

1’942

1’375

2’938

Torsten Wintergerste

1’708

971

3’024

2’938

1) Restricted share units assigned by Sulzer.

2) The average fair value of one performance share unit 2016 at grant date amounted to CHF 118.05.

3) The average fair value of one performance share unit 2017 at grant date amounted to CHF 116.02.

4) The average fair value of one performance share unit 2018 at grant date amounted to CHF 143.62.

Granted Sulzer shares to members of the Board of Directors

 

2019

2018

 

Quantity

Value in CHF

Quantity

Value in CHF

Allocated to members of the Board of Directors

10’551

1’031’419

9’288

1’155’710

12 Subsequent events after the balance sheet date

At the time when these financial statements were authorized for issue, the Board of Directors were not aware of any events that would materially affect these financial statements.