Notes to the consolidated financial statements

1 General information

– Financial reporting – Notes to the consolidated financial statements

General information

Sulzer Ltd (the “companyˮ) is a company domiciled in Switzerland. The address of the company’s registered office is Neuwiesenstrasse 15 in Winterthur, Switzerland. The consolidated financial statements for the year ended December 31, 2021, comprise the company and its subsidiaries (together referred to as the “groupˮ and individually as the “subsidiariesˮ) and the group’s interest in associates and joint ventures. The group specializes in pumping, agitation, mixing, separation and purification technologies for fluids of all types. Sulzer was founded in 1834 in Winterthur, Switzerland, and employs around 13’800 people. The company serves clients in over 180 production and service sites around the world. Sulzer Ltd is listed on SIX Swiss Exchange in Zurich, Switzerland (symbol: SUN).

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). They were authorized for issue by the Board of Directors on February 17, 2022.

Details of the group’s accounting policies are included in note 34.

2 Significant events and transactions during the reporting period

2Significant events and transactions during the reporting period

The financial position and performance of the group were particularly affected by the following events and transactions during the reporting period:

  • On September 20, 2021, Sulzer Ltd shareholders at their Extraordinary General Meeting approved the 100% spin-off of its 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 spin-off was registered in the commercial registers of the cantons of Zurich and Zug on September 20, 2021, simultaneously with the incorporation of the new company, which was registered with a share capital of 34’262’370 shares (registered shares with a nominal value of CHF 0.01 each). The spin-off became legally effective upon registration in the competent commercial registers, whereas the benefits and risks related to the assets and liabilities were economically transferred with retroactive effect as of January 1, 2021 (see note 7). The group has therefore separated the financial data for 2021 and prior year 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 shareholder approval to spin off the Applicator Systems division required the recognition of a distribution liability, measured at the fair value of the Applicator Systems division, and represented a deduction of retained earnings.
  • Net income from discontinued operations (net of tax) amounted to CHF 1’278.3 million, comprising a net income from discontinued business activities of CHF 23.2 million for the year up to the spin-off date and a gain on net assets derecognized of CHF 1’255.1 million. The gain on net assets derecognized is mainly the difference between the distribution liability of the Applicator Systems division of CHF 1’485.6 million and the division’s net assets of CHF 244.2 million on the spin-off date. In the balance sheet, the equity is increased by the net income from discontinued operations of CHF 1’278.3 million and offset by the derecognition of the spin-off related distribution liability of CHF 1’485.6 million. The details pertaining to the income statement, segment information and balance sheet of the discontinued operations are presented in note 7.
  • 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 Sulzer currently provides for the water market. Nordic Water will operate as part of the group’s Flow Equipment division. The acquisition resulted in an increase in goodwill of CHF 54.9 million and other intangible assets of CHF 72.3 million at the date of acquisition (see note 4).
  • The group recognized restructuring costs for continuing operations of CHF 11.5 million and for discontinued operations of CHF 0.2 million (2020: CHF 54.8 million for continuing operations and CHF 3.2 million for discontinued operations), partly offset by released restructuring provisions of CHF 2.0 million (2020: CHF 2.2 million). Restructuring costs mainly relate to resizing activities in the USA and the United Kingdom. Associated with restructuring initiatives, the group further recognized impairments on tangible and intangible assets for continuing operations of CHF 4.2 million (2020: CHF 9.4 million) and CHF 0.5 million for discontinued operations (2020: CHF 0.5 million). For more details, refer to note 7, note 14, note 15 and note 16.

For a detailed discussion about the group’s performance and financial position, please refer to the section “Financial review”.

3 Segment information

3Segment information

Segment information by divisions

 

 

Flow Equipment

 

Services

 

Chemtech

millions of CHF

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

Order intake from continuing operations (unaudited) 1)

 

1’324.7

 

1’297.6

 

1’163.4

 

1’130.8

 

679.5

 

620.8

Nominal growth (unaudited)

 

2.1%

 

–11.1%

 

2.9%

 

–5.2%

 

9.5%

 

–7.3%

Currency-adjusted growth (unaudited)

 

1.8%

 

–4.1%

 

2.8%

 

2.5%

 

8.8%

 

–1.1%

Organic growth (unaudited) 2)

 

–3.9%

 

–2.9%

 

2.0%

 

0.6%

 

8.8%

 

–6.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Order backlog as of December 31 (unaudited)

 

811.5

 

845.0

 

479.5

 

435.0

 

433.2

 

396.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales recognized at a point in time

 

993.5

 

839.5

 

898.8

 

887.3

 

377.0

 

372.6

Sales recognized over time

 

395.5

 

456.9

 

219.0

 

191.1

 

271.6

 

220.5

Sales from continuing operations 3)

 

1’389.0

 

1’296.3

 

1’117.7

 

1’078.3

 

648.5

 

593.1

Nominal growth

 

7.1%

 

–12.2%

 

3.7%

 

–7.6%

 

9.4%

 

–10.7%

Currency-adjusted growth (unaudited)

 

6.9%

 

–5.7%

 

3.5%

 

0.1%

 

8.4%

 

–4.8%

Organic growth (unaudited) 2)

 

2.0%

 

–4.5%

 

2.7%

 

–1.1%

 

8.4%

 

–9.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational profit from continuing operations (unaudited)

 

81.4

 

55.2

 

158.7

 

150.3

 

64.8

 

56.9

Operational profitability from continuing operations (unaudited)

 

5.9%

 

4.3%

 

14.2%

 

13.9%

 

10.0%

 

9.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

–7.5

 

–34.1

 

–0.6

 

–11.3

 

–1.3

 

–5.7

Amortization

 

–38.1

 

–29.6

 

–4.9

 

–9.2

 

–6.7

 

–6.8

Impairments on tangible and intangible assets

 

–0.9

 

–2.1

 

–2.8

 

–1.5

 

–0.5

 

–5.3

Non-operational items (unaudited)

 

0.1

 

–5.6

 

–2.3

 

–1.9

 

–2.7

 

–3.2

EBIT from continuing operations

 

35.1

 

–16.1

 

148.2

 

126.3

 

53.6

 

35.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

–33.4

 

–34.6

 

–31.5

 

–28.5

 

–12.8

 

–12.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating assets

 

1’573.9

 

1’456.4

 

939.5

 

893.6

 

552.8

 

507.0

Unallocated assets

 

 

 

 

 

 

Total assets as of December 31

 

1’573.9

 

1’456.4

 

939.5

 

893.6

 

552.8

 

507.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating liabilities

 

745.0

 

725.1

 

403.3

 

354.9

 

404.0

 

323.6

Unallocated liabilities

 

 

 

 

 

 

Total liabilities as of December 31

 

745.0

 

725.1

 

403.3

 

354.9

 

404.0

 

323.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating net assets

 

829.0

 

731.3

 

536.2

 

538.7

 

148.7

 

183.5

Unallocated net assets

 

 

 

 

 

 

Total net assets as of December 31

 

829.0

 

731.3

 

536.2

 

538.7

 

148.7

 

183.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure (incl. lease assets)

 

–33.9

 

–34.7

 

–57.1

 

–40.9

 

–20.7

 

–11.1

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

5’325

 

5’362

 

4’571

 

4’449

 

3’734

 

3’221

1) Order intake from external customers.

2) Adjusted for currency and acquisition effects.

3) Sales from external customers.

Segment information by divisions

 

 

Total divisions

 

Others 5)

 

Total Sulzer

millions of CHF

 

2021

 

2020 4)

 

2021

 

2020 4)

 

2021

 

2020 4)

Order intake from continuing operations (unaudited) 1)

 

3’167.6

 

3’049.2

 

 

 

3’167.6

 

3’049.2

Nominal growth (unaudited)

 

3.9%

 

–8.2%

 

 

 

3.9%

 

–8.2%

Currency-adjusted growth (unaudited)

 

3.6%

 

–1.1%

 

 

 

3.6%

 

–1.1%

Organic growth (unaudited) 2)

 

0.9%

 

–2.5%

 

 

 

0.9%

 

–2.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

Order backlog as of December 31 (unaudited)

 

1’724.1

 

1’676.8

 

 

 

1’724.1

 

1’676.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales recognized at a point in time

 

2’269.3

 

2’099.3

 

 

 

2’269.3

 

2’099.3

Sales recognized over time

 

886.0

 

868.4

 

 

 

886.0

 

868.4

Sales from continuing operations 3)

 

3’155.3

 

2’967.8

 

 

 

3’155.3

 

2’967.8

Nominal growth

 

6.3%

 

–10.3%

 

 

 

6.3%

 

–10.3%

Currency-adjusted growth (unaudited)

 

6.0%

 

–3.5%

 

 

 

6.0%

 

–3.5%

Organic growth (unaudited) 2)

 

3.5%

 

–4.3%

 

 

 

3.5%

 

–4.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational profit from continuing operations (unaudited)

 

304.9

 

262.4

 

–11.6

 

–7.4

 

293.3

 

255.0

Operational profitability from continuing operations (unaudited)

 

9.7%

 

8.8%

 

n/a

 

n/a

 

9.3%

 

8.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

–9.4

 

–51.2

 

–0.0

 

–1.4

 

–9.5

 

–52.6

Amortization

 

–49.6

 

–45.6

 

–0.6

 

–1.1

 

–50.2

 

–46.7

Impairments on tangible and intangible assets

 

–4.2

 

–8.9

 

 

–0.5

 

–4.2

 

–9.4

Non-operational items (unaudited)

 

–4.8

 

–10.7

 

–2.9

 

–3.2

 

–7.7

 

–13.8

EBIT from continuing operations

 

236.9

 

146.1

 

–15.0

 

–13.6

 

221.8

 

132.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

–77.7

 

–75.4

 

–3.3

 

–3.0

 

–81.0

 

–78.3

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating assets

 

3’066.2

 

2’857.0

 

180.3

 

804.4

 

3’246.5

 

3’661.4

Unallocated assets

 

 

 

1’763.9

 

1’705.6

 

1’763.9

 

1’705.6

Total assets as of December 31

 

3’066.2

 

2’857.0

 

1’944.3

 

2’510.1

 

5’010.4

 

5’367.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating liabilities

 

1’552.3

 

1’403.5

 

196.8

 

267.6

 

1’749.1

 

1’671.1

Unallocated liabilities

 

 

 

1’982.0

 

2’278.7

 

1’982.0

 

2’278.7

Total liabilities as of December 31

 

1’552.3

 

1’403.5

 

2’178.8

 

2’546.3

 

3’731.1

 

3’949.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating net assets

 

1’513.9

 

1’453.4

 

–16.4

 

536.9

 

1’497.5

 

1’990.3

Unallocated net assets

 

 

 

–218.1

 

–573.1

 

–218.1

 

–573.1

Total net assets as of December 31

 

1’513.9

 

1’453.4

 

–234.6

 

–36.2

 

1’279.3

 

1’417.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure (incl. lease assets)

 

–111.7

 

–86.7

 

–7.7

 

–1.3

 

–119.4

 

–88.0

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

13’631

 

13’032

 

185

 

165

 

13’816

 

13’197

1) Order intake from external customers.

2) Adjusted for currency and acquisition effects.

3) Sales from external customers.

4) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

5) The most significant activities under “Others” relate to Corporate Center. Total assets and total liabilities under “Others” include the former Applicator Systems (APS) division for the period 2020.

For the definition of operational profit, operational profitability, currency-adjusted growth and organic growth, reference is made to the section “Supplementary information” and for the reconciliation statements to the section “Financial review”.

The segment information for the discontinued operations (Applicator Systems division) is disclosed in note 7.

Information about reportable segments

Operating segments are determined based on the reports reviewed by the Chief Executive Officer that are used to measure performance, make strategic decisions and allocate resources to the segments. The business is managed on a divisional basis and the reported segments have been identified as follows:

Flow Equipment

The Flow Equipment division (renamed in 2021 from Pumps Equipment) specializes in pumping solutions specifically engineered for the processes of its customers. The division provides pumps, agitators, compressors, grinders, screens and filters developed through intensive research and development in fluid dynamics and advanced materials. The focus is on pumping solutions for water, oil and gas, power, chemicals and most industrial segments.

Services

The Services division (renamed in 2021 from Rotating Equipment Services) provides cutting-edge parts as well as maintenance and repair solutions for pumps, turbines, compressors, motors and generators, through a network of over 100 service sites around the world. The division services Sulzer original equipment, but also all associated third-party rotating equipment run by the customers, maximizing its sustainability and life-cycle cost-effectiveness. The division’s technology-based solutions, fast execution and expertise in complex maintenance projects are available at its customers’ doorsteps.

Chemtech

The Chemtech division focuses on innovative mass transfer, static mixing and polymer solutions for chemicals, petrochemicals, refining and LNG. Chemtech also provides ecological solutions such as bio-based chemicals, polymers and fuels, recycling technologies for textiles and plastic as well as carbon capture and utilization/storage, contributing to a circular economy. The division’s product offering ranges from process components to complete process plants and technology licensing.

Others

Certain expenses related to the Corporate Center are not attributable to a particular segment and are reviewed as a whole across the group. Also included are the eliminations for operating assets and liabilities.

The Chief Executive Officer primarily uses operational profit to assess the performance of the operating segments. However, the Chief Executive Officer also receives information about the segments’ order intake and backlog, sales, and operating assets and liabilities on a monthly basis.

Sales from external customers reported to the Chief Executive Officer are measured in a manner consistent with that in the income statement. There are no significant sales between the segments. No individual customer represents a significant portion of the group’s sales.

Operating assets and liabilities are assets or liabilities related to the operating activities of an entity and contributing to the EBIT.

Segment information by region

The allocation of assets is based on their geographical location. Non-current assets exclude other financial assets, deferred tax assets and defined benefit assets. The allocation of sales from external customers is based on the location of the customer.

Non-current assets by region

millions of CHF

 

2021

 

2020 1)

Europe, the Middle East and Africa

 

941.9

 

1’440.2

– thereof United Kingdom

 

203.0

 

209.9

– thereof Switzerland

 

201.5

 

274.8

– thereof Sweden

 

162.2

 

187.4

– thereof Finland

 

109.0

 

106.8

– thereof the Netherlands

 

100.8

 

116.8

 

 

 

 

 

Americas

 

425.9

 

452.8

– thereof USA

 

390.3

 

417.1

 

 

 

 

 

Asia-Pacific

 

144.6

 

141.8

– thereof China

 

53.6

 

54.6

 

 

 

 

 

Total

 

1’512.4

 

2’034.7

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 in note 4.

Sales by region

 

 

2021

millions of CHF

 

Flow Equipment

 

Services

 

Chemtech

 

Total Sulzer

Europe, the Middle East and Africa

 

671.8

 

485.6

 

140.0

 

1’297.5

– thereof Saudi Arabia

 

118.7

 

25.4

 

15.2

 

159.3

– thereof Germany

 

65.6

 

55.7

 

26.7

 

148.0

– thereof United Kingdom

 

25.7

 

112.1

 

5.3

 

143.1

– thereof Russia

 

34.2

 

35.6

 

15.9

 

85.6

– thereof France

 

27.3

 

30.8

 

9.1

 

67.2

 

 

 

 

 

 

 

 

 

Americas

 

386.0

 

473.5

 

118.6

 

978.1

– thereof USA

 

236.0

 

368.3

 

63.0

 

667.4

 

 

 

 

 

 

 

 

 

Asia-Pacific

 

331.1

 

158.6

 

390.0

 

879.7

– thereof China

 

227.3

 

30.7

 

265.8

 

523.7

 

 

 

 

 

 

 

 

 

Total

 

1’389.0

 

1’117.7

 

648.5

 

3’155.3

 

 

2020

millions of CHF

 

Flow Equipment

 

Services

 

Chemtech

 

Total Sulzer 1)

Europe, the Middle East and Africa

 

555.7

 

469.6

 

172.7

 

1’198.1

– thereof Saudi Arabia

 

89.0

 

26.9

 

31.2

 

147.0

– thereof Germany

 

58.2

 

49.2

 

26.3

 

133.7

– thereof United Kingdom

 

25.7

 

107.4

 

7.9

 

140.9

– thereof Russia

 

31.5

 

50.9

 

11.7

 

94.1

– thereof France

 

26.8

 

30.9

 

7.3

 

65.0

 

 

 

 

 

 

 

 

 

Americas

 

452.7

 

446.2

 

128.2

 

1’027.1

– thereof USA

 

297.8

 

358.8

 

81.9

 

738.5

 

 

 

 

 

 

 

 

 

Asia-Pacific

 

288.0

 

162.5

 

292.2

 

742.6

– thereof China

 

206.5

 

24.0

 

188.2

 

418.7

 

 

 

 

 

 

 

 

 

Total

 

1’296.3

 

1’078.3

 

593.1

 

2’967.8

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Segment information by market segment

The following table shows the allocation of sales from external customers by market segment. The group changed the market segment definition in 2021 and prior-year numbers have been reclassified accordingly.

Sales by market segment — Flow Equipment

millions of CHF

 

2021

 

2020

Energy

 

507.9

 

532.0

Water

 

497.0

 

403.8

Industry

 

384.1

 

360.6

Total Flow Equipment

 

1’389.0

 

1’296.3

Sales by market segment — Services

millions of CHF

 

2021

 

2020

Pumps Services

 

601.0

 

592.1

Other Equipment

 

516.7

 

486.2

Total Services

 

1’117.7

 

1’078.3

Sales by market segment — Chemtech

millions of CHF

 

2021

 

2020

Chemicals

 

366.4

 

317.2

Gas and Refining

 

128.1

 

141.2

Services

 

96.7

 

84.5

Renewables

 

38.3

 

32.0

Water

 

19.1

 

18.1

Total Chemtech

 

648.5

 

593.1

4 Acquisitions of subsidiaries

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

5 Critical accounting estimates and judgments

5Critical accounting estimates and judgments

All estimates and assessments are continually reviewed and are based on historical experience and other factors, including expectations regarding future events that appear reasonable under the given circumstances. The group makes estimates and assumptions that relate to the future. By their nature, these estimates will only rarely correspond to actual subsequent events. The estimates and assumptions that carry a significant risk, in the form of a substantial adjustment to the present values of assets and liabilities within the next financial year, are set out below.

Employee benefit plans

The present value of the pension assets/obligations and the plan assets depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Assumptions used in determining the defined benefit assets/obligations include the discount rate, future salary and pension increases, and mortality rates. The assumptions are reviewed and reassessed at the end of each year based on observable market data, i.e., interest rate of high-quality corporate bonds denominated in the corresponding currency and asset management studies. Further details are provided in note 9 and note 34.

Income taxes

The group is obliged to pay income taxes in numerous jurisdictions. Assumptions are required in order to determine income tax provisions. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of the business. The group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Management believes that the estimates are reasonable, and that the recognized liabilities for income tax-related uncertainties are adequate. Further details are disclosed in note 13.

Goodwill and other intangible assets

The group carries out an annual impairment test on goodwill in the first quarter of the year (after the budget and the three-year strategic plan have been approved by the Board of Directors in February), or when indications of a potential impairment exist. The recoverable amount from cash-generating units is measured on the basis of value-in-use calculations, with the terminal growth rate, the discount rate, and the projected cash flows as the main variables. Information about assumptions and estimation uncertainties that have significant risk of resulting in a material adjustment are disclosed in note 14. The accounting policies are disclosed in note 34.

Lease assets and lease liabilities

The group has applied judgment to determine the lease term for lease contracts that include renewal and termination options. The assessment of whether the group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and lease assets recognized. This assessment depends on economic incentives, such as removal and relocation costs. Further details are disclosed in note 16 and note 34.

Sales

At contract inception, the group assesses the goods or services promised in a contract with a customer and identifies each promise to transfer to the customer as a performance obligation. The group considers the terms of the contract and all other relevant facts, including the economic substance of the transaction. Judgment is needed to determine whether there is a single performance obligation or multiple separate performance obligations. In typical engineering contracts, engineering, production and installation are treated as one single performance obligation.

If the consideration promised in a contract includes a variable amount (e.g., expected liquidated damages, early payment discounts, volume discounts), the group estimates the amount of consideration to which the group will be entitled in exchange for transferring the promised goods or services to a customer. The amount of the variable consideration is estimated by using either of the following methods, depending on which method the group expects to better predict the amount of consideration to which it will be entitled: the expected value or the most likely amount. The method selected is applied consistently throughout the contract and to similar types of contracts when estimating the effect of uncertainty on the amount of variable consideration to which the group is entitled. Depending on the outcome of the respective transactions, actual payments may differ from these estimates.

