Notes to the consolidated financial statements

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1 General information

1 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 unaudited consolidated interim financial statements for the six months ended June 30, 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 application technologies for fluids of all types. Sulzer was founded in 1834 in Winterthur, Switzerland, and employs around 15’600 people. The company serves clients in 188 production and service sites around the world. Sulzer Ltd is listed on the SIX Swiss Exchange in Zurich, Switzerland (symbol: SUN).

The interim financial statements have been prepared in accordance with the requirements of IAS 34 “Interim financial reporting.ˮ Details of the group’s accounting policies are described in note 13.

2 Significant events and transactions during the reporting period

2 Significant events and transactions during the reporting period

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

  • The group announced on May 27, 2021, the intention to spin-off its Applicator Systems (APS) division through a 1:1 share split, granting Sulzer shareholders one APS share in addition to each Sulzer share held. Upon market introduction, APS will be renamed medmix and its listing will be combined with a share capital increase by medmix in the amount of CHF 200–300 million without subscription rights for existing shareholders. The spin-off of medmix will be executed in the form of a symmetrical split, according to art. 29 para b) and art. 31 para 2a) of the Swiss Merger Act, with existing shareholders receiving one medmix share in addition to each Sulzer share held. Sulzer’s Board of Directors has unanimously approved the transaction. The split of Sulzer into two separate companies and its associated capital increase will be proposed for shareholder approval at an extraordinary general meeting (EGM) to be scheduled in Q3, 2021.
  • On February 1, 2021, Sulzer acquired a 100% controlling interest of 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 as well as its global reach. With the acquisition of Nordic Water, Sulzer 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 Sulzer’s Pumps Equipment division. The acquisition resulted in an increase in goodwill of CHF 52.1 million and other intangible assets of CHF 73.3 million at the date of acquisition (see note 4).
  • For the period ended June 30, 2021, the group recognized restructuring costs of CHF 3.3 million (half year 2020: CHF 43.2 million), partly offset by released restructuring provisions of CHF 1.3 million (half year 2020: CHF 1.2 million). Restructuring costs mainly relate to the resizing of a site in Belgium. Associated with restructuring initiatives, the group further recognized impairments on tangible and intangible assets of CHF 0.9 million (half year 2020: CHF 4.2 million).

For a detailed discussion about the group’s performance and financial position please refer to the Business review.

3 Segment information

3 Segment information

Segment information by divisions

 

 

Pumps Equipment

 

Rotating Equipment Services

 

Chemtech

 

Applicator Systems

millions of CHF

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

Order intake 1)

 

626.8

 

744.0

 

570.8

 

617.0

 

353.9

 

319.4

 

268.9

 

160.2

Nominal growth

 

–15.8%

 

–1.1%

 

–7.5%

 

2.5%

 

10.8%

 

–8.8%

 

67.9%

 

–29.9%

Currency-adjusted growth

 

–15.3%

 

6.0%

 

–5.6%

 

10.2%

 

12.8%

 

–3.2%

 

69.4%

 

–27.3%

Organic growth 2)

 

–20.2%

 

7.3%

 

–6.0%

 

6.3%

 

12.8%

 

–12.0%

 

53.3%

 

–27.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Order backlog as of June 30/ December 31

 

869.8

 

845.0

 

496.1

 

435.0

 

458.2

 

396.9

 

124.8

 

82.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales recognized at a point in time

 

480.7

 

389.4

 

441.5

 

431.5

 

175.6

 

182.4

 

226.5

 

166.1

Sales recognized over time

 

183.2

 

227.2

 

84.0

 

96.6

 

130.0

 

105.4

 

1.8

 

Sales 3)

 

663.9

 

616.6

 

525.5

 

528.1

 

305.6

 

287.8

 

228.3

 

166.1

Nominal growth

 

7.7%

 

–10.7%

 

–0.5%

 

–5.9%

 

6.2%

 

