Financial 82 Consolidated financial statements

82 Consolidated income statement

reporting 83
84
Consolidated statement of comprehensive income
Consolidated balance sheet
85 Consolidated statement of changes in equity
87 Consolidated statement of cash flows
89 Notes to the consolidated financial statements
174 Auditor’s report
180 Supplementary information

188 Financial statements of Sulzer Ltd

188 Balance sheet of Sulzer Ltd
189 Income statement of Sulzer Ltd
190 Statement of changes in equity of Sulzer Ltd
191 Notes to the financial statements of Sulzer Ltd
198 Auditor’s report
Sulzer Annual Report 2023 – Financial reporting – Consolidated income statement 82

Consolidated income statement

January 1 – December 31

millions of CHF Notes 2023 2022

Sales 3, 20 3’281.7 3’179.9

Cost of goods sold –2’197.1 –2’240.3

Gross profit 1’084.6 939.6

Selling and distribution expenses –323.7 –317.0

General and administrative expenses –370.6 –363.0

Research and development expenses 10 –70.8 –66.4

Net impairment release / (loss) on contract assets and trade

accounts receivable 0.9 –39.9

Other operating income / (expenses), net 11 9.2 –42.1

Operating income (EBIT) 329.7 111.4

Interest and securities income 12 18.3 9.7

Interest expenses 12 –30.3 –27.3

Other financial income / (expenses), net 12 –10.3 16.0

Share of profit / (loss) of associates and joint ventures 17 –3.2 –2.7

Income before income tax expenses 304.3 107.0

Income tax expenses 13 –73.8 –79.0

Net income 230.5 28.0

– thereof attributable to shareholders of Sulzer Ltd 229.1 28.6

– thereof attributable to non-controlling interests 1.3 –0.6

Earnings per share (in CHF)

Basic earnings per share 25 6.76 0.85

Diluted earnings per share 25 6.67 0.83

Sulzer Annual Report 2023 – Financial reporting – Consolidated statement of comprehensive income 83

Consolidated statement of comprehensive

income

January 1 – December 31

millions of CHF Notes 2023 2022

Net income 230.5 28.0

Items that may be reclassified subsequently to the income

statement

Cash flow hedges, net of tax 29 8.3 –7.5

Currency translation differences –146.0 –60.3

Total of items that may be reclassified subsequently to the

income statement –137.7 –67.8

Items that will not be reclassified to the income statement

Remeasurements of defined benefit plans, net of tax 9 128.8 –75.5

Equity investments at FVOCI – net change in fair value, net of

tax 18 0.6 –11.0

Total of items that will not be reclassified to the income

statement 129.3 –86.5

Total other comprehensive income –8.3 –154.3

Total comprehensive income for the period 222.1 –126.2

- thereof attributable to shareholders of Sulzer Ltd 221.6 –125.5

- thereof attributable to non-controlling interests 0.6 –0.7

Sulzer Annual Report 2023 – Financial reporting – Consolidated balance sheet 84

Consolidated balance sheet

December 31
millions of CHF Notes 2023 2022
Non-current assets
Goodwill 14 637.9 676.9
Other intangible assets 14 196.8 234.3
Property, plant and equipment 15 348.2 360.5
Lease assets 16 93.2 90.1
Associates and joint ventures 17 54.7 41.8
Other non-current financial assets 18 38.4 28.5
Defined benefit assets 9 170.5 1.3
Non-current receivables 1.2 1.0
Deferred income tax assets 13 144.9 149.9
Total non-current assets 1’685.9 1’584.2

Current assets
Inventories 19 495.1 522.4
Current income tax receivables 30.4 28.3
Advance payments to suppliers 86.8 64.4
Contract assets 20 430.1 466.1
Trade accounts receivable 21 540.8 585.5
Other current receivables and prepaid expenses 22 123.4 128.7
Current financial assets 18 2.3 14.0
Cash and cash equivalents 23 974.7 1’196.3
Total current assets without disposal group 2’683.5 3’005.6
Assets of disposal group held for sale – 30.4
Total current assets 2’683.5 3’036.0
Total assets 4’369.5 4’620.2

Equity
Share capital 24 0.3 0.3
Reserves 1’095.0 1’023.9
Equity attributable to shareholders of Sulzer Ltd 1’095.4 1’024.3
Non-controlling interests 3.2 4.4
Total equity 1’098.6 1’028.6

Non-current liabilities
Non-current borrowings 26 795.2 1’043.9
Non-current lease liabilities 16 69.0 67.2
Deferred income tax liabilities 13 83.2 53.0
Non-current income tax liabilities 13 2.7 2.7
Defined benefit obligations 9 127.3 122.2
Non-current provisions 27 46.7 58.2
Other non-current liabilities 1.2 1.3
Total non-current liabilities 1’125.3 1’348.6

Current liabilities
Current borrowings 26 261.1 311.4
Current lease liabilities 16 23.9 22.4
Current income tax liabilities 13 44.1 30.0
Current provisions 27 145.3 155.9
Contract liabilities 20 451.0 382.3
Trade accounts payable 367.7 440.8
Other current and accrued liabilities 28 852.4 874.7
Total current liabilities without disposal group 2’145.6 2’217.5
Liabilities of disposal group held for sale – 25.4
Total current liabilities 2’145.6 2’242.9
Total liabilities 3’270.8 3’591.5

Total equity and liabilities 4’369.5 4’620.2

Sulzer Annual Report 2023 – Financial reporting – Consolidated statement of changes in equity 85

Consolidated statement of changes in equity

January 1 – December 31

Attributable to shareholders of Sulzer Ltd

Cash flow Currency Non-

Share Retained Treasury hedge translation controlling Total
millions of CHF Notes capital earnings shares reserve adjustment Total interests equity

Equity as of January 1, 2023 0.3 1’777.7 –42.9 –4.1 –706.7 1’024.3 4.4 1’028.6

Comprehensive income for the period:

Net income 229.1 229.1 1.3 230.5

- Cash flow hedges, net of tax 29 – – – 8.3 – 8.3 – 8.3

- Remeasurements of defined benefit

plans, net of tax 9 – 128.8 – – – 128.8 – 128.8

- Equity investments at FVOCI – net

change in fair value, net of tax 18 – 0.6 – – – 0.6 – 0.6

- Currency translation differences – – – – –145.3 –145.3 –0.7 –146.0

Other comprehensive income – 129.3 – 8.3 –145.3 –7.6 –0.7 –8.3

Total comprehensive income for the

period – 358.5 – 8.3 –145.3 221.6 0.6 222.1

Transactions with owners of the company:

Acquisition of non-controlling interests

without a change in control 4 – –22.4 – – 0.0 –22.4 –0.4 –22.8

Transactions with non-controlling interests 24 – – – – – – –1.1 –1.1

Contribution from medmix 24 – 0.3 – – – 0.3 0.3

Allocation of treasury shares to share plan

participants – –27.2 27.2 – – – –

Purchase of treasury shares 24 – – –20.9 – – –20.9 –20.9

Share-based payments 31 – 11.6 – – – 11.6 11.6

Dividends 24 – –118.9 – – – –118.9 –0.3 –119.2

Equity as of December 31, 2023 24 0.3 1’979.5 –36.7 4.2 –852.0 1’095.4 3.2 1’098.6
Sulzer Annual Report 2023 – Financial reporting – Consolidated statement of changes in equity 86

January 1 – December 31

Attributable to shareholders of Sulzer Ltd

Cash flow Currency Non-

Share Retained Treasury hedge translation controlling Total
millions of CHF Notes capital earnings shares reserve adjustment Total interests equity

Equity as of January 1, 2022 0.3 1’967.7 –51.0 3.3 –646.5 1’273.8 5.5 1’279.3

Comprehensive income for the period:

Net income 28.6 28.6 –0.6 28.0

- Cash flow hedges, net of tax 29 – – – –7.5 – –7.5 – –7.5

- Remeasurements of defined benefit

plans, net of tax 9 – –75.5 – – – –75.5 – –75.5

- Equity investments at FVOCI – net

change in fair value, net of tax 18 – –11.0 – – – –11.0 – –11.0

- Currency translation differences – – – – –60.2 –60.2 –0.2 –60.3

Other comprehensive income – –86.5 – –7.5 –60.2 –154.1 –0.2 –154.3

Total comprehensive income for the

period – –57.9 – –7.5 –60.2 –125.5 –0.7 –126.2

Transactions with owners of the company:

Disposal of non-controlling interests

without a change of control – –0.4 – – –0.0 –0.4 0.8 0.4

Capital increase non-controlling interests – – – – – – 0.5 0.5

Contribution from medmix 24 – 0.4 – – – 0.4 – 0.4

Transaction costs 24 – –0.7 – – – –0.7 – –0.7

Allocation of treasury shares to share plan

participants – –27.6 27.6 – – – – –

Purchase of treasury shares 24 – – –19.5 – – –19.5 – –19.5

Share-based payments 31 – 14.9 – – – 14.9 – 14.9

Dividends 24 – –118.7 – – – –118.7 –1.6 –120.3

Equity as of December 31, 2022 24 0.3 1’777.7 –42.9 –4.1 –706.7 1’024.3 4.4 1’028.6
Sulzer Annual Report 2023 – Financial reporting – Consolidated statement of cash flows 87

Consolidated statement of cash flows

January 1 – December 31

millions of CHF Notes 2023 2022

Cash and cash equivalents as of January 1, as per balance

sheet 1’196.3 1’505.4

Cash and cash equivalents classified as held for sale 28.6 –

Cash and cash equivalents as of January 1 1’224.9 1’505.4

Net income 230.5 28.0

Interest and securities income 12 –18.3 –9.7

Interest expenses 12 30.3 27.3

Income tax expenses 13 73.8 79.0

Depreciation, amortization and impairments 14, 15, 16 108.2 159.3

Income from disposals of tangible and intangible assets , net 11 –0.5 –5.5

Changes in inventories –17.0 –59.8

Changes in advance payments to suppliers –19.6 –0.4

Changes in contract assets –11.4 –60.3

Changes in trade accounts receivable 15.8 –82.4

Changes in contract liabilities 100.9 86.9

Changes in trade accounts payable –46.1 34.4

Changes in employee benefit plans –4.1 –7.6

Changes in provisions –4.7 –14.0

Changes in other net current assets –22.7 45.4

Other non-cash items 20.4 0.2

Interest received 18.3 9.3

Interest paid –25.9 –24.6

Income tax paid –65.6 –86.5

Total cash flow from operating activities 362.2 119.2

Purchase of intangible assets 14 –6.1 –8.7

Proceeds from the sale of intangible assets 14 – 0.0

Purchase of property, plant and equipment 15 –59.5 –61.2

Proceeds from the sale of property, plant and equipment 15 4.6 9.0

Acquisitions of subsidiaries, net of cash acquired 4 –1.3 –4.2

Divestitures and deconsolidation of subsidiaries, net of cash

derecognized 5 –26.6 3.2

Acquisitions of associates and joint ventures 17 –17.8 –20.9

Dividends from associates 17 0.2 0.1

Purchase of other non-current financial assets 18 –0.6 –6.7

Repayments of other non-current financial assets 18 0.1 3.2

Purchase of current financial assets 18 –0.7 –2.9

Repayments of current financial assets 18 2.8 1.2

Total cash flow from investing activities –104.8 –87.8

Sulzer Annual Report 2023 – Financial reporting – Consolidated statement of cash flows 88

Dividends paid to shareholders of Sulzer Ltd 24 –80.9 –80.6

Dividends paid to non-controlling interests in subsidiaries –0.3 –1.6

Purchase of treasury shares 24 –20.9 –19.5

Payments of lease liabilities 16 –28.3 –32.1

Divestiture (Acquisition) of non-controlling interests 4 –19.4 0.4

Capital increase non-controlling interests – 0.5

Proceeds from non-current borrowings 26 – 169.6

Repayments of non-current borrowings 26 – –0.0

Proceeds from current borrowings 26 26.0 1’054.0

Repayments of current borrowings 26 –324.9 –1’376.1

Total cash flow from financing activities –448.6 –285.4

Exchange gains / (losses) on cash and cash equivalents –59.0 –26.4

Net change in cash and cash equivalents –250.3 –280.5

Cash and cash equivalents as of December 31 23 974.7 1’224.9

Cash and cash equivalents classified as held for sale – –28.6

Cash and cash equivalents as of December 31 as per

balance sheet 974.7 1’196.3

For the calculation of free cash flow (FCF), reference is made to the section “Financial review”.
Notes to the consolidated financial statements

90 01 General information
91 02 Significant events and transactions during the reporting period
92 03 Segment information
98 04 Acquisitions of subsidiaries and transactions with non-controlling interests
99 05 Disposals, loss of control and disposal group held for sale
101 06 Critical accounting estimates and judgments
104 07 Financial risk management
113 08 Personnel expenses
114 09 Employee benefit plans
120 10 Research and development expenses
121 11 Other operating income and expenses
122 12 Financial income and expenses
123 13 Income taxes
127 14 Goodwill and other intangible assets
129 15 Property, plant and equipment
131 16 Leases
133 17 Associates and joint ventures
134 18 Other financial assets
135 19 Inventories
136 20 Assets and liabilities related to contracts with customers
137 21 Trade accounts receivable
139 22 Other current receivables and prepaid expenses
140 23 Cash and cash equivalents
141 24 Equity
143 25 Earnings per share
144 26 Borrowings
146 27 Provisions
148 28 Other current and accrued liabilities
149 29 Derivative financial instruments
150 30 Contingent liabilities
151 31 Share participation plans
154 32 Transactions with members of the Board of Directors, Executive Committee and related parties
155 33 Auditor remuneration
156 34 Key accounting policies and valuation methods
170 35 Subsequent events after the balance sheet date
171 36 Major subsidiaries
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 90

Notes to the consolidated financial statements

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 consolidated financial
statements for the year ended December 31, 2023, 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 energy-efficient pumping, agitation, mixing,
separation, purification, crystallization and polymerization technologies for fluids of all types. Sulzer
was founded in 1834 in Winterthur, Switzerland, and employs 13'130 people. The company serves
clients in 160 production and service sites around the world. Sulzer Ltd is listed on SIX Swiss
Exchange in Zurich, Switzerland (symbol: SUN).

Sulzer is a global leader in fluid engineering and chemical processing applications, developing
innovative products and services that drive sustainable progress.

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 21,
2024.

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

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 91

2 Significant events and transactions during the reporting period

The financial position and performance of the group was not affected by any significant event during
the period. As disclosed in the Annual Report 2022, Sulzer entered into a sales agreement for its
business in Russia on February 3, 2023, and successfully sold the business in the second half of
2023. Further details are provided in note 5.

For a detailed discussion about the group’s performance and financial position, please refer to the
section “Financial review”.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 92

3 Segment information
Segment information by divisions
Flow Equipment Services Chemtech
millions of CHF 2023 2022 2023 2022 2023 2022
Order intake (unaudited) 1) 1’466.5 1’419.2 1’271.3 1’171.3 842.5 834.9
Nominal growth (unaudited) 3.3% 7.1% 8.5% 0.7% 0.9% 22.9%
Currency-adjusted growth (unaudited) 10.6% 9.4% 18.5% 1.8% 7.5% 21.7%
Organic growth (unaudited) 2) 11.2% 8.9% 19.8% 1.6% 10.5% 22.5%

Order backlog as of December 31 (unaudited) 878.3 850.1 547.3 492.9 521.2 501.7

Sales recognized at a point in time 893.2 843.4 870.2 825.9 373.2 357.5
Sales recognized over time 461.1 479.5 284.6 291.1 399.4 382.4
Sales 3) 1’354.4 1’323.0 1’154.8 1’117.0 772.5 739.9
Nominal growth 2.4% –4.8% 3.4% –0.1% 4.4% 14.1%
Currency-adjusted growth (unaudited) 9.4% –3.1% 12.6% 0.8% 11.3% 12.9%
Organic growth (unaudited) 2) 10.9% –3.4% 14.5% 0.7% 15.5% 14.8%

Operational profit (unaudited) 108.2 87.4 171.3 159.0 95.0 80.0

Operational profitability (unaudited) 8.0% 6.6% 14.8% 14.2% 12.3% 10.8%

Restructuring expenses –2.1 0.3 –0.7 –1.3 –0.3 0.8

Amortization –25.4 –26.7 –3.7 –4.4 –6.8 –6.9
Impairments on tangible and intangible assets –0.1 –8.0 –0.0 –24.2 –0.1 –12.3
Non-operational items (unaudited) 4) –6.5 –20.4 12.7 –75.1 –2.9 –23.4
EBIT 74.1 32.6 179.6 54.0 84.9 38.3

Depreciation –28.8 –30.4 –27.3 –29.0 –12.8 –13.4

Operating assets 1’427.7 1’554.1 944.4 980.0 533.2 579.7

Unallocated assets – – – – – –
Total assets as of December 31 1’427.7 1’554.1 944.4 980.0 533.2 579.7

Operating liabilities 718.6 730.9 411.2 456.4 409.1 439.8

Unallocated liabilities – – – – – –
Total liabilities as of December 31 718.6 730.9 411.2 456.4 409.1 439.8

Operating net assets 709.1 823.2 533.2 523.7 124.1 139.9

Unallocated net assets – – – – – –
Total net assets as of December 31 709.1 823.2 533.2 523.7 124.1 139.9

Capital expenditure (incl. lease assets) –37.7 –37.9 –33.4 –42.0 –27.8 –16.8

Employees (number of full-time equivalents) as of

December 31 5’465 5’263 4’630 4’559 2’849 2’852

1) Order intake from external customers.