To allocate the transaction price to each performance obligation on a relative stand-alone selling price basis, the group determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price in proportion to those stand-alone selling prices. If the stand-alone selling price is not directly observable, then the group estimates the amount with the expected cost-plus-margin method.

The group recognizes sales either over time or at a point in time. Sales are recognized over time if any of the conditions described in note 34 is met. To determine the method, the right to payment condition is the one with the most critical estimates. The group estimates if an enforceable right to payment (including reasonable profit margin) for performance up to date exists in case the customer terminates the contract for convenience. For this estimate, the group reviews the contracts and considers relevant laws, legal precedents and customary business practice.

Applying the over time method requires the group to estimate the proportional sales and costs. To measure the stage of completion, generally, the cost-to-cost method is applied. Work progress of sub-suppliers is considered to determine the stage of completion. If circumstances arise that may change the original estimates of sales, costs or extent of progress toward completion, estimates are revised. These revisions may result in increases or decreases in estimated sales or costs and are reflected in income in the period in which the circumstances that give rise to the revision become known by management.

Further details are disclosed in note 20 and note 34.

Provisions

Provisions are made, among other reasons, for warranties, disputes, litigation and restructuring. A provision is recognized in the balance sheet when the group has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. The nature of these costs is such that judgment has to be applied to estimate the timing and amount of cash outflows. Depending on the outcome of the respective transactions, actual payments may differ from these estimates. Further details are disclosed in note 27 and note 34.

6 Financial risk management

6Financial risk management

6.1 Financial risk factors

The group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk, cash flow interest rate risk, and price risk), credit risk and liquidity risk. The group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the group’s financial performance. The group uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by a central treasury department (Group Treasury). Group Treasury identifies, evaluates and hedges financial risks in close cooperation with the group’s subsidiaries. Principles for overall risk management and policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity exist in writing.

a) Market risk

(I) Foreign exchange risk

The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. The group is exposed to transactional foreign currency risk to the extent that sales, purchases, license fees, borrowings and other balance sheet items are denominated in currencies other than the functional currencies of group companies. The functional currencies of group companies are primarily CHF, EUR, USD, CNY and GBP. Management has set up a policy to require subsidiaries to manage their foreign exchange risk against their functional currency. The subsidiaries are required to hedge their major foreign exchange risk exposure using forward contracts or other standard instruments, usually transacted with Group Treasury. The group’s management policy is to apply the following hedge ratios:

Contractual FX exposure
  • 90% to 100% of the exposure
Non-contractual FX exposure
  • 100% of the forecasted exposure for the next 1–3 months
  • 60% of the forecasted exposure for the next 4–6 months
  • 40% of the forecasted exposure for the next 7–12 months

The group uses forward exchange contracts to hedge its currency risk, most with a maturity of less than one year from the reporting date. The contracts are generally designated for hedge accounting as cash flow hedges. The group determines the existence of an economic relationship between the hedging instruments and the hedged item based on the currency, amount and timing of the respective cash flows. For hedges of foreign currency purchases, the group enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item. The group therefore performs a qualitative assessment of effectiveness. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the group uses the hypothetical derivative method to assess effectiveness. In hedges of foreign currency purchases, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated.

Presently, most of the contracts are designated as cash flow hedges. External foreign exchange contracts are designated as hedges of foreign exchange risk on specific assets, liabilities or future transactions on a gross basis. The group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. If required, currency exposure arising from the net assets of the group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies. Derivative financial instruments are only used on an ad hoc basis to manage foreign currency translation risk.

The following tables show the hypothetical influence on the income statement for 2021 and 2020 related to foreign exchange risk of financial instruments. The volatility used for the calculation is the one-year historic volatility on December 31 for the relevant currency pair and year. For 2021, the currency pair with the most significant exposure and inherent risk was the USD versus the BRL. If, on December 31, 2021, the USD had increased by 16.8% against the BRL with all other variables held constant, profit after tax for the year would have been CHF 0.9 million higher due to foreign exchange gains on USD-denominated financial assets. A decrease of the rate would have caused a loss of the same amount.

Hypothetical impact of foreign exchange risk on income statement

millions of CHF

 

2021

Currency pair

 

USD/BRL

 

USD/KRW

 

EUR/INR

 

USD/INR

Exposure

 

7.2

 

5.3

 

–5.4

 

–5.7

Volatility

 

16.8%

 

6.4%

 

5.8%

 

4.8%

Effect on profit after tax (rate increase)

 

0.9

 

0.4

 

–0.4

 

–0.4

Effect on profit after tax (rate decrease)

 

–0.9

 

–0.4

 

0.4

 

0.4

millions of CHF

 

2020

Currency pair

 

EUR/RUB

 

GBP/SAR

 

GBP/USD

 

EUR/ZAR

Exposure

 

4.1

 

6.8

 

–4.6

 

–2.9

Volatility

 

20.3%

 

7.8%

 

11.0%

 

16.7%

Effect on profit after tax (rate increase)

 

0.6

 

0.4

 

–0.4

 

–0.4

Effect on profit after tax (rate decrease)

 

–0.6

 

–0.4

 

0.4

 

0.4

The following tables show the hypothetical influence on equity for 2021 and 2020 related to foreign exchange risk of financial instruments for the most important currency pairs as of December 31 of the respective year. The volatility used for the calculation is the one-year historic volatility on December 31 for the relevant currency pair and year. Most of the hypothetical effect on equity is a result of fair value changes of derivative financial instruments designated as hedges of future cash flows in foreign currencies.

Hypothetical impact of foreign exchange risk on equity

millions of CHF

 

2021

Currency pair

 

USD/BRL

 

GBP/USD

 

EUR/USD

 

USD/CHF

 

USD/MXN

 

USD/INR

 

EUR/CHF

Exposure

 

–35.3

 

89.2

 

52.6

 

–40.7

 

–23.8

 

–40.1

 

–45.2

Volatility

 

16.8%

 

6.6%

 

5.7%

 

6.5%

 

11.1%

 

4.8%

 

3.9%

Effect on equity, net of taxes (rate increase)

 

–4.2

 

4.2

 

2.1

 

–1.9

 

–1.9

 

–1.4

 

–1.3

Effect on equity, net of taxes (rate decrease)

 

4.2

 

–4.2

 

–2.1

 

1.9

 

1.9

 

1.4

 

1.3

millions of CHF

 

2020

Currency pair

 

USD/MXN

 

GBP/USD

 

USD/CHF

 

EUR/USD

 

EUR/RUB

 

USD/BRL

 

USD/INR

Exposure

 

–41.5

 

52.0

 

–63.5

 

49.0

 

–15.2

 

–12.5

 

–22.1

Volatility

 

18.9%

 

11.1%

 

7.4%

 

7.6%

 

21.0%

 

21.3%

 

5.4%

Effect on equity, net of taxes (rate increase)

 

–5.6

 

4.1

 

–3.4

 

2.7

 

–2.3

 

–1.9

 

–0.9

Effect on equity, net of taxes (rate decrease)

 

5.6

 

–4.1

 

3.4

 

–2.7

 

2.3

 

1.9

 

0.9

(II) Price risk

As of December 31, 2021, and 2020, the group was not exposed to significant price risk related to investments in equity securities.

(III) Interest rate sensitivity

The group’s interest rate risk arises from interest-bearing assets and liabilities. Assets and liabilities at variable rates expose the group to cash flow interest rate risk. The group analyzes its interest rate exposure on a net basis, and if required, enters into derivative instruments in order to keep the volatility of net interest income or expense limited. The group’s non-current interest-bearing liabilities mainly comprise bonds with a fixed interest rate.

The following table shows the hypothetical influence on the income statement for variable interest-bearing assets net of liabilities at variable interest rates, assuming market interest rate levels would have increased/decreased by 100 basis points. For the most significant currencies, CHF, USD, CNY, EUR and GBP, increasing interest rates would have had a positive impact on the income statement, since the value of variable interest-bearing assets (comprising mainly cash and cash equivalents) exceed the value of variable interest-bearing liabilities.

Hypothetical impact of interest rate risk on income statement

millions of CHF

 

2021

Variable interest-bearing assets (net)

 

Amount

 

Sensitivity in basis points

 

Impact on post-tax profit

 

 

 

rate increase

 

rate decrease

CHF

 

559.4

 

100

 

4.0

 

–4.0

USD

 

319.3

 

100

 

2.3

 

–2.3

CNY

 

201.2

 

100

 

1.4

 

–1.4

EUR

 

175.1

 

100

 

1.3

 

–1.3

GBP

 

42.2

 

100

 

0.3

 

–0.3

millions of CHF

 

2020

Variable interest-bearing assets (net)

 

Amount

 

Sensitivity in basis points

 

Impact on post-tax profit

 

 

 

rate increase

 

rate decrease

CHF

 

501.4

 

100

 

3.6

 

–3.6

USD

 

287.4

 

100

 

2.1

 

–2.1

EUR

 

229.5

 

100

 

1.6

 

–1.6

CNY

 

181.7

 

100

 

1.3

 

–1.3

GBP

 

40.2

 

100

 

0.3

 

–0.3

On December 31, 2021, if the interest rates on CHF-denominated assets net of liabilities had been 100 basis points higher with all other variables held constant, post-tax profit for the year would have been CHF 4.0 million higher, as a result of higher interest income on CHF-denominated assets. A decrease of interest rates on CHF-denominated assets net of liabilities would have caused a loss of the same amount. As of December 31, 2020, if the interest rates had been 100 basis points higher with all other variables held constant, post-tax profit for the year would have been CHF 3.6 million higher, as a result of higher interest income on CHF-denominated assets.

b) Credit risk

Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits with financial institutions and credit exposures to customers, including outstanding receivables, contract assets and committed transactions. The maximum exposure to credit risk per class of financial asset is disclosed by carrying amounts in the fair value table. Not exposed to credit risks are equity securities. The carrying amounts of financial assets and contract assets represent the maximum credit risk exposure.

Credit risks of banks and financial institutions are monitored and managed centrally. Generally, only independently rated parties with a strong credit rating are accepted, and the total volume of transactions is split among several banks to reduce the individual risk with one bank.

For every customer with a large order volume, an individual risk assessment of the credit quality of the customer is performed that considers independent ratings, financial position, past experience and other factors. Additionally, bank guarantees and letters of credit are requested. For more details on the credit risk of contract assets, please refer to note 20, and on the credit risk of trade accounts receivable, please refer to note 21.

c) Liquidity risk

Prudent liquidity risk management includes the maintenance of sufficient cash and marketable securities, the availability of funding from an adequate number of committed credit facilities, and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury maintains flexibility in funding through a committed credit line.

Management anticipates the future development of the group’s liquidity reserve on the basis of expected cash flows by performing regular group-wide cash forecasts. In 2021, the existing syndicated credit facility of CHF 500 million was renewed for a duration of five years until December 31, 2026. The facility includes two one-year extension options and a further option to increase the credit facility by CHF 250 million (subject to lenders’ approval).

The following table analyzes the group’s financial liabilities in relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows calculated with the year-end closing rates. Borrowings include the notional amount and interest payments.

Maturity profile of financial liabilities

 

 

2021

millions of CHF

 

Carrying amount

 

<1 year

 

1–5 years

 

>5 years

 

Total

Borrowings

 

1’510.1

 

359.6

 

992.3

 

201.7

 

1’553.6

Lease liabilities

 

88.8

 

24.8

 

53.6

 

20.7

 

99.1

Trade accounts payable

 

431.8

 

431.8

 

 

 

431.8

Other current and non-current liabilities (excluding derivative liabilities)

 

393.8

 

389.2

 

4.6

 

 

393.8

Derivative liabilities

 

7.5

 

6.7

 

0.0

 

0.8

 

7.5

– thereof outflow

 

 

 

394.6

 

0.7

 

0.8

 

396.1

– thereof inflow

 

 

 

387.9

 

0.7

 

 

388.6

 

 

2020

millions of CHF

 

Carrying amount

 

<1 year

 

1–5 years

 

>5 years

 

Total

Borrowings

 

1’723.1

 

246.7

 

1’207.4

 

329.6

 

1’783.7

Lease liabilities

 

119.7

 

30.0

 

67.1

 

31.7

 

128.8

Trade accounts payable

 

465.8

 

465.8

 

 

 

465.8

Other current and non-current liabilities (excluding derivative liabilities)

 

368.2

 

347.5

 

23.0

 

0.0

 

370.6

Derivative liabilities

 

8.1

 

6.9

 

 

1.2

 

8.1

– thereof outflow

 

 

 

730.1

 

 

6.1

 

736.2

– thereof inflow

 

 

 

723.2

 

 

4.9

 

728.0

6.2 Capital risk management

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In this respect, the group aims at maintaining an investment-grade credit rating, either as a perceived rating or an external rating issued by a credit rating agency.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The following table shows the net debt/EBITDA ratio as of December 31, 2021, and 2020.

Net debt/EBITDA ratio

millions of CHF

 

2021

 

2020

 

 

 

 

 

Cash and cash equivalents

 

–1’505.4

 

–1’123.2

Current financial assets

 

–26.7

 

–305.1

Non-current borrowings

 

1’164.6

 

1’491.3

Non-current lease liabilities

 

64.5

 

90.2

Current borrowings

 

345.5

 

231.8

Current lease liabilities

 

24.3

 

29.5

Net debt as of December 31

 

66.8

 

414.5

 

 

 

 

 

Operating income (EBIT) from continuing operations

 

221.8

 

132.5

Operating income (EBIT) from discontinued operations

 

46.2

 

18.1

Depreciation from continuing operations

 

81.0

 

78.3

Depreciation from discontinued operations

 

20.5

 

23.4

Impairments on tangible and intangible assets from continuing operations

 

4.2

 

9.4

Impairments on tangible and intangible assets from discontinued operations

 

0.5

 

0.5

Amortization from continuing operations

 

50.2

 

46.7

Amortization from discontinued operations

 

16.6

 

19.2

EBITDA

 

441.0

 

328.1

 

 

 

 

 

Net debt

 

66.8

 

414.5

EBITDA

 

441.0

 

328.1

Net debt/EBITDA ratio

 

0.15

 

1.26

Another important ratio for the group is the gearing ratio (borrowings-to-equity ratio), which is calculated as total borrowings and lease liabilities divided by equity attributable to shareholders of Sulzer Ltd.

As of December 31, 2021, and 2020, the gearing ratio was as follows:

Gearing ratio (borrowings-to-equity ratio)

millions of CHF

 

2021

 

2020

Non-current borrowings

 

1’164.6

 

1’491.3

Non-current lease liabilities

 

64.5

 

90.2

Current borrowings

 

345.5

 

231.8

Current lease liabilities

 

24.3

 

29.5

Total borrowings and lease liabilities

 

1’598.9

 

1’842.8

Equity attributable to shareholders of Sulzer Ltd

 

1’273.8

 

1’404.3

Gearing ratio (borrowings-to-equity ratio)

 

1.26

 

1.31

For the definition of net debt, EBITDA and gearing ratio, please refer to the section “Supplementary information”.

6.3 Fair value estimation

The following tables present the carrying amounts and fair values of financial assets and liabilities as of December 31, 2021, and 2020, including their levels in the fair value hierarchy. For financial assets and financial liabilities not measured at fair value in the balance sheet, fair value information is not provided if the carrying amount is a reasonable approximation of fair value.

Fair values are categorized into three different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

The fair value of financial instruments traded in active markets, including the outstanding bonds, is based on quoted market prices at the balance sheet date. Such instruments are included in level 1.

The fair values included in level 2 are based on valuation techniques using observable market input data. This may include discounted cash flow analysis, option pricing models or reference to other instruments that are substantially the same, while always making maximum use of market inputs and relying as little as possible on entity-specific inputs. The fair values of forward contracts are measured based on broker quotes for foreign exchange rates and interest rates.

Fair values measured using unobservable inputs are categorized within level 3 of the fair value hierarchy. This applies particularly to contingent considerations in business combinations.

Contingent considerations are linked to the fulfillment of certain parameters, mainly related to earn-out clauses and technology transfer. For more information, please refer to note 4.

Fair value table

 

 

 

 

December 31, 2021

 

 

 

 

Carrying amount

 

Fair value

millions of CHF

 

Notes

 

Fair value hedging instruments

 

Fair value through profit or loss

 

Financial assets at fair value through other comprehensive income - equity instruments

 

Financial assets at amortized cost

 

Other financial liabilities

 

Total carrying amount

 

Level 1

 

Level 2

 

Level 3

 

Total fair value

Financial assets measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current financial assets (at fair value)

 

18

 

 

 

8.9

 

 

 

 

 

 

8.9

 

0.3

 

 

8.6

 

8.9

Derivative assets – non-current

 

29

 

0.7

 

 

 

 

 

 

 

 

 

0.7

 

 

0.7

 

 

0.7

Derivative assets – current

 

22, 29

 

7.0

 

 

 

 

 

 

 

 

 

7.0

 

 

7.0

 

 

7.0

Current financial assets (at fair value)

 

18

 

 

 

2.0

 

22.5

 

 

 

 

 

24.5

 

24.5

 

 

 

24.5

Total financial assets measured at fair value

 

 

 

7.7

 

10.9

 

22.5

 

 

 

41.1

 

24.8

 

7.7

 

8.6

 

41.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets not measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current financial assets (at amortized cost)

 

18

 

 

 

 

 

 

 

9.1

 

 

 

9.1

 

 

 

 

 

 

 

 

Non-current receivables (excluding non-current derivative assets)

 

 

 

 

 

 

 

 

 

4.6

 

 

 

4.6

 

 

 

 

 

 

 

 

Trade accounts receivable

 

21

 

 

 

 

 

 

 

549.2

 

 

 

549.2

 

 

 

 

 

 

 

 

Other current receivables (excluding current derivative assets and other taxes)

 

22

 

 

 

 

 

 

 

18.3

 

 

 

18.3

 

 

 

 

 

 

 

 

Current financial assets (at amortized cost)

 

18

 

 

 

 

 

 

 

2.2

 

 

 

2.2

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

23

 

 

 

 

 

 

 

1’505.4

 

 

 

1’505.4

 

 

 

 

 

 

 

 

Total financial assets not measured at fair value

 

 

 

 

 

 

2’088.8

 

 

2’088.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities – non-current

 

29

 

0.8

 

 

 

 

 

 

 

 

 

0.8

 

 

0.8

 

 

0.8

Derivative liabilities – current

 

28, 29

 

6.7

 

 

 

 

 

 

 

 

 

6.7

 

 

6.7

 

 

6.7

Contingent considerations

 

4

 

 

 

5.9

 

 

 

 

 

 

 

5.9

 

 

 

5.9

 

5.9

Total financial liabilities measured at fair value

 

 

 

7.5

 

5.9

 

 

 

 

13.4

 

 

7.5

 

5.9

 

13.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities not measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding non-current bonds

 

26

 

 

 

 

 

 

 

 

 

1’163.8

 

1’163.8

 

1’189.5

 

 

 

1’189.5

Other non-current borrowings

 

26

 

 

 

 

 

 

 

 

 

0.8

 

0.8

 

 

 

 

 

 

 

 

Other non-current liabilities (excluding non-current derivative liabilities)

 

 

 

 

 

 

 

 

 

 

 

4.6

 

4.6

 

 

 

 

 

 

 

 

Outstanding current bonds

 

26

 

 

 

 

 

 

 

 

 

325.0

 

325.0

 

325.9

 

 

 

325.9

Other current borrowings and bank loans

 

26

 

 

 

 

 

 

 

 

 

20.5

 

20.5

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

 

 

 

 

 

 

 

 

 

431.8

 

431.8

 

 

 

 

 

 

 

 

Other current liabilities (excluding current derivative liabilities, other taxes and contingent considerations)

 

28

 

 

 

 

 

 

 

 

 

350.9

 

350.9

 

 

 

 

 

 

 

 

Total financial liabilities not measured at fair value

 

 

 

 

 

 

 

2’297.3

 

2’297.3

 

 

 

 

 

 

 

 

Fair value table

 

 

 

 

December 31, 2020 1)

 

 

 

 

Carrying amount

 

Fair value

millions of CHF

 

Notes

 

Fair value hedging instruments

 

Fair value through profit or loss

 

Financial assets at fair value through other comprehensive income - equity instruments

 

Financial assets at amortized cost

 

Other financial liabilities

 

Total carrying amount

 

Level 1

 

Level 2

 

Level 3

 

Total fair value

Financial assets measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current financial assets (at fair value)

 

18

 

 

 

8.7

 

 

 

 

 

 

8.7

 

0.2

 

 

8.4

 

8.7

Derivative assets – non-current

 

29

 

1.0

 

 

 

 

 

 

 

 