–5.3%

 

37.5%

 

–23.9%

Currency-adjusted growth

 

8.8%

 

–4.4%

 

1.3%

 

1.3%

 

7.7%

 

0.2%

 

38.4%

 

–21.0%

Organic growth 2)

 

4.4%

 

–3.1%

 

0.9%

 

–1.2%

 

7.7%

 

–7.7%

 

25.8%

 

–21.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational profit

 

33.2

 

19.2

 

70.3

 

64.0

 

27.7

 

23.0

 

44.0

 

19.5

Operational profitability

 

5.0%

 

3.1%

 

13.4%

 

12.1%

 

9.1%

 

8.0%

 

19.3%

 

11.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

–0.7

 

–28.9

 

–0.7

 

–8.0

 

–0.6

 

–3.0

 

–0.2

 

–1.1

Amortization

 

–18.7

 

–14.8

 

–2.3

 

–3.9

 

–3.2

 

–3.3

 

–11.2

 

–9.0

Impairments on tangible and intangible assets

 

 

–0.4

 

–0.3

 

–0.0

 

 

–3.7

 

–0.6

 

–0.1

Non-operational items

 

1.0

 

–2.2

 

–0.7

 

–0.8

 

–2.8

 

–2.4

 

–0.8

 

–0.3

EBIT

 

14.8

 

–27.1

 

66.3

 

51.2

 

21.1

 

10.6

 

31.3

 

9.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

–16.5

 

–17.3

 

–15.6

 

–14.9

 

–6.5

 

–6.6

 

–13.8

 

–11.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating assets

 

1’628.5

 

1’456.4

 

938.0

 

893.6

 

570.7

 

507.0

 

751.0

 

731.1

Unallocated assets

 

 

 

 

 

 

 

 

Total assets as of June 30/ December 31

 

1’628.5

 

1’456.4

 

938.0

 

893.6

 

570.7

 

507.0

 

751.0

 

731.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating liabilities

 

737.5

 

725.1

 

394.3

 

354.9

 

372.5

 

323.6

 

143.4

 

126.6

Unallocated liabilities

 

 

 

 

 

 

 

 

Total liabilities as of June 30/ December 31

 

737.5

 

725.1

 

394.3

 

354.9

 

372.5

 

323.6

 

143.4

 

126.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating net assets

 

891.0

 

731.3

 

543.8

 

538.7

 

198.3

 

183.5

 

607.6

 

604.5

Unallocated net assets

 

 

 

 

 

 

 

 

Total net assets as of June 30/ December 31

 

891.0

 

731.3

 

543.8

 

538.7

 

198.3

 

183.5

 

607.6

 

604.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure (incl. lease assets)

 

–15.1

 

–21.0

 

–33.0

 

–23.8

 

–9.3

 

–6.5

 

–18.1

 

–22.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees (number of full-time equivalents) as of June 30/ December 31

 

5’408

 

5’362

 

4’510

 

4’449

 

3’536

 

3’221

 

1’945

 

1’857

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 4)

 

Total Sulzer

millions of CHF

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

Order intake 1)

 

1’820.4

 

1’840.5

 

 

 

1’820.4

 

1’840.5

Nominal growth

 

–1.1%

 

–4.8%

 

 

 

–1.1%

 

–4.8%

Currency-adjusted growth

 

0.2%

 

1.7%

 

 

 

0.2%

 

1.7%

Organic growth 2)

 

–3.3%

 

–0.6%

 

 

 

–3.3%

 

–0.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

Order backlog as of June 30/ December 31

 

1’948.9

 

1’758.9

 

 

 

1’948.9

 

1’758.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales recognized at a point in time

 

1’324.3

 

1’169.4

 

 

 

1’324.3

 

1’169.4

Sales recognized over time

 

399.0

 

429.1

 

 

 

399.0

 

429.1

Sales 3)

 

1’723.3

 

1’598.5

 

