Notes to the consolidated financial statements EN

5Discontinued operations

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

The group has separated the financial data for 2021 into “continuingˮ and “discontinuedˮ 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 System Division (now medmix) 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	2022	2021 1)
Sales	–	337.9
Cost of goods sold	–	–201.5
Gross profit from discontinued operations	–	136.5
Selling and distribution expenses	–	–28.3
General and administrative expenses	–	–30.9
Research and development expenses	–	–18.9
Net impairment loss on contract assets and trade accounts receivable	–	–0.1
Other operating income / (expenses), net	–	–12.0
Operating income (EBIT) from discontinued operations	–	46.2
Interest and securities income	–	0.1
Interest expenses	–	–5.9
Other financial income / (expenses), net	–	–0.0
Income before income tax expenses from discontinued operations	–	40.3
Income tax expenses	–	–17.1
Net income from discontinued operations before gain on net assets derecognized	–	23.2
Gain on net assets derecognized	–	1’255.1
Net income from discontinued operations, net of tax	–	1’278.3

1) The consolidated income statement amounts are for the period January 1, 2021, to September 20, 2021, the completion date of the spin-off. The information has been re-presented: Net impairment loss on contract assets and trade accounts receivable was previously included in selling and distribution expenses.

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 was 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 19).

The total non-taxable, non-cash gain recognized at the distribution date of the spin-off of the Applicator Systems division recorded in net income from discontinued operations, net of tax, amounted to CHF 1’255.1 million.