 

1.0

 

 

1.0

 

 

1.0

Derivative assets – current

 

22, 29

 

12.1

 

 

 

 

 

 

 

 

 

12.1

 

 

12.1

 

 

12.1

Current financial assets (at fair value)

 

18

 

 

 

1.7

 

 

 

 

 

 

 

1.7

 

1.7

 

 

 

1.7

Total financial assets measured at fair value

 

 

 

13.2

 

10.4

 

 

 

 

23.6

 

2.0

 

13.2

 

8.4

 

23.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets not measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current financial assets (at amortized cost)

 

18

 

 

 

 

 

 

 

2.0

 

 

 

2.0

 

 

 

 

 

 

 

 

Non-current receivables (excluding non-current derivative assets)

 

 

 

 

 

 

 

 

 

3.3

 

 

 

3.3

 

 

 

 

 

 

 

 

Trade accounts receivable

 

21

 

 

 

 

 

 

 

599.1

 

 

 

599.1

 

 

 

 

 

 

 

 

Other current receivables (excluding current derivative assets and other taxes)

 

22

 

 

 

 

 

 

 

19.2

 

 

 

19.2

 

 

 

 

 

 

 

 

Current financial assets (at amortized cost)

 

18

 

 

 

 

 

 

 

303.3

 

 

 

303.3

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

23

 

 

 

 

 

 

 

1’123.2

 

 

 

1’123.2

 

 

 

 

 

 

 

 

Total financial assets not measured at fair value

 

 

 

 

 

 

2’050.0

 

 

2’050.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities – non-current

 

29

 

1.2

 

 

 

 

 

 

 

 

 

1.2

 

 

1.2

 

 

1.2

Derivative liabilities – current

 

28, 29

 

6.9

 

 

 

 

 

 

 

 

 

6.9

 

 

6.9

 

 

6.9

Contingent considerations

 

4

 

 

 

6.6

 

 

 

 

 

 

 

6.6

 

 

 

6.6

 

6.6

Total financial liabilities measured at fair value

 

 

 

8.1

 

6.6

 

 

 

 

14.7

 

 

8.1

 

6.6

 

14.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities not measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding non-current bonds

 

26

 

 

 

 

 

 

 

 

 

1’488.5

 

1’488.5

 

1’527.5

 

 

 

1’527.5

Other non-current borrowings

 

26

 

 

 

 

 

 

 

 

 

2.7

 

2.7

 

 

 

 

 

 

 

 

Other non-current liabilities (excluding non-current derivative liabilities)

 

 

 

 

 

 

 

 

 

 

 

6.8

 

6.8

 

 

 

 

 

 

 

 

Outstanding current bonds

 

26

 

 

 

 

 

 

 

 

 

209.9

 

209.9

 

211.3

 

 

 

211.3

Other current borrowings and bank loans

 

26

 

 

 

 

 

 

 

 

 

21.9

 

21.9

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

 

 

 

 

 

 

 

 

 

465.8

 

465.8

 

 

 

 

 

 

 

 

Other current liabilities (excluding current derivative liabilities, other taxes and contingent considerations)

 

28

 

 

 

 

 

 

 

 

 

307.6

 

307.6

 

 

 

 

 

 

 

 

Total financial liabilities not measured at fair value

 

 

 

 

 

 

 

2’503.2

 

2’503.2

 

 

 

 

 

 

 

 

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 in note 4.

7 Discontinued operations

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.

8 Personnel expenses

8Personnel expenses

millions of CHF

 

2021

 

2020 1)

Salaries and wages

 

792.9

 

783.2

Defined contribution plan expenses

 

32.3

 

26.8

Defined benefit plan expenses

 

16.9

 

16.4

Cost of share-based payment transactions

 

20.8

 

13.7

Social benefit costs

 

117.4

 

117.5

Other personnel costs

 

37.9

 

56.7

Total personnel expenses continuing operations

 

1’018.1

 

1’014.4

Personnel expenses discontinued operations

 

91.4

 

109.0

Total personnel expenses

 

1’109.5

 

1’123.4

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

9 Employee benefit plans

9 Employee benefit plans

The defined benefit obligations for the active members of pension plans is the present value of accrued pension obligations at balance sheet date considering future salary and pension increases as well as turnover rates (using the project unit credit method). The defined benefit assets/obligations for the retirees are the present value of the current and future pension benefits considering future pension increases.

Reconciliation of the amount recognized in the balance sheet as of December 31

 

 

2021

millions of CHF

 

Funded plans Switzerland

 

Funded plans United Kingdom

 

Funded plans USA

 

Funded plans others

 

Unfunded plans

 

Total

Present value of funded defined benefit obligation

 

–891.6

 

–613.2

 

–68.4

 

–104.9

 

 

–1’678.1

Fair value of plan assets (funded plans)

 

1’025.8

 

504.0

 

50.6

 

66.1

 

 

1’646.6

Overfunding / (underfunding)

 

134.2

 

–109.2

 

–17.8

 

–38.8

 

 

–31.5

Present value of unfunded defined benefit obligation

 

 

 

 

 

–14.1

 

–14.1

Asset / (liability) recognized in the balance sheet

 

134.2

 

–109.2

 

–17.8

 

–38.8

 

–14.1

 

–45.7

– thereof defined benefit obligations

 

 

–109.2

 

–17.8

 

–38.9

 

–14.1

 

–180.0

– thereof defined benefit assets

 

134.2

 

 

 

0.1

 

 

134.3

 

 

2020

millions of CHF

 

Funded plans Switzerland

 

Funded plans United Kingdom

 

Funded plans USA

 

Funded plans others

 

Unfunded plans

 

Total

Present value of funded defined benefit obligation

 

–1’034.7

 

–609.9

 

–68.8

 

–110.7

 

 

–1’824.1

Fair value of plan assets

 

1’108.4

 

469.9

 

45.1

 

66.1

 

 

1’689.5

Overfunding / (underfunding)

 

73.7

 

–139.9

 

–23.7

 

–44.6

 

 

–134.6

Present value of unfunded defined benefit obligation

 

 

 

 

 

–17.1

 

–17.1

Asset / (liability) recognized in the balance sheet

 

73.7

 

–139.9

 

–23.7

 

–44.6

 

–17.1

 

–151.7

– thereof defined benefit obligations

 

–1.8

 

–139.9

 

–23.7

 

–44.7

 

–17.1

 

–227.4

– thereof defined benefit assets 1)

 

75.5

 

 

 

0.1

 

 

75.7

1) Defined benefit assets are presented as non-current assets and comparative information is re-presented. In 2020, defined benefit assets were presented as “other current receivables and prepaid expenses” under current assets.

The group operates major funded defined benefit pension plans in Switzerland, the UK and the USA. Unfunded defined benefit plans relate to German pension benefit plans. The plans are exposed to actuarial risks, e.g., longevity risk, currency risk and interest rate risk, and the funded plans additionally to market (investment) risk.

In Switzerland, the group contributes to two pension plans funded via two different pension funds, i.e., a base plan for all employees and a supplementary plan for employees with salaries exceeding a certain limit. Both plans provide benefits depending on the pension savings at retirement. They include certain legal minimum interest credits to the pension savings (i.e. investment return) and guaranteed rates of conversion of pension savings into an annuity at retirement. In addition, the plans offer death in service and disability benefits. The two pension funds are collective funds administrating pension plans of group companies and also unrelated companies. In case of a material underfunding of the pension plans, the regulations include predefined steps, such as higher contributions by employer and employees or lower interest on pension savings, to eliminate the underfunding. The pension funds are legally separated from the group. The vast majority of the active participants in the two pension funds are employed by companies not belonging to the group. The Board of Trustees for the base plan comprises 10 employee representatives and 10 employer representatives. The average discount rate increased in 2021 compared to 2020 (from 0.2% to 0.4% for active employees and from 0.1% to 0.3% for pensioners). The plan assets decreased compared to 2020 due to the spin-off of the Applicator Systems division. The total expenses recognized in the income statement in 2021 were CHF 16.6 million (2020: CHF 19.0 million).

In the UK, the plan is a final salary plan and provides benefits linked to salary at closure to future accrual adjusted for inflation to retirement or earlier date of leaving service. The scheme is fully closed to new entrants and future accruals. The scheme is managed by six trustees forming the Board. The plan is a multiemployer scheme with Sulzer (UK) Holding being the principal sponsor. The discount rate increased in 2021 by 0.5 percentage points to 2.0% (2020: 1.5%). The net pension liabilities decreased from CHF 139.9 million in 2020 to CHF 109.2 million due to the higher discount rate and changes in the demographic assumptions. The total expenses recognized in the income statement in 2021 were CHF 3.0 million, compared to CHF 3.3 million in 2020.

In the USA, the group operates non-contributory defined benefit retirement plans. The salaried plans provide benefits that are based on years of service and the employee’s compensation, averaged over the five highest consecutive years preceding retirement. The hourly plans’ benefits are based on years of service and a flat dollar benefit multiplier. All plans were closed for new entrants. In 2021, an expense of CHF 1.1 million was recognized in the income statement (2020: CHF 1.3 million). The discount rate increased in 2021 to 2.5% (2020: 2.2%). The amount recognized in other comprehensive income (OCI) in 2021 was CHF –1.0 million (2020: CHF –4.2 million).

In Germany, the group operates a range of different defined benefit pension plans. The majority of these plans are unfunded and benefits are paid directly by the employer to the beneficiaries as they become due. All defined benefit plans are closed for new entrants and a new defined contribution plan for all employees was introduced in 2007. Existing employees who participated in the defined benefit plans continued to be eligible for these defined benefit pensions but also became eligible for the new defined contribution pensions. However, benefits received under the defined contribution plan are offset against the benefits under the defined benefit plans. The different defined benefit plans offer retirement pension, disability pension and survivor’s pension benefits.

Employee benefit plans

millions of CHF

 

2021

 

2020

Reconciliation of effect of asset ceiling

 

 

 

 

Reconciliation of asset / (liability) recognized in the balance sheet

 

 

 

 

Asset / (liability) recognized at January 1

 

–151.7

 

–168.6

Defined benefit income / (expenses) recognized in the income statement

 

–24.1

 

–25.2

Defined benefit income / (expenses) recognized in OCI

 

102.2

 

8.8

Employer contributions

 

29.0

 

25.3

Derecognized as discontinued operations

 

1.4

 

Currency translation differences

 

–2.5

 

8.1

Asset / (liability) recognized at December 31

 

–45.7

 

–151.7

 

 

 

 

 

Components of defined benefit income / (expenses) in the income statement

 

 

 

 

Current service costs (employer)

 

–19.1

 

–22.2

Interest expenses

 

–12.9

 

–16.3

Interest income on plan assets

 

9.7

 

12.9

Past service costs

 

–0.1

 

Effects of curtailments and settlements

 

 

2.3

Other administrative costs

 

–1.7

 

–1.8

Income / (expenses) recognized in the income statement

 

–24.1

 

–25.2

– thereof charged to personnel expenses

 

–16.9

 

–16.4

– thereof charged to financial expenses

 

–3.2

 

–3.5

– thereof charged to net income from discontinued operations

 

–4.0

 

–5.3

 

 

 

 

 

Components of defined benefit gains / (losses) in OCI

 

 

 

 

Actuarial gains / (losses) on defined benefit obligation

 

16.6

 

–73.6

Returns on plan assets excl. interest income

 

84.9

 

82.2

Returns on reimbursement right excl. interest income / (expenses)

 

0.7

 

0.2

Defined benefit gains / (losses) recognized in OCI 1)

 

102.2

 

8.8

1) The tax effect on defined benefit cost recognized in OCI amounted to CHF -13.4 million (2020: CHF -0.8 million).

Employee benefit plans

millions of CHF

 

2021

 

2020

Reconciliation of defined benefit obligation

 

 

 

 

Defined benefit obligation as of January 1

 

–1’841.2

 

–1’884.0

Interest expenses

 

–12.9

 

–16.3

Current service costs (employer)

 

–19.1

 

–22.2

Contributions by plan participants

 

–9.2

 

–8.7

Past service costs

 

–0.1

 

Benefits paid / (deposited)

 

99.3

 

126.5

Effects of curtailments and settlement

 

 

2.3

Other administrative costs

 

–1.7

 

–1.8

Actuarial gains / (losses)

 

16.6

 

–73.6

Derecognized as discontinued operations

 

89.6

 

Currency translation differences

 

–13.6

 

36.7

Defined benefit obligation as of December 31 1)

 

–1’692.3

 

–1’841.2

 

 

 

 

 

Reconciliation of the fair value of plan assets

 

 

 

 

Fair value of plan assets as of January 1

 

1’689.5

 

1’715.4

Interest income on plan assets

 

9.7

 

12.9

Employer contributions

 

29.0

 

25.3

Contributions by plan participants

 

9.2

 

8.7

Benefits (paid) / deposited

 

–99.3

 

–126.5

Effects of curtailments and settlement

 

 

0.0

Returns on plan assets excl. interest income

 

84.9

 

82.2

Derecognized as discontinued operations

 

–88.2

 

Currency translation differences

 

11.8

 

–28.4

Fair value of plan assets as of December 31

 

1’646.6

 

1’689.5

 

 

 

 

 

Total plan assets at fair value – quoted market price

 

 

 

 

Cash and cash equivalents

 

82.1

 

70.6

Equity instruments

 

569.9

 

555.7

Debt instruments

 

392.3

 

439.8

Real estate funds

 

33.2

 

35.3

Investment funds

 

4.6

 

3.9

Others

 

126.3

 

118.7

Total assets at fair value – quoted market price as of December 31

 

1’208.5

 

1’224.1

 

 

 

 

 

Total plan assets at fair value – non-quoted market price

 

 

 

 

Properties occupied by or used by third parties (real estate)

 

264.7

 

287.7

Others

 

173.4

 

177.7

Total assets at fair value – non-quoted market price as of December 31

 

438.1

 

465.5

 

 

 

 

 

Best estimate of contributions for upcoming financial year

 

 

 

 

Contributions by the employer

 

23.3

 

28.7

1) The defined benefit obligation includes the funded part and the unfunded part.

Employee benefit plans

millions of CHF

 

2021

 

2020

Components of defined benefit obligation, split

 

 

 

 

Defined benefit obligation for active members

 

–275.3

 

–345.4

Defined benefit obligation for pensioners

 

–1’024.9

 

–1’109.9

Defined benefit obligation for deferred members

 

–392.0

 

–385.9

Total defined benefit obligation as of December 31

 

–1’692.3

 

–1’841.2

 

 

 

 

 

Components of actuarial gains / (losses) on obligations

 

 

 

 

Actuarial gains / (losses) arising from changes in financial assumptions

 

22.0

 

–75.6

Actuarial gains / (losses) arising from changes in demographic assumptions

 

1.7

 

11.4

Actuarial gains / (losses) arising from experience adjustments

 

–7.1

 

–9.5

Total actuarial gains / (losses) on defined benefit obligation

 

16.6

 

–73.6

 

 

 

 

 

Maturity profile of defined benefit obligation

 

 

 

 

Weighted average duration of defined benefit obligation in years

 

13.2

 

13.5

Since the defined benefit obligations for the Swiss and UK pension plans represents 89% (2020: 89%) of the group, the following significant actuarial assumptions apply exclusively to these two countries:

Principal actuarial assumptions as of December 31

 

 

2021

 

2020

 

 

Funded plans Switzerland

 

Funded plans United Kingdom

 

Funded plans Switzerland

 

Funded plans United Kingdom

Discount rate for active employees

 

0.4%

 

2.0%

 

0.2%

 

1.5%

Discount rate for pensioners

 

0.3%

 

2.0%

 

0.1%

 

1.5%

Future salary increases

 

1.0%

 

0.0%

 

1.0%

 

0.0%

Future pension increases

 

0.0%

 

3.2%

 

0.0%

 

2.8%

Life expectancy at retirement age (male / female) in years

 

22/24

 

22/24

 

22/24

 

22/24

Sensitivity analysis of defined benefit obligations

millions of CHF

 

2021

 

2020

Discount rate (decrease 0.25 percentage points)

 

–53.5

 

–59.2

Discount rate (increase 0.25 percentage points)

 

59.1

 

64.0

Future salary growth (decrease 0.25 percentage points)

 

7.9

 

7.6

Future salary growth (increase 0.25 percentage points)

 

–0.5

 

–0.5

Life expectancy (decrease 1 year)

 

104.5

 

110.1

Life expectancy (increase 1 year)

 

–95.8

 

–103.5

10 Research and development expenses

10Research and development expenses

A breakdown of the research and development expenses per division is shown in the table below:

millions of CHF

 

2021

 

2020 1)

Flow Equipment

 

39.6

 

39.1

Services

 

1.3

 

1.9

Chemtech

 

23.4

 

22.9

Total

 

64.4

 

63.8

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

11 Other operating income and expenses

11 Other operating income and expenses

millions of CHF

 

2021

 

2020 1)

Gain from sale of property, plant and equipment

 

1.7

 

3.0

Operating currency exchange gains, net

 

5.1

 

0.2

Other operating income

 

27.8

 

30.2

Total other operating income

 

34.6

 

33.4

 

 

 

 

 

Restructuring expenses

 

–9.5

 

–52.6

Impairments on tangible and intangible assets

 

–4.2

 

–9.4

Cost for mergers and acquisitions

 

–2.7

 

–1.2

Loss from sale of property, plant and equipment

 

–0.2

 

–0.1

Total other operating expenses

 

–16.5

 

–63.2

 

 

 

 

 

Total other operating income / (expenses), net

 

18.1

 

–29.8

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Other operating income includes income from charges to medmix for corporate support functions and centrally procured indirect spend utilized by medmix of CHF 11.5 million (2020: CHF 10.3 million). Further, other operating income includes income from litigation cases, government grants and incentives, and recharges to third parties not qualifying as sales from customers.

The group recognized restructuring costs for continuing operations of CHF 11.5 million and for discontinued operations of CHF 0.2 million (2020: CHF 54.8 million for continuing operations and CHF 3.2 million for discontinued operations), partly offset by released restructuring provisions of CHF 2.0 million (2020: CHF 2.2 million). Restructuring costs mainly relate to resizing activities in the USA and the United Kingdom. Associated with restructuring initiatives, the group further recognized impairments on tangible and intangible assets for continuing operations of CHF 4.2 million (2020: CHF 9.4 million) and CHF 0.5 million for discontinued operations (2020: CHF 0.5 million). For more details refer to note 7note 14, note 15 and note 16.

The functional allocation of the total restructuring expenses and impairments is as follows: cost of goods sold CHF –6.6 million (2020: CHF –37.5 million), selling and distribution expenses CHF –0.4 million (2020: CHF –5.5 million), general and administrative expenses CHF –6.6 million (2020: CHF –18.7 million) and research and development expenses CHF 0.0 million (2020: CHF –0.3 million).

12 Financial income and expenses

12Financial income and expenses

millions of CHF

 

2021

 

2020 1)

Interest and securities income

 

10.4

 

10.5

Total interest and securities income

 

10.4

 

10.5

Interest expenses on borrowings and lease liabilities

 

–22.5

 

–20.6

Interest expenses on employee benefit plans

 

–3.2

 

–3.5

Total interest expenses

 

–25.7

 

–24.0

Total interest income / (expenses), net

 

–15.3

 

–13.6

 

 

 

 

 

Fair value changes

 

1.3

 

6.1

Other financial expenses

 

–1.6

 

–3.6

Currency exchange gains / (losses), net

 

–6.0

 

–9.5

Total other financial income / (expenses), net

 

–6.4

 

–6.9

 

 

 

 

 

Total financial income / (expenses), net

 

–21.7

 

–20.5

– thereof fair value changes on financial assets at fair value through profit and loss

 

1.3

 

6.1

– thereof interest income on financial assets at amortized costs

 

10.4

 

10.5

– thereof other financial expenses

 

–1.6

 

–3.6

– thereof currency exchange gains / (losses), net

 

–6.0

 

–9.5

– thereof interest expenses on borrowings

 

–20.4

 

–18.3

– thereof interest expenses on lease liabilities

 

–2.1

 

–2.3

– thereof interest expenses on employee benefit plans

 

–3.2

 

–3.5

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Total financial expenses, net amounted to CHF 21.7 million, compared with CHF 20.5 million in 2020.

The “Fair value changesˮ are largely related to derivative financial instruments that are classified as financial assets or financial liabilities at fair value through profit and loss and that are used as hedging instruments to hedge foreign exchange risks.