 

 

1’723.3

 

1’598.5

Nominal growth

 

7.8%

 

–9.9%

 

 

 

7.8%

 

–9.9%

Currency-adjusted growth

 

9.2%

 

–3.9%

 

 

 

9.2%

 

–3.9%

Organic growth 2)

 

6.1%

 

–5.5%

 

 

 

6.1%

 

–5.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational profit

 

175.2

 

125.8

 

–3.6

 

–5.6

 

171.6

 

120.2

Operational profitability

 

10.2%

 

7.9%

 

n/a

 

n/a

 

10.0%

 

7.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

–2.1

 

–41.0

 

0.1

 

–1.0

 

–2.0

 

–42.0

Amortization

 

–35.4

 

–31.0

 

–0.3

 

–0.5

 

–35.7

 

–31.6

Impairments on tangible and intangible assets

 

–0.9

 

–4.2

 

 

 

–0.9

 

–4.2

Non-operational items

 

–3.2

 

–5.7

 

–1.0

 

–0.7

 

–4.3

 

–6.4

EBIT

 

133.6

 

43.8

 

–4.9

 

–7.8

 

128.7

 

36.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

–52.5

 

–50.1

 

–1.7

 

–1.5

 

–54.2

 

–51.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating assets

 

3’888.3

 

3’588.1

 

174.0

 

71.1

 

4’062.3

 

3’659.2

Unallocated assets

 

 

 

1’541.6

 

1’705.6

 

1’541.6

 

1’705.6

Total assets as of June 30/ December 31

 

3’888.3

 

3’588.1

 

1’715.6

 

1’776.7

 

5’603.9

 

5’364.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating liabilities

 

1’647.6

 

1’530.2

 

210.7

 

152.7

 

1’858.3

 

1’682.8

Unallocated liabilities

 

 

 

2’276.4

 

2’264.8

 

2’276.4

 

2’264.8

Total liabilities as of June 30/ December 31

 

1’647.6

 

1’530.2

 

2’487.1

 

2’417.4

 

4’134.7

 

3’947.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating net assets

 

2’240.7

 

2’058.0

 

–36.7

 

–81.6

 

2’204.0

 

1’976.4

Unallocated net assets

 

 

 

–734.7

 

–559.2

 

–734.7

 

–559.2

Total net assets as of June 30/ December 31

 

2’240.7

 

2’058.0

 

–771.4

 

–640.7

 

1’469.3

 

1’417.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure (incl. lease assets)

 

–75.4

 

–74.0

 

–0.8

 

–1.2

 

–76.3

 

–75.1

 

 

 

 

 

 

 

 

 

 

 

 

 

Employees (number of full-time equivalents) as of June 30/ December 31

 

15’399

 

14’888

 

176

 

165

 

15’574

 

15’054

1) Order intake from external customers.

2) Adjusted for currency and acquisition effects.

3) Sales from external customers.

4) The most significant activities under “Others” relate to Corporate Center.

For the definition of operational profit, operational profitability and adjustments for currency and acquisition effects, reference is made to the Sulzer Annual Report 2020.

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:

Pumps Equipment

The Pumps Equipment division 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.

Rotating Equipment Services

Through a network of over 100 service sites around the world, the Rotating Equipment Services division provides cutting-edge parts as well as maintenance and repair solutions for pumps, turbines, compressors, motors and generators. 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 biopolymers as well as textile and plastic recycling, contributing to a circular economy. The division’s product offering ranges from technology licensing to process components all the way to complete separation process plants. Customer support ranges from engineering and field services to tray and packing installation, tower maintenance, welding and plant turnaround projects – ensuring minimal downtime.

Applicator Systems

Through its well-known brands (Mixpac, Transcodent, Cox, medmix, Haselmeier and Geka), the Applicator Systems division develops and delivers innovative products and services for liquid application and mixing solutions within the healthcare, adhesives and beauty markets. The division’s IP-protected applicator solutions make the customers’ products precise, safe, unique and more sustainable, leveraging the division’s expertise in plastic-injection molding, two-component mixing, drug delivery and micro-brushes.

