5Disposals, loss of control and disposal group held for sale
Loss of control in 2023
In February 2023, the group entered into an agreement with a third party for the sale of four legal entities in Russia. From the date of the sales agreement, the group lost power over the relevant activities of these entities due to the contractual requirements and legal environment. Consequently, these four entities were deconsolidated in the first half of 2023, resulting in the derecognition of the assets and liabilities previously classified as held for sale. Upon deconsolidation, a loan with one of these former subsidiaries was measured at a fair value and recognized as a current financial asset.
The deconsolidation resulted in a gain on deconsolidation amounting to CHF 8.0 million, of which CHF 11.2 million resulted from the reclassification of accumulated currency translation differences and CHF 0.6 million from the reclassification of cash flow hedge reserves, net of tax. The gain on deconsolidation is recorded in other operating income. The following table presents the assets and liabilities derecognized, previously classified as assets and liabilities of disposal groups held for sale.
|
millions of CHF |
|
Total |
|
Cash and cash equivalents |
|
32.1 |
|
Non-current lease liabilities |
|
–0.3 |
|
Other non-current liabilities |
|
–0.0 |
|
Current lease liabilities |
|
–0.2 |
|
Current provisions |
|
–0.4 |
|
Trade accounts payable and contract liabilities |
|
–13.8 |
|
Other current and accrued liabilities |
|
–10.6 |
|
Net assets derecognized |
|
6.8 |
Cash and cash equivalents in the amount of CHF 32.3 million were derecognized as part of deconsolidations in the first half of 2023, and consideration amounting to CHF 0.3 million was received for a divestment in prior years. The net cash flow of CHF 32.0 million was presented in the statement of cash flows as "Divestitures and deconsolidation of subsidiaries, net of cash derecognized".
Disposals, loss of control and disposal group held for sale in 2022
In the first half year of 2022, the group sold its 100% shareholding in the Brazilian subsidiary Sulzer Services Brasil, Triunfo. The disposal resulted in a loss of CHF 0.6 million, including a loss of CHF 1.0 million from the reclassification of currency translation differences into the income statement. The deconsolidation of two Polish subsidiaries resulted in a loss of CHF 6.2 million, including a loss of CHF 1.2 million from the reclassification of currency translation differences into the income statement. The investment retained is valued at zero. The losses are recorded in other operating expenses (see note 7).
The cash flows resulting from disposals in the first half of 2022 amounted to CHF 3.1 million, consisting of CHF 7.8 million cash consideration received and CHF 4.7 million cash disposed. They are presented in the statement of cash flows as "Divestitures and deconsolidation of subsidiaries, net of cash derecognized".
In the first half of 2022, the four legal entities in Russia were classified as 'held for sale,' and impairments of CHF 88.9 million were recorded, of which CHF 32.2 million was recorded in other operating expenses, CHF 38.8 million in cost of goods sold, CHF 15.7 million in general and administrative expenses, and CHF 2.2 million was recorded in the income tax expenses line. The write-downs included mainly impairments of goodwill, other intangible assets, property, plant and equipment, and write-down of inventory. The total net impairment loss recorded on contract assets and receivables amounted to CHF 37.9 million.