2) Adjusted for acquisition, divestiture/deconsolidation and currency effects.
3) Sales from external customers.
4) Mainly consists of a gain on deconsolidation relating to the Russian business of CHF 8.0 million, including the reclassification of the accumulated currency translation adjustments
being allocated to the divisions.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 93

Segment information by divisions

Total divisions Others 1) Total Sulzer
millions of CHF 2023 2022 2023 2022 2) 2023 2022 2)
Order intake (unaudited) 3) 3’580.3 3’425.4 – – 3’580.3 3’425.4
Nominal growth (unaudited) 4.5% 8.1% – – 4.5% 8.1%
Currency-adjusted growth (unaudited) 12.6% 9.2% – – 12.6% 9.2%
Organic growth (unaudited) 4) 13.9% 9.1% – – 13.9% 9.1%

Order backlog as of December 31 (unaudited) 1’946.8 1’844.7 - – 1’946.8 1’844.7

Sales recognized at a point in time 2’136.6 2’026.8 – – 2’136.6 2’026.8

Sales recognized over time 1’145.1 1’153.1 – – 1’145.1 1’153.1
Sales 5) 3’281.7 3’179.9 – – 3’281.7 3’179.9
Nominal growth 3.2% 0.8% – – 3.2% 0.8%
Currency-adjusted growth (unaudited) 11.0% 1.6% – – 11.0% 1.6%
Organic growth (unaudited) 4) 13.2% 1.8% – – 13.2% 1.8%

Operational profit (unaudited) 374.5 326.4 –8.9 –8.8 365.6 317.6

Operational profitability (unaudited) 11.4% 10.3% n/a n/a 11.1% 10.0%

Restructuring expenses –3.1 –0.1 0.1 0.0 –3.0 –0.1

Amortization –35.9 –38.0 –0.7 –0.8 –36.6 –38.8
Impairments on tangible and intangible assets –0.2 –44.5 – – –0.2 –44.5
Non-operational items (unaudited) 6) 3.3 –119.0 0.5 –3.8 3.8 –122.8
EBIT 338.6 124.8 –9.0 –13.5 329.7 111.4

Depreciation –68.9 –72.8 –2.6 –3.2 –71.4 –76.0

Operating assets 7) 2’905.3 3’113.8 213.6 42.6 3’118.9 3’156.4

Unallocated assets 7) – – 1’250.5 1’463.7 1’250.5 1’463.7
Total assets as of December 31 2’905.3 3’113.8 1’464.2 1’506.4 4’369.5 4’620.2

Operating liabilities 8) 1’538.9 1’627.0 261.3 98.1 1’800.2 1’725.1

Unallocated liabilities 8) – – 1’470.6 1’866.4 1’470.6 1’866.4
Total liabilities as of December 31 1’538.9 1’627.0 1’731.9 1’964.5 3’270.8 3’591.5

Operating net assets 1’366.4 1’486.8 –47.7 –55.5 1’318.7 1’431.4

Unallocated net assets – – –220.1 –402.7 –220.1 –402.7
Total net assets as of December 31 1’366.4 1’486.8 –267.8 –458.2 1’098.6 1’028.6

Capital expenditure (incl. lease assets) –98.9 –96.7 –4.1 –3.3 –103.1 –100.0

Employees (number of full-time equivalents) as of

December 31 12’944 12’674 186 194 13’130 12’868

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

2) Amounts in 2022 were restated, please refer to 7) and 8) below.
3) Order intake from external customers.
4) Adjusted for acquisition, divestiture/deconsolidation and currency effects.
5) Sales from external customers.
6) Mainly consists of a gain on deconsolidation relating to the Russia business of CHF 8.0 million, including the reclassification of the accumulated currency translation adjustments being
allocated to the divisions.
7) In 2022, within “Others”, operating assets were adjusted by CHF 90.1 million from CHF -47.5 million to CHF 42.6 million, the unallocated assets were adjusted by CHF -90.1 million
from CHF 1’553.8 million to CHF 1’463.7 million. In “Total Sulzer”, operating assets were adjusted by CHF 90.1 million from CHF 3’066.3 million to CHF 3,156.4 million, the unallocated
assets were adjusted by CHF -90.1 million from CHF 1’553.8 million to CHF 1’463.7 million.
8) In 2022, within “Others”, operating liabilities were adjusted by CHF 90.1 million from CHF 8.0 million to CHF 98.1 million, the unallocated liabilities were adjusted by CHF -90.1 million
from CHF 1’956.5 million to CHF 1’866.4 million. In “Total Sulzer”, operating liabilities were adjusted by CHF 90.1 million from CHF 1’635.0 million to CHF 1’725.1 million, the
unallocated liabilities were adjusted by CHF -90.1 million from CHF 1’956.5 million to CHF 1’866.4 million.

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”.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 94

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 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 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 and sustainable 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
assessed 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 the measurement 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 95

Segment information by region

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

Non-current assets by region

millions of CHF 2023 2022

Europe, the Middle East and Africa 831.5 853.5

– thereof Switzerland 227.0 220.5

– thereof United Kingdom 175.5 180.1

– thereof Sweden 112.4 125.7

– thereof Finland 111.3 114.6

– thereof the Netherlands 79.7 84.6

Americas 375.8 413.4

– thereof USA 335.5 376.6

Asia-Pacific 123.6 136.7

– thereof China 47.1 52.4

Total 1’330.9 1’403.6

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 96

Sales by region

2023

Flow Total
millions of CHF Equipment Services Chemtech Sulzer

Europe, the Middle East and Africa 607.7 446.5 191.8 1’246.0

– thereof United Kingdom 36.7 123.0 15.7 175.5

– thereof Saudi Arabia 91.1 32.4 30.7 154.2

– thereof Germany 60.6 46.1 39.3 145.9

– thereof France 34.7 36.4 8.2 79.3

– thereof Spain 43.1 5.9 5.4 54.5

Americas 452.8 561.2 185.8 1’199.8

– thereof USA 261.7 435.3 130.7 827.7

Asia-Pacific 293.9 147.2 394.9 836.0

– thereof China 177.7 24.7 266.7 469.1

Total 1’354.4 1’154.8 772.5 3’281.7

2022

Flow Total
millions of CHF Equipment Services Chemtech Sulzer

Europe, the Middle East and Africa 602.0 439.9 166.0 1’207.9

– thereof United Kingdom 36.3 112.9 15.7 164.9

– thereof Germany 87.8 43.1 17.0 147.9

– thereof Saudi Arabia 66.3 23.7 20.3 110.3

– thereof France 32.3 31.3 8.6 72.2

– thereof Russia 31.2 23.2 14.0 68.4

Americas 420.9 525.5 196.4 1’142.8

– thereof USA 223.6 397.1 141.3 761.9

Asia-Pacific 300.1 151.6 377.5 829.2

– thereof China 202.2 28.3 254.6 485.1

Total 1’323.0 1’117.0 739.9 3’179.9

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 97

Segment information by market segment

The following table shows the allocation of sales from external customers by market segment.

Sales by market segment – Flow Equipment

millions of CHF 2023 2022

Water 497.7 489.8

Energy 453.0 453.4

Industry 403.7 379.7

Total Flow Equipment 1’354.4 1’323.0

Sales by market segment – Services

millions of CHF 2023 2022

Pumps Services 629.3 593.7

Other Equipment 525.5 523.4

Total Services 1’154.8 1’117.0

Sales by market segment – Chemtech

millions of CHF 2023 2022

Chemicals 357.8 398.4

Gas and Refining 174.8 130.4

Renewables 115.8 73.9

Services 94.0 108.5

Water 30.1 28.6

Total Chemtech 772.5 739.9

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 98

4 Acquisitions of subsidiaries and transactions with non-

controlling interests
Contingent consideration for former acquisitions

millions of CHF 2023 2022

Balance as of January 1 1.9 5.9

Payment of contingent consideration –1.3 –4.2

Release to other operating income –0.5 –

Currency translation differences –0.1 0.2

Total contingent consideration as of December 31 – 1.9

– thereof non-current – –

– thereof current – 1.9

The group paid a contingent consideration in the amount of CHF 1.3 million and recorded a release to
other operating income amounting to CHF 0.5 million, both related to an acquisition in 2021. The
payment of CHF 1.3 million is presented in the cash flow statement in "Acquisitions of subsidiaries,
net of cash acquired". No businesses were acquired in 2023.

Transactions with non-controlling interests

millions of CHF 2023 2022

Carrying amount of non-controlling interests acquired (disposed) 0.4 –0.8

Consideration received (paid) in cash –19.4 0.4

Non-cash consideration –2.8 –

Consideration payable –0.6 –

Decrease in equity attributable to owners of Sulzer Ltd –22.4 –0.4

In January 2023, the group acquired the remaining 25% ownership in Sulzer Saudi Pump Company
Limited for a total consideration of CHF 22.8 million, of which CHF 19.4 million were paid in cash.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 99

5 Disposals, loss of control and disposal group held for sale

Disposals and 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 (AO Sulzer Pumps, Sulzer Pumps Rus LLC, Sulzer Turbo Services Rus LLC and
Sulzer Chemtech LLC). 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 2023, resulting in the derecognition of the assets and
liabilities previously classified as held for sale. 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 / (expenses), net. A loan with one of the former subsidiaries was measured at
a fair value and recognized as a current financial asset at the time control was lost. The payment
received on the financial asset exceeded the estimated fair value, the income from the impairment
release was recorded in other financial income (see note 12).

Including other minor disposals in 2023, a net gain on disposal (pre-tax) of CHF 7.2 million was
recorded in other operating income / (expenses), net, of which CHF 10.9 million pertains to the
reclassification of accumulated currency translation differences and CHF 0.6 million to the
reclassification of cash flow hedge reserves, net of tax (see note 11).

The aggregated assets and liabilities derecognized in the year 2023 as part of the disposals are
presented in the below table.

millions of CHF 2023 1)

Property, plant and equipment 0.2

Deferred income tax assets 0.6

Inventories and advance payments to suppliers 0.1

Trade accounts receivable 0.4

Cash and cash equivalents 32.6

Non-current liabilities –0.3

Trade accounts payable –0.6

Contract liabilities –13.3

Current lease liabilities –0.2

Current provisions –0.4

Other current and accrued liabilities –10.7

Net assets derecognized 8.5

1) Assets and liabilities classified as assets and liabilities of disposal groups held for sale prior to the disposal are presented as per their initial classification
prior to the classification as held for sale.

Cash flow from divestments

millions of CHF 2023 2022

Cash consideration received 5.8 7.8

Cash disposed of –32.6 –4.6

Cash consideration received for divestments in prior years 0.3 –

Total cash flow from divestitures, net of cash derecognized –26.6 3.2
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 100

Disposals and loss of control 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 was valued at zero. The losses are recorded in other operating expenses (see
note 11).

The assets and liabilities derecognized in the year 2022 as part of the disposals are presented in the
below table.

millions of CHF 2022

Property, plant and equipment 2.5

Deferred income tax assets 0.2

Inventories and advance payments to suppliers 2.0

Trade accounts receivable 9.0

Contract assets 0.6

Other current receivables 1.9

Cash and cash equivalents 4.7

Non-current provisions –0.3

Trade accounts payable –2.6

Contract liabilities –0.7

Other current and accrued liabilities –4.8

Net assets derecognized 12.5

Disposal group held for sale in 2022

In the June 2022, the four legal entities in Russia were classified as 'held for sale,' and as a result,
impairments of CHF 88.9 million were recorded, of which CHF 32.2 million 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 in the income tax expenses line. The write-downs included mainly
impairments of goodwill, other intangible assets, property, plant and equipment, lease assets,
inventory and advance payments from customers. The total net impairment loss recorded on contract
assets and receivables amounted to CHF 37.4 million as of December 31, 2022.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 101

6 Critical 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 measurement
of assets and liabilities within the next financial year, are set out below.

Employee benefit plans

Assets, liabilities and costs for defined benefit pension plans and other post-employment plans 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., market yields of high-quality corporate bonds denominated in the
corresponding currency and asset management studies. In case a defined benefit plan results in a
surplus, the group needs to calculate the asset ceiling and the present value of the economic benefits
available in the form of refunds or reductions in future contributions to the plan. For the calculation of
the economic benefits, the future benefits are discounted with the applicable discount rate, adjusted
for estimated future salary increases. These estimates might significantly impact the balance
sheet. Further details on the defined benefit plans are provided in note 9 and note 34.

Income taxes
The group is subject to 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 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 102

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.

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 are met. The most critical estimate in determining whether
sales should be recorded over time or at a point in time, is the existence of a right to payment. The
group estimates if an enforceable right to payment (including reasonable profit margin) for
performance 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 in determining 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.

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 103

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.

Financial assets
The fair value needs to be measured for the financial assets measured at fair value through P&L. If
there is no observable fair value, valuation approaches relying on unobservable inputs are used.
These inputs inherently require a higher level of judgement. Assumptions and estimates of
unobservable market inputs in the fair valuation of financial assets require significant judgment and
could affect amounts recognized in the statement of income.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 104

7 Financial risk management

7.1 Financial risk factors
The group’s activities expose it to market, credit and liquidity risks. The group’s overall risk
management program focuses on the mitigation of such risks to minimize potential adverse effects on
the group’s financial performance. The group uses derivative financial instruments to hedge certain
risk exposures.

Financial 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 exposure originates mainly
from group companies with the functional currencies CHF, USD, EUR, CNY and INR. 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 hedge 90% to 100% of the contractual FX exposures.

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.

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 2023 and 2022
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 2023, the
currency pair with the most significant exposure and inherent risk was the EUR versus the BRL. If, on
December 31, 2023, the EUR had increased by 12.0% against the BRL with all other variables held
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 105

constant, profit after tax for the year would have been CHF 0.6 million lower due to foreign exchange
losses on EUR-denominated financial assets. A decrease of the rate would have caused a profit of the
same amount.

Hypothetical impact of foreign exchange risk on income statement

millions of CHF 2023

Currency pair EUR/BRL EUR/CNY EUR/INR USD/MXN

Exposure –6.7 6.5 –5.8 3.3

Volatility 12.0% 6.7% 7.2% 11.4%

Effect on profit after tax (rate increase) –0.6 0.3 –0.3 0.3

Effect on profit after tax (rate decrease) 0.6 –0.3 0.3 –0.3

millions of CHF 2022

Currency pair EUR/RUB USD/BRL EUR/BRL USD/BHD

Exposure 5.9 7.8 –6.0 7.8

Volatility 54.5% 18.9% 19.1% 10.0%

Effect on profit after tax (rate increase) 2.3 1.1 –0.8 0.6

Effect on profit after tax (rate decrease) –2.3 –1.1 0.8 –0.6

The following tables show the hypothetical influence on equity for 2023 and 2022 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 cash flow hedges.

Hypothetical impact of foreign exchange risk on equity

millions of CHF 2023

Currency pair GBP/USD USD/MXN EUR/USD CHF/EUR USD/INR EUR/BRL USD/CAD

Exposure 116.1 –57.2 52.5 –60.9 –59.9 15.7 –26.4

Volatility 8.3% 11.4% 7.6% 5.1% 3.2% 12.0% 6.1%

Effect on equity, net of taxes

(rate increase) 7.3 –4.9 3.0 –2.4 –1.5 1.4 –1.2

Effect on equity, net of taxes

(rate decrease) –7.3 4.9 –3.0 2.4 1.5 –1.4 1.2

millions of CHF 2022

Currency pair GBP/USD EUR/USD USD/MXN EUR/CHF USD/INR GBP/EUR USD/CHF

Exposure 156.3 47.6 –42.7 –57.9 –46.9 –28.7 –22.9

Volatility 12.5% 10.1% 10.4% 7.6% 5.2% 7.7% 9.4%

Effect on equity, net of taxes

(rate increase) 14.3 3.5 –3.2 –3.2 –1.8 –1.6 –1.6

Effect on equity, net of taxes

(rate decrease) –14.3 –3.5 3.2 3.2 1.8 1.6 1.6
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 106

(II) Price risk

As of December 31, 2023, and 2022, the group was not exposed to significant price risk related to
investments in equity securities.

(III) Interest rate risk

The group’s interest rate risk arises from interest-bearing assets and liabilities. Financial 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 of 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, EUR,
CNY and INR, 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 2023

Impact on post-tax profit

Sensitivity in
Variable interest-bearing assets (net) Amount basis points rate increase rate decrease

CHF 282.2 100 2.1 –2.1

USD 180.1 100 1.4 –1.4

EUR 172.1 100 1.3 –1.3

CNY 144.1 100 1.1 –1.1

INR 39.2 100 0.3 –0.3

millions of CHF 2022

Impact on post-tax profit

Sensitivity in
Variable interest-bearing assets (net) Amount basis points rate increase rate decrease

CHF 417.2 100 3.0 –3.0

USD 264.4 100 1.9 –1.9

EUR 181.3 100 1.3 –1.3

CNY 174.0 100 1.3 –1.3

INR 29.8 100 0.2 –0.2

On December 31, 2023, 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 2.1 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, 2022, 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 3.0 million
higher, as a result of higher interest income on CHF-denominated assets.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 107

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 trade receivables, and
contract assets. The maximum exposure to credit risk per class of financial asset is disclosed by
carrying amounts in the fair value table. Equity instruments are not exposed to credit risks. 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 committed and uncommitted credit lines.

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. As of December 2023, Sulzer
had access to a syndicated credit facility of CHF 500 million maturing on 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). In 2022 and 2023, the group exercised the options,
extending the term of the credit facility in the amount of CHF 415 million to December 2028.

The following table analyzes the group’s financial liabilities in relevant maturity groupings based on
the remaining period from the reporting to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows translated at year-end closing rates, if not
denominated in CHF. Borrowings include the notional amount and interest payments.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 108

Maturity profile of financial liabilities

2023

Carrying
millions of CHF amount <1 year 1–5 years >5 years Total

Borrowings 1’056.3 279.3 816.8 0.6 1’096.7

Lease liabilities 93.0 24.7 53.4 24.6 102.7

Trade accounts payable 367.7 367.7 – – 367.7

Other current and non-current liabilities (excluding

derivative liabilities) 405.5 404.3 1.2 – 405.5

Derivative liabilities 3.2 3.2 – – 3.2

– thereof outflow 279.3 – – 279.3

– thereof inflow 276.1 – – 276.1

2022

Carrying
millions of CHF amount <1 year 1–5 years >5 years Total

Borrowings 1’355.3 330.0 1’080.6 – 1’410.6

Lease liabilities 89.6 22.8 48.2 25.7 96.7

Trade accounts payable 440.8 440.8 – – 440.8

Other current and non-current liabilities (excluding

derivative liabilities) 432.5 431.2 0.1 1.2 432.5

Derivative liabilities 7.0 7.0 0.0 – 7.0

– thereof outflow – 604.7 9.9 – 614.6

– thereof inflow – 597.7 9.9 – 607.6

7.2 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 109

The following table shows the net debt/EBITDA ratio as of December 31, 2023, and 2022.