13 Income taxes

13Income taxes

millions of CHF

 

2021

 

2020 1)

Current income tax expenses

 

–86.4

 

–56.8

Deferred income tax income

 

29.1

 

16.9

Total income tax expenses

 

–57.2

 

–39.8

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

The weighted average tax rate results from applying each subsidiary’s statutory income tax rate to the income before taxes. Since the group operates in countries that have differing tax laws and rates, the consolidated weighted average effective tax rate will vary from year to year according to variations in income per country and changes in applicable tax rates.

Reconciliation of income tax expenses

millions of CHF

 

2021

 

2020 1)

Income before income tax expenses from continuing operations

 

197.9

 

111.3

Weighted average tax rate

 

23.7%

 

23.2%

Income taxes at weighted average tax rate

 

–46.9

 

–25.9

Income taxed at different tax rates

 

1.0

 

2.5

Effect of tax loss carryforwards and allowances for deferred income tax assets

 

–4.7

 

–3.5

Expenses not deductible for tax purposes

 

–5.3

 

–5.6

Effect of changes in tax rates and legislation

 

3.6

 

–0.1

Prior year items and others

 

–4.9

 

–7.3

Total income tax expenses

 

–57.2

 

–39.8

Effective income tax rate

 

28.9%

 

35.8%

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

The effective income tax rate for 2021 was 28.9% (2020: 35.8%). The effect of tax loss carryforwards and allowances of deferred tax assets in the amount of CHF –4.7 million consist of restructuring expenses related to closed facilities and divestments of businesses with no corresponding tax effects. Expenses not deductible for tax purposes in the amount of CHF –5.3 million mainly relate to the disallowance of group charges and interests. Prior year items and others include additional provision for uncertain tax positions in the amount of CHF 1.1 million, tax base adjustments in Russia and Mexico, and negative tax audit assessments.

The effective income tax rate for 2020 was 35.8%. The effect of tax loss carryforwards and allowances of deferred tax assets in the amount of CHF –3.5 million consist of restructuring expenses related to closed facilities with no corresponding tax effects. Expenses not deductible for tax purposes in the amount of CHF –5.6 million mainly relate to the disallowance of group charges and interests. Prior year items and others include additional provision for uncertain tax positions in the amount of CHF 4.2 million.

Income tax liabilities

millions of CHF

 

2021

 

2020

Balance as of January 1

 

43.5

 

35.9

Acquired through business combination

 

0.7

 

2.3

Derecognized as discontinued operations

 

–10.0

 

Additions

 

77.0

 

68.3

Released as no longer required

 

–6.9

 

–5.8

Utilized

 

–62.6

 

–55.8

Currency translation differences

 

0.7

 

–1.3

Total income tax liabilities as of December 31

 

42.4

 

43.5

– thereof non-current

 

2.2

 

4.8

– thereof current

 

40.2

 

38.7

Summary of deferred income tax assets and liabilities in the balance sheet

 

 

2021

 

2020

millions of CHF

 

Assets

 

Liabilities

 

Net

 

Assets

 

Liabilities

 

Net

Intangible assets

 

11.9

 

–66.5

 

–54.6

 

17.0

 

–83.1

 

–66.1

Property, plant and equipment

 

3.2

 

–16.8

 

–13.6

 

4.5

 

–16.0

 

–11.5

Other financial assets

 

17.1

 

–0.5

 

16.6

 

4.3

 

–1.1

 

3.2

Inventories

 

29.4

 

–1.2

 

28.2

 

27.4

 

–2.7

 

24.7

Other assets

 

18.7

 

–50.9

 

–32.2

 

16.0

 

–31.2

 

–15.2

Defined benefit obligations

 

33.0

 

 

33.0

 

37.8

 

–1.4

 

36.4

Non-current provisions

 

13.4

 

–0.0

 

13.4

 

12.7

 

–2.0

 

10.8

Current provisions

 

29.2

 

–2.7

 

26.5

 

16.0

 

–0.6

 

15.4

Other liabilities

 

48.0

 

–14.6

 

33.4

 

36.8

 

–11.7

 

25.1

Tax loss carryforwards

 

28.9

 

 

28.9

 

42.7

 

 

42.7

Elimination of intercompany profits

 

0.5

 

 

0.5

 

0.6

 

 

0.6

Tax assets / liabilities

 

233.2

 

–153.2

 

80.1

 

215.8

 

–149.8

 

66.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Offset of assets and liabilities

 

–69.1

 

69.1

 

 

–61.3

 

61.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net recorded deferred income tax assets and liabilities

 

164.2

 

–84.1

 

80.1

 

154.5

 

–88.5

 

66.0

Cumulative deferred income taxes recorded in equity as of December 31, 2021, amounted to CHF 0.5 million (2020: CHF 13.3 million). The group does not recognize any deferred taxes on investments in subsidiaries because it controls the dividend policy of its subsidiaries — i.e., the group controls the timing of reversal of the related taxable temporary differences and management is satisfied that no material amounts will reverse in the foreseeable future.

Movement of deferred income tax assets and liabilities in the balance sheet

 

 

2021

millions of CHF

 

Balance as of January 1

 

Recognized in profit or loss continuing operations

 

Recognized in profit or loss discontinued operations

 

Recognized in other comprehensive income

 

Acquisition of subsidiaries

 

Derecognized as discontinued operations

 

Currency translation differences

 

Balance as of December 31

Intangible assets

 

–66.1

 

5.6

 

3.8

 

 

–19.7

 

21.4

 

0.5

 

–54.6

Property, plant and equipment

 

–11.5

 

–2.4

 

0.8

 

 

 

–0.1

 

–0.4

 

–13.6

Other financial assets

 

3.2

 

13.2

 

 

 

 

 

0.2

 

16.6

Inventories

 

24.7

 

2.3

 

1.2

 

 

 

 

 

28.2

Other assets

 

–15.2

 

–13.9

 

–6.3

 

0.8

 

 

–0.2

 

2.6

 

–32.2

Defined benefit obligations

 

36.4

 

7.2

 

2.1

 

–13.4

 

 

–0.7

 

1.5

 

33.0

Non-current provisions

 

10.8

 

2.9

 

 

 

 

–0.2

 

 

13.4

Current provisions

 

15.4

 

10.7

 

0.2

 

 

0.1

 

 

 

26.5

Other liabilities

 

25.1

 

6.5

 

1.3

 

 

 

–0.8

 

1.3

 

33.4

Tax loss carryforwards

 

42.7

 

–2.8

 

–8.4

 

 

 

–1.9

 

–0.7

 

28.9

Elimination of intercompany profits

 

0.6

 

–0.1

 

 

 

 

 

 

0.5

Total

 

66.0

 

29.1

 

–5.3

 

–12.6

 

–19.6

 

17.5

 

5.0

 

80.1

 

 

2020

millions of CHF

 

Balance as of January 1

 

Recognized in profit or loss continuing operations

 

Recognized in profit or loss discontinued operations

 

Recognized in other comprehensive income

 

Acquisition of subsidiaries

 

Derecognized as discontinued operations

 

Currency translation differences

 

Balance as of December 31

Intangible assets

 

–72.5

 

5.7

 

5.2

 

 

–5.6

 

 

1.2

 

–66.1

Property, plant and equipment

 

–8.5

 

–2.6

 

–1.1

 

 

 

 

0.7

 

–11.5

Other financial assets

 

4.6

 

–1.0

 

 

 

 

 

–0.5

 

3.2

Inventories

 

17.6

 

8.1

 

–0.2

 

 

 

 

–0.8

 

24.7

Other assets

 

–2.3

 

–14.8

 

5.2

 

–2.4

 

 

 

–0.9

 

–15.2

Defined benefit obligations

 

27.9

 

11.0

 

0.2

 

–0.8

 

 

 

–1.8

 

36.4

Non-current provisions

 

14.8

 

–3.0

 

 

 

 

 

–1.0

 

10.8

Current provisions

 

17.5

 

0.4

 

–1.3

 

 

0.3

 

 

–1.5

 

15.4

Other liabilities

 

22.6

 

2.7

 

1.0

 

 

 

 

–1.2

 

25.1

Tax loss carryforwards

 

32.6

 

10.6

 

1.1

 

 

 

 

–1.5

 

42.7

Elimination of intercompany profits

 

0.8

 

–0.2

 

 

 

 

 

 

0.6

Total

 

55.0

 

16.9

 

9.9

 

–3.2

 

–5.3

 

 

–7.3

 

66.0

Tax loss carryforwards (TLCF)

 

 

2021

millions of CHF

 

Amount

 

Potential tax assets

 

Valuation allowance

 

Carrying amount

 

Unrecognized TLCF

Expiring in the next 3 years

 

0.0

 

0.0

 

 

0.0

 

Expiring in 4–7 years

 

17.0

 

3.6

 

–3.1

 

0.5

 

14.5

Available without limitation

 

232.4

 

45.7

 

–17.3

 

28.4

 

104.8

Total tax loss carryforwards as of December 31

 

249.4

 

49.3

 

–20.4

 

28.9

 

119.3

 

 

2020

millions of CHF

 

Amount

 

Potential tax assets

 

Valuation allowance

 

Carrying amount

 

Unrecognized TLCF

Expiring in the next 3 years

 

0.5

 

0.1

 

–0.1

 

0.1

 

0.3

Expiring in 4–7 years

 

32.9

 

6.4

 

–3.3

 

3.1

 

14.6

Available without limitation

 

285.6

 

55.4

 

–15.9

 

39.5

 

111.7

Total tax loss carryforwards as of December 31

 

318.9

 

62.0

 

–19.3

 

42.7

 

126.6

Deferred income tax assets are recognized for tax loss carryforwards to the extent that the realization of the related tax benefit through future taxable profits is probable. No deferred income tax assets have been recognized on tax loss carryforwards in the amount of CHF 119.3 million (2020: CHF 126.6 million).

14 Goodwill and other intangible assets

14Goodwill and other intangible assets

 

 

2021

millions of CHF

 

Goodwill

 

Trademarks and licenses

 

Research and development

 

Computer software

 

Customer relationship

 

Total

Acquisition cost

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

1’286.0

 

221.6

 

15.3

 

58.3

 

628.4

 

2’209.6

Acquired through business combination

 

56.6

 

11.0

 

 

 

68.7

 

136.3

Derecognized as discontinued operations

 

–265.4

 

–78.8

 

–5.8

 

–16.7

 

–239.8

 

–606.6

Additions

 

 

 

0.3

 

6.7

 

0.0

 

6.9

Disposals

 

 

–61.2

 

–0.0

 

–2.4

 

–0.7

 

–64.4

Currency translation differences

 

–9.9

 

1.2

 

–0.0

 

1.4

 

–7.1

 

–14.4

Balance as of December 31

 

1’067.3

 

93.8

 

9.8

 

47.2

 

449.5

 

1’667.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortization and impairment losses

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

340.0

 

148.7

 

11.4

 

46.5

 

316.1

 

862.6

Derecognized as discontinued operations

 

 

–66.2

 

–4.4

 

–13.9

 

–112.7

 

–197.2

Additions

 

 

16.9

 

1.3

 

2.8

 

45.9

 

66.8

Disposals

 

 

–61.2

 

–0.0

 

–2.3

 

–0.7

 

–64.2

Impairments

 

 

 

 

 

0.2

 

0.2

Currency translation differences

 

 

–0.1

 

–0.0

 

0.2

 

–4.6

 

–4.5

Balance as of December 31

 

340.0

 

38.1

 

8.2

 

33.3

 

244.2

 

663.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

As of January 1

 

946.0

 

73.0

 

4.0

 

11.8

 

312.3

 

1’347.0

As of December 31

 

727.3

 

55.7

 

1.6

 

14.0

 

205.3

 

1’003.8

 

 

2020

millions of CHF

 

Goodwill 1)

 

Trademarks and licenses

 

Research and development

 

Computer software

 

Customer relationship

 

Total

Acquisition cost

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

1’260.8

 

220.9

 

14.6

 

52.9

 

609.8

 

2’159.0

Acquired through business combination

 

48.8

 

9.2

 

 

0.3

 

32.0

 

90.3

Additions

 

 

0.0

 

0.6

 

6.9

 

 

7.5

Disposals

 

 

–5.9

 

 

–1.5

 

–0.1

 

–7.5

Currency translation differences

 

–23.7

 

–2.5

 

0.0

 

–0.3

 

–13.3

 

–39.7

Balance as of December 31

 

1’286.0

 

221.6

 

15.3

 

58.3

 

628.4

 

2’209.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortization

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

340.0

 

138.4

 

9.8

 

45.4

 

274.5

 

808.1

Additions

 

 

15.4

 

1.6

 

3.2

 

45.7

 

65.9

Disposals

 

 

–5.9

 

 

–1.4

 

–0.0

 

–7.4

Impairments

 

 

 

0.0

 

0.9

 

 

0.9

Currency translation differences

 

 

0.8

 

–0.0

 

–1.6

 

–4.1

 

–4.9

Balance as of December 31

 

340.0

 

148.7

 

11.4

 

46.5

 

316.1

 

862.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

As of January 1

 

920.8

 

82.5

 

4.9

 

7.6

 

335.2

 

1’350.9

As of December 31

 

946.0

 

73.0

 

4.0

 

11.8

 

312.3

 

1’347.0

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 in note 4.

Goodwill impairment test

 

 

2021

millions of CHF

 

Goodwill

 

Headroom

 

Growth rate residual value

 

Pretax discount rate

Flow Equipment

 

416.3

 

545.0

 

2.0%

 

8.3%

Services

 

222.0

 

1’208.2

 

2.0%

 

10.5%

Chemtech

 

88.9

 

684.2

 

2.0%

 

9.5%

Discontinued operations

 

 

 

n/a

 

n/a

Total goodwill as of December 31

 

727.3

 

2’437.4

 

 

 

 

 

 

2020

millions of CHF

 

Goodwill 1)

 

Headroom

 

Growth rate residual value

 

Pretax discount rate

Flow Equipment

 

373.6

 

235.3

 

2.0%

 

8.8%

Services

 

217.2

 

1’021.0

 

2.0%

 

10.2%

Chemtech

 

89.8

 

594.8

 

1.5%

 

10.3%

Discontinued operations

 

265.4

 

1’762.3

 

2.0%

 

5.8%

Total goodwill as of December 31

 

946.0

 

3’613.5

 

 

 

 

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 in note 4.

Goodwill is allocated to the smallest cash-generating unit at which goodwill is monitored for internal management purposes (i.e., division or business unit). The recoverable amount of these units is determined over a five-year cash flow projection period.

The calculation is based on the budget for the first period (2021), the three-year strategic plan for the subsequent two periods (2022–2023), and a management calculation for the next two periods (2024–2025). The budget and the three-year strategic plan were approved by the Board of Directors in February 2021. Cash flows beyond the planning period are extrapolated using a terminal value including the growth rates as stated above.

As of December 31, 2021, there is no indication for goodwill impairment. Updating the impairment test would not have resulted in a goodwill impairment.

Sensitivity analyses

The recoverable amount from cash-generating units is measured on the basis of value-in-use calculations significantly impacted by the terminal growth rate used to determine the residual value, the discount rate and the projected cash flows. The table above shows the amount by which the estimated recoverable amount of the CGU exceeds its carrying amount (headroom).

Management identified that for the CGU Flow Equipment a reasonably possible decrease in the terminal growth rate by 5 percentage points could cause the carrying amount to exceed the recoverable amount (2020: decrease by 2.3 percentage points).

Management determined there are no other reasonably possible changes in key assumptions that would result in a goodwill impairment.

15 Property, plant and equipment

15Property, plant and equipment

 

 

2021

millions of CHF

 

Land and buildings

 

Machinery and technical equipment

 

Other non-current assets

 

Assets under construction

 

Total

Acquisition cost

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

366.8

 

710.2

 

186.3

 

89.3

 

1’352.6

Acquired through business combination

 

0.5

 

2.0

 

0.0

 

0.1

 

2.5

Derecognized as discontinued operations

 

–46.6

 

–229.2

 

–16.6

 

–53.6

 

–346.0

Additions

 

5.3

 

14.5

 

6.9

 

52.4

 

79.2

Disposals

 

–9.1

 

–24.4

 

–7.5

 

 

–41.0

Reclassifications

 

10.4

 

24.4

 

10.3

 

–45.1

 

Currency translation differences

 

5.5

 

6.3

 

–0.1

 

0.6

 

12.4

Balance as of December 31

 

332.8

 

503.8

 

179.4

 

43.6

 

1’059.6

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

169.5

 

489.8

 

148.0

 

 

807.3

Derecognized as discontinued operations

 

–26.6

 

–146.4

 

–7.4

 

–0.6

 

–181.0

Additions

 

11.9

 

41.1

 

12.1

 

 

65.0

Disposals

 

–5.9

 

–21.0

 

–6.9

 

 

–33.9

Impairments

 

0.0

 

1.4

 

0.1

 

0.6

 

2.1

Currency translation differences

 

1.7

 

–0.9

 

5.2

 

 

6.1

Balance as of December 31

 

150.7

 

363.9

 

151.1

 

 

665.7

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

As of January 1

 

197.3

 

220.4

 

38.3

 

89.3

 

545.3

As of December 31

 

182.2

 

139.8

 

28.4

 

43.6

 

394.0

 

 

2020

millions of CHF

 

Land and buildings

 

Machinery and technical equipment

 

Other non-current assets

 

Assets under construction

 

Total

Acquisition cost

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

380.8

 

756.6

 

193.9

 

71.5

 

1’402.9

Acquired through business combination

 

2.8

 

4.2

 

0.6

 

5.5

 

13.1

Additions

 

10.2

 

20.1

 

9.5

 

58.1

 

98.0

Disposals

 

–11.1

 

–60.3

 

–11.9

 

 

–83.3

Reclassifications

 

6.7

 

27.7

 

4.0

 

–38.5

 

Currency translation differences

 

–22.6

 

–38.2

 

–9.9

 

–7.4

 

–78.1

Balance as of December 31

 

366.8

 

710.2

 

186.3

 

89.3

 

1’352.6

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

178.4

 

525.7

 

154.4

 

 

858.5

Additions

 

11.6

 

42.1

 

12.2

 

 

65.9

Disposals

 

–10.0

 

–56.5

 

–10.8

 

 

–77.4

Reclassifications

 

 

 

 

 

Impairments

 

0.9

 

4.6

 

0.2

 

 

5.7

Currency translation differences

 

–11.3

 

–26.0

 

–8.0

 

 

–45.4

Balance as of December 31

 

169.5

 

489.8

 

148.0

 

 

807.3

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

As of January 1

 

202.4

 

230.9

 

39.5

 

71.5

 

544.4

As of December 31

 

197.3

 

220.4

 

38.3

 

89.3

 

545.3

The group performed impairment tests on production machines and facilities, resulting in impairments of CHF 2.1 million as of December 31, 2021 (December 31, 2020: CHF 5.7 million), all of which were charged to other operating expenses.

In 2021, the group sold property, plant and equipment with a book value of CHF 7.1 million for CHF 8.7 million resulting in a net gain of CHF 1.5 million (2020: property, plant and equipment sold for CHF 8.9 million with a book value of CHF 5.9 million, resulting in a net gain of CHF 3.0 million).

The contractual commitments to acquire property, plant and equipment as of December 31, 2021, amounted to CHF 11.8 million (December 31, 2020: CHF 7.0 million).

