4Acquisitions of subsidiaries
Acquisitions in 2021
The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition, including the resulting goodwill and the total consideration paid. If new information obtained within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition identifies adjustments to the amounts recognized below, then the accounting for the acquisition will be revised.
Net assets acquired
|
millions of CHF |
|
Nordic Water |
|
Others |
|
Total |
|
Intangible assets |
|
72.3 |
|
7.4 |
|
79.7 |
|
Property, plant and equipment |
|
1.2 |
|
1.4 |
|
2.5 |
|
Lease assets |
|
2.9 |
|
1.5 |
|
4.4 |
|
Deferred income tax assets |
|
0.1 |
|
– |
|
0.1 |
|
Cash and cash equivalents |
|
14.1 |
|
0.9 |
|
15.0 |
|
Trade accounts receivable |
|
7.3 |
|
0.1 |
|
7.4 |
|
Other current assets |
|
19.9 |
|
1.3 |
|
21.2 |
|
Lease liabilities |
|
–2.9 |
|
–1.4 |
|
–4.4 |
|
Provisions |
|
–1.9 |
|
–0.2 |
|
–2.1 |
|
Deferred income tax liabilities |
|
–18.7 |
|
–1.0 |
|
–19.7 |
|
Other liabilities |
|
–20.1 |
|
–0.4 |
|
–20.5 |
|
Net identifiable assets |
|
74.3 |
|
9.4 |
|
83.6 |
|
Goodwill recognized in balance sheet |
|
54.9 |
|
1.7 |
|
56.6 |
|
Total consideration |
|
129.2 |
|
11.1 |
|
140.2 |
|
|
|
|
|
|
|
|
|
Purchase price paid in cash |
|
129.2 |
|
9.2 |
|
138.4 |
|
Contingent consideration |
|
– |
|
1.9 |
|
1.9 |
|
Total consideration |
|
129.2 |
|
11.1 |
|
140.2 |
Nordic Water
On February 1, 2021, the group acquired a 100% controlling interest in Nordic Water Holding AB (Nordic Water) for CHF 129.2 million. The headquarters of Nordic Water is located in Gothenburg, Sweden. Nordic Water employs approximately 200 people and is a pioneering innovation leader and is known for its broad application suite in primary, secondary and tertiary water treatment and its global reach. With the acquisition of Nordic Water, the group will be able to grow its wastewater-treatment business with equipment that complements the existing portfolio of pumps, grinders, mixers, compressors and other products that the group currently provides for the water market. Nordic Water will operate as part of Sulzer’s Flow Equipment division. The goodwill is attributable to synergies by leveraging the scale of the combined businesses. None of the goodwill is expected to be deductible for tax purposes. Transaction costs recognized in the income statement amount to CHF –1.0 million. Since the acquisition date, Nordic Water contributed order intake of CHF 73.6 million, sales of CHF 63.6 million and net income of CHF –1.2 million to the group.
Acquired receivables
The fair value of acquired trade accounts receivable is CHF 7.3 million. The gross contractual amount for trade account receivables due is CHF 7.8 million, of which CHF 0.5 million are expected to be uncollectible at the date of acquisition.
Acquisitions of non-controlling interests in 2021
On March 22, 2021, the group acquired an additional 49.5% interest in Sulzer Wood Ltd. for CHF 17.3 million, increasing its ownership from 50.5% to 100%. The carrying amount of Sulzer Wood’s net assets in the group’s consolidated financial statements on the acquisition date was CHF 5.4 million. The group recognized a decrease of non-controlling interests of CHF 5.4 million and a decrease in equity attributable to owners of Sulzer Ltd of CHF 11.9 million.
The following table summarizes the effect of changes in the group’s ownership interest in Sulzer Wood Ltd.
|
millions of CHF |
|
2021 |
|
Carrying amount of non-controlling interests acquired |
|
5.4 |
|
Consideration paid to non-controlling interests in cash |
|
17.3 |
|
Decrease in equity attributable to owners of Sulzer Ltd |
|
11.9 |
Pro forma sales and profit contribution
Had all above acquisitions occurred on January 1, 2021, management estimates that total net sales of the group would amount to CHF 3’159.5 million, and the consolidated net income would be CHF 1’418.7 million.