Net debt/EBITDA ratio

millions of CHF 2023 2022

Cash and cash equivalents –974.7 –1’196.3

Current financial assets –2.3 –14.0

Non-current borrowings 795.2 1’043.9

Non-current lease liabilities 69.0 67.2

Current borrowings 261.1 311.4

Current lease liabilities 23.9 22.4

Net debt as of December 31 172.3 234.6

Operating income (EBIT) 329.7 111.4

Depreciation 71.4 76.0

Impairments on tangible and intangible assets 1) 0.2 44.5

Amortization 36.6 38.8

EBITDA 437.9 270.7

Net debt 172.3 234.6

EBITDA 437.9 270.7

Net debt/EBITDA ratio 0.39 0.87

1) Impairments on tangible and intangible assets in 2022 include CHF 32.4 million impairments recorded in connection with the Russian business classified as
held for sale, see Note 11.

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, 2023, and 2022, the gearing ratio was as follows:

Gearing ratio (borrowings-to-equity ratio)

millions of CHF 2023 2022

Non-current borrowings 795.2 1’043.9

Non-current lease liabilities 69.0 67.2

Current borrowings 261.1 311.4

Current lease liabilities 23.9 22.4

Total borrowings and lease liabilities 1’149.2 1’444.9

Equity attributable to shareholders of Sulzer Ltd 1’095.4 1’024.3

Gearing ratio (borrowings-to-equity ratio) 1.05 1.41

For the definition of net debt, EBITDA and gearing ratio, please refer to the section “Supplementary
information”.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 110

7.3 Fair value estimation

The following tables present the carrying amounts and fair values of financial assets and liabilities as
of December 31, 2023, and 2022, 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 determined using unobservable inputs are categorized within level 3 of the fair value
hierarchy. Level 3 instruments consist of non-current financial assets at fair value through profit or
loss. Non-current financial assets at fair value through profit or loss consist of unquoted equity or debt
instruments including private equity or fund investments. Fair values are mainly determined based on
external valuations. Unrealized fair value gains are recorded in other financial income / (expenses),
net. For the partial release of a contingent consideration, an income of CHF 0.5 million (2022:
CHF 0.0 million) was recorded in other operating income. For more information, please refer to note 4.

Level 3 financial assets at fair value through profit or loss

millions of CHF 2023 2022

Balance as of January 1 22.6 8.6

Additions 0.6 6.4

Reclassification –3.0 –

Unrealized fair value gain, net 1.9 7.6

Total level 3 financial assets at fair value through profit or loss as of

December 31 22.0 22.6

In 2022, additional assets were measured at fair value and categorized within level 3 due to the
classification as held for sale. The fair value of these assets was determined to be zero and losses in
the amount of CHF 32.4 million were recorded. These assets were part of the Russian business that
was deconsolidated in 2023, see note 5 and note 11.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 111

Fair value table

December 31, 2023
Carrying amount Fair value
Financial
assets at fair
value through
other
Fair value comprehensive Financial
Fair value through income – assets at Other Total
hedging profit or equity amortized financial carrying Total fair
millions of CHF Notes instruments loss instruments cost liabilities amount Level 1 Level 2 Level 3 value
Financial assets measured at
fair value
Other non-current financial
assets (at fair value) 18 22.2 9.5 31.7 9.7 – 22.0 31.7
Derivative assets – current 22,29 13.9 13.9 – 13.9 – 13.9
Current financial assets (at fair
value) 18 1.6 1.6 1.6 – – 1.6
Total financial assets
measured at fair value 13.9 23.8 9.5 – – 47.2 11.3 13.9 22.0 47.2

Financial assets not

measured at fair value
Other non-current financial
assets (at amortized cost) 18 6.7 6.7
Non-current receivables
(excluding non-current
derivative assets) 1.2 1.2
Trade accounts receivable 21 540.8 540.8
Other current receivables
(excluding current derivative
assets and other taxes) 22 22.6 22.6
Current financial assets (at
amortized cost) 18 0.7 0.7
Cash and cash equivalents 23 974.7 974.7
Total financial assets not
measured at fair value – – – 1’546.7 – 1’546.7

Financial liabilities measured

at fair value
Derivative liabilities – current 28,29 3.2 3.2 – 3.2 – 3.2
Total financial liabilities
measured at fair value 3.2 – – – – 3.2 – 3.2 – 3.2

Financial liabilities not

measured at fair value
Outstanding non-current bonds 26 794.3 794.3 786.2 – – 786.2
Other non-current borrowings 26 0.9 0.9
Other non-current liabilities
(excluding non-current
derivative liabilities) 1.2 1.2
Outstanding current bonds 26 250.0 250.0 250.0 – – 250.0
Other current borrowings and
bank loans 26 11.1 11.1
Trade accounts payable 367.7 367.7
Other current liabilities
(excluding current derivative
liabilities and other taxes) 28 404.3 404.3
Total financial liabilities not
measured at fair value – – – – 1’829.5 1’829.5
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 112

Fair value table

December 31, 2022
Carrying amount Fair value
Financial
assets at fair
value through
other
Fair value comprehensive Financial
Fair value through income – assets at Other Total
hedging profit or equity amortized financial carrying Total fair
millions of CHF Notes instruments loss instruments cost liabilities amount Level 1 Level 2 Level 3 value
Financial assets measured at
fair value
Other non-current financial
assets (at fair value) 18 22.8 – 22.8 0.2 – 22.6 22.8
Derivative assets – non-current 29 0.1 0.1 – 0.1 – 0.1
Derivative assets – current 22,29 13.2 13.2 – 13.2 – 13.2
Current financial assets (at fair
value) 18 1.5 8.8 10.3 10.3 – – 10.3
Total financial assets
measured at fair value 13.2 24.4 8.8 – – 46.4 10.5 13.2 22.6 46.4

Financial assets not

measured at fair value
Other non-current financial
assets (at amortized cost) 18 5.6 5.6
Non-current receivables
(excluding non-current
derivative assets) 0.9 0.9
Trade accounts receivable 21 585.5 585.5
Other current receivables
(excluding current derivative
assets and other taxes) 22 23.4 23.4
Current financial assets (at
amortized cost) 18 3.6 3.6
Cash and cash equivalents 23 1’196.3 1’196.3
Total financial assets not
measured at fair value – – – 1’815.5 – 1’815.5

Financial liabilities measured

at fair value
Derivative liabilities – non-
current 29 0.0 0.0 – 0.0 – 0.0
Derivative liabilities – current 28,29 7.0 7.0 – 7.0 – 7.0
Contingent considerations 4 1.9 1.9 – – 1.9 1.9
Total financial liabilities
measured at fair value 7.0 1.9 – – – 8.9 – 7.0 1.9 8.9

Financial liabilities not

measured at fair value
Outstanding non-current bonds 26 1’043.9 1’043.9 1’003.7 – – 1’003.7
Other non-current liabilities
(excluding non-current
derivative liabilities) 1.3 1.3
Outstanding current bonds 26 289.9 289.9 288.5 – – 288.5
Other current borrowings and
bank loans 26 21.5 21.5
Trade accounts payable 440.8 440.8
Other current liabilities
(excluding current derivative
liabilities, other taxes and
contingent considerations) 28 396.3 396.3
Total financial liabilities not
measured at fair value – – – – 2’193.6 2’193.6
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 113

8 Personnel expenses

millions of CHF 2023 2022

Salaries and wages 822.6 793.2

Defined contribution plan expenses 29.9 29.6

Defined benefit plan expenses 14.4 15.7

Cost of share-based payment transactions 12.6 15.4

Social benefit costs 119.5 112.3

Other personnel costs 31.7 36.2

Total personnel expenses 1’030.8 1’002.4

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 114

9 Employee benefit plans

The present value of the defined benefit obligations and costs of the defined benefits are calculated
using the projected unit credit method. For active members the calculation considers future salary
increases, future pension increases as well as the probability of departures, and for retirees, current
and future pension benefits considering future pension increases.

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

2023

Funded
Funded plans Funded
plans United Funded plans Unfunded
millions of CHF Switzerland Kingdom plans USA others plans Total

Present value of funded defined benefit

obligation –731.2 –346.1 –48.6 –83.1 – –1’209.0

Fair value of plan assets (funded plans) 899.9 268.5 38.6 56.2 – 1’263.2

Overfunding / (underfunding) 168.8 –77.6 –10.0 –27.0 – 54.2

Present value of unfunded defined benefit

obligation – – – – –10.9 –10.9

Adjustment to asset ceiling – – – – – –

Net asset / (liability) recognized in the

balance sheet 168.8 –77.6 –10.0 –27.0 –10.9 43.2

– thereof defined benefit obligations – –77.6 –10.0 –28.7 –10.9 –127.3

– thereof defined benefit assets 168.8 – – 1.7 – 170.5

2022

Funded
Funded plans Funded
plans United Funded plans Unfunded
millions of CHF Switzerland Kingdom plans USA others plans Total

Present value of funded defined benefit

obligation –716.8 –355.3 –53.7 –78.3 – –1’204.0

Fair value of plan assets (funded plans) 914.7 277.2 43.5 57.1 – 1’292.5

Overfunding / (underfunding) 197.9 –78.0 –10.2 –21.2 – 88.5

Present value of unfunded defined benefit

obligation – – – – –11.5 –11.5

Adjustment to asset ceiling –197.9 – – –0.0 – –197.9

Net asset / (liability) recognized in the

balance sheet – –78.0 –10.2 –21.2 –11.5 –121.0

– thereof defined benefit obligations – –78.0 –10.2 –22.5 –11.5 –122.2

– thereof defined benefit assets – – – 1.3 – 1.3

The group operates major funded defined benefit pension plans in Switzerland, the UK and the USA.
The main unfunded defined benefit plan is a German pension benefit plan. 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 115

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 discount
rate in 2023 decreased compared to 2022 (from 2.2% to 1.5% for active employees and from 2.3% to
1.5% for pensioners). In 2023, a gain from the change in effect of asset ceiling amounting to
CHF 202.3 million (2022: loss of CHF 197.9 million) was recorded in other comprehensive income
(OCI) related to the Swiss pension plans. The net pension asset increased from CHF 0.0 million to
CHF 168.8 million. The total expenses recognized in the income statement in 2023 amounted to
CHF 11.3 million (2022: CHF 13.7 million) and includes past service costs amounting to
CHF 1.3 million. The past service costs were recorded for a plan amendment to one of the pension
plans, enabling employees to extend the retirement saving process.

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 nine trustees forming the Board. The
plan is a multiemployer scheme with Sulzer (UK) Holding being the principal sponsor. The discount
rate decreased in 2023 by 0.2 percentage points to 4.7% (2022: 4.9%). The net pension liability
decreased from CHF 78.0 million in 2022 to CHF 77.6 million in 2023, with a loss recognized in OCI
amounting to CHF 6.6 million (2022: gain of CHF 15.3 million). In 2023, the total expenses recognized
in the income statement amounted to CHF 3.8 million (2022: CHF 2.8 million).

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 are closed to new entrants. The discount rate
decreased in 2023 to 4.7% (2022: 4.8%). The net pension liability decreased from CHF 10.2 million in
2022 to CHF 10.0 million in 2023 with a loss recognized in OCI amounting to CHF 0.4 million (2022:
gain of CHF 8.9 million). The total expenses recognized in 2023 amounted to CHF 1.1 million (2022:
CHF 1.1 million).

In Germany, the group operates a range of different defined benefit pension plans, with one unfunded
plan and two funded plans. 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 116

Employee benefit plans

millions of CHF 2023 2022

Reconciliation of effect of asset ceiling

Adjustment to asset ceiling at January 1 –197.9 –

Interest (expenses) / income on effect of asset ceiling –4.4 –

Change in effect of asset ceiling excl. interest (expenses) / income 202.3 –197.9

Currency translation differences –0.0 –0.0

Adjustment to asset ceiling at December 31 – –197.9

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

Net asset / (liability) recognized at January 1 –121.0 –45.7

Defined benefit income / (expenses) recognized in the income statement –20.1 –18.7

Defined benefit income / (expenses) recognized in OCI 160.3 –90.8

Employer contributions 24.1 24.8

Divestitures of subsidiaries – 0.2

Reclassification 1)
–6.0 –

Currency translation differences 5.9 9.2

Net asset / (liability) recognized at December 31 43.2 –121.0

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

statement

Current service costs (employer) –12.1 –16.4

Past service costs –1.5 0.9

Gains and (losses) on settlement 0.1 1.3

Interest expenses –38.5 –17.3

Interest income on plan assets 37.2 14.5

Interest expenses / (income) on effect of asset ceiling –4.4 –

Other administrative costs –0.9 –1.5

Income / (expenses) recognized in the income statement –20.1 –18.7

– thereof charged to personnel expenses –14.4 –15.7

– thereof charged to interest income / expenses, net –5.7 –2.9

Components of defined benefit gains / (losses) in OCI

Actuarial gains / (losses) on defined benefit obligation –64.6 366.3

Returns on plan assets excl. interest income 22.4 –259.4

Changes in effect of asset ceiling excl. interest expenses / (income) 202.3 –197.9

Returns on reimbursement right excl. interest income / (expenses) 0.2 0.2

Defined benefit gains / (losses) recognized in OCI 2) 160.3 –90.8

1) Defined benefit plans reclassified from provisions to defined benefit obligation, see note 27.
2) The tax effect on defined benefit cost recognized in OCI amounted to CHF -31.5 million (2022: CHF 15.4 million).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 117

Employee benefit plans

millions of CHF 2023 2022

Reconciliation of defined benefit obligation (funded and unfunded plans)

Defined benefit obligation as of January 1 –1’215.6 –1’692.3

Interest expenses –38.5 –17.3

Current service costs (employer) –12.1 –16.4

Past service costs –1.5 0.9

Contributions by plan participants –8.1 –7.5

Benefits paid / (deposited) 105.1 104.4

Gains and (losses) on settlement 0.1 1.3

Other administrative costs –0.9 –1.5

Actuarial gains / (losses) –64.6 366.3

Divestitures of subsidiaries – 0.2

Reclassification 1) –6.0 –

Currency translation differences 22.1 46.4

Defined benefit obligation as of December 31 –1’220.0 –1’215.6

Reconciliation of the fair value of plan assets

Fair value of plan assets as of January 1 1’292.5 1’646.6

Interest income on plan assets 37.2 14.5

Employer contributions 24.1 24.8

Contributions by plan participants 8.1 7.5

Benefits (paid) / deposited –104.9 –104.4

Returns on plan assets excl. interest income 22.4 –259.4

Currency translation differences –16.3 –37.1

Fair value of plan assets as of December 31 1’263.2 1’292.5

Total plan assets at fair value – quoted market price

Cash and cash equivalents 52.3 44.5

Equity instruments 242.4 237.8

Debt instruments 272.5 292.7

Real estate funds 29.4 33.0

Investment funds 5.0 4.9

Others 72.5 80.6

Total assets at fair value – quoted market price as of December 31 674.1 693.5

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

Properties occupied by or used by third parties (real estate) 271.3 270.0

Others 317.7 329.1

Total assets at fair value – non-quoted market price as of December 31 589.0 599.0

Best estimate of contributions for upcoming financial year

Contributions by the employer 25.3 23.9

1) Defined benefit plans reclassified from provisions to defined benefit obligation, see note 27.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 118

Employee benefit plans

millions of CHF 2023 2022

Components of defined benefit obligation, split

Defined benefit obligation for active members –238.5 –211.4

Defined benefit obligation for pensioners –777.4 –801.4

Defined benefit obligation for deferred members –204.1 –202.7

Total defined benefit obligation as of December 31 –1’220.0 –1’215.6

Components of actuarial gains / (losses) on obligations

Actuarial gains / (losses) arising from changes in financial assumptions –55.3 384.1

Actuarial gains / (losses) arising from changes in demographic assumptions 12.8 4.0

Actuarial gains / (losses) arising from experience adjustments –22.1 –21.8

Total actuarial gains / (losses) on defined benefit obligation –64.6 366.3

Maturity profile of defined benefit obligation

Weighted average duration of defined benefit obligation in years 10.8 10.4

The defined benefit obligations for the Swiss and UK pension plans represent 88% (2022: 88%) of the
group. The following significant actuarial assumptions were used for these two countries:

Principal actuarial assumptions as of December 31

2023 2022

Funded plans Funded plans Funded plans Funded plans

Switzerland United Kingdom Switzerland United Kingdom

Discount rate for active employees 1.5% n/a 2.2% n/a

Discount rate for pensioners 1.5% 4.7% 2.3% 4.9%

Future salary increases 2.3% n/a 1.5% n/a

Future pension increases 0.0% 2.7% 0.0% 2.7%

Life expectancy at retirement age (male / female) in

years 22/23 21/24 22/24 22/24
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 119

Sensitivity analysis of defined benefit obligations

millions of CHF 2023 2022 1)

Discount rate (decrease 0.25 percentage points) –32.1 –30.8

Discount rate (increase 0.25 percentage points) 30.4 29.3

Future salary growth (decrease 0.25 percentage points) 2.1 1.9

Future salary growth (increase 0.25 percentage points) –2.0 –1.9

Life expectancy (decrease 1 year) 66.6 63.7

Life expectancy (increase 1 year) –64.9 –61.7

1) The sensitivity impacts of the comparison period 2022 were restated to correct a prior year misstatement. The adjustments are outlined in the table below.

Negative amounts in the above table indicate an increase in defined benefit obligations, positive
amounts indicate a decrease in defined benefit obligations. The sensitivity analysis is based on
reasonably possible changes of the significant actuarial assumptions as of year end. The sensitivities
provided are based on the change in one assumption while holding the other assumptions
unchanged, interdependencies were not considered.