16 Leases

16Leases

Lease assets

 

 

2021

millions of CHF

 

Land and buildings, leased

 

Machinery and technical equipment, leased

 

Other non-current assets, leased

 

Total

Balance as of January 1

 

99.7

 

8.2

 

13.4

 

121.2

Acquired through business combination

 

3.7

 

0.1

 

0.6

 

4.4

Derecognized as discontinued operations

 

–45.1

 

–5.3

 

–1.2

 

–51.6

Additions

 

52.6

 

5.4

 

7.7

 

65.7

Disposals

 

–1.0

 

–0.0

 

–1.5

 

–2.5

Depreciation

 

–27.0

 

–2.6

 

–6.9

 

–36.5

Impairments

 

–2.4

 

 

 

–2.4

Remeasurements and contract modifications

 

–8.9

 

 

–0.1

 

–9.0

Currency translation differences

 

–0.0

 

0.1

 

–0.2

 

–0.1

Total lease assets as of December 31

 

71.7

 

5.7

 

11.7

 

89.2

 

 

2020

millions of CHF

 

Land and buildings, leased

 

Machinery and technical equipment, leased

 

Other non-current assets, leased

 

Total

Balance as of January 1

 

92.6

 

5.8

 

14.1

 

112.6

Acquired through business combination

 

2.1

 

0.0

 

0.3

 

2.4

Additions

 

39.5

 

5.0

 

8.0

 

52.5

Disposals

 

–1.3

 

–0.4

 

–1.3

 

–3.0

Depreciation

 

–25.8

 

–2.1

 

–8.0

 

–35.8

Impairments

 

–3.3

 

 

 

–3.3

Remeasurements and contract modifications

 

–0.2

 

 

1.1

 

0.9

Currency translation differences

 

–4.0

 

–0.3

 

–0.8

 

–5.1

Total lease assets as of December 31

 

99.7

 

8.2

 

13.4

 

121.2

Lease liabilities

 

 

2021

millions of CHF

 

Non-current lease liabilities

 

Current lease liabilities

 

Total

Balance as of January 1

 

90.2

 

29.5

 

119.7

Acquired through business combination

 

3.2

 

1.2

 

4.4

Derecognized as discontinued operations

 

–43.5

 

–7.6

 

–51.1

Additions

 

55.8

 

9.9

 

65.7

Interest expenses

 

1.6

 

0.5

 

2.1

Cash flow for repayments – principal portion

 

–9.3

 

–31.8

 

–41.1

Cash flow for repayments – interest portion

 

–1.6

 

–0.5

 

–2.1

Remeasurements and contract modifications

 

–5.8

 

–2.6

 

–8.4

Reclassifications

 

–25.7

 

25.7

 

Currency translation differences

 

–0.4

 

–0.0

 

–0.4

Total lease liabilities as of December 31

 

64.5

 

24.3

 

88.8

 

 

2020

millions of CHF

 

Non-current lease liabilities

 

Current lease liabilities

 

Total

Balance as of January 1

 

82.3

 

27.4

 

109.7

Acquired through business combination

 

1.6

 

0.9

 

2.4

Additions

 

45.9

 

6.6

 

52.5

Interest expenses

 

2.1

 

0.7

 

2.8

Cash flow for repayments – principal portion

 

–9.8

 

–29.4

 

–39.2

Cash flow for repayments – interest portion

 

–2.1

 

–0.7

 

–2.8

Remeasurements and contract modifications

 

–5.3

 

4.5

 

–0.8

Reclassifications

 

–20.6

 

20.6

 

Currency translation differences

 

–3.7

 

–1.2

 

–4.9

Total lease liabilities as of December 31

 

90.2

 

29.5

 

119.7

Other leasing disclosures

 

 

 

 

 

millions of CHF

 

2021

 

2020 1)

Recognized in the income statement

 

 

 

 

Expenses relating to short-term leases

 

–15.2

 

–17.5

Expenses relating to low-value asset leases, excluding short-term leases of low-value assets

 

–1.5

 

–1.9

Expenses relating to variable lease payments not included in the lease liability

 

–2.6

 

–2.4

Income from subleasing right-of-use assets

 

0.8

 

0.5

Interest expenses on lease liabilities

 

–2.1

 

–2.3

Total recognized in the income statement continuing operations

 

–20.6

 

–23.6

Recognized in the income statement discontinued operations

 

–2.4

 

–0.5

Total recognized in the income statement

 

–23.0

 

–24.1

 

 

 

 

 

Recognized in the statement of cash flows

 

 

 

 

Cash flow for short-term, low-value and variable leases (included within cash flow from operating activities)

 

–19.3

 

–21.9

Cash flow from subleasing right-of-use assets (included within cash flow from operating activities)

 

0.8

 

0.5

Cash flow for repayments of interest on lease liabilities (included within cash flow from operating activities)

 

–2.1

 

–2.8

Cash flow for repayments of the principal portion on lease liabilities (included within cash flow from financing activities)

 

–41.1

 

–39.2

Total cash outflow

 

–61.7

 

–63.3

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

17 Associates

17Associates

millions of CHF

 

2021

 

2020

Balance as of January 1

 

21.2

 

10.7

Additions

 

6.9

 

6.7

Reclassifications

 

 

4.4

Share of gains / (losses) of associates

 

–2.2

 

–0.7

Dividend payments received

 

–0.5

 

–0.0

Currency translation differences

 

0.2

 

0.1

Total investments in associates as of December 31

 

25.5

 

21.2

On March 31, 2021, the group increased its investment in Tamturbo Plc by CHF 5.4 million. Tamturbo is a manufacturer of oil-free industrial air compressor systems, offering disruptive solutions. It enables cleaner and more energy-efficient compressed air production, complementing the group’s low-pressure compressors for wastewater aeration.

On May 4, 2021, the group increased its investment in Worn Again by CHF 1.5 million. Worn Again is developing a unique polymer recycling process leveraging the group’s technology to enable the recycling of textiles and polyester packaging.

18 Other financial assets

18Other financial assets

 

 

2021

millions of CHF

 

Financial assets at fair value through profit and loss

 

Financial assets at fair value through other comprehensive income

 

Financial assets at amortized costs

 

Total

Balance as of January 1

 

10.4

 

 

305.3

 

315.7

Derecognized as discontinued operations

 

–0.0

 

 

–0.4

 

–0.4

Recognized through Applicator Systems division spin-off

 

 

21.9

 

434.2

 

456.2

Additions

 

0.9

 

 

5.3

 

6.2

Repayments

 

 

 

–733.0

 

–733.0

Changes in fair value

 

0.3

 

0.6

 

 

0.9

Currency translation differences

 

–0.7

 

 

–0.1

 

–0.8

Balance as of December 31

 

10.9

 

22.5

 

11.3

 

44.7

– thereof non-current

 

8.9

 

 

9.1

 

18.0

– thereof current

 

2.0

 

22.5

 

2.2

 

26.7

 

 

2020

millions of CHF

 

Financial assets at fair value through profit and loss

 

Financial assets at fair value through other comprehensive income

 

Financial assets at amortized costs

 

Total

Balance as of January 1

 

10.3

 

 

59.8

 

70.1

Changes in scope of consolidation

 

 

 

0.1

 

0.1

Additions

 

4.0

 

 

369.7

 

373.8

Disposals

 

 

 

–123.3

 

–123.3

Reclassifications

 

–4.1

 

 

–0.4

 

–4.4

Changes in fair value

 

0.1

 

 

 

0.1

Currency translation differences

 

–0.0

 

 

–0.7

 

–0.7

Balance as of December 31

 

10.4

 

 

305.3

 

315.7

– thereof non-current

 

8.7

 

 

2.0

 

10.6

– thereof current

 

1.7

 

 

303.3

 

305.1

Financial assets that belong to the category “financial assets at fair value through profit and lossˮ include investments in equity securities.

Financial assets that belong to the category “financial assets at fair value through other comprehensive income” include CHF 22.5 million (2020: CHF 0.0 million) investments in medmix shares. Through the Applicator Systems spin-off, the group received one medmix Ltd share for one treasury share held, in total 498’736 shares. The financial investment in medmix Ltd was recognized at its fair value based on the share price of medmix Ltd on September 30, 2021 (a Level 1 hierarchy valuation). Management has designated this investment at fair value through other comprehensive income.

Financial assets at amortized costs increased by CHF 434.2 million through the Applicator Systems division spin-off. Prior to the spin-off, these were intercompany borrowings between the group and Applicator Systems entities, which following the spin-off were classified as financial assets at amortized costs.

Financial assets at amortized costs include CHF 0.0 million (2020: CHF 302.4 million) investments in fixed-term deposits with maturities between 4 and 12 months at the date of acquisition.

19 Inventories

19Inventories

millions of CHF

 

2021

 

2020

Raw materials, supplies and consumables

 

186.0

 

197.6

Work in progress

 

218.3

 

216.4

Finished products and trade merchandise

 

71.3

 

101.1

Total inventories as of December 31

 

475.6

 

515.1

In 2021, the group recognized write-downs of CHF 16.5 million (2020: CHF 26.5 million) in the income statement. Total accumulated write-downs on inventories amounted to CHF 85.4 million as of December 31, 2021 (2020: CHF 94.2 million). Material expenses in 2021 amounted to CHF 1’110.1 million (2020: CHF 1’225.0 million).

20 Assets and liabilities related to contracts with customers

20Assets and liabilities related to contracts with customers

millions of CHF

 

2021

 

2020 1)

Sales recognized over time related to ongoing performance obligations

 

525.5

 

474.5

Sales recognized over time related to satisfied performance obligations

 

360.6

 

393.9

Sales recognized over time

 

886.0

 

868.4

Sales recognized at a point in time

 

2’269.3

 

2’099.3

Sales

 

3’155.3

 

2’967.8

– thereof sales recognized included in the contract liability balance at the beginning of the period

 

300.5

 

344.8

– thereof sales recognized from performance obligations satisfied (or partially satisfied) in previous periods

 

0.6

 

0.1

 

 

 

 

 

Cost of goods sold recognized over time related to ongoing performance obligations

 

–391.8

 

–363.5

Cost of goods sold recognized over time related to satisfied performance obligations

 

–255.5

 

–289.8

Cost of goods sold recognized over time

 

–647.3

 

–653.3

Cost of goods sold recognized at a point in time

 

–1’561.1

 

–1’442.1

Cost of goods sold

 

–2’208.4

 

–2’095.3

 

 

 

 

 

Gross profit recognized over time related to ongoing performance obligations

 

133.7

 

111.0

Gross profit recognized over time related to satisfied performance obligations

 

105.0

 

104.2

Gross profit recognized over time

 

238.7

 

215.2

Gross profit recognized at a point in time

 

708.2

 

657.2

Gross profit

 

946.9

 

872.4

 

 

 

 

 

Contract assets from sales recognized over time relating to ongoing performance obligations

 

912.5

 

749.3

Expected loss rate

 

0.1%

 

0.1%

Allowance for expected losses

 

–0.6

 

–0.6

Netting with contract liabilities

 

–502.6

 

–423.9

Contract assets

 

409.3

 

324.9

 

 

 

 

 

Contract liabilities from costs recognized over time relating to ongoing performance obligations

 

86.3

 

46.9

Advance payments from customers relating to point in time contracts

 

173.3

 

200.8

Advance payments from customers relating to over time contracts

 

567.5

 

476.8

Netting with contract assets

 

–502.6

 

–423.9

Contract liabilities

 

324.5

 

300.5

 

 

 

 

 

Order backlog (aggregate amount of transaction price allocated to unsatisfied performance obligations)

 

1’724.1

 

1’768.7

– thereof expected to be recognized as revenue within 12 months

 

1’515.8

 

1’571.4

– thereof expected to be recognized in more than 12 months

 

208.3

 

197.3

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Total sales recognized over time increased from CHF 868.4 million in 2020 to CHF 886.0 million in 2021. As a result, contract assets increased by CHF 84.4 million and contract liabilities by CHF 24.0 million.

21 Trade accounts receivable

21Trade accounts receivable

Aging structure of trade accounts receivable

 

 

2021

 

2020

millions of CHF

 

Expected loss rate

 

Gross amount

 

Allowance

 

Net book value

 

Expected loss rate

 

Gross amount

 

Allowance

 

Net book value

Not past due

 

0.2%

 

411.0

 

–0.9

 

410.2

 

0.1%

 

419.7

 

–0.6

 

419.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Past due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1–30 days

 

0.5%

 

54.6

 

–0.3

 

54.3

 

0.8%

 

83.4

 

–0.7

 

82.7

31–60 days

 

3.7%

 

24.1

 

–0.9

 

23.2

 

6.2%

 

27.3

 

–1.7

 

25.6

61–120 days

 

3.5%

 

21.2

 

–0.7

 

20.5

 

4.2%

 

31.8

 

–1.3

 

30.5

>120 days

 

56.7%

 

94.7

 

–53.7

 

41.0

 

54.6%

 

90.5

 

–49.4

 

41.1

Total trade accounts receivable as of December 31

 

 

 

605.7

 

–56.5

 

549.2

 

 

 

652.7

 

–53.7

 

599.1

Allowance for doubtful trade accounts receivable

millions of CHF

 

2021

 

2020

Balance as of January 1

 

53.7

 

47.1

Derecognized as discontinued operations

 

–2.0

 

Additions

 

19.5

 

22.9

Released as no longer required

 

–8.5

 

–10.1

Utilized

 

–6.7

 

–4.5

Currency translation differences

 

0.6

 

–1.8

Balance as of December 31

 

56.5

 

53.7

Approximately 32% (2020: 36%) of the gross amount of trade accounts receivable was past due, and an allowance of CHF 56.5 million (2020: CHF 53.7 million) was recorded. The recoverability of trade accounts receivable is regularly reviewed, and the credit quality of new customers is thoroughly assessed. Due to the large and heterogeneous customer base, the credit risk from individual customers of the group is limited. The allowance for doubtful trade accounts receivable is based on expected credit losses. These are based on historical observed default rates over the expected life of the trade receivables and are adjusted for forward-looking information such as development of gross domestic product (GDP) and oil price development.

Accounts receivable by geographical region

millions of CHF

 

2021

 

2020

Europe, the Middle East and Africa

 

236.1

 

284.7

– thereof United Kingdom

 

55.3

 

62.7

– thereof Saudi Arabia

 

32.5

 

27.2

– thereof Germany

 

15.8

 

37.4

– thereof Spain

 

20.4

 

18.4

– thereof Sweden

 

14.0

 

7.1

 

 

 

 

 

Americas

 

111.0

 

137.2

– thereof USA

 

70.5

 

88.4

 

 

 

 

 

Asia-Pacific

 

202.0

 

177.1

– thereof China

 

137.7

 

112.2

 

 

 

 

 

Total as of December 31

 

549.2

 

599.1

22 Other current receivables and prepaid expenses

22Other current receivables and prepaid expenses

millions of CHF

 

2021

 

2020 1)

Taxes (VAT, withholding tax)

 

62.0

 

63.9

Derivative financial instruments

 

7.0

 

12.1

Other current receivables

 

18.3

 

19.2

Total other current receivables as of December 31

 

87.3

 

95.2

 

 

 

 

 

Prepaid expenses

 

31.4

 

31.3

Total prepaid expenses as of December 31

 

31.4

 

31.3

 

 

 

 

 

Total other current receivables and prepaid expenses as of December 31

 

118.7

 

126.5

1) Defined benefit assets are presented as non-current assets and comparative information is re-presented. In 2020, defined benefit assets were presented as “other current receivables and prepaid expenses” under current assets.

For further details on derivative financial instruments, refer to note 29. Other current receivables and prepaid expenses do not include any material positions that are past due or impaired.

23 Cash and cash equivalents

23Cash and cash equivalents

millions of CHF

 

2021

 

2020

Cash

 

858.4

 

915.8

Cash equivalents

 

647.0

 

207.4

Total cash and cash equivalents as of December 31

 

1’505.4

 

1’123.2

As of December 31, 2021, the group held restricted cash and cash equivalents of CHF 36.3 million (2020: CHF 17.3 million).

24 Equity

24Equity

Share capital

 

 

2021

 

2020

thousands of CHF

 

Number of shares

 

Share capital

 

Number of shares

 

Share capital

Balance as of December 31 (par value CHF 0.01)

 

34’262’370

 

342.6

 

34’262’370

 

342.6

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.

Share ownership

Sulzer shares are freely transferable provided that, when requested by the company to do so, buyers declare that they have purchased and will hold the shares in their own name and for their own account. Nominees will only be entered in the share register with the right to vote provided that they meet the following conditions: the nominee is subject to the supervision of a recognized banking and financial market regulator; the nominee has entered into an agreement with the Board of Directors concerning its status; the share capital held by the nominee does not exceed 3% of the registered share capital entered in the commercial register; and the names, addresses and number of shares of those individuals for whose accounts the nominee holds at least 0.5% of the share capital have been disclosed. The Board of Directors is also entitled, beyond these limits, to enter shares of nominees with voting rights in the share register, provided that the above-mentioned conditions are met (see also paragraph 6a of the Articles of Association at https://sulzer.com/governance).

Shareholders holding more than 3%

 

 

Dec 31, 2021

 

Dec 31, 2020

 

 

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

FIL Limited

 

1’114’854

 

3.25

 

-

 

-

Retained earnings

The retained earnings include prior years’ undistributed income of consolidated companies and all remeasurements of the net liability for defined benefit plans and other transactions recorded directly in retained earnings.

Treasury shares

During 2021, the group acquired 207’690 treasury shares for CHF 21.8 million (2020: 285’460 shares for CHF 23.1 million). The total number of shares held by the group as of December 31, 2021, amounted to 534’073 treasury shares (December 31, 2020: 426’467 shares).

The treasury shares are mainly held for the purpose of issuing shares under the management share-based payment programs.

Cash flow hedge reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments where the hedged transaction has not yet occurred. Amounts are reclassified to profit or loss when the associated hedged transaction affects the income statement.

Currency translation reserve

The currency translation reserve comprises all foreign exchange differences arising on the translation of the financial statements of controlled entities, whose functional currency differs from the reporting currency of the group. The cumulative amount is reclassified to profit or loss when the net investment is derecognized.

Acquisition of non-controlling interests without a change of control

Reference is made to note 4.

Spin-off Applicator Systems division

Reference is made to note 7.

Transaction costs

Directly attributable transaction costs relating to the spin-off of the Applicator Systems division amounting to CHF 3.4 million have been recognized directly in retained earnings in equity.

Dividends

On April 14, 2021, the Annual General Meeting approved an ordinary dividend of CHF 4.00 (2020: ordinary dividend of CHF 4.00) per share to be paid out of reserves. The dividend was paid to shareholders on April 20, 2021. The total amount of the dividend to shareholders of Sulzer Ltd is CHF 135.4 million (2020: CHF 136.1 million), thereof paid dividends of CHF 91.9 million (2020: CHF 92.6 million) and unpaid dividends of CHF 43.5 million (2020: CHF 43.5 million). The dividend payments to the group’s main shareholder, Tiwel Holding AG, could still not be transferred as a result of US sanctions. The unpaid dividends are reflected in the balance sheet position “other current and accrued liabilitiesˮ (see note 28).

The Board of Directors decided to propose to the Annual General Meeting 2022 a dividend for the year 2021 of CHF 3.50 per share (2020: CHF 4.00).

25 Earnings per share

25Earnings per share

 

 

2021

 

2020

Net income attributable to shareholders of Sulzer Ltd – continuing operations

 

138.5

 

68.0

Net income attributable to shareholders of Sulzer Ltd – discontinued operations

 

1’278.3

 

15.6

Net income attributable to shareholders of Sulzer Ltd (millions of CHF)

 

1’416.7

 

83.6

 

 

 

 

 

Issued number of shares

 

34’262’370

 

34’262’370

Adjustment for the average treasury shares held

 

–474’364

 

–292’229

Average number of shares outstanding as of December 31

 

33’788’006

 

33’970’141

 

 

 

 

 

Adjustment for share participation plans

 

534’195

 

343’482

Average number of shares for calculating diluted earnings per share as of December 31

 

34’322’201

 

34’313’623

 

 

 

 

 

Earnings per share, attributable to a shareholder of Sulzer Ltd (in CHF) as of December 31

 

 

 

 

Basic earnings per share

 

41.93

 

2.46

– thereof basic earnings per share continuing operations

 

4.10

 

2.00

– thereof basic earnings per share discontinued operations

 

37.83

 

0.46

Diluted earnings per share

 

41.28

 

2.44

– thereof diluted earnings per share continuing operations

 

4.03

 

1.98

– thereof diluted earnings per share discontinued operations

 

37.24

 

0.46

26 Borrowings

26Borrowings

 

 

2021

millions of CHF

 

Non-current borrowings

 

Current borrowings

 

Total

Balance as of January 1

 

1’491.3

 

231.8

 

1’723.1

Acquired through business combination

 

0.8

 

 

0.8

Derecognized as discontinued operations

 

 

–5.5

 

–5.5

Cash flow from proceeds

 

0.0

 

54.8

 

54.8

Cash flow for repayments

 

–0.0

 

–263.1

 

–263.1

Changes in amortized costs

 

0.3

 

0.1

 

0.4

Reclassifications

 

–327.7

 

327.7

 

Currency translation differences

 

–0.0

 

–0.4

 

–0.4

Total borrowings as of December 31

 

1’164.6

 

345.5

 

1’510.1

 

 

2020

millions of CHF

 

Non-current borrowings

 

Current borrowings

 

Total

Balance as of January 1

 

1’199.2

 

131.0

 

1’330.2

Cash flow from proceeds

 

498.9

 

72.2

 

571.1

Cash flow for repayments

 

–0.0

 

–177.1

 

–177.1

Changes in amortized costs

 

0.3

 

0.1

 

0.4

Reclassifications

 

–207.1

 

207.1

 

Currency translation differences

 

0.0

 

–1.6

 

–1.5

Total borrowings as of December 31

 

1’491.3

 

231.8

 

1’723.1

Borrowings by currency

 

 

2021

 

2020

 

 

millions of CHF

 

in %

 

Interest rate

 

millions of CHF

 

in %

 

Interest rate

CHF

 

1’488.8

 

98.6

 

0.8%

 

1’700.2

 

98.7

 

0.9%

INR

 

6.0

 

0.4

 

4.7%

 

6.0

 

0.3

 

5.0%

USD

 

7.8

 

0.5

 

0.9%

 

5.1

 

0.3

 

1.8%

EUR

 

1.3

 

0.1

 

0.3%

 

10.1

 

0.6

 

1.1%

SEK

 

2.4

 

0.2

 

 

 

 

Other

 

3.7

 

0.2

 

 

1.7

 

0.1

 

Total as of December 31

 

1’510.1

 

100.0

 

 

1’723.1

 

100.0

 

The group arranged the renewal of the CHF 500 million syndicated credit facility with a maturity date of December 31, 2026. The facility includes two one-year extension options and a further option to increase the credit facility by CHF 250 million (subject to lenders’ approval). 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, 2021, and 2020, the syndicated facility was not used.