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 EBIT.

Segment information by region

The allocation of sales from external customers is based on the ship-to location defined by Sulzer’s customer, which does not necessarily correspond with the location of the end customer.

Sales by region

 

 

2021

millions of CHF

 

Pumps Equipment

 

Rotating Equipment Services

 

Chemtech

 

Applicator Systems

 

Total Sulzer

Europe, the Middle East and Africa

 

313.8

 

221.5

 

67.1

 

135.7

 

738.2

– thereof Germany

 

27.4

 

25.8

 

14.7

 

53.2

 

121.0

– thereof United Kingdom

 

11.6

 

53.8

 

2.4

 

9.2

 

76.9

– thereof Saudi Arabia

 

56.1

 

11.7

 

7.2

 

0.1

 

75.1

– thereof France

 

13.7

 

13.6

 

4.5

 

11.5

 

43.3

– thereof Russia

 

15.6

 

13.5

 

6.6

 

1.1

 

36.8

 

 

 

 

 

 

 

 

 

 

 

Americas

 

194.8

 

232.2

 

65.5

 

70.8

 

563.3

– thereof USA

 

112.6

 

182.2

 

41.5

 

64.8

 

401.0

 

 

 

 

 

 

 

 

 

 

 

Asia-Pacific

 

155.3

 

71.8

 

172.9

 

21.8

 

421.9

– thereof China

 

115.3

 

11.4

 

127.5

 

10.1

 

264.2

 

 

 

 

 

 

 

 

 

 

 

Total

 

663.9

 

525.5

 

305.6

 

228.3

 

1’723.3

 

 

2020

millions of CHF

 

Pumps Equipment

 

Rotating Equipment Services

 

Chemtech

 

Applicator Systems

 

Total Sulzer

Europe, the Middle East and Africa

 

263.5

 

219.1

 

84.4

 

96.8

 

663.8

– thereof Germany

 

30.8

 

23.8

 

13.3

 

37.8

 

105.7

– thereof United Kingdom

 

11.6

 

52.8

 

4.9

 

6.8

 

76.2

– thereof Saudi Arabia

 

35.3

 

11.4

 

17.0

 

0.0

 

63.7

– thereof Russia

 

16.4

 

30.8

 

5.5

 

1.0

 

53.7

– thereof France

 

14.1

 

9.8

 

2.3

 

12.0

 

38.3

 

 

 

 

 

 

 

 

 

 

 

Americas

 

226.0

 

239.1

 

66.9

 

55.5

 

587.5

– thereof USA

 

152.7

 

195.4

 

47.6

 

50.0

 

445.6

 

 

 

 

 

 

 

 

 

 

 

Asia-Pacific

 

127.0

 

69.8

 

136.5

 

13.8

 

347.2

– thereof China

 

93.8

 

10.2

 

89.5

 

6.4

 

199.9

 

 

 

 

 

 

 

 

 

 

 

Total

 

616.6

 

528.1

 

287.8

 

166.1

 

1’598.5

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 — Pumps Equipment

millions of CHF

 

2021

 

2020

Energy

 

239.9

 

255.3

Water

 

233.6

 

188.8

Industry

 

190.5

 

172.4

Total Pumps Equipment

 

663.9

 

616.6

Sales by market segment — Rotating Equipment Services

millions of CHF

 

2021

 

2020

Pumps Services

 

283.7

 

285.8

Other Equipment

 

241.9

 

242.2

Total Rotating Equipment Services

 

525.5

 

528.1

Sales by market segment — Chemtech

millions of CHF

 

2021

 

2020

Chemicals

 

178.4

 

151.4

Gas/Refining

 

57.8

 

62.8

Service

 

47.9

 

