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7Discontinued operations

On September 20, 2021, Sulzer Ltd shareholders at their Extraordinary General Meeting approved the 100% spin-off of the Applicator Systems (APS) division (later renamed medmix) through a 1:1 share split, granting Sulzer shareholders one APS share in addition to each Sulzer share held.

The group has therefore separated the financial data for 2021 and prior years into “continuing” and “discontinued” operations. Discontinued operations include the operational results from the Applicator Systems division, certain corporate activities attributable to the Applicator Systems division prior to the spin-off on September 20, 2021 and the gain on net assets derecognized as of September 20, 2021.

The Applicator Systems division develops and delivers innovative products and services for liquid application and mixing solutions within the healthcare, adhesives and beauty markets through its well-known brands (Mixpac, Transcodent, Cox, medmix, Haselmeier and Geka).

Income statement of discontinued operations

millions of CHF

 

2021 1)

 

2020

 

Sales

 

337.9

 

351.2

 

Cost of goods sold

 

–201.5

 

–230.1

 

Gross profit from discontinued operations

 

136.5

 

121.2

 

Selling and distribution expenses

 

–28.4

 

–33.4

 

General and administrative expenses

 

–30.9

 

–37.5

 

Research and development expenses

 

–18.9

 

–20.3

 

Other operating income / (expenses), net

 

–12.0

 

–11.8

 

Operating income (EBIT) from discontinued operations

 

46.2

 

18.1

 

Interest and securities income

 

0.1

 

0.2

 

Interest expenses

 

–5.9

 

–7.7

 

Other financial income / (expenses), net

 

–0.0

 

–0.1

 

Income before income tax expenses from discontinued operations

 

40.3

 

10.5

 

Income tax income / (expenses)

 

–17.1

 

5.2

 

Net income from discontinued operations before gain on net assets derecognized

 

23.2

 

15.6

 

Gain on net assets derecognized

 

1’255.1

 

 

Net income from discontinued operations, net of tax

 

1’278.3

 

15.6

 

1) The consolidated income statement amounts reflect the period from January 1, 2021, to the completion of the spin-off on September 20, 2021.

Segment information of discontinued operations

millions of CHF

 

2021 1)

 

2020

Order intake (unaudited) 2)

 

401.6

 

364.8

Nominal growth (unaudited)

 

10.1%

 

–14.2%

Currency-adjusted growth (unaudited)

 

n/a

 

–11.0%

Organic growth (unaudited) 3)

 

n/a

 

–14.2%

 

 

 

 

 

Order backlog as of September 20 / December 31 (unaudited)

 

133.6

 

82.0

 

 

 

 

 

Sales recognized at a point in time

 

335.8

 

349.8

Sales recognized over time

 

2.2

 

1.4

Sales 4)

 

337.9

 

351.2

Nominal growth

 

–3.8%

 

–16.5%

Currency-adjusted growth (unaudited)

 

n/a

 

–13.4%

Organic growth (unaudited) 3)

 

n/a

 

–15.2%

 

 

 

 

 

Operational profit (unaudited)

 

64.8

 

42.6

Operational profitability (unaudited)

 

19.2%

 

12.1%

 

 

 

 

 

Restructuring expenses

 

–0.2

 

–3.2

Amortization

 

–16.6

 

–19.2

Impairments on tangible and intangible assets

 

–0.5

 

–0.5

Non-operational items (unaudited)

 

–1.3

 

–1.6

Operating income (EBIT)

 

46.2

 

18.1

 

 

 

 

 

Depreciation

 

–20.5

 

–23.4

 

 

 

 

 

Operating assets

 

756.1

 

n/a

Unallocated assets

 

86.2

 

n/a

Total assets as of September 20

 

842.3

 

n/a

 

 

 

 

 

Operating liabilities

 

135.8

 

n/a

Unallocated liabilities

 

462.3

 

n/a

Total liabilities as of September 20

 

598.1

 

n/a

 

 

 

 

 

Operating net assets

 

620.2

 

n/a

Unallocated net assets

 

–376.1

 

n/a

Total net assets as of September 20

 

244.2

 

n/a

 

 

 

 

 

Capital expenditure (incl. lease assets)

 

–32.4

 

–70.0

 

 

 

 

 

Employees (number of full-time equivalents) as of September 20 / December 31

 

1’972

 

1’857

1) The consolidated income statement amounts reflect the period from January 1, 2021, to the completion of the spin-off on September 20, 2021.