Outstanding bonds

 

 

2021

 

2020

millions of CHF

 

Amortized costs

 

Nominal

 

Amortized costs

 

Nominal

0.375% 07/2016–07/2022

 

325.0

 

325.0

 

325.1

 

325.0

0.875% 07/2016–07/2026

 

125.0

 

125.0

 

125.0

 

125.0

1.300% 07/2018–07/2023

 

289.8

 

290.0

 

289.6

 

290.0

0.625% 10/2018–10/2021

 

 

 

209.9

 

210.0

1.600% 10/2018–10/2024

 

249.9

 

250.0

 

249.8

 

250.0

0.800% 09/2020–09/2025

 

299.5

 

300.0

 

299.3

 

300.0

0.875% 11/2020–11/2027

 

199.7

 

200.0

 

199.6

 

200.0

Total as of December 31

 

1’488.8

 

1’490.0

 

1’698.4

 

1’700.0

– thereof non-current

 

1’163.8

 

1’165.0

 

1’488.5

 

1’490.0

– thereof current

 

325.0

 

325.0

 

209.9

 

210.0

All the outstanding bonds are traded on SIX Swiss Exchange.

27 Provisions

27Provisions

 

 

2021

millions of CHF

 

Other employee benefits

 

Warranties / liabilities

 

Restructuring

 

Environmental

 

Other

 

Total

Balance as of January 1

 

53.5

 

85.3

 

41.5

 

12.8

 

56.3

 

249.3

Acquired through business combination

 

0.6

 

0.6

 

 

 

0.9

 

2.1

Derecognized as discontinued operations

 

–4.0

 

–2.0

 

–0.5

 

 

–7.2

 

–13.7

Additions

 

12.2

 

37.1

 

11.7

 

 

69.7

 

130.7

Released as no longer required

 

–1.9

 

–6.9

 

–2.0

 

 

–6.1

 

–16.9

Utilized

 

–7.0

 

–20.7

 

–29.8

 

–1.1

 

–56.7

 

–115.2

Currency translation differences

 

0.4

 

0.3

 

0.1

 

0.1

 

–1.4

 

–0.5

Total provisions as of December 31

 

53.9

 

93.8

 

21.0

 

11.8

 

55.4

 

235.8

– thereof non-current

 

38.9

 

4.0

 

2.5

 

11.8

 

10.8

 

68.0

– thereof current

 

15.0

 

89.7

 

18.5

 

0.0

 

44.6

 

167.8

 

 

2020

millions of CHF

 

Other employee benefits

 

Warranties / liabilities

 

Restructuring

 

Environmental

 

Other

 

Total

Balance as of January 1

 

54.4

 

67.6

 

20.0

 

14.7

 

51.9

 

208.7

Acquired through business combination

 

 

0.0

 

 

 

3.5

 

3.5

Additions

 

12.2

 

44.2

 

58.0

 

 

65.6

 

179.9

Released as no longer required

 

 

–7.5

 

–2.2

 

–0.2

 

–5.6

 

–15.5

Utilized

 

–10.1

 

–15.5

 

–33.0

 

–1.4

 

–54.9

 

–114.8

Currency translation differences

 

–3.0

 

–3.6

 

–1.4

 

–0.3

 

–4.2

 

–12.5

Total provisions as of December 31

 

53.5

 

85.3

 

41.5

 

12.8

 

56.3

 

249.3

– thereof non-current

 

37.3

 

3.3

 

2.7

 

12.7

 

9.7

 

65.8

– thereof current

 

16.2

 

82.0

 

38.7

 

0.0

 

46.6

 

183.5

The category “Other employee benefitsˮ includes provisions for jubilee gifts, early retirement of senior managers and other obligations to employees.

The category “Warranties/liabilitiesˮ includes provisions for warranties, customer claims, penalties, litigation and legal cases relating to goods delivered or services rendered.

The group recognized restructuring costs for continuing operations of CHF 11.5 million and for discontinued operations of CHF 0.2 million (2020: CHF 54.8 million for continuing operations and CHF 3.2 million for discontinued operations), partly offset by released restructuring provisions of CHF 2.0 million (2020: CHF 2.2 million). Restructuring costs mainly relate to resizing activities in the USA and the United Kingdom. The remaining restructuring provision as of December 31, 2021, is CHF 21.0 million, of which CHF 18.5 million is expected to be utilized within one year.

“Environmentalˮ mainly consists of expected costs related to inherited liabilities.

“Otherˮ includes provisions that do not fit into the aforementioned categories. A large number of these provisions refer to onerous contracts and indemnities, in particular related from divestitures. In addition, provisions for ongoing asbestos lawsuits and other legal claims are included. Based on the currently known facts, the group is of the opinion that the resolution of the open cases will not have material effects on its liquidity or financial condition. Although the group expects a large part of the category “Otherˮ to be realized in 2022, by their nature, the amounts and timing of any cash outflows are difficult to predict.

28 Other current and accrued liabilities

28Other current and accrued liabilities

millions of CHF

 

2021

 

2020 1)

Liability related to the purchase of treasury shares

 

98.1

 

103.4

Outstanding dividend payments

 

201.1

 

157.6

Taxes (VAT, withholding tax)

 

34.3

 

35.6

Derivative financial instruments

 

6.7

 

6.9

Notes payable

 

26.7

 

17.0

Contingent consideration

 

4.0

 

6.6

Other current liabilities

 

25.1

 

29.6

Total other current liabilities as of December 31

 

395.9

 

356.6

 

 

 

 

 

Contract-related costs

 

168.3

 

116.3

Salaries, wages and bonuses

 

116.8

 

114.0

Vacation and overtime claims

 

24.0

 

20.8

Other accrued liabilities

 

123.1

 

116.3

Total accrued liabilities as of December 31

 

432.3

 

367.5

 

 

 

 

 

Total other current and accrued liabilities as of December 31

 

828.1

 

724.1

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 in note 4.

The outstanding dividend payments of CHF 201.1 million (2020: CHF 157.6 million) are explained in note 24.

29 Derivative financial instruments

29Derivative financial instruments

 

 

2021

 

2020

 

 

Derivative assets

 

Derivative liabilities

 

Derivative assets

 

Derivative liabilities

millions of CHF

 

Notional value

 

Fair value

 

Notional value

 

Fair value

 

Notional value

 

Fair value

 

Notional value

 

Fair value

Forward exchange rate contracts

 

750.5

 

7.0

 

388.6

 

6.7

 

672.7

 

12.1

 

723.2

 

6.9

Interest rate swaps

 

 

0.7

 

 

0.8

 

4.9

 

1.0

 

4.9

 

1.2

Total as of December 31

 

750.5

 

7.7

 

388.6

 

7.5

 

677.6

 

13.2

 

728.0

 

8.1

– thereof due in <1 year

 

750.5

 

7.0

 

387.9

 

6.7

 

672.7

 

12.1

 

723.2

 

6.9

– thereof due in 1–5 years

 

 

0.7

 

0.7

 

0.0

 

 

 

 

– thereof due in >5 years

 

 

 

 

0.8

 

4.9

 

1.0

 

4.9

 

1.2

The notional value and the fair value of derivative assets and liabilities include current and non-current derivative financial instruments. The cash flow hedges of the expected future sales were assessed as highly effective. As of December 31, 2021, net cumulative unrealized gains of CHF 4.3 million (2020: gains of CHF 7.4 million) with deferred tax liabilities of CHF 1.0 million (2020: tax liabilities of CHF 1.5 million) relating to these cash flow hedges were included in the cash flow hedge reserves. In 2021, gains of CHF 0.7 million (2020: losses of CHF 6.3 million) were reclassified from cash flow hedge reserves to profit and loss (thereof gains of CHF 1.8 million to continuing operations and a losses of CHF 1.1 million to discontinued operations, 2020: losses of 6.3 million to continuing operations and CHF 0.0 million to discontinued operations). There was no ineffectiveness that arose from cash flow hedges in 2021 (2020: CHF 0.0 million). The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the balance sheet.

The hedged, highly probable forecast transactions denominated in foreign currencies are mostly expected to occur at various dates during the next 12 months. Gains and losses recognized in the cash flow hedge reserve (cash flow hedges) in equity on forward foreign exchange contracts as of December 31, 2021, are recognized either in sales, cost of goods sold or other operating income/expenses in the period or periods during which the hedged transaction affects the income statement. This is generally within 12 months from the balance sheet date unless the gain or loss is included in the initial amount recognized for the purchase of fixed assets, in which case recognition is over the lifetime of the asset (5 to 10 years).

The group enters into derivative financial instruments under enforceable master netting arrangements. These agreements do not meet the criteria for offsetting derivative assets and derivative liabilities in the consolidated balance sheet. As of December 31, 2021, the amount subject to such netting arrangements was CHF 3.4 million (2020: CHF 5.0 million). Considering the effect of these agreements, the amount of derivative assets would reduce from CHF 7.7 million to CHF 4.3 million (2020: from CHF 13.2 million to CHF 8.2 million), and the amount of derivative liabilities would reduce from CHF 7.5 million to CHF 4.1 million (2020: from CHF 8.1 million to CHF 3.1 million).

30 Contingent liabilities

30Contingent liabilities

millions of CHF

 

2021

 

2020

Guarantees in favor of third parties

 

43.0

 

11.0

Total contingent liabilities as of December 31

 

43.0

 

11.0

As of December 31, 2021, guarantees provided to third parties amounted to CHF 43.0 million (2020: CHF 11.0 million), whereof CHF 42.0 million were related to disposed businesses (2020: CHF 10.0 million) and CHF 1.0 million to general business activities (2020: CHF 1.0 million). All guarantees will expire in 2022.

Related to the spin-off of medmix, the group may be held liable by creditors of medmix Ltd who may be able to enforce certain claims existing at the time of the spin-off or having their basis prior to the spin-off against Sulzer Ltd.

31 Share participation plans

31Share participation plans

Share-based payments charged to personnel expenses

millions of CHF

 

2021

 

2020 1)

Restricted share unit plan

 

1.3

 

1.2

Performance share plan continuing operations

 

19.5

 

12.5

Performance share plan discontinued operations

 

1.1

 

0.5

Total charged to personnel expenses

 

21.9

 

14.2

1) Comparative information has been re-presented due to discontinued operations (details are described in note 7).

Restricted share unit plan settled in Sulzer shares

This long-term incentive plan covers the Board of Directors. Restricted share units (RSU) are granted annually. Awards to members of the Board of Directors automatically vest with the departure from the Board. 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. The fair value of the RSU granted is measured at the grant date closing share price of Sulzer Ltd, and discounted over the vesting period using a discount rate that is based on the yield of Swiss government bonds for the duration of the vesting period. Participants are not entitled to dividends declared during the vesting period. Consequently, the grant date fair value of the RSU is reduced by the present value of the dividends expected to be paid during the vesting period.

Given the spin-off of the Applicator Systems division, the group neutralized the consequences from the demerger for the restricted share plans. The number of originally granted RSU was recalculated to neutralize the effect of the spin-off on the share price, resulting in the same fair value before and after the spin-off and did not impact the share-based payments expense.

Restricted share units

Grant year

 

2021

 

2020

 

2019

 

2018

 

2017

 

Total

Outstanding as of January 1, 2020

 

 

 

10’551

 

5’522

 

2’476

 

18’549

Granted

 

 

17’715

 

 

 

 

17’715

Exercised

 

 

 

–3’517

 

–2’761

 

–2’476

 

–8’754

Forfeited

 

 

 

 

 

 

Outstanding as of December 31, 2020

 

 

17’715

 

7’034

 

2’761

 

 

27’510

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding as of January 1, 2021

 

 

17’715

 

7’034

 

2’761

 

 

27’510

Granted

 

10’866

 

 

 

 

 

10’866

APS division spin-off

 

5’766

 

4’910

 

1’415

 

 

 

12’091

Exercised

 

 

–8’461

 

–4’371

 

–2’761

 

 

–15’593

Forfeited

 

 

 

 

 

 

Outstanding as of December 31, 2021

 

16’632

 

14’164

 

4’078

 

 

 

34’874

 

 

 

 

 

 

 

 

 

 

 

 

 

Average fair value at grant date in CHF

 

106.32

 

65.22

 

97.76

 

118.20

 

98.00

 

 

Performance share plan settled in Sulzer shares

This long-term incentive plan covers the members of the Executive Committee and the members of the Sulzer Management Group. Performance share units (PSU) are granted annually, depending on the organizational position of the employee.

Vesting of the PSUs is subject to continuous employment and to the achievement of performance conditions over the performance period. Participants are not entitled to dividends declared during the vesting period. Vesting of the performance share plans (PSP) is based on three performance conditions: operational income before restructuring, amortization, impairments and non-operational items (operational profit) growth over the performance period (weighted 25%), average operational return on capital employed (operational ROCEA) (weighted 25%), and Sulzer’s total return to shareholders (TSR), compared to a selected group of peer companies (weighted 50%).

TSR is measured with a starting value of the volume-weighted average share price (VWAP) over the first three months of the first year, and an ending value of the VWAP over the last three months of the vesting period. The rank of Sulzer’s TSR at the end of the performance period determines the effective number of total shares. The exercise price of the PSUs is zero.

Given the spin-off of the Applicator Systems division, the group neutralized the consequences from the demerger for the PSP. The number of originally granted PSUs was recalculated to neutralize the effect of the spin-off on share price, resulting in the same fair value before and after the spin-off. The target values of the Applicator Systems business for the PSP 2019, PSP 2020 and PSP 2021, as derived from their respective three-year financial plans, are deducted for the Sulzer group. As a result, the target values for the group comprise only what remain as continuing businesses within the group. Furthermore, for each non-market performance condition (i.e., operational profit growth and operational ROCEA) of PSP 2019, PSP 2020 and PSP 2021, the performance curve depicting the gradient formed from the threshold, target and cap performance level remains unchanged.

The following inputs were used to determine the fair value of the PSUs at grant date using a Monte Carlo simulation:

Grant year

 

2021

 

2020

 

2019

 

2018

 

2017

Fair value at grant date

 

124.95

 

78.18

 

115.95

 

143.62

 

116.02

Share price at grant date

 

101.12

 

76.05

 

92.46

 

120.60

 

104.80

Expected volatility

 

34.68%

 

37.45%

 

29.64%

 

29.12%

 

25.10%

Risk-free interest rate

 

–0.58%

 

–0.64%

 

–0.57%

 

–0.42%

 

–0.56%

The expected volatility of the Sulzer share and the peer group companies is determined by the historical volatility. The zero-yield curves of those countries in which the companies and indices are listed were used as the relevant risk-free rates. Historical data was used to arrive at an estimate for the correlation between Sulzer and the peer companies. For the TSR calculation, all dividends paid during the vesting period are added to the closing share price.

Performance share units — terms of awards

Grant year

 

2021

 

2020

 

2019

 

2018

 

2017

Number of awards granted

 

90’527

 

151’422

 

112’857

 

74’467

 

76’818

Grant date

 

April 1, 2021

 

June 1, 2020

 

April 1, 2019

 

July 1, 2018

 

April 1, 2017

Performance period for cumulative operational profit

 

01/21–12/23

 

01/20–12/22

 

01/19–12/21

 

01/18–12/20

 

01/17–12/19

Performance period for TSR

 

01/21–12/23

 

01/20–12/22

 

01/19–12/21

 

01/18–12/20

 

01/17–12/19

Fair value at grant date in CHF

 

124.95

 

78.18

 

115.95

 

143.62

 

116.02

Performance share units

Grant year

 

2021

 

2020

 

2019

 

2018

 

2017

 

Total

Outstanding as of January 1, 2020

 

 

 

110’639

 

70’163

 

66’837

 

247’639

Granted

 

 

151’422

 

 

 

 

151’422

Exercised

 

 

–999

 

–3’831

 

–4’748

 

–66’837

 

–76’415

Forfeited

 

 

–3’564

 

–5’044

 

–2’158

 

 

–10’766

Outstanding as of December 31, 2020

 

 

146’859

 

101’764

 

63’257

 

 

311’880

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding as of January 1, 2021

 

 

146’859

 

101’764

 

63’257

 

 

311’880

Granted

 

90’527

 

 

 

 

 

90’527

APS division spin-off

 

44’801

 

74’680

 

53’141

 

 

 

172’622

Exercised

 

–553

 

–3’829

 

–2’088

 

–63’257

 

 

–69’727

Forfeited

 

–7’284

 

–7’516

 

–1’008

 

 

 

–15’808

Outstanding as of December 31, 2021

 

127’491

 

210’194

 

151’809

 

 

 

489’494

32 Transactions with members of the Board of Directors, Executive Committee and related parties

32Transactions with members of the Board of Directors, Executive Committee and related parties

Key management compensation

 

 

2021

 

2020

thousands of CHF

 

Short-term benefits

 

Equity-based compensation

 

Pension and social security contributions

 

Total

 

Short-term benefits

 

Equity-based compensation

 

Pension and social security contributions

 

Total

Board of Directors

 

1’444

 

1’155

 

263

 

2’862

 

1’396

 

1’155

 

257

 

2’808

Executive Committee

 

8’186

 

4’486

 

1’938

 

14’609

 

7’445

 

5’238

 

1’965

 

14’648

As of December 31, 2021, there are no outstanding loans with members of the Board of Directors or the Executive Committee. No shares have been granted to members of the Board of Directors, the Executive Committee, or related persons, with the exception of shares granted in connection with equity-settled plans and service awards.

Related parties

As of December 31, 2021, open payables with related parties amounted to CHF 299.4 million (2020: CHF 261.0 million), thereof CHF 98.1 million related to the purchase of treasury shares, CHF 201.1 million outstanding dividend payments (see note 24 and note 28) and CHF 0.2 million related to other payables. Sales with related parties amounted to CHF 0.1 million (2020: CHF 0.0 million). The other operating income in 2021 amounted to CHF 3.1 million (2020: CHF 0.0 million) and the operating expenses to CHF 1.3 million (2020: CHF 0.8 million). As of December 31, 2021, open trade and other receivables amounted to CHF 1.9 million (2020: CHF 0.0 million). The interest income in 2021 amounted to CHF 0.1 million (2020: CHF 0.0 million) with open other financial assets as of December 31, 2021, of CHF 3.4 million (2020: 0.0 million) originating from the medmix spin-off. Transactions with related parties are mainly with medmix since the spin-off at September 20, 2021. These transactions comprise primarily charges for corporate support functions, centrally procured indirect spend utilized by medmix, as well as interest income.

Sales with associates in 2021 amounted to CHF 4.8 million (2020: CHF 1.1 million) with open receivables of CHF 1.6 million (2020: CHF 0.5 million). The operating expenses amounted to CHF 0.7 million (2020: CHF 0.2 million) with open payables of CHF 0.4 million (2020: CHF 0.0 million, see note 17 for details on the investments in associates). 

All related party transactions are priced on an arm’s-length basis.

33 Auditor remuneration

33Auditor remuneration

Fees for the audit services by KPMG as the appointed group auditor amounted to CHF 3.8 million (2020: CHF 3.6 million). Additional services provided by the group auditor amounted to a total of CHF 1.5 million (2020: CHF 1.8 million). This amount includes CHF 0.2 million (2020: CHF 0.5 million) for tax services and CHF 1.3 million (2020: CHF 1.3 million) for other services.

34 Key accounting policies and valuation methods

34Key accounting policies and valuation methods

34.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) using the historical cost convention except for:

  • financial assets at fair value through profit and loss and financial assets at fair value through other comprehensive income; and
  • net position from defined benefit plans, where plan assets are measured at fair value and the plan liabilities are measured at the present value of the defined benefit obligations (see note 34.20 a).

