6Disposal group held for sale

The assets and liabilities of the disposal group held for sale are composed of the Russian business classified as held for sale. On May 24, 2022, the group announced its intention to exit the Russian market and initiated the search for potential buyers for the four legal entities in the country. The Russian business is comprised of four legal entities with operations in the reporting segments Flow Equipment, Services and Chemtech which includes two service centers and one production facility, and the assets and liabilities of these operations expected to be transferred as part of a sale have been classified as held for sale in June 2022. In February 2023, Sulzer signed an agreement to sell its business in Russia to a local third party. The transaction is subject to regulatory approvals by the Russian Government Subcommission for Control over Foreign Investments and the Federal Antimonopoly Service (FAS).

With the classification as held for sale in June, the disposal group was measured at the lower fair value less costs to sell, resulting in the recognition of impairments amounting to CHF 88.9 million on that date, with CHF 32.2 million recorded in other operating expenses, CHF 38.8 million in costs of goods sold, CHF 15.7 million in general and administrative expenses and CHF 2.2 million in income tax expenses. The write-offs were mainly recorded on goodwill, other intangible assets, property, plant and equipment, lease assets, inventory and advance payments from customers. In addition, the group recognized net impairment losses on contract assets and trade accounts receivables related to the Russian business. These impairment losses amounted to CHF 37.4 million as of December 31, 2022. Deferred tax assets in the amount of CHF 5.1 million were reversed as of year end 2022. Reference is made to note 12 and note 20 and the respective balance sheet notes.

The cumulative income recognized in other comprehensive income related to the disposal group amounts to CHF 11.8 million as of December 31, 2022, consisting entirely of items to be reclassified to the income statement at the date of the sale. The assets and liabilities classified as held for sale as of December 31, 2022, are presented in the table below.

While the cash and cash equivalents classified as held for sale can be used without restriction in the respective country, they are not available for general use by other entities within the group.