46.1

Renewables

 

14.3

 

17.4

Water

 

7.2

 

10.0

Total Chemtech

 

305.6

 

287.8

Sales by market segment — Applicator Systems

millions of CHF

 

2021

 

2020

Dental

 

60.7

 

35.9

Drug delivery

 

21.3

 

Surgery

 

5.8

 

6.6

Total Healthcare

 

87.9

 

42.5

 

 

 

 

 

Industry

 

78.5

 

62.7

Beauty

 

61.9

 

60.8

Total Consumer & Industrial

 

140.5

 

123.6

 

 

 

 

 

Total Applicator Systems

 

228.3

 

166.1

4 Acquisitions of subsidiaries and non-controlling interests

4 Acquisitions of subsidiaries and non-controlling interests

Acquisitions of subsidiaries 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

 

73.3

 

7.4

 

80.7

Property, plant and equipment

 

1.2

 

1.4

 

2.6

Lease assets

 

3.0

 

1.5

 

4.4

Deferred income tax assets

 

0.1

 

 

0.1

Cash and cash equivalents

 

14.2

 

0.9

 

15.1

Trade accounts receivable

 

7.4

 

0.1

 

7.5

Other current assets

 

19.9

 

1.3

 

21.2

Lease liabilities

 

–3.0

 

–1.4

 

–4.4

Provisions

 

–0.5

 

–0.2

 

–0.7

Non-current income tax liabilities

 

 

 

Deferred income tax liabilities

 

–17.9

 

–1.0

 

–18.9

Other liabilities

 

–20.7

 

–0.4

 

–21.1

Net identifiable assets

 

77.1

 

9.4

 

86.4

Goodwill recognized in balance sheet

 

52.1

 

1.7

 

53.8

Total consideration

 

129.2

 

11.0

 

140.3

 

 

 

 

 

 

Purchase price paid in cash

 

129.2

 

9.1

 

138.3

Contingent consideration

 

 

1.9

 

1.9

Total consideration

 

129.2

 

11.0

 

140.3

Nordic Water

On February 1, 2021, Sulzer acquired a 100% controlling interest of 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 as well as its global reach. With the acquisition of Nordic Water, Sulzer 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 Sulzer’s Pumps 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 39.4 million, sales of CHF 29.0 million, and net income of
CHF –0.3 million to the group.

Acquired receivables

The fair value of acquired trade accounts receivable is CHF 7.4 million. The gross contractual amount for trade account receivables due is CHF 7.9 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% interests 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, excl. dividends

 

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 1’727.5 million, and the consolidated net income would be CHF 85.4 million.

Restated balance sheet 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. Since the group concluded not to pursue the development project, the earn-out amount was adjusted from CHF 14.2 million to CHF 0.3 million retrospectively. Consequently, the group adjusted goodwill and other non-current liabilities by CHF 13.9 million as of December 31, 2020.

millions of CHF

 

As reported 2020

 

Measurement adjustment

 

Restated 2020

Goodwill

 

957.7

 

–13.9

 

943.8

Total non-current assets

 

2’215.9

 

–13.9

 

2’202.0

Total assets

 

5’378.7

 

–13.9

 

5’364.8

 

 

 

 

 

 

 

Other non-current liabilities

 

21.9

 

–13.9

 

8.0

Total non-current liabilities

 

1’989.9

 

–13.9

 

1’976.0

Total equity and liabilities

 

5’378.7

 

–13.9

 

5’364.8

Cash flow from acquisitions of subsidiaries

millions of CHF

 

2021

 

2020

Cash consideration paid

 

–138.3

 

–1.5

Contingent consideration paid

 

–0.5

 

Cash acquired

 

15.1

 

–5.3

Total cash flow from acquisitions, net of cash acquired

 

–123.9

 

–6.8

Contingent consideration

millions of CHF

 

2021

 

Restated 2020

Balance as of January 1

 

4.4

 

3.5

Assumed in a business combination

 

1.9

 

0.3

Payment of contingent consideration

 

–0.5

 

Currency translation differences

 

0.3

 

0.6

Total contingent consideration as of June 30/ December 31

 

6.1

 

4.4

– thereof non-current

 

1.9

 

– thereof current

 

4.2

 

4.4

5 Financial instruments

5 Financial instruments

The following tables present the carrying amounts and fair values of financial assets and liabilities as of June 30, 2021, and December 31, 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 earnout clauses and technology transfer. For more information please refer to note 4.