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and have been applied consistently by all subsidiaries.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the group’s accounting policies. The areas involving a higher degree of judgment or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 5.

Rounding

Due to rounding, numbers presented throughout the consolidated financial statements may not add up precisely to the totals provided. All ratios, percentages and variances are calculated using the underlying amount rather than the presented rounded amount.

Tables

Within tables, blank fields generally indicate that the field is not applicable or not meaningful, or that information is not available as of the relevant date or for the relevant period. Dashes (–) generally indicate that the respective figure is zero, while a zero (0.0) indicates that the relevant figure has been rounded to zero.

34.2 Change in accounting policies

a) Standards, amendments and interpretations which were effective for 2021

A number of amended standards became applicable for the current reporting period. The group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these amended standards.

Software as a service (SaaS) arrangements

The group previously capitalized costs incurred in configuring or customizing software as a service (SaaS) arrangements as intangible assets, as the group considered that it would benefit from these implementation costs over the contract term of the SaaS arrangements. Following the IFRS Interpretations Committee (IFRIC) agenda decision on configuration or customization costs in a cloud computing arrangement, which was published in April 2021, the group has reconsidered its accounting treatment and adopted the treatment set out in this IFRIC agenda decision. The revised accounting policy capitalizes these costs as intangible assets only if the implementation activities create an intangible asset that the entity controls and the intangible asset meets the recognition criteria. Costs that do not meet these criteria are expensed as incurred, unless they are paid to the suppliers of the SaaS arrangement to significantly customize the cloud-based software for the group, in which case they are recognized as a prepayment for services and amortized over the expected period of use of the SaaS arrangement.

As a result of this change in accounting policy, the group completed a review of the existing intangible assets portfolio and there was no material impact to software intangible assets because of the change in accounting policy.

b) Standards, amendments and interpretations issued but not yet effective, which the group decided not to adopt early in 2021

There are no other IFRS standards or interpretations issued but not yet effective that would be expected to have a material impact on the group.

34.3 Consolidation

a) Business combinations

The group accounts for business combinations using the acquisition method when control is transferred to the group. The consideration transferred in the acquisition is measured at the fair value of the assets given, the liabilities incurred to the former owner of the acquiree and the equity interest issued by the group. Any goodwill arising is tested annually for impairment. Any gain on a bargain purchase is recognized in the income statement immediately. Acquisition-related costs are expensed as incurred, except if related to the issue of debt or equity securities. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination, are measured initially at their fair values at the acquisition date.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognized in the income statement.

If share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. The determination is based on the difference between the market-based measure of the replacement awards compared with the market-based measure of the acquiree’s awards and the extent to which the replacement awards relate to precombination service.

b) Subsidiaries

Subsidiaries are all entities controlled by the group. The group controls an entity when it is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

According to the full consolidation method, all assets and liabilities and income and expenses of the subsidiaries are included in the consolidated financial statements. The share of non-controlling interests in the net assets and results is presented separately as non-controlling interests in the consolidated balance sheet and income statement, respectively.

c) Non-controlling interests

The group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, at the non-controlling interest’s proportionate share of the recognized amounts of the acquiree’s identifiable net assets. Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions.

When the group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related non-controlling interest and other components of equity. Any resulting gain or loss is recognized in the income statement. Any interest retained in the former subsidiary is measured at fair value when control is lost.

d) Associates and joint ventures

Associates are those entities in which the group has significant influence, but no control, over the financial and operating policies. Significant influence is presumed to exist when the group holds, directly or indirectly, between 20% and 50% of the voting rights. Joint ventures are those entities over whose ­activities the group has joint control, established by contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. Associates and joint ventures are accounted for using the equity method and are initially recognized at cost.

e) Transactions eliminated on consolidation

All material intercompany transactions and balances and any unrealized gains arising from intercompany transactions are eliminated in preparing the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

34.4 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer. The Chief Executive Officer, who is responsible for allocating resources and assessing performance (e.g., operating income) of the operating segments, has been identified as chief operating decision maker.

34.5 Foreign currency translation

a) Functional and presentation currency

Items included in the financial statements of subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in Swiss francs (CHF).

The following table shows the major currency exchange rates for the reporting periods 2021 and 2020:

 

 

2021

 

2020

CHF

 

Average rate

 

Year-end rate

 

Average rate

 

Year-end rate

EUR 1

 

1.08

 

1.03

 

1.07

 

1.08

GBP 1

 

1.26

 

1.23

 

1.20

 

1.20

USD 1

 

0.91

 

0.91

 

0.94

 

0.88

CNY 100

 

14.17

 

14.35

 

13.60

 

13.49

INR 100

 

1.24

 

1.23

 

1.27

 

1.21

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement.

c) Subsidiaries

The results and balance sheet positions of all the subsidiaries (excluding the ones with hyperinflationary economy) that have a functional currency different from the presentation currency of the group are translated into the presentation currency as follows:

  • Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet.
  • Income and expenses for each income statement are translated at average exchange rates.

Translation differences resulting from consolidation are taken to other comprehensive income. In the event of a sale or liquidation of foreign subsidiaries, exchange differences that were recorded in other comprehensive income are recognized in the income statement as part of the gain or loss on sale or liquidation.

If a loan is made to a group company, and the loan in substance forms part of the group’s investment in the group company, translation differences arising from the loan are recognized directly in other comprehensive income as foreign currency translation differences. When the group company is sold or partially disposed of, and control no longer exists, gains and losses accumulated in equity are reclassified to the income statement as part of the gain or loss on disposal.

34.6 Intangible assets

The intangible assets with finite useful life are ­amortized in line with the expected useful life, usually on a straight-line basis. The period of useful life is to be assessed according to business rather than legal criteria. This assessment is made at least once a year. An impairment might be required in the event of sudden or unforeseen value changes.

a) Goodwill

Goodwill represents the difference between the consideration transferred and the fair value of the group’s share in the identifiable net asset value of the acquired business at the time of acquisition. Any goodwill arising as a result of a business combination is included within intangible assets.

Goodwill is subject to an annual impairment test and valued at its original acquisition cost less accumulated impairment losses. In cases where circumstances indicate a potential impairment, impairment tests are conducted more frequently. Profits and losses arising from the sale of a business include the book value of the goodwill assigned to the business being sold.

For impairment testing, goodwill is allocated to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Goodwill originating from the acquisition of an associated company is included in the book value of the participation in associated companies.

b) Trademarks and licenses

Trademarks, licenses and similar rights acquired from third parties are stated at acquisition cost. Such assets are amortized over their expected useful life, generally not exceeding 10 years.

c) Research and development

Expenditure on research activities is recognized in the income statement as incurred. Development costs for major projects are capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the group intends and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in the income statement as incurred. Subsequently, such assets are measured at cost less accumulated amortization (max. five years) and any accumulated impairment loss.

d) Computer software

Acquired computer software licenses in control of the group are capitalized on the basis of the cost incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives (three to max. five years).

e) Customer relationships

As part of a business combination, acquired customer rights are recorded at fair value (cost at the time of acquisition). These costs are amortized over their estimated useful lives, generally not exceeding 15 years.

34.7 Property, plant and equipment

Property, plant and equipment is stated at acquisition cost less depreciation and impairments. Acquisition cost includes expenditure that is directly attributable to the acquisition of the item. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced item is derec­ognized. All other repairs and maintenance are charged to the income statement during the financial ­period in which they are incurred.

Depreciation is provided on a straight-line basis over the estimated useful life. Land is stated at cost and is not depreciated.

The useful lives are as follows:
Buildings: 20–50 years
Machinery: 5–15 years
Technical equipment: 5– 10 years
Other non-current assets: max. 5 years

34.8 Impairment of property, plant and equipment and intangible assets

Assets with a finite useful life are only tested for impairment if relevant events or changes in circumstances indicate that the book value is no longer recoverable. An impairment loss is recorded equal to the excess of the carrying value over the recoverable amount. The recoverable amount is the higher of the fair value of the asset less disposal costs and its value in use. The value in use is based on the estimated cash flow over a five-year period and the extrapolated projections for subsequent years. The results are discounted using an appropriate pretax, long-term interest rate. For the purposes of the impairment test, assets are grouped together at the lowest level for which separate cash flows can be identified (cash-generating units).

34.9 Lease assets and lease liabilities

The group recognizes lease assets and lease liabilities for most leases (these leases are on-balance-sheet). However, the group has elected not to recognize lease assets and lease liabilities for some leases of low-value assets and short-term leases. The group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

The group presents lease assets and lease liabilities as separate line items in the balance sheet.

The group recognizes lease assets and lease liabilities at the lease commencement date. The asset is initially measured at cost and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain remeasurements. The lease liability is initially measured at the present value of the lease payments that are not paid on commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group’s incremental borrowing rate. In most cases, the group uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised, or a termination option is reasonably certain not to be exercised.

34.10 Financial assets

Financial assets are classified into the following three categories:

  • Financial assets at fair value through profit or loss (FVTPL)
  • Financial assets at fair value through other comprehensive income (FVOCI)
  • Financial assets measured at amortized cost

For debt instruments, classification depends on the business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. The group reclassifies debt investments when and only when its business model for managing those assets changes. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

Debt instruments

Financial assets at fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognized in profit or loss and presented within other operating income and expenses or other financial income and expenses, depending on the nature of the investment, in the period in which it arises.

Financial assets at fair value through other comprehensive income (FVOCI)

Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through other comprehensive income, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses, which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss and recognized in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line items in the statement of profit or loss.

Financial assets measured at amortized cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line items in the statement of profit or loss.

Equity instruments

The group subsequently measures all equity investments at fair value. Where the group’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as other income when the group’s right to receive payments is established. A gain or loss on an equity investment that is subsequently measured at FVTPL is recognized in profit or loss and presented within other operating income and expenses or other financial income and expenses, depending on the nature of the investment, in the period in which it arises.

34.11 Derivative financial instruments and hedging activities

The group uses derivative financial instruments, such as forward currency contracts and other forward contracts, to hedge its risks associated with fluctuations in foreign currencies arising from operational and financing activities. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

Any gains or losses arising from changes in fair value on the derivatives during the year that do not qualify for hedge accounting are taken directly into profit or loss.

The group applies hedge accounting to secure the foreign currency risks of future cash flows that have a high probability of occurrence. These hedges are classified as “cash flow hedges”, whereas the hedge instrument is recorded on the balance sheet at fair value and the effective portions are booked against “Other comprehensive ­incomeˮ in the column “Cash flow hedge reserve”. If the hedge relates to a non-financial transaction that will subsequently be recorded on the balance sheet, the adjustments accumulated under “Other comprehensive incomeˮ at that time will be included in the initial book value of the asset or liability. In all other cases, the cumulative changes of fair value of the hedging instrument that have been recorded in other comprehensive income are included as a charge or credit to income when the forecasted trans­action is recognized or when hedge accounting is discontinued as the criteria are no longer met. In general, the fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion on the hedge is recognized ­in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement. Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or sold.

At the inception of the transaction, the group documents the relationship between hedging instruments and hedged items and its risk management objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

34.12 Offsetting financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

34.13 Inventories

Raw materials, supplies and consumables are stated at the lower of cost or net realizable value. Finished products and work in progress are stated at the lower of production cost or net realizable value. Production cost includes the costs of materials, direct and indirect manufacturing costs, and contract-related costs of construction. Inventories are valued by reference to weighted average costs. Provisions are made for slow-moving and excess inventories.

34.14 Trade receivables

Trade and other accounts receivable are recognized initially at fair value and subsequently measured at amortized cost, less allowances for doubtful trade accounts receivable.

The allowance for doubtful trade accounts receivable is based on expected credit losses. These are based on historical observed default rates over the expected life of the trade receivables and are adjusted for forward-looking information such as development of gross domestic product (GDP) and oil price development.

34.15 Cash and cash equivalents

Cash and cash equivalents comprise bills, postal giros and bank accounts, together with other short-term highly liquid investments with a maturity of three months or less from the date of acquisition. Bank overdrafts are reported within borrowings in the current liabilities.

34.16 Share capital

Ordinary shares are classified as equity. Costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects. When share capital is repurchased, the amount of the consideration paid, which includes directly attributable cost, is net of any tax effects and is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity and the resulting surplus or deficit on the transaction is transferred to/from retained earnings.

34.17 Trade payables

Trade payables and other payables are stated at face value. The respective value corresponds approx­imately to the amortized cost.

34.18 Borrowings

Financial debt is stated at fair value when initially recognized, after recognition of transaction costs. In subsequent periods, it is valued at amortized cost. Any difference between the amount borrowed (after deduction of transaction costs) and the repayment amount is reported in the income statement over the duration of the loan using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

34.19 Current and deferred income taxes

The current income tax charge comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the group’s subsidiaries and associates operate and generate taxable income. The management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

The liability method is used to provide deferred taxes on all temporary differences between the tax base of assets and liabilities and their carry­ing amounts in the consolidated financial statements. Deferred taxes are valued by applying tax rates (and regulations) substantially enacted on the balance sheet date or any that have essentially been legally approved and are expected to apply at the time when the deferred tax asset is realized or the deferred tax liability is settled.

Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in which case it is recognized directly in equity or other comprehensive income.

Deferred tax assets are recognized for unused tax losses and deductible temporary differences to the extent that it is probable that a taxable profit will be available against which they can be used. Deferred tax liabilities arising as a result of temporary differences relating to investments in subsidiaries and asso­ciated companies are applied, unless the group can control when temporary differences are reversed and it is unlikely that they will be reversed in the foreseeable future.

34.20 Employee benefits

a) Defined benefit plans

The group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and deducting the fair value of any plan assets.

The calculation of defined benefit assets/obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest income on plan assets), and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The group determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability/(asset), taking into account any changes in the net defined benefit liability/(asset) during the period as a result of contributions and benefit payments. Net interest expenses and other expenses related to defined benefit plans are recognized in the income statement.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in the income statement. The group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

b) Defined contribution plans

Defined contribution plans are defined as pure savings plans, under which the employer makes certain contributions into a separate legal entity (fund) and does not have a legal or an extendible (constructive) liability to contribute any additional amounts in the event this entity does not have enough funds to pay out benefits. A “constructiveˮ commitment exists when it can be assumed that the employer will voluntarily make additional contributions in order not to endanger the relationship with its employees. Company contributions to such plans are considered in the income statement as personnel expenses.

c) Other employee benefits

Some subsidiaries provide other employee benefits such as early retirement benefits or jubilee gifts to their employees. Early retirement benefits are defined as termination benefits for employees accepting voluntary redundancy in exchange for those benefits. Jubilee gifts are other long-term benefits. For example, in Switzerland, the group makes provisions for jubilee benefits based on a Swiss local directive. The provisions are reported in the category “Other employee benefitsˮ.

Short-term benefits are payable within 12 months after the end of the period in which the employees render the related employee service. In the case of liabilities of a long-term nature, the discounting effects and employee turnover are to be taken into consideration.

Obligations to employees arising from restructuring measures are included under the category “Restruc­turing provisions”.

34.21 Share-based compensation

The group operates two equity-settled share-based payment plans. A performance share plan (PSP) covers the members of the Executive Committee and starting 2016, also the members of the Sulzer Management Group. A restricted share plan (RSP) covers the members of the Board of Directors and until 2015, also covered the members of the Sulzer Management Group.

a) Performance share plan (PSP)

The fair value of the employee services received in exchange for the grant of the performance share units (PSU) is recognized as a personnel expense with a corresponding increase in equity. The total amount to be expensed over the vesting period is determined by reference to the fair value of the share units granted, excluding the impact of any non-market vesting conditions (e.g., profitability targets). At each balance sheet date, the group reassesses its estimates of the number of share units that are expected to vest. It recognizes the impact of the reassessment of original estimates, if any, in the income statement, and a corresponding adjustment to equity. The fair value of PSUs granted is measured by external valuation specialists based on a Monte Carlo simulation.

The group accrues for the expected cost of social charges in connection with the allotment of shares under the PSP. The dilution effect of the share-based awards is considered when calculating diluted earnings per share.

b) Restricted share plan (RSP)

The fair value of the employee services received in exchange for the grant of the share units is recognized as a personnel expense with a corresponding increase in equity. The total amount expensed is recognized over the vesting period, which is the period over which the specified service conditions are expected to be met.

The fair value of the restricted share units (RSU) granted for services rendered is measured at the Sulzer closing share price at grant date, and discounted over the vesting period using a discount rate that is based on the yield of Swiss government bonds with maturities matching the duration of the vesting period. Participants are not entitled to dividends declared during the vesting period. The grant date fair value of the RSUs is consequently reduced by the present value of dividends expected to be paid during the vesting period.

The group accrues for the expected cost of social charges in connection with the allotment of shares under the RSP. The dilutive effect of the share-based awards is considered when calculating diluted earnings per share.

34.22 Provisions

Provisions are recognized when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required is determined by considering the class of obligation as a whole. A provision is recognized even if the likelihood of an outflow with respect to a single item included in the class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pretax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.

34.23 Sales

Sales comprises the fair value of the consideration received or receivable for the sale of goods and rendering of services in the ordinary course of the group’s activities. This includes standard products (off the rack) and configured and engineered or tailor-made products. Sales are shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the group.

The core principle is that sales are recognized at an amount that reflects the consideration to which the group expects to be entitled in exchange for transferring goods or services to a customer.

Sales are recognized when (or as) the group satisfies a performance obligation by transferring a promised good or service (i.e., an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

A customer obtains control of a good or service if it has the ability to direct the use of, and obtain substantially all of the remaining benefits from, that good or service (e.g., use, consume, sale, hold). A customer could have the future right to direct the use of the asset and obtain substantially all of the benefits from it (i.e., upon making a prepayment for a specified product).

There are two methods to recognize sales:

  • Over time method (OT): sales, costs and profit margin recognition in line with the progress of the project
  • Point in time method (PIT): sales recognition when the performance obligation is satisfied at a certain point in time

The group determines at contract inception whether control of each performance obligation transfers to a customer over time or at a point in time. Arrangements where the performance obligations are satisfied over time are not limited to services arrangements. The assessment of whether control transfers over time or at a point in time is critical to the timing of revenue recognition.

Over time method (OT)

Sales are recognized over time if any of the following is met:

  • The customer simultaneously receives/consumes as the group performs.
  • The group creates/enhances an asset and the customer controls it during this process.
  • The created asset has no alternative use for the customer and the group has an enforceable right to payment (including reasonable profit margin) for performance up to date if the customer terminates the contract for convenience.

The group has construction contracts without right to payment clauses in cases of termination for convenience by the customer. The group applies the point in time method to recognize sales for such contracts.

The over time method is based on the percentage of costs to date compared with the total estimated contract costs (cost-to-cost method). In rare cases, other methods, such as a milestones method, may be used for a particular project, assuming that the stage of completion can be better estimated than by applying the cost-to-cost method. Work progress of sub-suppliers is considered to determine the stage of completion. If circumstances arise that may change the original estimates of sales, costs or extent of progress toward completion, estimates are revised. These revisions may result in increases or decreases in estimated sales or costs, and are reflected in income in the period in which the circumstances that give rise to the revision become known by management.

The income statement contains a share of sales, including an estimated share of profit. The balance sheet includes the corresponding contract assets if the assets exceed the advance payments from the customer of the project. When it appears probable that the total costs of an order will exceed the expected income, the total amount of expected loss is recognized immediately in the income statement.

Point in time method (PIT)

A performance obligation is satisfied at a point in time if none of the criteria for satisfying a performance obligation over time is met. Sales are recognized when (or as) the customer obtains control of that asset (depending on incoterms). The following points indicate that a customer has obtained control of an asset:

  • The entity has a present right to payment
  • The customer has legal title
  • The customer has physical possession
  • The customer has the significant risks and rewards of ownership
  • The customer has accepted the asset

For contracts applying the point in time method, the transfer of risks and rewards of ownership (depending on international commercial terms) typically depicts the transfer in control most appropriately.

Contract classification per division

Sales are measured based on the consideration specified in a contract with a customer. Sales are recognized over time if any of the conditions above is met. If none of the criteria for satisfying a performance obligation over time are met, sales are recognized at a point in time.

The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, and the related revenue recognition method.