Restatement of the sensitivity analysis on defined benefit obligations

millions of CHF 2022 reported Adjustment 2022 restated

Discount rate (decrease 0.25 percentage points) –33.7 2.9 –30.8

Discount rate (increase 0.25 percentage points) 26.5 2.8 29.3

Future salary growth (decrease 0.25 percentage

points) 0.6 1.3 1.9

Future salary growth (increase 0.25 percentage points) –6.5 4.6 –1.9

Life expectancy (decrease 1 year) 15.2 48.4 63.7

Life expectancy (increase 1 year) –15.1 –46.5 –61.7

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 120

10 Research and development expenses

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

millions of CHF 2023 2022

Flow Equipment 38.6 36.7

Services 1.6 1.8

Chemtech 30.7 27.8

Total 70.8 66.4

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 121

11 Other operating income and expenses

millions of CHF 2023 2022

Income from release of contingent consideration 0.5 –

Gain from sale of property, plant and equipment 0.6 5.5

Gain from deconsolidation of subsidiaries 8.3 –

Other operating income 8.3 19.2

Total other operating income 17.7 24.7

Restructuring expenses –3.0 –0.1

Impairments on tangible and intangible assets –0.2 –44.5

Cost for mergers and acquisitions –1.8 –1.5

Loss from sale of property, plant and equipment –0.1 –0.0

Loss from deconsolidation of subsidiaries –1.1 –6.7

Operating currency exchange losses, net –2.3 –13.9

Total other operating expenses –8.4 –66.7

Total other operating income / (expenses), net 9.2 –42.1

Other operating income includes recharges to third parties not qualifying as sales to customers,
government grants and incentives, and sundry other tax refunds. In 2023, other operating income
included income from charges to the discontinued operation Applicator Systems division (later
renamed medmix) for corporate support functions and centrally procured indirect spend utilized by
medmix of CHF 1.6 million (2022: CHF 9.8 million).

In 2023, the total gain from deconsolidation primarily included a gain of CHF 8.0 million from the
deconsolidation of four Russian legal entities. The total gain and loss from deconsolidation includes a
net gain from the reclassification of currency translation adjustments of CHF 10.9 million and a gain of
CHF 0.6 million from the reclassification of cash flow hedge reserves (see note 5).

In 2022, the loss from deconsolidation of subsidiaries includes a loss of CHF 6.2 million resulting from
the deconsolidation of two subsidiaries in Poland and a loss of CHF 0.6 million from the disposal of a
subsidiary in Brazil (see note 5).

In 2023, the group recognized net impairment losses on tangible and intangible assets amounting to
CHF 0.2 million (2022: impairment losses of CHF 44.5 million), consisting of impairment losses of CHF
1.0 million, partially offset with the reversal of impairment losses amounting to CHF 0.8 million. In
2022, impairment losses amounting to CHF 12.1 million were recorded based on performed
impairment tests on production machines and facilities as well as lease assets. Impairments of
CHF 32.4 million on goodwill, other intangible assets, property, plant and equipment and lease assets
were recorded in connection with the classification of the business in Russia as held for sale and the
write-down to fair value less costs to sell (see note 5).

In 2023, the group recognized restructuring costs of CHF 5.2 million (2022: CHF 1.8 million), partially
offset with the release of restructuring provisions of CHF 2.2 million (2022: CHF 1.7 million).
Restructuring costs mainly relate to the reorganization in the Flow Equipment division.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 122

12 Financial income and expenses

millions of CHF 2023 2022

Interest and securities income 18.3 9.3

Interest income on employee benefit plans 0.1 0.4

Total interest and securities income 18.3 9.7

Interest expenses on borrowings and lease liabilities –24.5 –24.1

Interest expenses on employee benefit plans –5.7 –3.2

Total interest expenses –30.3 –27.3

Total interest income / (expenses), net –11.9 –17.6

Fair value changes 5.1 24.0

Other financial income (expenses) 2.5 –1.5

Currency exchange gains / (losses), net –17.9 –6.6

Total other financial income / (expenses), net –10.3 16.0

Total financial income / (expenses), net –22.2 –1.6

- thereof fair value changes on financial assets at fair value through profit or
loss 5.1 24.0

- thereof interest income on financial assets at amortized costs 18.3 9.3

- thereof other financial expenses 2.5 –1.5

- thereof currency exchange gains / (losses), net –17.9 –6.6

- thereof interest expenses on borrowings –22.1 –22.1

- thereof interest expenses on lease liabilities –2.5 –2.0

- thereof interest expenses on employee benefit plans, net –5.7 –2.9

In 2023, the total financial expenses, net amounted to CHF 22.2 million, compared with CHF 1.6
million in 2022.

The total interest and securities income amounted to CHF 18.3 million (2022: CHF 9.3 million). The
increase compared to the prior year is mainly due to higher variable interest rates on deposits.

The line “Fair value changesˮ includes gains from fair value changes of investments in financial
instruments classified at fair value through profit or loss amounting to CHF 2.7 million (2022: CHF 8.7
million), with the remainder relating to fair value changes of derivative financial instruments used as
hedging instruments to hedge foreign exchange risks.

Currency exchange gains/losses are mainly related to foreign currency differences of non-operating
assets and liabilities recorded at the prevailing rate at the time of acquisition (or preceding year-end
closing rate) as against the current balance sheet rate. The net currency exchange loss in
2022 includes a positive foreign exchange effect of CHF 21.0 million arising on unhedged
intercompany loans to Russian entities prior to their classification as held for sale.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 123

13 Income taxes

millions of CHF 2023 2022

Current income tax expenses –79.1 –76.3

Deferred income tax (expenses) income 5.4 –2.7

Total income tax expenses –73.8 –79.0

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 may 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 2023 2022

Income before income tax expenses from continuing operations 304.3 107.0

Weighted average tax rate 23.7% 23.7%

Income taxes at weighted average tax rate –72.1 –25.4

Income taxed at different tax rates –12.3 3.4

Effect of tax loss carryforwards and allowances for deferred income tax
assets 0.9 –2.7

Expenses not deductible for tax purposes –11.4 –5.2

Effect of changes in tax rates and legislation 0.0 –2.2

Prior year items and others 21.2 –47.0

Total income tax expenses –73.8 –79.0

Effective income tax rate 24.2% 73.8%

The effective income tax rate for 2023 was 24.2% (2022: 73.8%). The effective income tax rate was
impacted by income taxed at different tax rates in the amount of CHF 12.3 million due to participation
exemptions on dividend income and withholding taxes on dividends, trademark royalties and
interests.

Expenses not deductible for tax purposes in the amount of CHF 11.4 million mainly relate to
disallowances of group charges for services, financing and other expenses in India, Mexico, the UK
and the USA.

Prior year items and others include current tax refunds and receivables from R&D tax credits in Brazil
and the USA. Additionally, a deferred income tax asset of CHF 4.0 million was recognized on a step-
up in relation to the Swiss Corporate Tax Reform (TRAF) enacted in prior periods. The deconsolidation
of the Russian business positively impacted the reconciliation by CHF 2.3 million.

The effective income tax rate for 2022 was 73.8%. The effective income tax rate was significantly
impacted by recognized impairments on the Russian business upon the classification of the four
Russian entities as held for sale and the wind down of the Polish business. The total tax impact
amounted to CHF 37.4 million, with CHF 32.3 million presented in prior year items and others.
Furthermore, the effect of tax loss carryforwards and allowances for deferred income tax assets in the
amount of –2.7 million was impacted by a reversal of Russian deferred tax assets in the amount of
CHF 5.1 million. The effect of changes in tax rates and legislation mainly related to the announced tax
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 124

rate change in France and UK causing the revaluation of a deferred tax position in the amount of
CHF –2.2 million. Expenses not deductible for tax purposes in the amount of CHF –5.2 million mainly
related to disallowances of group charges and interest.

Income tax liabilities

millions of CHF 2023 2022

Balance as of January 1 32.8 42.4

Additions 78.9 76.1

Released as no longer required –13.1 –16.6

Utilized –48.8 –67.4

Currency translation differences –2.9 –1.8

Total income tax liabilities as of December 31 46.8 32.8

– thereof non-current 2.7 2.7

– thereof current 44.1 30.0

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

2023 2022

millions of CHF Assets Liabilities Net Assets Liabilities Net

Intangible assets 15.0 –52.4 –37.4 11.8 –57.9 –46.1

Property, plant and equipment 5.2 –13.6 –8.4 3.6 –17.4 –13.7

Other financial assets 16.6 –1.1 15.6 21.3 –1.6 19.7

Inventories 27.4 –2.2 25.1 32.3 –2.1 30.3

Other assets 23.7 –55.9 –32.1 18.9 –30.7 –11.7

Defined benefit obligations 21.8 –0.1 21.7 20.7 – 20.7

Non-current provisions 9.6 –0.1 9.5 9.1 –1.0 8.0

Current provisions 23.9 –1.5 22.4 29.2 –1.0 28.2

Other liabilities 44.4 –23.0 21.3 53.6 –16.8 36.9

Tax loss carryforwards 23.1 – 23.1 23.5 – 23.5

Elimination of intercompany profits 1.0 – 1.0 1.1 – 1.1

Tax assets / liabilities 211.7 –149.9 61.8 225.2 –128.3 96.9

Offset of assets and liabilities –66.8 66.8 – –75.3 75.3 –

Net recorded deferred income tax assets and

liabilities 144.9 –83.2 61.8 149.9 –53.0 96.9

Cumulative deferred income taxes recorded in equity as of December 31, 2023, amounted to CHF –
12.5 million (2022: CHF 21.8 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 125

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

2023

Recognized in
other Currency Balance as
Balance as Recognized in comprehensive Divestment of translation of December
millions of CHF of January 1 profit or loss income subsidiaries differences 31

Intangible assets –46.1 5.7 – – 3.0 –37.4

Property, plant and equipment –13.7 4.5 – – 0.8 –8.4

Other financial assets 19.7 –2.5 – – –1.7 15.6

Inventories 30.3 –3.9 – – –1.2 25.1

Other assets –11.7 17.0 –36.7 – –0.7 –32.1

Defined benefit obligations 20.7 –0.5 2.3 – –0.8 21.7

Non-current provisions 8.0 2.2 – – –0.7 9.5

Current provisions 28.2 –4.5 – – –1.3 22.4

Other liabilities 36.9 –13.8 – – –1.7 21.3

Tax loss carryforwards 23.5 1.2 – –0.6 –1.1 23.1

Elimination of intercompany profits 1.1 –0.1 – – – 1.0

Total 96.9 5.4 –34.4 –0.6 –5.5 61.8

2022

Recognized in
other Currency Balance as
Balance as of Recognized in comprehensive translation of December
millions of CHF January 1 profit or loss income differences 31

Intangible assets –54.6 4.6 – 3.9 –46.1

Property, plant and equipment –13.6 –0.7 – 0.6 –13.7

Other financial assets 16.6 3.1 – 0.0 19.7

Inventories 28.2 1.5 – 0.6 30.3

Other assets –32.2 15.4 5.4 –0.3 –11.7

Defined benefit obligations 33.0 –25.2 15.4 –2.5 20.7

Non-current provisions 13.4 –5.2 – –0.2 8.0

Current provisions 26.5 2.2 – –0.5 28.2

Other liabilities 33.4 4.7 – –1.3 36.9

Tax loss carryforwards 28.9 –3.8 – –1.6 23.5

Elimination of intercompany profits 0.5 0.6 – – 1.1

Total 80.1 –2.7 20.7 –1.2 96.9

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 126

Tax loss carryforwards (TLCF)

2023

Potential tax Valuation Carrying Unrecognized

millions of CHF Amount assets allowance amount TLCF

Expiring in the next 3 years 2.5 0.1 –0.0 0.0 –

Expiring in 4–7 years 3.9 1.0 –0.0 1.0 0.4

Available without limitation 207.6 37.4 –15.4 22.0 90.5

Total tax loss carryforwards as of December 31 213.9 38.5 –15.4 23.1 90.9

2022

Potential tax Valuation Carrying Unrecognized

millions of CHF Amount assets allowance amount TLCF

Expiring in the next 3 years 0.1 0.0 – 0.0 –

Expiring in 4–7 years 6.0 1.1 –0.0 1.1 0.4

Available without limitation 219.4 39.4 –17.0 22.4 97.2

Total tax loss carryforwards as of December 31 225.5 40.5 –17.0 23.5 97.6

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 90.9 million (2022: CHF 97.6
million) or on some step-ups in relation with the Swiss corporate tax reform (TRAF), which entered into
effect on January 1, 2020.

Global Minimum top-up tax

The group operates in Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, Norway, Romania, South Korea, Sweden, Switzerland, and the United Kingdom, which
has enacted new national legislation to implement the global minimum top-up tax. The group might be
subject to the top-up tax in relation to its legal entities in Bahrain, Ireland, Qatar, and United Arab
Emirates. As the new top-up tax legislation enacted in Switzerland implements only Qualified
Domestic Top-up Tax (“QDMTT”) from January 1, 2024, the implementation of the QDMTTs in each
individual country needs to be analyzed.

Furthermore, the Group has applied the temporary mandatory relief from deferred tax accounting for
the impacts of the top-up tax. The Group recognizes the top-up tax as a current tax when it incurs.

If the QDMTTs had applied in 2023, then the profits relating to the subsidiaries in Bahrain, Ireland,
Qatar, and the United Arab Emirates for the year ended December 31, 2023, would not be subject to
material top-up tax. The effective tax rate would not significantly increase.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 127

14 Goodwill and other intangible assets

2023
Trademarks Research and Computer Customer
millions of CHF Goodwill and licenses development software relationship Total
Acquisition cost
Balance as of January 1 1’016.9 92.5 16.1 50.7 399.5 1’575.6
Additions – – 0.0 5.1 0.9 6.1
Disposals – – – –0.7 –3.3 –4.0
Reclassifications – – 2.6 0.0 0.5 3.1
Currency translation differences –38.9 –4.6 –0.1 –1.7 –19.2 –64.5
Balance as of December 31 977.9 88.0 18.6 53.4 378.5 1’516.3

Accumulated amortization and impairment losses

Balance as of January 1 340.0 45.8 9.3 30.7 238.6 664.5
Additions 1) – 7.9 1.3 2.8 24.6 36.6
Disposals – – – –0.7 –3.3 –4.0
Currency translation differences – –2.4 –0.0 –1.2 –11.9 –15.5
Balance as of December 31 340.0 51.3 10.6 31.5 248.1 681.5

Net book value

As of January 1 676.9 46.7 6.7 20.0 160.8 911.2
As of December 31 637.9 36.6 8.0 21.8 130.4 834.8

1) In the statement of income, the amortization expense for trademark and licenses is recognized in “Research and development expense” and in “Selling and distribution expense”, the
amortization expense for Customer relationship is primarily recognized in “Selling and distribution expense”.

2022
Trademarks Research and Computer Customer
millions of CHF Goodwill and licenses development software relationship Total
Acquisition cost
Balance as of January 1 1’067.3 93.8 9.8 47.2 449.5 1’667.6
Divestitures of subsidiaries – – – –0.3 –1.4 –1.7
Classification as held for sale 2) –8.6 – – –0.8 –12.6 –22.0
Additions – – 2.2 6.4 0.1 8.7
Disposals – – – –4.1 –8.6 –12.6
Reclassifications – – 4.1 1.8 0.2 6.0
Currency translation differences –41.8 –1.3 –0.0 0.5 –27.7 –70.3
Balance as of December 31 1’016.9 92.5 16.1 50.7 399.5 1’575.6

Accumulated amortization and impairment losses

Balance as of January 1 340.0 38.1 8.2 33.3 244.2 663.8
Divestitures of subsidiaries – – – –0.3 –1.4 –1.7
Classification as held for sale 2) – – – –0.3 –6.4 –6.7
Additions – 8.4 1.1 2.3 27.0 38.8
Disposals – – – –4.1 –8.6 –12.6
Currency translation differences – –0.7 –0.0 –0.2 –16.2 –17.1
Balance as of December 31 340.0 45.8 9.3 30.7 238.6 664.5

Net book value

As of January 1 727.3 55.7 1.6 14.0 205.3 1’003.8
As of December 31 676.9 46.7 6.7 20.0 160.8 911.2

1) In 2022, Goodwill in the amount of CHF 8.6 million and other intangible assets with a net book value of 6.7 million were allocated to the Russian disposal group and fully impaired. The
impairments of CHF 15.3 million were recorded in other operating expenses (see note 11).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 128

Goodwill impairment test

2023

Growth rate Pretax discount

millions of CHF Goodwill Headroom residual value rate

Flow Equipment 362.3 628.5 2.0% 9.9%

Services 193.8 1’620.3 2.0% 10.8%

Chemtech 81.8 830.0 2.0% 10.9%

Total as of December 31 637.9 3’078.8

2022

Growth rate Pretax discount

millions of CHF Goodwill Headroom residual value rate

Flow Equipment 384.9 605.7 2.0% 8.9%

Services 205.0 1’275.5 2.0% 10.2%

Chemtech 87.0 717.6 2.0% 10.5%

Total as of December 31 676.9 2’598.8

Goodwill is allocated to the smallest cash-generating unit (CGU) at which goodwill is monitored for
internal management purposes (i.e., division). The recoverable amount has been determined based on
a value-in-use calculation. The three-year strategic plan approved by the Board of Directors in the first
quarter of the year forms the basis for the projected cash flows, with two additional periods based on
a management calculation. The budget and the three-year strategic plan were approved by the Board
of Directors in February 2023. Cash flows beyond the planning period are extrapolated using a
terminal value including a growth rate as stated above.

As of December 31, 2023, there is no indication of goodwill impairment. Updating the impairment test
would not have resulted in any 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).