Fair value table

 

 

 

 

June 30, 2021

 

 

 

 

Carrying amount

 

Fair value

millions of CHF

 

Notes

 

Fair value hedging instruments

 

Fair value through profit or loss

 

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)

 

 

 

 

 

9.0

 

 

 

 

 

9.0

 

0.2

 

 

8.8

 

9.0

Derivative assets – non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative assets – current

 

 

 

3.1

 

 

 

 

 

 

 

3.1

 

 

3.1

 

 

3.1

Current financial assets (at fair value)

 

 

 

 

 

1.7

 

 

 

 

 

1.7

 

1.7

 

 

 

1.7

Total financial assets measured at fair value

 

 

 

3.1

 

10.7

 

 

 

13.9

 

2.0

 

3.1

 

8.8

 

13.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets not measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other non-current financial assets (at amortized cost)

 

 

 

 

 

 

 

5.7

 

 

 

5.7

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

4.6

 

 

 

4.6

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

 

 

 

 

 

575.0

 

 

 

575.0

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

21.3

 

 

 

21.3

 

 

 

 

 

 

 

 

Current financial assets (at amortized cost)

 

 

 

 

 

 

 

1.2

 

 

 

1.2

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

1’292.5

 

 

 

1’292.5

 

 

 

 

 

 

 

 

Total financial assets not measured at fair value

 

 

 

 

 

1’900.4

 

 

1’900.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative liabilities – non-current

 

 

 

0.1

 

 

 

 

 

 

 

0.1

 

 

0.1

 

 

0.1

Derivative liabilities – current

 

 

 

8.4

 

 

 

 

 

 

 

8.4

 

 

8.4

 

 

8.4

Contingent considerations

 

4

 

 

 

6.1

 

 

 

 

 

6.1

 

 

 

6.1

 

6.1

Total financial liabilities measured at fair value

 

 

 

8.5

 

6.1

 

 

 

14.6

 

 

8.5

 

6.1

 

14.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities not measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding non-current bonds

 

10

 

 

 

 

 

 

 

1’488.7

 

1’488.7

 

1’518.8

 

 

 

1’518.8

Other non-current borrowings

 

 

 

 

 

 

 

 

 

0.9

 

0.9

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

6.9

 

6.9

 

 

 

 

 

 

 

 

Outstanding current bonds

 

10

 

 

 

 

 

 

 

209.9

 

209.9

 

210.4

 

 

 

210.4

Other current borrowings and bank loans

 

 

 

 

 

 

 

 

 

21.9

 

21.9

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

 

 

 

 

 

 

 

478.2

 

478.2

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

353.8

 

353.8

 

 

 

 

 

 

 

 

Total financial liabilities not measured at fair value

 

 

 

 

 

 

2’560.2

 

2’560.2

 

 

 

 

 

 

 

 

Fair value table

 

 

 

 

December 31, 2020

 

 

 

 

Carrying amount

 

Fair value

millions of CHF

 

Notes

 

Fair value hedging instruments

 

Fair value through profit or loss

 

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)

 

 

 

 

 

8.7

 

 

 

 

 

8.7

 

0.2

 

 

8.4

 

8.7

Derivative assets – non-current

 

 

 

1.0

 

 

 

 

 

 

 

1.0

 

 

1.0

 

 

1.0

Derivative assets – current

 

 

 