2) Order intake from external customers.

3) Adjusted for currency and acquisition effects.

4) Sales from external customers.

Re-presented consolidated income statement 2020

millions of CHF

 

2020 as originally presented

 

Adjustments

 

2020 adjusted

Sales

 

3’319.0

 

–351.2

 

2’967.8

Cost of goods sold

 

–2’325.4

 

230.1

 

–2’095.3

Gross profit

 

993.6

 

–121.2

 

872.4

Selling and distribution expenses

 

–339.2

 

33.4

 

–305.8

General and administrative expenses

 

–378.0

 

37.5

 

–340.5

Research and development expenses

 

–84.1

 

20.3

 

–63.8

Other operating income / (expenses), net

 

–41.6

 

11.8

 

–29.8

Operating income (EBIT)

 

150.6

 

–18.1

 

132.5

Interest and securities income

 

4.1

 

6.3

 

10.5

Interest expenses

 

–25.2

 

1.2

 

–24.0

Other financial income / (expenses), net

 

–7.0

 

0.1

 

–6.9

Share of gains / (losses) of associates

 

–0.7

 

 

–0.7

Income before income tax expenses

 

121.8

 

–10.5

 

111.3

Income tax expenses

 

–34.6

 

–5.2

 

–39.8

Net income from continuing operations

 

87.2

 

–15.6

 

71.5

Net income from discontinued operations, net of tax

 

 

15.6

 

15.6

Net income

 

87.2

 

 

87.2

- thereof attributable to shareholders of Sulzer Ltd

 

83.6

 

 

83.6

- thereof attributable to non-controlling interests

 

3.6

 

 

3.6

Net assets derecognized

The following table presents the Applicator Systems division net assets at the date of spin-off on September 20, 2021.

millions of CHF

 

September 20, 2021

Goodwill

 

265.4

Other intangible assets

 

143.9

Property, plant and equipment

 

165.0

Lease assets

 

51.6

Deferred income tax assets

 

6.6

Other non-current assets

 

0.1

Cash and cash equivalents

 

85.9

Inventories

 

71.8

Trade accounts receivable

 

40.7

Other current assets

 

11.3

Borrowings

 

–439.8

Lease liabilities

 

–51.1

Provisions

 

–13.7

Non-current income tax liabilities

 

–1.9

Deferred income tax liabilities

 

–24.1

Other liabilities

 

–67.3

Net assets derecognized

 

244.2

Gain on net assets derecognized

millions of CHF

 

September 20, 2021

Net assets derecognized

 

–244.2

Derecognition of distribution liability

 

1’485.6

Difference between net assets and distribution liability

 

1’241.4

Recognition of medmix Ltd shares

 

21.9

Currency translation differences recycled into the income statement

 

–7.2

Cash flow hedges, net of tax recycled into the income statement

 

–1.1

Gain on net assets derecognized

 

1’255.1

Following the approval of the Sulzer Ltd shareholders to spin-off the Applicator Systems division through a 1:1 share split, the group recognized a distribution liability at fair value amounting to CHF 1’485.6 million. The distribution liability is recognized as a deduction to retained earnings and exceeded the carrying value of the Applicator Systems division of CHF 244.2 million by CHF 1’241.4 million.

At the time of the spin-off on September 20, 2021, the group held 498’736 treasury shares. Through the spin-off the group received 498’736 medmix Ltd shares which were recognized at fair value based on the closing price at the first trading date on September 30, 2021. At initial recognition, the fair value of CHF 21.9 million was reported as a financial asset. Management has designated this investment at fair value through other comprehensive income (see note 18).

The total non-taxable, non-cash gain recognized at the distribution date of the spin-off of the Applicator Systems division amounted to CHF 1’255.1 million.