Sensitivity analyses were performed with regards to key assumptions, that would not change the
conclusions of the impairment test. An increase of the discount rate by 5.0 percentage points or a
decrease of the terminal growth rate by 5.0 percentage points would still lead to a recoverable
amount exceeding the carrying amount for all CGU's.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 129

15 Property, plant and equipment

2023
Machinery and
Land and technical Other non- Assets under
millions of CHF buildings equipment current assets construction Total
Acquisition cost
Balance as of January 1 326.8 477.5 172.8 36.1 1’013.2
Divestitures of subsidiaries –0.3 0.0 –0.1 –0.0 –0.4
Additions 3.0 13.8 7.4 35.3 59.5
Disposals –1.6 –14.4 –9.4 – –25.4
Reclassifications 9.6 13.8 6.0 –29.1 0.3
Currency translation differences –22.9 –31.4 –11.1 –2.3 –67.7
Balance as of December 31 314.6 459.4 165.6 39.9 979.5

Accumulated depreciation
Balance as of January 1 152.9 350.1 147.1 2.6 652.6
Divestitures of subsidiaries –0.2 –0.1 –0.1 - –0.3
Additions 9.7 24.5 9.6 - 43.9
Disposals –1.0 –11.3 –9.0 - –21.3
Impairments (Reversal) - –0.1 –0.1 - –0.2
Currency translation differences –11.1 –24.4 –7.8 –0.1 –43.4
Balance as of December 31 150.4 338.7 139.7 2.4 631.3

Net book value

As of January 1 173.9 127.4 25.7 33.5 360.5
As of December 31 164.2 120.6 25.9 37.5 348.2

2022
Machinery and
Land and technical Other non- Assets under
millions of CHF buildings equipment current assets construction Total
Acquisition cost
Balance as of January 1 332.8 503.8 179.4 43.6 1’059.6
Divestitures of subsidiaries –0.6 –5.4 –0.6 –0.1 –6.7
Classification as held for sale 1) –9.1 –15.8 –4.1 –0.7 –29.7
Additions 4.6 14.8 7.8 34.0 61.2
Disposals –3.1 –24.5 –6.7 – –34.3
Reclassifications 10.5 20.5 2.5 –39.5 –6.0
Currency translation differences –8.4 –15.9 –5.5 –1.2 –31.0
Balance as of December 31 326.8 477.5 172.8 36.1 1’013.2

Accumulated depreciation
Balance as of January 1 150.7 363.9 151.1 - 665.7
Divestitures of subsidiaries –0.2 –3.6 –0.5 - –4.3
Classification as held for sale 1) –1.5 –9.4 –2.7 - –13.5
Additions 10.1 25.9 11.0 - 47.0
Disposals –1.6 –22.7 –6.3 - –30.6
Impairments - 7.8 0.0 2.7 10.5
Currency translation differences –4.6 –11.9 –5.5 –0.1 –22.1
Balance as of December 31 152.9 350.1 147.1 2.6 652.6

Net book value

As of January 1 182.2 139.8 28.4 43.6 394.0
As of December 31 173.9 127.4 25.7 33.5 360.5

1) In 2022, property, plant and equipment with a net book value of CHF 16.2 million was included in the Russian disposal group classified as held for sale and fully impaired; reference is
made to note 5. The impairments of CHF 16.2 million are recorded in other operating expenses (see note 11).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 130

The group performed impairment tests on production machines and facilities, resulting in impairments
amounting to CHF 0.6 million and reversal of impairments amounting to CHF 0.8 million as of
December 31, 2023 (December 31, 2022: impairment of CHF 10.5 million), all of which were charged
or credited to operating expenses.

In 2023, the group sold property, plant and equipment with a book value of CHF 4.1 million for
CHF 4.6 million resulting in a net gain of CHF 0.5 million (2022: property, plant and equipment with a
book value of CHF 3.6 million was sold for CHF 9.0 million, resulting in a net gain of CHF 5.5 million).

The contractual commitments to acquire property, plant and equipment as of December 31, 2023,
amounted to CHF 5.1 million (December 31, 2022: CHF 5.0 million).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 131

16 Leases
Lease assets

2023

Machinery and
Land and technical Other non-current
millions of CHF buildings, leased equipment, leased assets, leased Total

Balance as of January 1 73.0 4.5 12.6 90.1

Additions 24.4 3.8 9.3 37.5

Depreciation –19.1 –2.1 –6.3 –27.5

Impairments –0.4 – – –0.4

Remeasurements and contract modifications 0.5 –0.1 –1.3 –0.8

Currency translation differences –4.3 –0.4 –0.9 –5.6

Total lease assets as of December 31 74.1 5.7 13.4 93.2

2022

Machinery and
Land and technical Other non-current
millions of CHF buildings, leased equipment, leased assets, leased Total

Balance as of January 1 71.7 5.7 11.7 89.2

Classification as held for sale 1)

–0.7 – –0.0 –0.7

Additions 33.6 1.4 8.4 43.3

Disposals –5.8 –0.1 –0.6 –6.5

Depreciation –20.2 –2.5 –6.3 –29.0

Impairments –1.6 – –0.0 –1.7

Remeasurements and contract modifications –0.5 – 0.1 –0.4

Currency translation differences –3.4 –0.0 –0.7 –4.1

Total lease assets as of December 31 73.0 4.5 12.6 90.1

1) In 2022, lease assets with a book value of CHF 0.7 million were included in the Russian disposal group classified as held for sale and fully impaired, reference is made to Note 5. The
impairments of CHF 0.7m are recorded in other operating expenses (see note 11).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 132

Lease liabilities

2023 2022

Balance as of January 1 89.6 88.8

Classification as held for sale – –0.5

Additions 37.5 43.3

Interest expenses 2.5 2.0

Cash flow for repayments – principal portion –28.3 –32.1

Cash flow for repayments – interest portion –2.5 –2.0

Remeasurements and contract modifications –0.4 –6.0

Currency translation differences –5.4 –4.0

Total lease liabilities as of December 31 93.0 89.6

- thereof non-current lease liabilities 69.0 67.2

- thereof current lease liabilities 23.9 22.4

The group leases land and buildings used for production, storage or office space. The terms are
typically fixed for a period of three to five years. Various lease contracts for buildings contain
extension options, providing the group with operational flexibility and planning security. Extension
options are included in the measurement of the lease liability and the lease assets only if Management
assesses these extension options as reasonably certain to be exercised.

Other leasing disclosures

millions of CHF 2023 2022

Recognized in the income statement

Expenses relating to short-term leases –15.8 –13.8

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

low-value assets –1.5 –1.0

Expenses relating to variable lease payments not included in the lease liability –2.7 –2.7

Income from subleasing right-of-use assets 0.3 0.5

Interest expenses on lease liabilities –2.5 –2.0

Total recognized in the income statement –22.3 –19.0

Recognized in the statement of cash flows

Cash flow for short-term, low-value asset and variable leases (included within
cash flow from operating activities) –20.1 –17.6

Cash flow from subleasing right-of-use assets (included within cash flow from
operating activities) 0.3 0.5

Cash flow for repayments of interest on lease liabilities (included within cash
flow from operating activities) –2.5 –2.0

Cash flow for repayments of the principal portion on lease liabilities (included
within cash flow from financing activities) –28.3 –32.1

Total cash outflow –50.5 –51.1

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 133

17 Associates and joint ventures

millions of CHF 2023 2022

Balance as of January 1 41.8 25.5

Additions 17.8 20.9

Reclassifications 1.8 –

Share of profit / (loss) of associates and joint ventures –3.2 –2.7

Dividend payments received –0.2 –0.1

Currency translation differences –3.2 –1.8

Total investments in associates and joint ventures as of December 31 54.7 41.8

- thereof investments in associates: 54.5 41.8

- thereof investments in joint ventures: 0.2 –

In February 2023, the group acquired a strategic stake in Fuenix Ecogy Holding B.V., a circular
technology company, for CHF 10.1 million and classified the investment as an investment in
associates. In September 2023, the group acquired an additional ownership in Cellicon Holding B.V.
for CHF 6.5 million, in addition to an existing ownership of CHF 3.0 million and the total investment
was classified as an investment in associate.

On September 22, 2022, the group increased its investment in the associate Worn Again by
CHF 20.9 million. Worn Again is developing a unique polymer recycling process leveraging the
group’s technology to enable the recycling of textiles and polyester packaging. Sulzer is accounting
for its investment in Worn Again using the equity method of accounting.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 134

18 Other financial assets

2023

Financial assets at
fair value through
Financial assets at other
fair value through comprehensive Financial assets at
millions of CHF profit or loss income amortized costs Total

Balance as of January 1 24.4 8.8 9.3 42.5

Recognized through deconsolidation – – 3.1 3.1

Additions 1.0 – 0.3 1.3

Repayments 1)
– – –7.8 –7.8

Changes in fair value 3.3 0.7 – 4.0

Other non-cash items – – 2.6 2.6

Reclassifications –3.0 – – –3.0

Currency translation differences –1.7 – –0.2 –2.0

Balance as of December 31 23.8 9.5 7.4 40.7

– thereof non-current 22.2 9.5 6.7 38.4

– thereof current 1.6 – 0.7 2.3

1) Repayments in the amount of CHF 4.9 million are presented in the statement of cash flows in “Divestitures and deconsolidation of subsidiaries, net of cash”.

2022

Financial assets at
fair value through
Financial assets at other
fair value through comprehensive Financial assets at
millions of CHF profit or loss income amortized costs Total

Balance as of January 1 10.9 22.5 11.3 44.7

Additions 6.7 – 2.9 9.6

Repayments – – –4.4 –4.4

Changes in fair value 8.0 –13.7 – –5.8

Currency translation differences –1.1 – –0.6 –1.7

Balance as of December 31 24.4 8.8 9.3 42.5

– thereof non-current 22.8 – 5.6 28.5

– thereof current 1.5 8.8 3.6 14.0

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

The financial assets in the category “financial assets at fair value through other comprehensive
incomeˮ are comprised of medmix shares amounting to CHF 9.5 million (2022: CHF 8.8 million), which
were received as part of the Applicator Systems spin-off in 2021. The financial investment in medmix
Ltd is recognized at its fair value based on the share price of medmix Ltd (a level 1 hierarchy
valuation). Management has designated this investment at fair value through other comprehensive
income at initial recognition. In 2023, fair value changes amounting to CHF 0.7 million
(2022: CHF –13.7 million) were recorded in other comprehensive income, with an associated deferred
tax effect of CHF –0.1 million (2022: CHF 2.7 million). The dividend received amounted to CHF
0.2 million (2022: CHF 0.2 million).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 135

19 Inventories

millions of CHF 2023 2022

Raw materials, supplies and consumables 166.9 192.3

Work in progress 255.4 250.3

Finished products and trade merchandise 72.8 79.9

Total inventories as of December 31 495.1 522.4

In 2023, the group recognized write-downs of CHF 16.6 million in the income statement. In 2022, the
total write downs amounted to CHF 49.8 million, of which CHF 31.4 million were recorded in
connection with the Russian business that was classified as 'held for sale' in that year. The
accumulated write-downs on inventories amounted to CHF 72.7 million as of December 31, 2023
(2022: CHF 79.9 million). Material expenses in 2023 amounted to CHF 1’239.4 million (2022: CHF
1’192.1 million).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 136

20 Assets and liabilities related to contracts with customers

millions of CHF 2023 2022
Sales recognized over time related to ongoing performance obligations 625.2 641.5
Sales recognized over time related to satisfied performance obligations 519.9 511.6
Sales recognized over time 1’145.1 1’153.1
Sales recognized at a point in time 2’136.6 2’026.8
Sales 3’281.7 3’179.9
– thereof sales recognized included in the contract liability balance at the
beginning of the period 382.3 324.5
– thereof sales recognized from performance obligations satisfied (or partially
satisfied) in previous periods –0.0 0.1

Contract assets from sales recognized over time relating to ongoing

performance obligations 1’048.4 1’087.4
Expected loss rate 0.1% 0.2%
Allowance for expected losses –1.3 –2.4
Reversal of write-offs / (write-offs) on contract assets in the disposal group
classified as held for sale (see note 5) 2.0 –26.8
Netting with contract liabilities –619.0 –592.1
Contract assets 430.1 466.1

Contract liabilities from costs recognized over time relating to ongoing

performance obligations 145.4 119.2
Advance payments from customers relating to point in time contracts 203.7 172.9
Advance payments from customers relating to over time contracts 720.8 682.3
Netting with contract assets –619.0 –592.1
Contract liabilities 451.0 382.3

Order backlog (aggregate amount of transaction price allocated to unsatisfied

performance obligations) 1’946.8 1’844.7
– thereof expected to be recognized as revenue within 12 months 1’810.9 1’650.5
– thereof expected to be recognized in more than 12 months 135.9 194.2
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 137

21 Trade accounts receivable

Aging structure of trade accounts receivable

2023 2022

Expected Gross Net book Expected Gross Net book

millions of CHF loss rate amount Allowance value loss rate amount Allowance value

Not past due 0.1% 393.1 –0.4 392.7 0.9% 439.0 –3.7 435.2

Past due

1–30 days 0.7% 61.7 –0.5 61.2 0.9% 61.6 –0.6 61.1

31–60 days 2.6% 29.3 –0.8 28.6 1.5% 31.7 –0.5 31.2

61–120 days 6.4% 24.9 –1.6 23.3 8.4% 20.7 –1.7 19.0

>120 days 53.7% 75.7 –40.6 35.0 52.2% 81.6 –42.6 39.0

Total trade
accounts
receivable as of
December 31 584.7 –43.8 540.8 634.6 –49.1 585.5

Allowance for doubtful trade accounts receivable

millions of CHF 2023 2022

Balance as of January 1 49.1 56.5

Reclassification as held for sale – –8.6

Additions 9.0 19.3

Released as no longer required –7.4 –10.1

Utilized –3.8 –7.6

Currency translation differences –3.1 –0.3

Balance as of December 31 43.8 49.1

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 by country and by division. 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).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 138

Accounts receivable by geographical region

millions of CHF 2023 2022

Europe, the Middle East and Africa 250.0 265.9

– thereof United Kingdom 52.1 48.0

– thereof Saudi Arabia 32.8 38.6

– thereof France 24.9 23.4

– thereof Spain 20.7 21.7

– thereof Germany 18.4 22.8

Americas 131.0 124.8

– thereof USA 79.7 75.3

Asia-Pacific 159.8 194.8

– thereof China 102.8 127.5

Total as of December 31 540.8 585.5

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 139

22 Other current receivables and prepaid expenses

millions of CHF 2023 2022

Taxes (VAT, withholding tax) 61.3 55.8

Derivative financial instruments 13.9 13.2

Other current receivables 22.6 23.4

Total other current receivables as of December 31 97.8 92.4

Prepaid expenses 25.6 36.3

Total prepaid expenses as of December 31 25.6 36.3

Total other current receivables and prepaid expenses as of December 31 123.4 128.7

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 140

23 Cash and cash equivalents

millions of CHF 2023 2022

Cash 780.8 939.6

Cash equivalents 193.9 256.8

Total cash and cash equivalents as of December 31 974.7 1’196.3

As of December 31, 2023, the group held restricted cash and cash equivalents of CHF 13.5 million
(2022: CHF 15.7 million).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 141

24 Equity
Share capital

2023 2022

Number of Number of
thousands of CHF shares Share capital 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. On December 31,
2023, conditional share capital amounted to CHF 17’000 (2022: CHF 17’000), consisting of 1’700’000
shares with a par value of CHF 0.01.

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://www.sulzer.com/en/shared/about-us/
corporate-governance).

Shareholders holding more than 3%

Dec 31, 2023 Dec 31, 2022

Number of Number of
shares in % shares in %

Viktor Vekselberg (direct shareholder: Tiwel Holding AG) 16’728’414 48.82 16’728’414 48.82

The Capital Group Companies, Inc. 1’034’950 3.02 1’034’950 3.02

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

Treasury shares
During 2023, the group acquired 260’000 treasury shares for CHF 20.9 million (2022: 281’349 shares
for CHF 19.5 million). The total number of shares held by the group as of December 31, 2023,
amounted to 451’074 treasury shares (December 31, 2022: 523'855 shares).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 142

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.

Transactions with non-controlling interests

An agreement entered with non-controlling shareholders of a subsidiary, agreeing on a fixed profit
distribution for that subsidiary, resulted in the recognition of liability and a reduction in non-controlling
interests.

Contribution from medmix

The contribution relates to vested shares under Sulzer share plans for medmix employees.

Dividends
On April 19, 2023, the Annual General Meeting approved an ordinary dividend of CHF 3.50 (2022:
ordinary dividend of CHF 3.50) per share to be paid out of reserves. The dividend was paid to
shareholders on April 25, 2023. The total amount of the dividend to shareholders of Sulzer Ltd was
CHF 118.9 million (2022: CHF 118.7 million), thereof paid dividends of CHF 80.9 million (2022:
CHF 80.6 million), and unpaid dividends of CHF 38.1 million (2022: CHF 38.1 million). 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 2024 a dividend for the
year 2023 of CHF 3.75 per share (2022: CHF 3.50).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 143

25 Earnings per share

2023 2022

Net income attributable to shareholders of Sulzer Ltd (millions of CHF) 229.1 28.6

Issued number of shares 34’262’370 34’262’370

Adjustment for average treasury shares held –377’719 –436’556

Average number of shares outstanding as of December 31 33’884’651 33’825’814

Adjustment for share participation plans 490’686 697’151

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

December 31 34’375’337 34’522’965

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

December 31

Basic earnings per share 6.76 0.85

Diluted earnings per share 6.67 0.83

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 144

26 Borrowings

2023

Non-current
millions of CHF borrowings Current borrowings Total

Balance as of January 1 1’043.9 311.4 1’355.3

Cash flow from proceeds – 26.0 26.0

Cash flow for repayments –0.0 –324.9 –325.0

Changes in amortized costs 0.3 0.1 0.4

Other non-cash increase 0.9 0.1 1.0

Reclassifications –249.9 249.9 0.0

Currency translation differences –0.1 –1.5 –1.6

Total borrowings as of December 31 795.2 261.1 1’056.3

2022

Non-current
millions of CHF borrowings Current borrowings Total

Balance as of January 1 1’164.6 345.5 1’510.1

Cash flow from proceeds 169.6 1’054.0 1’223.6

Cash flow for repayments –0.0 –1’376.1 –1’376.1

Changes in amortized costs 0.3 0.0 0.3

Reclassifications –289.9 289.9 –

Currency translation differences –0.8 –1.8 –2.6

Total borrowings as of December 31 1’043.9 311.4 1’355.3

Borrowings by currency

2023 2022

millions of millions of
CHF in % Interest rate CHF in % Interest rate

CHF 1’044.2 98.9 1.4% 1’333.8 98.4 1.4%

INR 4.7 0.4 5.6% 8.3 0.6 4.4%

IDR 3.3 0.3 8.7% 6.3 0.5 7.1%

USD 1.5 0.1 3.8% 5.0 0.4 3.8%

AED 0.9 0.1 2.8% – – –

EUR 0.5 0.0 – – – –

Other 1.2 0.1 – 1.9 0.1 –

Total as of December 31 1’056.3 100.0 – 1’355.3 100.0 –

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 145

As of December 2023, Sulzer had access to a syndicated credit facility of CHF 500 million maturing
on 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). In 2022 and 2023, the
group exercised the options, extending the term of the credit facility in the amount of CHF 415 million
to December 2028. 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, 2023, and
2022, the syndicated facility was not used.