12.1

 

 

 

 

 

 

 

12.1

 

 

12.1

 

 

12.1

Current financial assets (at fair value)

 

 

 

 

 

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)

 

 

 

 

 

 

 

2.0

 

 

 

2.0

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

3.3

 

 

 

3.3

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

 

 

 

 

 

599.1

 

 

 

599.1

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

19.2

 

 

 

19.2

 

 

 

 

 

 

 

 

Current financial assets (at amortized cost)

 

 

 

 

 

 

 

303.3

 

 

 

303.3

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

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

 

 

 

1.2

 

 

 

 

 

 

 

1.2

 

 

1.2

 

 

1.2

Derivative liabilities – current

 

 

 

6.9

 

 

 

 

 

 

 

6.9

 

 

6.9

 

 

6.9

Contingent considerations

 

4

 

 

 

4.4

 

 

 

 

 

4.4

 

 

 

4.4

 

4.4

Total financial liabilities measured at fair value

 

 

 

8.1

 

4.4

 

 

 

12.5

 

 

8.1

 

4.4

 

12.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities not measured at fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding non-current bonds

 

10

 

 

 

 

 

 

 

1’488.5

 

1’488.5

 

1’527.5

 

 

 

1’527.5

Other non-current borrowings

 

 

 

 

 

 

 

 

 

2.7

 

2.7

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

6.8

 

6.8

 

 

 

 

 

 

 

 

Outstanding current bonds

 

10

 

 

 

 

 

 

 

209.9

 

209.9

 

211.3

 

 

 

211.3

Other current borrowings and bank loans

 

 

 

 

 

 

 

 

 

21.9

 

21.9

 

 

 

 

 

 

 

 

Trade accounts payable

 

 

 

 

 

 

 

 

 

465.8

 

465.8

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

307.6

 

307.6

 

 

 

 

 

 

 

 

Total financial liabilities not measured at fair value

 

 

 

 

 

 

2’503.2

 

2’503.2

 

 

 

 

 

 

 

 

6 Other operating income and expenses

6 Other operating income and expenses

millions of CHF

 

2021

 

2020

Gain from sale of property, plant and equipment

 

1.0

 

0.3

Operating currency exchange gains, net

 

1.6

 

Other operating income

 

5.5

 

7.4

Total other operating income

 

8.1

 

7.7

 

 

 

 

 

Restructuring expenses

 

–2.0

 

–42.0

Impairments on tangible and intangible assets

 

–0.9

 

–4.2

Cost for mergers and acquisitions

 

–2.3

 

–0.2

Loss from sale of property, plant and equipment

 

–0.0

 

–0.1

Operating currency exchange losses, net

 

 

–1.6

Total other operating expenses

 

–5.3

 

–48.1

 

 

 

 

 

Total other operating income and expenses, net

 

2.8

 

–40.3

Other operating income includes income from litigation cases, government grants and incentives, and recharges to third parties not qualifying as sales from customers.

For the period ended June 30, 2021, the group recognized restructuring costs of CHF 3.3 million (half year 2020: CHF 43.2 million), partly offset by released restructuring provisions of CHF 1.3 million (2020: CHF 1.2 million). Restructuring costs mainly relate to the resizing of a site in Belgium. During 2020, the group had initiated restructuring measures of sites in Europe and the USA to mitigate the impact of market disruptions on Energy-related business activities caused by the pandemic. The group further performed impairment tests on production machines and facilities leading to impairments of CHF 0.9 million (half year 2020: CHF 4.2 million).

The functional allocation of the total restructuring expenses and impairments is as follows: cost of goods sold CHF –0.6 million (half year 2020: CHF –32.3 million), selling and distribution expenses CHF –0.2 million (half year 2020: CHF –3.2 million), general and administrative expenses CHF –1.5 million (half year 2020: CHF –9.7 million) and research and development expenses CHF –0.6 million (half year 2020: CHF –1.0 million).