Cash flow from acquisitions of subsidiaries
|
millions of CHF |
|
2021 |
|
2020 |
|
Cash consideration paid |
|
–138.4 |
|
–106.5 |
|
Contingent consideration paid |
|
–0.5 |
|
– |
|
Cash acquired |
|
15.0 |
|
3.7 |
|
Payments for acquisitions in prior years |
|
– |
|
–5.4 |
|
Total cash flow from acquisitions, net of cash acquired |
|
–123.9 |
|
–108.2 |
Contingent consideration
|
millions of CHF |
|
2021 |
|
2020 1) |
|
Balance as of January 1 |
|
6.6 |
|
3.5 |
|
Assumed in a business combination |
|
1.9 |
|
2.7 |
|
Derecognized as discontinued operations |
|
–2.2 |
|
– |
|
Payment of contingent consideration |
|
–0.5 |
|
– |
|
Currency translation differences |
|
0.1 |
|
0.3 |
|
Total contingent consideration as of December 31 |
|
5.9 |
|
6.6 |
|
– thereof non-current |
|
1.9 |
|
– |
|
– thereof current |
|
4.0 |
|
6.6 |
1) The balance sheet as of December 31, 2020, has been adjusted following the finalization of the purchase price accounting and measurement period adjustments related to acquisitions in 2020. A reconciliation to the previously published balance sheet is provided further below within this note.
Acquisitions in 2020
The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition, including the resulting goodwill and the total consideration paid.
|
millions of CHF |
|
Haselmeier |
|
Others |
|
Total |
|
Intangible assets |
|
39.8 |
|
1.7 |
|
41.5 |
|
Property, plant and equipment |
|
13.1 |
|
0.0 |
|
13.1 |
|
Lease assets |
|
2.4 |
|
– |
|
2.4 |
|
Deferred income tax assets |
|
0.3 |
|
– |
|
0.3 |
|
Cash and cash equivalents |
|
3.7 |
|
0.0 |
|
3.7 |
|
Trade accounts receivable |
|
5.2 |
|
0.0 |
|
5.2 |
|
Other current assets |
|
9.6 |
|
0.1 |
|
9.7 |
|
Lease liabilities |
|
–2.4 |
|
– |
|
–2.4 |
|
Provisions |
|
–3.5 |
|
–0.0 |
|
–3.5 |
|
Non-current income tax liabilities |
|
–2.3 |
|
– |
|
–2.3 |
|
Deferred tax liabilities |
|
–5.3 |
|
–0.3 |
|
–5.6 |
|
Other liabilities |
|
–1.8 |
|
– |
|
–1.8 |
|
Net identifiable assets |
|
58.8 |
|
1.5 |
|
60.3 |
|
Goodwill recognized in balance sheet 1) |
|
48.8 |
|
– |
|
48.8 |
|
Total consideration 1) |
|
107.6 |
|
1.5 |
|
109.1 |
|
|
|
|
|
|
|
|
|
Purchase price paid in cash |
|
105.0 |
|
1.5 |
|
106.5 |
|
Contingent consideration 1) |
|
2.7 |
|
– |
|
2.7 |
|
Total consideration 1) |
|
107.6 |
|
1.5 |
|
109.1 |
1) Numbers are adjusted to reflect the reassessment of the contingent considerations (measurement period adjustment).
Measurement period adjustment as of December 31, 2020
The group reassessed the accounting treatment of the contingent consideration of the Haselmeier acquisition based on facts and circumstances already existing at the acquisition date on October 1, 2020. The contingent consideration is mainly dependent on technology-related proof-of-concept, project development and customer orders and following the reassessment the earn-out amount was adjusted from CHF 13.9 million to CHF 2.2 million retrospectively. Consequently, the group adjusted goodwill and other liabilities by CHF 11.7 million as of December 31, 2020.
|
millions of CHF |
|
As reported 2020 |
|
Measurement period adjustment |
|
Adjusted 2020 |
|
Goodwill |
|
957.7 |
|
–11.7 |
|
946.0 |
|
Total non-current assets |
|
2’291.6 |
|
–11.7 |
|
2’279.9 |
|
Total assets |
|
5’378.7 |
|
–11.7 |
|
5’367.0 |
|
|
|
|
|
|
|
|
|
Other non-current liabilities |
|
21.9 |
|
–13.9 |
|
8.0 |
|
Total non-current liabilities |
|
1’989.9 |
|
–13.9 |
|
1’976.0 |
|
|
|
|
|
|
|
|
|
Other current and accrued liabilities |
|
721.9 |
|
2.2 |
|
724.1 |
|
Total current liabilities |
|
1’971.7 |
|
2.2 |
|
1’973.8 |
|
Total equity and liabilities |
|
5’378.7 |
|
–11.7 |
|
5’367.0 |