Outstanding bonds
2023 2022
millions of CHF Amortized costs Nominal Amortized costs Nominal
0.875% 07/2016–07/2026 124.9 125.0 125.0 125.0
1.300% 07/2018–07/2023 - - 289.9 290.0
1.600% 10/2018–10/2024 250.0 250.0 249.9 250.0
0.800% 09/2020–09/2025 299.8 300.0 299.6 300.0
0.875% 11/2020–11/2027 199.8 200.0 199.7 200.0
3.350% 12/2022–11/2026 169.7 170.0 169.6 170.0
Total as of December 31 1’044.1 1’045.0 1’333.8 1’335.0
– thereof non-current 794.2 795.0 1’043.9 1’045.0
– thereof current 250.0 250.0 289.9 290.0

On July 6, 2023, Sulzer repaid CHF 290.0 million for the second and last tranche of a bond issued in
2018. This second tranche had a term of 5 years and carried a coupon of 1.300%.

On December 16, 2022, Sulzer issued a CHF 170 million single tranche bond. The bond has a term of
three years and 11 months and carries a coupon of 3.350% at a price of 100.055%.

All the outstanding bonds are traded on SIX Swiss Exchange.

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 146

27 Provisions

2023

Other
employee Warranties /
millions of CHF benefits liabilities Restructuring Environmental Other Total

Balance as of January 1 44.5 92.3 8.1 11.4 57.8 214.1

Additions 8.0 41.6 5.2 1.2 35.9 91.9

Released as no longer required –4.2 –9.6 –2.2 – –16.5 –32.6

Utilized –7.1 –19.4 –4.7 –0.1 –32.5 –63.9

Reclassification 1)
–6.0 – – – – –6.0

Currency translation differences –1.9 –6.0 –1.3 –0.2 –2.0 –11.4

Total provisions as of December 31 33.2 98.8 5.0 12.4 42.6 192.0

– thereof non-current 22.0 2.8 0.5 12.3 9.1 46.7

– thereof current 11.2 96.0 4.6 0.0 33.4 145.3

1) Includes a reclassification of CHF 6.0 million to the defined benefit obligation, see note 9.

2022

Other
employee Warranties /
millions of CHF benefits liabilities Restructuring Environmental Other Total

Balance as of January 1 53.9 93.8 21.0 11.8 55.4 235.8

Classified as held for sale – –2.5 – – – –2.5

Additions 11.0 26.9 1.8 0.1 68.0 107.8

Released as no longer required –7.0 –10.0 –1.7 – –3.6 –22.3

Utilized –10.6 –16.1 –12.7 –0.0 –58.7 –97.9

Currency translation differences –2.8 0.1 –0.3 –0.5 –3.3 –6.7

Total provisions as of December 31 44.5 92.3 8.1 11.4 57.8 214.1

– thereof non-current 31.0 3.2 1.2 11.4 11.5 58.2

– thereof current 13.5 89.1 6.9 0.0 46.3 155.9

The category “Other employee benefitsˮ includes provisions for jubilee gifts 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. Warranties that provide
customers with assurance that the product complies with the agreed specifications, are accounted for
as provisions over the agreed warranty period.

In 2023, the group utilized CHF 4.7 million (2022: CHF 12.7 million) of restructuring provisions mainly
relating to resizing measures of sites in Europe and the USA initiated in 2020 and 2021 and resizing
measures in Indonesia initiated in 2022. The group recorded restructuring provisions of CHF 5.2
million (2022: CHF 1.8 million), partly offset by released restructuring provisions of CHF 2.2 million
(2022: CHF 1.7 million). Restructuring costs mainly relate to reorganization in the Flow equipment
division. The remaining restructuring provision as of December 31, 2023, is CHF 5.0 million, of which
CHF 4.6 million is expected to be utilized within one year.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 147

“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 to 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 2024, by their nature, the amounts and timing of any cash outflows are
difficult to predict.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 148

28 Other current and accrued liabilities

millions of CHF 2023 2022

Liability related to the purchase of treasury shares 88.1 92.9

Outstanding dividend payments 277.2 239.2

Taxes (VAT, withholding tax) 31.4 33.0

Derivative financial instruments 3.2 7.0

Notes payable – 20.6

Contingent consideration – 1.9

Other current liabilities 38.9 43.6

Total other current liabilities as of December 31 438.9 438.2

Contract-related costs 121.3 137.8

Salaries, wages and bonuses 121.9 108.9

Vacation and overtime claims 23.0 22.4

Other accrued liabilities 147.3 167.3

Total accrued liabilities as of December 31 413.5 436.5

Total other current and accrued liabilities as of December 31 852.4 874.7

The outstanding dividend payments of CHF 277.2 million (2022: CHF 239.2 million) are explained in
note 24.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 149

29 Derivative financial instruments

2023 2022

Derivative assets Derivative liabilities Derivative assets Derivative liabilities

Notional Notional Notional Notional

millions of CHF value Fair value value Fair value value Fair value value Fair value

Forward exchange
rate contracts 817.6 13.9 276.1 3.2 575.4 13.2 607.6 7.0

Total as of
December 31 817.6 13.9 276.1 3.2 575.4 13.2 607.6 7.0

– thereof due in <1

year 817.6 13.9 276.1 3.2 571.5 13.2 597.7 7.0

– thereof due in 1–5

years – – – – 3.9 0.1 9.9 0.0

In 2023, the notional value and the fair value of derivative assets and liabilities consists of current
derivative financial instruments. Some of these derivative assets and liabilities are dedicated as
hedging instruments for cash flow hedges. The cash flow hedges of expected future sales were
assessed as highly effective. In 2023, the net unrealized gains for cash flow hedges recorded in the
cash flow hedge reserves in other comprehensive income amount to CHF 8.3 million (2022: losses of
CHF 7.5 million), net of a deferred tax impact of CHF 2.7 million (2022: CHF 2.6 million). As of
December 31, 2023, the accumulated cash flow hedge reserve amounts to CHF 5.3 million (2022:
CHF –5.7 million) with the recognition of net deferred tax liabilities of CHF 1.0 million (2022: deferred
tax assets of CHF 1.6 million) relating to these cash flow hedges included in the cash flow hedge
reserves. In 2023, gains of CHF 2.6 million (2022: gains of CHF 0.1 million) were reclassified from the
cash flow hedge reserves to the income statement. 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 in equity on forward foreign exchange contracts as of December 31, 2023,
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, 2023, the amount subject to such netting
arrangements was CHF 2.1 million (2022: CHF 2.7 million). Considering the effect of these
agreements, the amount of derivative assets would reduce from CHF 13.9 million to CHF 11.8 million
(2022: from CHF 13.2 million to CHF 10.5 million), and the amount of derivative liabilities would reduce
from CHF 3.2 million to CHF 1.1 million (2022: from CHF 7.0 million to CHF 4.3 million).
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 150

30 Contingent liabilities

millions of CHF 2023 2022

Guarantees in favor of third parties 9.9 9.1

Total contingent liabilities as of December 31 9.9 9.1

As of December 31, 2023, guarantees provided to third parties amounted to CHF 9.9 million (2022:
CHF 9.1 million) and relate to disposed businesses.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 151

31 Share participation plans

Share-based payments charged to personnel expenses

millions of CHF 2023 2022

Restricted share unit plan 0.9 1.6

Performance share plan 11.7 13.8

Total charged to personnel expenses 12.6 15.4

The compensation charged to personnel expenses for the services received during the period
amounts to CHF 12.6 million including CHF 11.6 million relating to equity-settled plans credited in the
retained earnings. The remaining CHF 1.0 million corresponds to cash-settled plans.

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 members. 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 in 2021, 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 2023 2022 2021 2020 2019 Total

Outstanding as of January 1, 2022 – – 16’632 14’164 4’078 34’874

Granted – 11’637 – – – 11’637

Exercised – – –10’344 –10’994 –4’078 –25’416

Outstanding as of December 31, 2022 11’637 6’288 3’170 – 21’095

Outstanding as of January 1, 2023 – 11’637 6’288 3’170 – 21’095

Granted 10’128 – – – – 10’128

Exercised – –6’279 –4’344 –3’170 – –13’793

Outstanding as of December 31, 2023 10’128 5’358 1’944 – – 17’430

Average fair value at grant date in CHF 77.05 77.82 106.32 65.22 97.76
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 152

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) in the last year of 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
last three months prior to 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 group neutralized the consequences of the spin-off of the Applicator Systems division in
2021. 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 and operational ROCEA) of PSP 2019,
PSP 2020 and PSP 2021, the performance curve depicting the gradient formed from the threshold
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 2023 2022 2021 2020 2019

Fair value at grant date 88.38 84.69 124.95 78.18 115.95

Share price at grant date 77.45 76.35 101.12 76.05 92.46

Expected volatility 28.76% 35.59% 34.68% 37.45% 29.64%

Risk-free interest rate 1.96% 0.39% –0.58% –0.64% –0.57%

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 153

Performance share units – terms of awards

Grant year 2023 2022 2021 2020 2019

Number of awards granted 99’244 97’930 90’527 151’422 112’857

April 1, April 1, April 1, June 1, April 1,

Grant date 2023 2022 2021 2020 2019

01/23– 01/22– 01/21– 01/20– 01/19–

Performance period for cumulative operational profit 12/25 12/24 12/23 12/22 12/21

01/23– 01/22– 01/21– 01/20– 01/19–

Performance period for TSR 12/25 12/24 12/23 12/22 12/21

Fair value at grant date in CHF 88.38 84.69 124.95 78.18 115.95

Performance share units

Grant year 2023 2022 2021 2020 2019 Total

Initially granted 99’244 97’930 90’527 151’422 112’857 551’980

APS division spin-off restatement – – 44’801 74’680 53’141 172’622

Outstanding as of January 1, 2022 – – 127’491 210’194 151’809 489’494

Granted – 97’930 – – – 97’930

Exercised – –998 –3’788 –6’202 –151’809 –162’797

Forfeited – –2’746 –6’634 –4’828 – –14’208

Outstanding as of December 31, 2022 – 94’186 117’069 199’164 – 410’419

Outstanding as of January 1, 2023 – 94’186 117’069 199’164 – 410’419

Granted 99’244 – – – – 99’244

Exercised –1’576 –6’666 –6’470 –199’164 – –213’876

Forfeited –3’386 –10’587 –1’867 – – –15’840

Outstanding as of December 31, 2023 94’282 76’933 108’732 – – 279’947

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 154

32 Transactions with members of the Board of Directors,

Executive Committee and related parties
Key management compensation

2023 2022

Pension and Pension and

social social
Short-term Equity-based security Short-term Equity-based security
thousands of CHF benefits compensation contributions Total benefits compensation contributions Total

Board of Directors 1’231 780 272 2’283 1’152 905 283 2’340

Executive Committee 8’681 3’231 1’892 13’804 7’065 2’822 1’649 11’536

As of December 31, 2023, 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.

Transactions and balances with associates and joint ventures

In 2023, the group recorded transactions and balances with associates. Sales with associates
amounted to CHF 0.5 million (2022: CHF 0.0 million), the operating expenses amounted to
CHF 1.5 million (2022: CHF 2.5 million). As of December 31, 2023, loan receivables amount to
CHF 2.0 million (2022: CHF 0.0 million), payables amount to CHF 0.1 million (2022: CHF 0.4 million).
See note 17 for details on the investments in associates.

Transactions and balances with other related parties

In 2023, sale or other operating income with other related parties amounted to zero (2022: CHF 0.0
million), and operating expenses in relation to goods and services purchased amount to zero (2022:
CHF 0.0 million). Open payables with related parties amounted to CHF 365.4 million (2022:
CHF 332.0 million), of which CHF 88.1 million (2022: CHF 92.9 million) related to the purchase of
treasury shares (see note 28) and CHF 277.2 million (2022: CHF 239.2 million) related to outstanding
dividend payments (see note 24 and note 28).

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

Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 155

33 Auditor remuneration
Fees for the audit services by KPMG as the appointed group auditor amounted to CHF 3.7 million
(2022: CHF 4.1 million). Additional services provided by the group auditor amounted to a total of
CHF 0.6 million (2022: CHF 1.9 million). This amount includes CHF 0.2 million (2022: CHF 0.2 million)
for tax services and CHF 0.4 million (2022: CHF 1.7 million) for other services.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 156

34 Key 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 or 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
34.18 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 6.

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 2023
Starting from January 1, 2023, the group applied changes in standards, amendments and
interpretations that became effective January 1, 2023. None of these changes had a material effect on
the financial statements of the group.

The group has adopted the amendments to IAS 12 International Tax Reform – Pillar Two Model Rules
upon their release in May 2023. The amendments are effective immediately and provide a mandatory
temporary exception from deferred tax accounting for the top-up tax and introduce new disclosures
on the Pillar Two impact. The mandatory exception from deferred tax accounting applies
retrospectively. No new tax legislation implementing top-up tax was enacted or substantively enacted
on December 31, 2022, in any of the jurisdiction in which the group is operating and no related
deferred tax assets or liabilities were recognized at that date. The retrospective application has no
impact on the group's financial statements.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 157

b) Standards, amendments and interpretations issued but not yet effective, which the group
decided not to adopt early in 2023
The following amended standards will become effective from January 1, 2024. The group does not
expect these to have a material impact on the consolidated financial statements:

Amendments to IAS 1 – Classification of liabilities as current or non-current and non-current

liabilities with covenants. The amendments provide clarification when an entity should classify
liabilities as current or non-current and introduce new disclosure requirements for non-current
liabilities that are subject to future covenants.
Amendments to IFRS 16 Leases – Lease liability in a sale and leaseback. The amendments
provide further clarification how the lease liability should be measured by a seller-lessee.
Amendments to IAS 7 and IFRS 7 – Disclosure of supplier finance arrangements. The
amendments introduce new disclosure requirements for supplier finance arrangements that
should allow users to assess the impact of such agreements on an entity's liabilities, cash flows
and liquidity risk.

The following amended standards will become effective from January 1, 2025. The group is in the
process of assessing the below amendments and does currently not expect these to have a material
impact on the consolidated financial statements:

Amendments to IAS 21 – Lack of exchangeability

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 158

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 159

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 2023 and
2022:

2023 2022
CHF Average rate Year-end rate Average rate Year-end rate
EUR 1 0.97 0.93 1.00 0.98
GBP 1 1.12 1.08 1.18 1.11
USD 1 0.90 0.84 0.95 0.92
CNY 100 12.68 11.89 14.19 13.29
INR 100 1.09 1.01 1.21 1.12

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 subsidiaries 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 160

34.6 Intangible assets

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 associate or joint venture is included in the book
value of the investment.

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

d) 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 161

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 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 on the balance sheet.

The group recognizes lease assets and lease liabilities at the lease commencement date. The lease
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. Generally, the group uses currency and duration specific incremental
borrowing rates for the discounting.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 162

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 measured at amortized cost

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

Debt instruments
Financial assets measured at amortized cost
Initially, financial assets are recognized at fair value. Assets that are held for collection of contractual
cash flows where those cash flows represent solely payments of principal and interest are measured
subsequently 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 the income statement and presented in other financial income / (expenses), net
together with foreign exchange gains and losses. Impairment losses are presented as separate line
items in the income statement.

Equity instruments
The group measures all equity investments at fair value. Where the group is holding equity
instruments not for trading and group’s management has elected to present fair value gains and
losses on equity investments in other comprehensive income (OCI), there is no subsequent
reclassification of fair value gains and losses to the income statement following the derecognition of
the investment. Dividends from such investments continue to be recognized in the income statement
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 the income statement 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 163

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 hedgesˮ, 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 reserveˮ. 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.

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 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 and are recognized in the income
statement in Costs of goods sold.

34.13 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. The group
applies the simplified approach, measuring the loss amount based on lifetime 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.

34.14 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.

34.15 Trade payables

Trade payables and other payables are stated at face value. The respective value corresponds
approximately to the amortized cost.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 164

34.16 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.

34.17 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 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 the income statement 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, associates and joint venture 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.

34.18 Employee benefits

a) Defined benefit plans
The group’s net obligation in respect of defined benefit plans is calculated separately for each
plan. The calculation of defined benefit assets / obligations is performed annually by a qualified
actuary using the projected unit credit method. The net obligation is estimated based on the
discounted future benefit that employees have earned in the current and prior periods, deducting the
fair value of any plan assets. The discount rate is determined with reference to the interest rates on
high-quality corporate bonds denominated in the currency of the expected cash flows and aligned
with the estimated term.

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 165

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 jubilee gifts to their employees. 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 provisionsˮ.

34.19 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 the members of the Sulzer Management Group.
A restricted share plan (RSP) covers the members of the Board of Directors.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 166

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., target profit
levels). 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.

34.20 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 167

34.21 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 group and the group has an enforceable right to
payment (including reasonable profit margin) for performance completed to date if the customer
terminates the contract for convenience.

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 168

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 international commercial terms). 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 of control most
appropriately.

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 169

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.