7 Financial income and expenses

7 Financial income and expenses

millions of CHF

 

2021

 

2020

Interest and securities income

 

1.7

 

2.5

Total interest and securities income

 

1.7

 

2.5

Interest expenses on borrowings and lease liabilities

 

–11.7

 

–10.3

Interest expenses on employee benefit plans

 

–1.4

 

–1.4

Total interest expenses

 

–13.1

 

–11.7

Total interest income and expenses, net

 

–11.4

 

–9.3

 

 

 

 

 

Fair value changes

 

–8.1

 

11.9

Other financial expenses

 

–0.4

 

–1.3

Currency exchange gains/losses, net

 

6.5

 

–13.6

Total other financial income and expenses, net

 

–2.0

 

–3.0

 

 

 

 

 

Total financial income and expenses, net

 

–13.4

 

–12.3

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

 

–8.1

 

11.9

– thereof interest income on financial assets at amortized costs

 

1.7

 

2.5

– thereof other financial expenses

 

–0.4

 

–1.3

– thereof currency exchange gains/losses, net

 

6.5

 

–13.6

– thereof interest expenses on borrowings

 

–10.4

 

–9.1

– thereof interest expenses on lease liabilities

 

–1.3

 

–1.2

– thereof interest expenses on employee benefit plans

 

–1.4

 

–1.4

Total financial expenses amounted to CHF 13.4 million, compared with CHF 12.3 million in the first half of 2020.

“Interest expenses” increased from CHF 10.3 million in the first half year 2020 to CHF 11.7 million for the same period in 2021. This is mainly due to interest expenses on bonds issued in the second half of 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.

8 Income taxes

8 Income taxes

Income tax expenses comprise current and deferred tax. Income tax expenses are recognized based on the estimated income tax rate for the full financial year. The estimated average annual tax rate used for the year 2021 is 24.4%, compared with 28.4% for the six months ended June 30, 2020. Compared to 2020, the effective income tax rate used for 2021 was less impacted by restructuring expenses with no corresponding tax effects and the allocation of profitability among the group’s entities is more favorable.

9 Equity

9 Equity

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.

Treasury shares

The total number of shares held by Sulzer Ltd as of June 30, 2021, amounted to 474’078 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.

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 unpaid dividends are reflected in the balance sheet position “other current and accrued liabilitiesˮ (see note 12).

10 Borrowings

10 Borrowings

 

 

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

 

0.9

 

 

0.9

Cash flow from proceeds

 

0.0

 

27.8

 

27.9

Cash flow for repayments

 

–2.8

 

–28.4

 

–31.1

Changes in amortized costs

 

0.1

 

0.1

 

0.2

Currency translation differences

 

0.0

 

0.5

 

0.5

Total borrowings as of June 30

 

1’489.6

 

231.8

 

1’721.4

 

 

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

The group arranged a CHF 500 million syndicated credit facility with maturity date May 2022. 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 (earnings before interest, taxes, depreciation and amortization), which were adhered to throughout the reporting period. As of June 30, 2021, and December 31, 2020, the syndicated facility of CHF 500 million was not used.

Outstanding bonds

 

 

2021

 

2020

millions of CHF

 

Amortized costs

 

Nominal

 

Amortized costs

 

Nominal

0.375% 07/2016–07/2022

 

325.1

 

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

 

289.7

 

290.0

 

289.6

 

290.0

0.625% 10/2018–10/2021

 

209.9

 

210.0

 

209.9

 

210.0

1.600% 10/2018–10/2024

 

249.9

 

250.0

 

249.8

 

250.0

0.800% 09/2020–09/2025

 

299.4

 

300.0

 

299.3

 

300.0

0.875% 11/2020–11/2027

 

199.7

 

200.0

 

199.6

 

200.0

Total as of June 30/ December 31

 

1’698.6

 

1’700.0

 

1’698.4

 

1’700.0