Contract classification

 

Characteristics

 

Typical sales recognition method

 

 

 

 

Created asset has no alternative use for the customer and the group has enforceable right to payment (including reasonable profit margin) for performance up to date if the customer terminates the contract for convenience

 

Created asset has alternative use for the customer or the group has no enforceable right to payment (including reasonable profit margin) for performance up to date if the customer terminates the contract for convenience

Flow Equipment

 

 

 

 

 

 

 

 

— Standard products made to stock

 

 

 

 

 

 

— New pumps

 

 

 

 

Standard business

 

— Spare parts

 

n/a

 

PIT

 

 

— Preconfigured products

 

 

 

 

Configured business

 

— Assembled and packaged on customer order

 

OT

 

PIT

 

 

— Highly customized products

 

 

 

 

Engineered business

 

— Engineered to order according to customer’s specifications

 

OT

 

PIT

Services

 

 

 

 

 

 

 

 

— Turbo

 

 

 

 

 

 

— Electromechanical

 

 

 

 

Repair

 

— Pumps

 

OT

 

PIT

 

 

— Gas turbine components

 

 

 

 

 

 

— Coils

 

 

 

 

 

 

— Pump spares

 

 

 

 

 

 

— Retrofits

 

 

 

 

 

 

— Off-the-shelf articles or manufactured on customer order

 

 

 

 

Parts

 

— Others (tool container, remote monitoring, other spare parts)

 

OT

 

PIT

 

 

— Overhaul / field service

 

 

 

 

 

 

— Site setup

 

 

 

 

 

 

— Disassembly / reassembly

 

 

 

 

 

 

— Installation / commissioning

 

 

 

 

 

 

— Technical support

 

 

 

 

 

 

— Refurb / retrofit

 

 

 

 

 

 

— Relocation

 

 

 

 

 

 

— Long-term service agreement (LTSA) / long-term parts agreement (LTPA)

 

 

 

 

Services

 

— Customized services according to customer’s specifications

 

OT

 

PIT or OT for field services (asset that the customer controls)

Chemtech

 

 

 

 

 

 

 

 

— Off-the-shelf articles of stock materials

 

 

 

 

Rush orders

 

— Articles purchased for sale

 

n/a

 

PIT

 

 

— Standard configured to customer’s requirements

 

 

 

 

 

 

— Tailor-made to customer’s requirements

 

 

 

 

 

 

— Replacement of components

 

 

 

 

 

 

— Standard mechanical engineering

 

 

 

 

 

 

— Supervision

 

 

 

 

 

 

— Installation workforce

 

 

 

 

Components

 

— Combined order for Separation Technology (ST) and Tower Field Services (TFS)

 

OT

 

PIT

 

 

— Studies

 

 

 

 

 

 

— Engineering

 

 

 

 

 

 

— Site project management

 

 

 

 

 

 

— Supervision

 

 

 

 

 

 

— Key equipment

 

 

 

PIT or

 

 

— Installation

 

 

 

OT for certain service contracts

Services / engineered solutions

 

— Procurement of equipment, spare parts

 

OT

 

where the customer simultaneously receives the service

Disaggregation of sales

In the segment information (note 3), sales are disaggregated by:

  • Divisions (group’s reportable segments)
  • Timing of sales recognition (sales recognition method: over time, point in time) and divisions
  • Market segments and divisions
  • Geographical regions and divisions

Payment terms

The group’s general terms and conditions of supply require payments within 30 days after the invoice date.

If the group’s general terms and conditions apply for a contract, the group is entitled to issue the invoices as follows: for one-third of the contract value within five days after effective date (date when the purchase order has been accepted by the supplier, or the date of the latest signing), for one-third after expiration of half of the delivery time, and for one-third within 45 days prior to delivery. Payments for prices calculated on a time basis are invoiced on a biweekly basis or after completion of the scope of supply, whichever occurs first.

Other payment terms may apply if otherwise defined in the customer contract, the purchase order, the respective change order or the quotation.

Variable considerations

If the consideration promised in a contract includes a variable amount (e.g., liquidated damages, early payment discount, volume discounts), the group estimates the amount of consideration to which the group will be entitled in exchange for transferring the promised goods or services to a customer. The amount of the variable consideration is estimated by using either of the following methods, depending on which method the group expects will better predict the amount of consideration to which it will be entitled: the expected value method or the most likely amount method. The method selected is applied consistently throughout the contract and to similar types of contracts when estimating the effect of uncertainty on the amount of variable consideration to which the group is entitled.

The group’s general terms and conditions of supply foresee the following warranty periods. Except in cases where the scope of supply is limited to services only, the warranty period ends on the earliest of the dates below:

  • After 12 months from the initial operation of the scope of supply
  • After 18 months from delivery of the scope of supply
  • In the event that delivery is delayed or impeded for reasons beyond the supplier’s control, after 18 months from the date of the supplier’s notification that the scope of supply is ready for dispatch

Where the scope of supply is limited to services only, the warranty period ends six months after completion of such services.

If the group fails to meet the delivery date for more than two calendar weeks due to reasons for which the group is directly responsible, and provided that the purchase order expressly provides liquidated damages for such failure, the purchaser is entitled to demand that the group pay liquidated damages at the rate stated in the purchase order.

The group’s obligation for warranties, liquidated damages and other obligations is accounted for as a variable consideration in the sales and recognized as a provision.

Allocation of the transaction price

To allocate the transaction price to each performance obligation on a relative stand-alone, selling-price basis, the group determines the stand-alone selling price at contract inception of the distinct good or service underlying each performance obligation in the contract and allocates the transaction price in proportion to those stand-alone selling prices. If the stand-alone selling price is not directly observable, then the group estimates the amount with the expected cost-plus-margin method.

34.24 Assets and disposal groups held for sale

A non-current asset or a group of assets is classified as “held for saleˮ if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the management must be committed to sell the assets, the assets must be actively marketed for sale, and the sale must be expected to be completed within one year. A non-current asset or a group of assets classified as “held for saleˮ will be measured at the lower of its carrying amount or fair value less selling cost.

34.25 Dividend distribution

Dividend distribution to the shareholders of Sulzer Ltd is resolved upon decision at the Annual General Meeting and will be paid in the same reporting period.

34.26 Discontinued operations

A discontinued operation is a component of the group’s business, which can be clearly distinguished from the rest of the group and which:

  • represents a separate major line of business or geographic area of operations;
  • is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or
  • is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss is re-presented as if the operation had been discontinued from the start of the comparative year.

35 Subsequent events after the balance sheet date

35Subsequent events after the balance sheet date

The Board of Directors authorized these consolidated financial statements for issue on February 17, 2022. They are subject to approval at the Annual General Meeting, which will be held on April 6, 2022. At the time when these consolidated financial statements were authorized for issue, the Board of Directors and the Executive Committee were not aware of any events that would materially affect these financial statements.

36 Major subsidiaries

36Major subsidiaries

December 31, 2021

 

 

Subsidiary

 

Sulzer ownership and voting rights

 

Registered capital (including paid-in capital in the USA and Canada)

 

Direct participation by Sulzer Ltd

 

Research and development

 

Production and engineering

 

Sales

 

Service

Europe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Switzerland

 

Sulzer Chemtech AG, Winterthur

 

100%

 

CHF 10’000’000

 

 

 

 

 

 

 

Sulzer Markets and Technology AG, Winterthur

 

100%

 

CHF 4’000’000

 

 

 

 

 

 

 

 

 

 

 

Sulzer Management AG, Winterthur

 

100%

 

CHF 500’000

 

 

 

 

 

 

 

 

 

 

 

Tefag AG, Winterthur

 

100%

 

CHF 500’000

 

 

 

 

 

 

 

 

 

 

 

Sulzer International AG, Winterthur

 

100%

 

CHF 100’000

 

 

 

 

 

 

 

 

 

Belgium

 

Sulzer Pumps Wastewater Belgium N.V./S.A., St. Stevens-Woluwe

 

100%

 

EUR 123’947

 

 

 

 

 

 

 

 

 

Ensival Moret Belgium SA, Thimister-Clermont

 

100%

 

EUR 7’400’000

 

 

 

 

 

 

 

 

 

Czech Republic

 

Sulzer Chemtech Czech Republic s.r.o., Brno

 

100%

 

CZK 28’053’000

 

 

 

 

 

 

Germany

 

Sulzer Pumpen (Deutschland) GmbH, Bruchsal

 

100%

 

EUR 3’000’000

 

 

 

 

 

 

 

Sulzer Pumps Wastewater Germany GmbH, Bonn

 

100%

 

EUR 300’000

 

 

 

 

 

 

 

 

 

Sulzer Chemtech GmbH, Krefeld

 

100%

 

EUR 300’000

 

 

 

 

 

 

 

 

 

Nordic Water GmbH, Neuss 1)

 

100%

 

EUR 25’565

 

 

 

 

 

 

Denmark

 

Sulzer Pumps Denmark A/S, Farum

 

100%

 

DKK 501’000

 

 

 

 

 

 

 

Finland

 

Sulzer Pumps Finland Oy, Kotka

 

100%

 

EUR 16’000’000

 

 

 

 

 

France

 

Sulzer Pompes France SASU, Buchelay

 

100%

 

EUR 6’600’000

 

 

 

 

 

 

 

Sulzer Ensival Moret France SASU, Saint-Quentin

 

100%

 

EUR 10’000’000

 

 

 

 

 

 

UK

 

Sulzer Pumps (UK) Ltd., Leeds

 

100%

 

GBP 9’610’000

 

 

 

 

 

 

 

 

Sulzer Chemtech (UK) Ltd., Stockton on Tees

 

100%

 

GBP 100’000

 

 

 

 

 

 

 

 

 

 

Sulzer Electro Mechanical Services (UK) Ltd., Birmingham

 

100%

 

GBP 48’756

 

 

 

 

 

 

 

 

 

Sulzer (UK) Holdings Ltd., Leeds

 

100%

 

GBP 6’100’000

 

 

 

 

 

 

 

 

 

 

 

Alba Power Ltd., Aberdeen

 

100%

 

GBP 1

 

 

 

 

 

 

Ireland

 

Sulzer Pump Solutions Ireland Ltd., Wexford

 

100%

 

EUR 2’222’500

 

 

 

 

 

 

 

Sulzer Finance (Ireland) Limited, Wexford

 

100%

 

EUR 100

 

 

 

 

 

 

 

 

 

 

Italy

 

Sulzer Italy S.r.l., Casalecchio di Reno

 

100%

 

EUR 600’000

 

 

 

 

 

 

 

 

Norway

 

Sulzer Pumps Wastewater Norway A/S, Sandvika

 

100%

 

NOK 502’000

 

 

 

 

 

 

 

 

 

Sulzer Pumps Norway A/S, Klepp Stasjon

 

100%

 

NOK 500’000

 

 

 

 

 

 

 

 

 

Nordic Water Products A/S, Straume 1)

 

100%

 

NOK 150’000

 

 

 

 

 

 

 

 

The Netherlands

 

Sulzer Pumps Wastewater Netherlands B.V., Maastricht-Airport

 

100%

 

EUR 15’882

 

 

 

 

 

 

 

 

 

 

Sulzer Chemtech Nederland B.V., Breda

 

100%

 

EUR 1’134’451

 

 

 

 

 

 

 

 

 

 

Sulzer Turbo Services Venlo B.V., Lomm

 

100%

 

EUR 443’940

 

 

 

 

 

 

 

 

Sulzer Netherlands Holding B.V., Lomm

 

100%

 

EUR 10’010’260

 

 

 

 

 

 

 

 

 

 

 

Sulzer Capital B.V., Lomm

 

100%

 

EUR 50’000

 

 

 

 

 

 

 

 

 

 

Austria

 

Sulzer Austria GmbH, Wiener Neudorf

 

100%

 

EUR 350’000

 

 

 

 

 

 

 

Poland

 

Sulzer Turbo Services Poland Sp. z o.o., Lublin

 

100%

 

PLN 2’427’000

 

 

 

 

 

 

 

 

 

 

Sulzer Pumps Wastewater Poland Sp. z o.o., Warsaw

 

100%

 

PLN 800’000

 

 

 

 

 

 

 

Romania

 

Sulzer GTC Technology Romania S.R.L., Bucharest

 

100%

 

RON 1’345’070

 

 

 

 

 

 

 

 

Russia

 

AO Sulzer Pumps, St. Petersburg

 

100%

 

RUB 24’000’000

 

 

 

 

 

 

 

 

 

 

Sulzer Pumps Rus LLC, Moscow

 

100%

 

RUB 6’000’600

 

 

 

 

 

 

 

 

 

Sulzer Turbo Services Rus LLC, Moscow

 

100%

 

RUB 14’705’882

 

 

 

 

 

 

 

 

 

 

Sulzer Chemtech LLC, Serpukhov

 

100%

 

RUB 55’500’000

 

 

 

 

 

 

Sweden

 

Sulzer Pumps Sweden AB, Vadstena

 

100%

 

SEK 3’000’000

 

 

 

 

 

 

 

Nordic Water Products AB, Mölndal 1)

 

100%

 

SEK 200’000

 

 

 

 

 

 

Spain

 

Sulzer Pumps Spain S.A., Madrid

 

100%

 

EUR 1’750’497

 

 

 

 

 

 

 

 

Sulzer Pumps Wastewater Spain S.A., Rivas Vaciamadrid

 

100%

 

EUR 2’000’000

 

 

 

 

 

 

 

 

North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

Sulzer Pumps (Canada) Inc., Burnaby

 

100%

 

CAD 2’771’588

 

 

 

 

 

 

 

 

 

Sulzer Chemtech Canada Inc., Edmonton

 

100%

 

CAD 1’000’000

 

 

 

 

 

 

 

 

Sulzer Rotating Equipment Services (Canada) Ltd., Edmonton

 

100%

 

CAD 7’000’000

 

 

 

 

 

 

 

 

JWC Environmental Canada ULC, Burnaby

 

100%

 

CAD 1’832’816

 

 

 

 

 

 

 

 

USA

 

Sulzer Pumps (US) Inc., Houston, Texas

 

100%

 

USD 40’381’108

 

 

 

 

 

 

 

 

Sulzer Pumps Solutions Inc., Easley, South Carolina

 

100%

 

USD 25’589’260

 

 

 

 

 

 

 

 

 

Sulzer Pump Services (US) Inc., Houston, Texas

 

100%

 

USD 1’000

 

 

 

 

 

 

 

 

 

Sulzer Chemtech USA, Inc., Tulsa, Oklahoma

 

100%

 

USD 47’895’000

 

 

 

 

 

 

 

 

Sulzer Turbo Services Houston Inc., La Porte, Texas

 

100%

 

USD 18’840’000

 

 

 

 

 

 

 

 

 

Sulzer Turbo Services New Orleans Inc., Belle Chasse, Louisiana

 

100%

 

USD 4’006’122

 

 

 

 

 

 

 

 

 

Sulzer Electro-Mechanical Services (US) Inc., Pasadena, Texas

 

100%

 

USD 12’461’286

 

 

 

 

 

 

 

 

 

Sulzer US Holding Inc., Houston, Texas

 

100%

 

USD 310’335’340

 

 

 

 

 

 

 

 

 

 

 

JWC Environmental Inc., Santa Ana, California

 

100%

 

USD 220’818’520

 

 

 

 

 

 

 

 

Sulzer GTC Technology US Inc., Houston, Texas

 

100%

 

USD 1

 

 

 

 

 

 

Mexico

 

Sulzer Pumps México, S.A. de C.V., Cuautitlán Izcalli

 

100%

 

MXN 4’887’413

 

 

 

 

 

 

 

 

Sulzer Chemtech, S. de R.L. de C.V., Cuautitlán Izcalli

 

100%

 

MXN 231’345’500

 

 

 

 

 

 

Central and South America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Argentina

 

Sulzer Turbo Services Argentina S.A., Buenos Aires

 

100%

 

ARS 9’730’091

 

 

 

 

 

 

Brazil

 

Sulzer Brasil S.A., Jundiaí

 

100%

 

BRL 81’789’432

 

 

 

 

 

 

 

 

Sulzer Pumps Wastewater Brasil Ltda., Jundiaí

 

100%

 

BRL 37’966’785

 

 

 

 

 

 

 

 

Sulzer Services Brasil, Triunfo

 

100%

 

BRL 40’675’856

 

 

 

 

 

 

 

 

Chile

 

Sulzer Bombas Chile Ltda., Vitacura

 

100%

 

CLP 46’400’000

 

 

 

 

 

 

 

 

Colombia

 

Sulzer Pumps Colombia S.A.S., Cota

 

100%

 

COP 7’142’000’000

 

 

 

 

 

 

 

Africa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

South Africa

 

Sulzer Pumps (South Africa) (Pty) Ltd., Elandsfontein

 

75%

 

ZAR 100’450’000

 

 

 

 

 

 

 

 

Sulzer (South Africa) Holdings (Pty) Ltd., Elandsfontein

 

100%

 

ZAR 16’476

 

 

 

 

 

 

Morocco

 

Sulzer Maroc S.A.R.L. A.U., Nouaceur

 

100%

 

MAD 3’380’000

 

 

 

 

 

 

 

 

Nigeria

 

Sulzer Pumps (Nigeria) Ltd., Lagos

 

100%

 

NGN 5’000’000

 

 

 

 

 

 

 

Zambia

 

Sulzer Zambia Ltd., Chingola

 

100%

 

ZMK 15’000’000

 

 

 

 

 

 

 

Middle East

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

United Arab Emirates

 

Sulzer Pumps Middle East FZCO, Dubai

 

100%

 

AED 500’000

 

 

 

 

 

 

 

 

 

Sulzer Rotating Equipment FZE, Dubai

 

100%

 

USD 272’000

 

 

 

 

 

 

 

 

Saudi Arabia

 

Sulzer Saudi Pump Company Limited, Riyadh

 

75%

 

SAR 44’617’000

 

 

 

 

 

 

Bahrain

 

Sulzer Chemtech Middle East W.L.L., Al Seef

 

100%

 

BHD 50’000

 

 

 

 

 

 

 

 

Asia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

Sulzer Pumps India Pvt. Ltd., Navi Mumbai

 

100%

 

INR 24’893’500

 

 

 

 

 

 

 

 

Sulzer India Pvt. Ltd., Pune

 

100%

 

INR 34’500’000

 

 

 

 

 

 

 

 

Sulzer Tech India Pvt. Ltd., Navi Mumbai

 

100%

 

INR 100’000

 

 

 

 

 

 

 

 

Indonesia

 

PT. Sulzer Indonesia, Purwakarta

 

95%

 

IDR 28’234’800’000

 

 

 

 

 

 

Japan

 

Sulzer Daiichi K.K., Tokyo

 

60%

 

JPY 30’000’000

 

 

 

 

 

 

 

 

 

 

Sulzer Japan Ltd., Tokyo

 

100%

 

JPY 30’000’000

 

 

 

 

 

 

Malaysia

 

Sulzer Pumps Wastewater Malaysia Sdn. Bhd., Selangor Darul Ehsan

 

100%

 

MYR 1’000’000

 

 

 

 

 

 

 

 

Singapore

 

Sulzer Singapore Pte. Ltd., Singapore

 

100%

 

SGD 1’000’000

 

 

 

 

 

 

South Korea

 

Sulzer Korea Ltd., Seoul

 

100%

 

KRW 222’440’000

 

 

 

 

 

 

 

 

 

 

Sulzer GTC Technology Korea Co. Ltd., Seoul

 

100%

 

KRW 4’870’000’000

 

 

 

 

 

 

Thailand

 

Sulzer (Thailand) Co., Ltd., Rayong

 

100%

 

THB 25’000’000

 

 

 

 

 

 

 

 

People’s Republic of China

 

Sulzer Dalian Pumps & Compressors Ltd., Dalian

 

100%

 

CHF 21’290’000

 

 

 

 

 

 

 

 

Sulzer Pumps Suzhou Ltd., Suzhou

 

100%

 

CNY 282’069’324

 

 

 

 

 

 

 

 

Sulzer Pump Solutions (Kunshan) Co., Ltd., Kunshan

 

100%

 

USD 5’760’000

 

 

 

 

 

 

 

 

 

 

Sulzer Shanghai Eng. & Mach. Works Ltd., Shanghai

 

100%

 

CNY 54’267’608

 

 

 

 

 

 

 

Sulzer Pumps Wastewater Shanghai Co. Ltd., Shanghai

 

100%

 

USD 1’550’000

 

 

 

 

 

 

 

 

 

Sulzer GTC (Beijing) Technology Inc., Beijing

 

100%

 

USD 150’000

 

 

 

 

 

 

 

Nordic Water Products (Beijing) Co., Ltd., Beijing 1)

 

100%

 

USD 800’000

 

 

 

 

 

 

 

 

Australia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sulzer Australia Pty Ltd., Brisbane

 

100%

 

AUD 5’308’890

 

 

 

 

 

 

 

 

 

 

Sulzer Australia Holding Pty Ltd., Brendale

 

100%

 

AUD 34’820’100

 

 

 

 

 

 

 

 

 

1) Acquired in 2021.