If the group fails to meet the delivery date and a 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 estimated liquidated damages are
recorded as a reduction in revenue.

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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 170

35 Subsequent events after the balance sheet date

The Board of Directors authorized these consolidated financial statements for issue on February 21,
2024. They are subject to approval at the Annual General Meeting, which will be held on April 16,
2024. 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.
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 171

36 Major subsidiaries
December 31, 2023
Registered capital Direct
Sulzer (including paid-in participation Production
ownership and capital in the USA by Sulzer Research and and
Subsidiary voting rights and Canada) Ltd development 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 •
Sulzer Pumps Wastewater
Belgium Belgium N.V.,Anderlecht 100% EUR 123’947 • • •
Ensival Moret Belgium SA,
Thimister-Clermont 100% EUR 7’400’000 •
Sulzer Pumpen (Deutschland)
Germany 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 100% EUR 25’565 • • • •
Sulzer Pumps Denmark A/S,
Denmark Farum 100% DKK 501’000 • • •
Finland Sulzer Pumps Finland Oy, Kotka 100% EUR 16’000’000 • • • • •
Sulzer Pompes France SASU,
France 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 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 • • • •
Sulzer Pump Solutions Ireland
Ireland Ltd., Wexford 100% EUR 2’222’500 • • • • •
Sulzer Finance (Ireland) Limited,
Wexford 100% EUR 100
Sulzer Italy S.r.l., Casalecchio di
Italy Reno 100% EUR 600’000 • •
Sulzer Pumps Wastewater
Norway 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 100% NOK 150’000 • •
Sulzer Pumps Wastewater
The Netherlands B.V., Maastricht-
Netherlands Airport 100% EUR 45’378 • •
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
Sulzer Austria GmbH, Wiener
Austria Neudorf 100% EUR 350’000 • • •
Sulzer GTC Technology Romania
Romania S.R.L., Bucharest 100% RON 1’345’070 • •
Sulzer Pumps Sweden AB,
Sweden Vadstena 100% SEK 3’000’000 • • • • •
Nordic Water Products AB,
Mölndal 100% SEK 200’000 • • • •
Spain Sulzer Pumps Spain S.A., Madrid 100% EUR 1’750’497 • • • •
Sulzer Pumps Wastewater Spain
S.A.U., Rivas Vaciamadrid 100% EUR 2’000’000 • •
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 172

North
America
Sulzer Pumps (Canada) Inc.,
Canada 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 • •
Sulzer Pumps (US) Inc., Houston,
USA 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 • • • •
Sulzer Pumps México, S.A. de
Mexico 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
Sulzer Turbo Services Argentina
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 Bombas Chile Ltda.,
Chile Vitacura 100% CLP 46’400’000 • •
Sulzer Pumps Colombia S.A.S., COP
Colombia Cota 100% 7’142’000’000 • • •
Africa
Sulzer Pumps (South Africa) (Pty)
South Africa Ltd., Elandsfontein 75% ZAR 100’450’000 • • • •
Sulzer (South Africa) Holdings
(Pty) Ltd., Elandsfontein 100% ZAR 16’476 • • • •
Sulzer Maroc S.A.R.L. A.U.,
Morocco Nouaceur 100% MAD 3’380’000 • •
Sulzer Pumps (Nigeria) Ltd.,
Nigeria Lagos 100% NGN 5’000’000 • • •
Zambia Sulzer Zambia Ltd., Chingola 100% ZMK 15’000’000 • • •
Middle East
United Arab Sulzer Pumps Middle East FZCO,
Emirates Dubai 100% AED 500’000 • • •
Sulzer Saudi Pump Company
Saudi Arabia Limited, Riyadh 100% SAR 44’617’000 • • • •
Sulzer Chemtech Middle East
Bahrain W.L.L., Al Seef 100% BHD 50’000 • •
Asia
Sulzer Pumps India Pvt. Ltd., Navi
India 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 • •
IDR
Indonesia PT. Sulzer Indonesia, Purwakarta 95% 28’234’800’000 • • • •
Japan Sulzer Daiichi K.K., Tokyo 60% JPY 30’000’000 • •
Sulzer Japan Ltd., Tokyo 100% JPY 30’000’000 • • • •
Sulzer Annual Report 2023 – Financial reporting – Notes to the consolidated financial statements 173

Sulzer Pumps Wastewater

Malaysia Sdn. Bhd., Selangor
Malaysia Darul Ehsan 100% MYR 1’000’000 • •
Sulzer Singapore Pte. Ltd.,
Singapore Singapore 100% SGD 1’000’000 • • • •
South Korea Sulzer Korea Ltd., Seoul 100% KRW 222’440’000 • •
Sulzer GTC Technology Korea Co. KRW
Ltd., Seoul 100% 4’870’000’000 • • • •
Sulzer (Thailand) Co., Ltd.,
Thailand Rayong 100% THB 25’000’000 • •
People’s
Republic of Sulzer Dalian Pumps &
China 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 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 •
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Auditor’s report 174

Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Sulzer Ltd and its subsidiaries (the Group),
which comprise the “Consolidated balance sheet” as at December 31, 2023, the “Consolidated
income statement”, “Consolidated statement of comprehensive income”, “Consolidated statement of
changes in equity” and “Consolidated statement of cash flows” for the year then ended, and “Notes
to the consolidated financial statements”, including material accounting policy information.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated
financial position of the Group as at December 31, 2023, and of its consolidated financial performance
and its consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRS) and comply with Swiss law.

Basis for Opinion

We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISA) and
Swiss Standards on Auditing (SA-CH). Our responsibilities under those provisions and standards are
further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements” section of our report. We are independent of the Group in accordance with the
provisions of Swiss law, together with the requirements of the Swiss audit profession, as well as those
of the International Ethics Standards Board for Accountants’ International Code of Ethics for
Professional Accountants (including International Independence Standards) (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Key Audit Matters

Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Auditor’s report 175

Customer contracts – existence and accuracy of revenue, valuation of contract assets, work in
progress (WIP), and accuracy of contract liabilities

Key Audit Matter Our response

As per December 31, 2023, revenue from customer Our procedures included, among others, obtaining an
contracts amounts to CHF 3’281.7 million, contract understanding of the project execution processes and
assets amount to CHF 430.1 million, contract liabilities to relevant controls relating to the accounting for customer
CHF 451.0 million and the balance of work in progress contracts.
(WIP) amounts to CHF 255.4 million.
For the revenue recognized throughout the year, we
Under IFRS 15 revenue is recognized when a evaluated selected key controls, including results reviews
performance obligation is satisfied by transferring control by management, and performed procedures to gain
over a promised good or service. sufficient audit evidence on the accuracy of the
accounting for customer contracts and related financial
Revenue and related costs from long-term customer statement captions.
orders (construction and service contracts) are
recognized over time (OT), provided they fulfill the criteria These procedures included reading significant new
of International Financial Reporting Standards, specifically contracts to understand the terms and conditions and
having the right to payment in case of termination for their impact on revenue recognition. We performed
convenience. The OT method allows recognizing inquiries with management to understand their project
revenues by reference to the stage of completion of the risk assessments and inspected meeting minutes from
contract. The application of the OT method is complex project reviews performed by management to identify
and requires judgments by management when estimating relevant changes in their assessments and estimates. We
the stage of completion, total project costs and the costs challenged these assessments and estimates for OT
to complete the work. Incorrect assumptions and projects including comparing estimated project financials
estimates can lead to revenue being recognized in the between reporting periods and assessed the historical
wrong reporting period or in amounts inadequate to the accuracy of these estimates.
actual stage of completion, and therefore to an incorrect
result for the period. On a sample basis, we reconciled revenue to the
supporting documentation, validated estimates of costs
During order fulfillment, contractual obligations may need to complete, tested the mathematical accuracy of
to be reassessed. In addition, change orders or calculations and the adequacy of project accounting. We
cancelations have to be considered. As a result, total also examined costs included within contract assets on a
estimated project costs may exceed total contract sample basis by verifying the amounts back to source
revenues and therefore require write-offs of contract documentation and tested their recoverability through
assets, receivables and the immediate recognition of the comparing the net realizable values as per the
expected loss as a provision. agreements with estimated cost to complete.

Regarding the projects recognized at a point in time (PIT), We further performed testing for PIT projects on a sample
the risks include inappropriate revenue recognition from basis to confirm the appropriate application of revenue
revenue being recorded in the wrong accounting period recognition policies and to verify valuation of WIP
as well as overstated WIP that requires impairment balances. This included reconciling accounting entries to
adjustments. supporting documentation. When doing this, we
specifically put emphasis on those transactions occurring
close before or after the balance sheet date to obtain
sufficient evidence over the accuracy of cut-off.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Auditor’s report 176

For further information on Customer contracts – existence and accuracy of revenue, valuation of
contract assets, work in progress (WIP) and accuracy of contract liabilities refer to the following:

Note 19 to the consolidated financial statements

Note 20 to the consolidated financial statements

Accounting for warranties and other costs to fulfil contract obligations

Key Audit Matter Our response

As per December 31, 2023, provisions in the amount of Based on our knowledge gained through contract and
CHF 98.8 million are held on the balance sheet to cover project reviews, we assessed the need for and the
expected costs arising from product warranties. accuracy of provisions.
Additional expected costs to fulfil contract obligations
from onerous contracts are recorded as other provisions. We further challenged management’s contract risk
assessments by inquiries, inspection of meeting minutes
Sulzer is exposed to claims from customers for not and review of correspondence with customers where
meeting contractual obligations. Remedying measures, available.
addressing technical shortcomings or settlement
negotiations with clients, may take several months and Where milestones or contract specifications were not
cause additional costs. The assessment of these costs to met, we challenged the recognition and appropriateness
satisfy order related obligations contains management of provisions by recalculating the amounts, obtaining
assumptions with a higher risk of material misjudgment. written management statements and evidence from
supporting documents such as correspondence with
clients or legal assessments of external counsels where
available.

We also evaluated the historical accuracy of estimates

made by management through retrospective reviews. In
order to gain a complete and clear understanding of legal
matters we further performed inquiry procedures with the
office of Sulzer’s General Counsel and reviewed relevant
documents.

For further information on accounting for warranties and other cost to fulfil contract obligations refer
to the following:

Note 27 to the consolidated financial statements

Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Auditor’s report 177

Other Information in the Annual Report

The Board of Directors is responsible for the other information. The other information comprises the
information included in the annual report, but does not include the consolidated financial statements,
the standalone financial statements of the company, the compensation report and our auditor’s
reports thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.

Board of Directors’ Responsibilities for the Consolidated Financial Statements

The Board of Directors is responsible for the preparation of the consolidated financial statements that
give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such
internal control as the Board of Directors determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or
error.

In preparing the consolidated financial statements, the Board of Directors is responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either intends
to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with Swiss law, ISA and SA-CH will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Swiss law, ISA and SA-CH, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Auditor’s report 178

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made.
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group
audit. We remain solely responsible for our audit opinion.

We communicate with the Board of Directors or its relevant committee regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.

We also provide the Board of Directors or its relevant committee with a statement that we have
complied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Board of Directors or its relevant committee, we determine
those matters that were of most significance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters. We describe these matters in our auditor’s
report, unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Auditor’s report 179

Report on Other Legal and Regulatory Requirements

In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control
system exists, which has been designed for the preparation of the consolidated financial statements
according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

KPMG AG

Rolf Hauenstein Miriam von Gunten

Licensed Audit Expert Licensed Audit Expert
Auditor in Charge

Zurich, February 21, 2024

KPMG AG, Badenerstrasse 172, CH-8036 Zurich

© 2024 KPMG AG, a Swiss corporation, is a subsidiary of KPMG Holding AG, which is a member of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Supplementary information 180

Supplementary information
Alternative performance measures (APM)
The financial information included in this report includes certain alternative performance measures
(APMs), which are not accounting measures as defined by IFRS. These APMs should not be used
instead of, or considered as alternatives to, the group’s consolidated financial results based on IFRS.
These APMs may not be comparable to similarly titled measures disclosed by other companies. All
APMs presented relate to the performance of the current reporting period and comparative periods.

Definition of alternative performance measures (APM)

Order intake
Order intake includes all registered orders of the period that will be recorded or have already been
recorded as sales. The reported value of an order corresponds to the undiscounted value of sales that
the group expects to recognize following delivery of goods or services subject to the order, less any
trade discounts and excluding value added or sales tax. Adjustments, corrections and cancellations
resulting from updating the order backlog are respectively included in the amount of the order intake.

Order intake gross margin

The order intake gross margin is defined as the expected gross profit of order intake divided by order
intake.

Order backlog
Order backlog represents the undiscounted value of sales the group expects to generate from orders
on hand at the end of the reporting period.

Return on sales (ROS)

ROS measures the profitability relative to sales. ROS is calculated by dividing EBIT by sales.

Operational profit
Operational profit is used to determine the profitability of the business, without considering
impairments, restructuring expenses and other non-operational items and before interest, taxes and
amortization. Non-operational items include significant acquisition-related expenses, gains and losses
from sale of businesses or real estate, and certain non-operational items that are non-recurring or do
not occur in similar magnitude.

Operational profitability
Operational profitability measures how the group turns sales into operating profits. Operational
profitability is calculated by dividing operational profit by sales.

Operational ROCEA (operational return on capital employed)

Operational ROCEA measures how the group generates operational profits from its capital employed.
Operational ROCEA is calculated by dividing operational profit by average capital employed.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Supplementary information 181

Capital employed
Capital employed refers to the amount of capital investment the group uses to operate and provides
an indication of how the group is investing its money. For the calculation of the capital employed,
please refer to the reconciliation statement below.

EBITDA (earnings before interest, taxes, depreciation and amortization)

The group uses EBITDA to determine the net debt/EBITDA ratio. EBITDA is defined as EBIT before
depreciation, amortization and impairment.

Core net income

Core net income is used to determine the dividend proposal. Sulzer’s long-term target is to maintain a
dividend payout ratio of approximately 40% to 70% of core net income with due consideration to
liquidity and funding requirements as well as continuity. Core net income is defined as net income
before tax-adjusted effects on restructuring, amortization, impairments and non-operational items.

Free cash flow (FCF)

FCF is used to assess the group’s ability to generate the cash required to conduct and maintain its
operations. It also indicates the group’s ability to generate cash to finance dividend payments, repay
debt and to undertake merger and acquisition activities. FCF is calculated based on the IFRS cash
flow from operating activities and adjusted for capital expenditures (investments in property, plant and
equipment and intangible assets).

Net debt
Net debt is used to monitor the group’s overall short- and long-term liquidity. Net debt is calculated
as the sum of total current and non-current borrowings and lease liabilities less cash and cash
equivalents and current financial assets.

Net debt/EBITDA ratio

Net debt/EBITDA is a ratio measuring the amount of income generated and available to pay down
debt before covering interest, taxes, depreciations and amortization expenses. The net debt/EBITDA
ratio is used as a measurement of leverage. It is calculated as net debt divided by EBITDA.

Gearing ratio (borrowings-to-equity ratio)

The gearing ratio compares the borrowings and lease liabilities relative to the equity. The gearing ratio
represents the group’s leverage, comparing how much of the business’s funding comes from
borrowed funds (lenders) versus company owners (shareholders). The gearing ratio is defined as
borrowings and lease liabilities divided by equity attributable to shareholders of Sulzer Ltd.

Currency-adjusted growth
Certain percentage changes in the financial review and the business review divisions have been
calculated using constant exchange rates, which allow for an assessment of the group’s financial
performance with the effects of exchange rate fluctuations eliminated. The currency-adjusted growth
is calculated by applying the previous year’s exchange rates for the current year and calculating the
growth without currency effects.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Supplementary information 182

Organic growth
Organic growth measures changes with the same period in the previous year after adjusting for
effects arising from acquisitions, divestitures/deconsolidations and foreign exchange differences.

The impact of the organic growth is determined as follows:

Currency-adjusted growth as described above

For the current-year acquisitions, by deducting the currency-adjusted amount generated during
the current-year by the acquired entities
For prior-year acquisitions, by deducting the currency-adjusted amount generated over the
months during which the acquired entities were not consolidated in the previous year
For current-year disposals, by adding the currency-adjusted amount generated by the divested
entities in the previous year over the months during which those entities were no longer
consolidated in the current year
For the prior-year disposals, by adding for the current year the currency-adjusted amount
generated in the previous year by the divested entities

Reconciliation statements for alternative performance

measures (APM)
For reconciliation statements of operational profit, operational profitability, core net income and free
cash flow, please refer to the section “Financial review”, for EBITDA, net debt and gearing ratio to
note 7 and for operational ROCEA to the table below.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Supplementary information 183

Operational ROCEA reconciliation statement

millions of CHF 2023 2022

Total assets 4’369.5 4’620.2

./. Other intangible assets –196.8 –234.3

./. Cash and cash equivalents –974.7 –1’196.3

./. Current financial assets –2.3 –14.0

./. Total current and non-current income and deferred tax assets and liabilities –45.3 –92.4

./. Total non-current liabilities –1’125.3 –1’348.6

./. Total current liabilities –2’145.6 –2’217.5

Non-current borrowings 795.2 1’043.9

Current borrowings 261.1 311.4

Liability related to the purchase of treasury shares 88.1 92.9

Outstanding dividend payments 277.2 239.2

Adjustment for average calculation and currency translation differences –12.6 135.8

Average capital employed 1’288.6 1’340.2

Operational profit 365.6 317.6

Average capital employed 1’288.6 1’340.2

Operational ROCEA 28.4% 23.7%

Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Five-year summaries 184

Five-year summaries of key financial data

Key figures from consolidated income statement and statement of cash flows 1)

millions of CHF 2023 2022 2021 2020 2) 2019 2)

Order intake 3’580.3 3’425.4 3’167.6 3’049.2 3’322.1

Currency-adjusted growth order intake 12.6% 9.2% 3.6% –1.1% n/a

Order intake gross margin 33.9% 33.5% 33.1% 32.6% 32.0%

Order backlog 1’946.8 1’844.7 1’724.1 1’676.8 1’731.8

Sales 3’281.7 3’179.9 3’155.3 2’967.8 3’307.9

Operating income (EBIT) 329.7 111.4 221.8 132.5 202.8

Operational profit 365.6 317.6 293.3 255.0 283.1

Operational profitability 11.1% 10.0% 9.3% 8.6% 8.6%

Net income attributable to shareholders of Sulzer Ltd 229.1 28.6 1’416.7 83.6 154.0

– in percentage of equity attributable to shareholders of Sulzer Ltd

(ROE) 20.9% 2.8% 111.2% 6.0% 9.7%

Basic earnings per share (in CHF) 6.76 0.85 41.93 2.46 4.52

Depreciation –71.4 –76.0 –81.0 –78.3 –79.7

Amortization –36.6 –38.8 –50.2 –46.7 –45.5

Impairments of tangible and intangible assets –0.2 –44.5 –4.2 –9.4 –3.1

Research and development expenses –70.8 –66.4 –64.4 –63.8 –62.7

Personnel expenses –1’030.8 –1’002.4 –1’018.1 –1’014.4 –1’078.7

Capital expenditure (incl. lease assets) –103.1 –100.0 –119.4 –88.0 –100.8

Free cash flow (FCF) 301.3 58.3 210.5 262.6 156.8

FCF conversion (free cash flow/net income) 1.31 2.08 1.50 3.67 1.18

Employees (number of full-time equivalents) as of December 31 13’130 12’868 13’816 13’197 14’685

1) The comparatives are based on the foreign currency exchange rates of the respective year and are not adjusted for changes in currency exchange rates.
2) Comparative information has been re-presented due to discontinued operations in 2021.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Five-year summaries 185

Key figures from consolidated balance sheet 1)

millions of CHF 2023 2022 2021 2020 2) 2019

Non-current assets 1’685.9 1’584.2 1’834.2 2’279.9 2’172.0

– thereof property, plant and equipment 348.2 360.5 394.0 545.3 544.4

Current assets 2’683.5 3’036.0 3’176.2 3’087.1 2’937.5

– thereof cash and cash equivalents 974.7 1’196.3 1’505.4 1’123.2 1’035.5

Total assets 4’369.5 4’620.2 5’010.4 5’367.0 5’109.5

Equity attributable to shareholders of Sulzer Ltd 1’095.4 1’024.3 1’273.8 1’404.3 1’580.7

Non-current liabilities 1’125.3 1’348.6 1’568.8 1’976.0 1’644.1

– thereof non-current borrowings 795.2 1’043.9 1’164.6 1’491.3 1’199.2

– thereof non-current lease liabilities 69.0 67.2 64.5 90.2 82.3

Current liabilities 2’145.6 2’242.9 2’162.3 1’973.8 1’871.5

– thereof current borrowings 261.1 311.4 345.5 231.8 131.0

– thereof current lease liabilities 23.9 22.4 24.3 29.5 27.4

Net debt 172.3 234.6 66.8 414.5 346.9

Net debt/EBITDA ratio 0.39 0.87 0.15 1.26 0.84

Equity ratio 3)
25.1% 22.2% 25.4% 26.1% 30.9%

1) The comparatives are based on the foreign currency exchange rates of the respective year and are not adjusted for changes in currency exchange rates.
2) Comparative information has been re-presented due to discontinued operations in 2021. 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. Defined benefit assets are presented as non-current assets and comparative
information is re-presented.
3) Equity attributable to shareholders of Sulzer Ltd in relation to total assets.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Five-year summaries 186

Five-year summaries by division

Order intake 1) Sales 1)

millions of CHF 2023 2022 2021 2020 2) 2019 2) 2023 2022 2021 2020 2) 2019 2)

Flow Equipment 1’466.5 1’419.2 1’324.7 1’297.6 1’458.9 1’354.4 1’323.0 1’389.0 1’296.3 1’477.0

Services 1’271.3 1’171.3 1’163.4 1’130.8 1’193.2 1’154.8 1’117.0 1’117.7 1’078.3 1’167.0

Chemtech 842.5 834.9 679.5 620.8 670.0 772.5 739.9 648.5 593.1 664.0

Total 3’580.3 3’425.4 3’167.6 3’049.2 3’322.1 3’281.7 3’179.9 3’155.3 2’967.8 3’307.9

Order backlog 1) Employees 3)

millions of CHF 2023 2022 2021 2020 2) 2019 2) 2023 2022 2021 2020 2) 2019 2)

Flow Equipment 878.3 850.1 811.5 845.0 924.3 5’465 5’263 5’325 5’362 5’759

Services 547.3 492.9 479.5 435.0 422.2 4’630 4’559 4’571 4’449 4’900

Chemtech 521.2 501.7 433.2 396.9 385.3 2’849 2’852 3’734 3’221 3’803

Divisions 1’946.8 1’844.7 1’724.1 1’676.8 1’731.8 12’944 12’674 13’631 13’032 14’463

Others 186 194 185 165 222

Total 1’946.8 1’844.7 1’724.1 1’676.8 1’731.8 13’130 12’868 13’816 13’197 14’685

Operational profit 1) Operational profitability

millions of CHF 2023 2022 2021 2020 2) 2019 2) 2023 2022 2021 2020 2) 2019 2)

Flow Equipment 108.2 87.4 81.4 55.2 59.7 8.0% 6.6% 5.9% 4.3% 4.0%

Services 171.3 159.0 158.7 150.3 164.5 14.8% 14.2% 14.2% 13.9% 14.1%

Chemtech 95.0 80.0 64.8 56.9 63.8 12.3% 10.8% 10.0% 9.6% 9.6%

Divisions 374.5 326.4 304.9 262.4 288.0 11.4% 10.3% 9.7% 8.8% 8.7%

Others –8.9 –8.8 –11.6 –7.4 –4.9 n/a n/a n/a n/a n/a

Total 365.6 317.6 293.3 255.0 283.0 11.1% 10.0% 9.3% 8.6% 8.6%

1) The comparatives are based on the foreign currency exchange rates of the respective year and are not adjusted for changes in currency exchange rates.
2) Comparative information has been re-presented due to discontinued operations in 2021.
3) Number of full-time equivalents as of December 31.
Sulzer Annual Report 2023 – Financial reporting – Consolidated financial statements – Five-year summaries 187

Five-year summaries by region

Order intake by region 1)

millions of CHF 2023 2022 2021 2020 2) 2019 2)

Europe, the Middle East and Africa 1’278.3 1’322.9 1’281.2 1’211.6 1’375.8

Americas 1’353.8 1’193.2 1’051.8 1’009.5 1’134.6

Asia-Pacific 948.2 909.3 834.6 828.2 811.7

Total 3’580.3 3’425.4 3’167.6 3’049.2 3’322.1

1) The comparatives are based on the foreign currency exchange rates of the respective year and are not adjusted for changes in currency exchange rates.
2) Comparative information has been re-presented due to discontinued operations in 2021.

Sales by region 1)

millions of CHF 2023 2022 2021 2020 2) 2019 2)

Europe, the Middle East and Africa 1’246.0 1’207.9 1’297.5 1’198.1 1’306.9

Americas 1’199.8 1’142.8 978.1 1’027.1 1’165.3

Asia-Pacific 836.0 829.2 879.7 742.6 835.8

Total 3’281.7 3’179.9 3’155.3 2’967.8 3’307.9

1) The comparatives are based on the foreign currency exchange rates of the respective year and are not adjusted for changes in currency exchange rates.
2) Comparative information has been re-presented due to discontinued operations in 2021.

Employees by company location 1 )

millions of CHF 2023 2022 2021 2020 2) 2019 2)

Europe, the Middle East and Africa 5’445 5’602 5’795 5’709 6’246

Americas 3’642 3’422 4’207 3’960 4’429

Asia-Pacific 4’043 3’845 3’815 3’528 4’010

Total 13’130 12’868 13’816 13’197 14’685

1) Number of full-time equivalents as of December 31.

2) Comparative information has been re-presented due to discontinued operations in 2021.
Sulzer Annual Report 2023 – Financial reporting – Financial statements of Sulzer Ltd – Balance sheet of Sulzer Ltd 188

Balance sheet of Sulzer Ltd

December 31
millions of CHF Notes 2023 2022
Current assets
Cash and cash equivalents 3 275.7 388.0
Marketable securities – 8.8
Accounts receivable from subsidiaries 207.3 324.2
Prepaid expenses and other current accounts receivable 6.3 3.1
Total current assets 489.3 724.1

Non-current assets
Loans to subsidiaries 621.2 743.9
Financial assets 23.7 12.3
Investments in subsidiaries 4 1’545.2 1’486.6
Investments in associates 22.0 5.4
Total non-current assets 2’212.1 2’248.2

Total assets 2’701.4 2’972.3

Current liabilities
Current interest-bearing liabilities 6 250.0 289.9
Current liabilities with subsidiaries 6.5 0.2
Current liabilities with shareholders 365.7 332.3
Accrued liabilities and other current liabilities 8.4 11.9
Current provisions 4.7 5.2
Total current liabilities 635.3 639.5

Non-current liabilities
Non-current interest-bearing liabilities 6 794.3 1’043.9
Non-current provisions 33.1 33.2
Total non-current liabilities 827.4 1’077.1
Total liabilities 1’462.7 1’716.6

Equity
Registered share capital 5 0.3 0.3
Legal capital reserves 5 155.5 155.5
Reserves from capital contribution 200.7 200.7
Voluntary retained earnings
– Free reserves 5 791.5 891.5
– Retained earnings 31.7 48.8
– Net profit for the year 95.7 1.8
Treasury shares 5 –36.7 –42.9
Total equity 1’238.7 1’255.7

Total equity and liabilities 2’701.4 2’972.3

Sulzer Annual Report 2023 – Financial reporting – Financial statements of Sulzer Ltd – Income statement of Sulzer Ltd 189

Income statement of Sulzer Ltd

January 1 – December 31

millions of CHF Notes 2023 2022

Income

Investment income 9 200.6 160.0

Financial income 11 41.9 44.0

Other income 10 44.2 42.3

Total income 286.7 246.3

Expenses

Administrative expenses 8 100.9 70.1

Financial expenses 11 66.7 45.7

Investment and loan expenses 9 14.1 118.5

Other expenses 8.2 9.3

Direct taxes 1.1 0.9

Total expenses 191.0 244.5

Net profit for the year 95.7 1.8

Sulzer Annual Report 2023 – Financial reporting – Financial statements of Sulzer Ltd – Statement of changes in equity of Sulzer Ltd 190

Statement of changes in equity of Sulzer Ltd

January 1 – December 31
Reserves
from
Share Legal capital Free Retained Net Treasury
millions of CHF capital reserves contribution reserves earnings income shares Total

Equity as of January 1, 2022 0.3 155.5 200.7 891.5 46.2 121.3 –51.0 1’364.5

Dividend –118.7 –118.7

Allocation of net income 2.6 –2.6 –

Net profit for the year 1.8 1.8

Change in treasury shares 8.1 8.1

Equity as of December 31, 2022 0.3 155.5 200.7 891.5 48.8 1.8 –42.9 1’255.7

Dividend –118.9 –118.9

Allocation of net income –100.0 –17.1 117.1 –

Net profit for the year 95.7 95.7

Change in treasury shares 6.2 6.2

Equity as of December 31, 2023 0.3 155.5 200.7 791.5 31.7 95.7 –36.7 1’238.7
Sulzer Annual Report 2023 – Financial reporting – Notes to the financial statements of Sulzer Ltd 191

Notes to the financial statements of Sulzer Ltd

1 General information
Sulzer Ltd, Winterthur, Switzerland (the company), is the parent company of the Sulzer group. Its
financial statements are prepared in accordance with Swiss law and serve as complementary
information to the consolidated financial statements.

These financial statements were prepared according to the provisions of the Swiss Law on
Accounting and Financial Reporting (32nd title of the Swiss Code of Obligations). Where not
prescribed by law, the significant accounting and valuation principles applied are described below.

2 Key accounting policies and principles

Treasury shares
Treasury shares are recognized at acquisition cost and deducted from shareholders’ equity at the time
of acquisition. In case of a resale, the gain or loss is recognized through the income statement as
financial income or financial expenses.

Investments in subsidiaries and third parties

The participations are valued at acquisition cost or if the value is lower, at value in use, using generally
accepted valuation principles.

Non-current interest-bearing liabilities

Non-current interest-bearing liabilities are recognized in the balance sheet at amortized cost.
Discounts and issue costs for bonds are amortized on a straight-line basis over the bond’s maturity
period.

Share-based payments
Sulzer Ltd operates a share-based payment program that covers the Board of Directors. Restricted
share units (RSU) are granted annually. 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. Awards
automatically vest with the departure from the Board. The fair value of the Sulzer share at vesting date
is recognized as compensation to the Board of Directors.

Foregoing a cash flow statement and additional disclosures in the notes

As Sulzer Ltd has prepared its consolidated financial statements in accordance with a recognized
accounting standard (IFRS), it has decided to forego presenting additional information on audit fees
and interest-bearing liabilities in the notes and a cash flow statement in accordance with the law.
Sulzer Annual Report 2023 – Financial reporting – Notes to the financial statements of Sulzer Ltd 192

3 Cash and cash equivalents

As of December 2023, Sulzer had access to a syndicated credit facility of CHF 500 million maturing
on 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). In 2022 and 2023, the
group exercised the options, extending the term of the credit facility in the amount of CHF 415 million
to December 2028. 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, 2023, and
2022, the syndicated facility was not used.

4 Investments in subsidiaries
A list of the major subsidiaries held directly or indirectly by Sulzer Ltd is included in note 36 to the
consolidated financial statements.

5 Equity
Share capital
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.

Shareholders holding more than 3%

Dec 31, 2023 Dec 31, 2022

Number of Number of
shares in % shares in %

Viktor Vekselberg (direct shareholder: Tiwel Holding AG) 16’728’414 48.82 16’728’414 48.82

The Capital Group Companies, Inc. 1’034’950 3.02 1’034’950 3.02

Treasury shares held by Sulzer Ltd

2023 2022

Total Total
Number of transaction Number of transaction
millions of CHF shares amount shares amount

Balance as of January 1 523’855 42.9 534’733 51.0

Purchase 260’000 20.9 281’349 19.5

Share-based remuneration –332’781 –27.1 –292’227 –27.6

Balance as of December 31 451’074 36.7 523’855 42.9

The total number of treasury shares held by Sulzer Ltd as of December 31, 2023, amounted to
451'074 (December 31, 2022: 523'855 shares), which are mainly held for the purpose of issuing
shares under the management share-based payment programs.
Sulzer Annual Report 2023 – Financial reporting – Notes to the financial statements of Sulzer Ltd 193

6 Interest-bearing liabilities

2023 2022

millions of CHF Book value Nominal Book value Nominal

0.875% 07/2016–07/2026 125.0 125.0 125.0 125.0

1.300% 07/2018–07/2023 – – 289.9 290.0

1.600% 10/2018–10/2024 250.0 250.0 249.9 250.0

0.800% 09/2020–09/2025 299.8 300.0 299.6 300.0

0.875% 11/2020–11/2027 199.8 200.0 199.7 200.0

3.350% 12/2022–12/2026 169.7 170.0 169.7 170.0

Total as of December 31 1’044.3 1’045.0 1’333.8 1’335.0

– thereof non-current 794.3 795.0 1’043.9 1’045.0

– thereof current 250.0 250.0 289.9 290.0

All the outstanding bonds are traded on SIX Swiss Exchange.

7 Contingent liabilities

millions of CHF 2023 2022

Guarantees, sureties and comfort letters for subsidiaries

– to banks and insurance companies 845.5 937.3

– to customers 216.3 258.2

– to others 399.3 455.7

Guarantees for third parties 9.3 9.0

Total contingent liabilities as of December 31 1’470.4 1’660.2

As of December 31, 2023, CHF 406.3 million (2022: CHF 410.8 million) in guarantees, sureties and
comfort letters for subsidiaries to banks and insurance companies were utilized.

8 Administrative expenses

millions of CHF 2023 2022

Compensation of Board of Directors 2.6 1.8

Other administrative expenses 98.3 68.3

Total administrative expenses 100.9 70.1

Sulzer Ltd does not have any employees. The compensation of the Board of Directors includes share-
based payments and remuneration. Other administrative expenses contain management services and
recharges from subsidiaries.
Sulzer Annual Report 2023 – Financial reporting – Notes to the financial statements of Sulzer Ltd 194

9 Investment income and investment and loan expenses

In 2023, the investment income contains ordinary and extraordinary dividend payments from
subsidiaries amounting to CHF 182.3 million (2022: CHF 142.9 million). The release of allowances on
investments amounts to CHF 17.6 million (2022: CHF 0.0 million). The income from the sale of
subsidiaries amounts to CHF 0.4 million (2022: CHF 7.0 million), net.

The investment and loan expenses contain allowances on investments amounting to CHF 10.5
million (2022: CHF 44.6 million) and waivers on loans and receivables amounting to CHF 0.8 million
(2022: CHF 71.3 million). The share of loss from associates amounts to CHF 2.9 million (2022:
CHF 2.5 million).

10 Other income
The income from trademark license amounts to CHF 44.2 million (2022: CHF 42.3 million).

11 Financial income and expenses

The financial income contains interests on loans with subsidiaries amounting to CHF 35.1 million
(2022: CHF 42.1 million) and CHF 2.5 million (2022: CHF 0.5 million) with banks. The realized and
unrealized gain on marketable securities amounts to CHF 4.3 million (2022: loss of CHF 18.5 million).

The financial expenses contain mainly interest expenses on interest-bearing liabilities of

CHF 17.5 million (2022: CHF 15.8 million). The foreign currency revaluation on intercompany loans
resulted in a loss of CHF 48.8 million (2022: loss of CHF 11.4 million).
Sulzer Annual Report 2023 – Financial reporting – Notes to the financial statements of Sulzer Ltd 195

12 Share participation of the Board of Directors, Executive

Committee and related parties
Restricted share units for members of the Board
The compensation of the Board of Directors consists of a fixed cash component and a restricted
share unit (RSU) component with a fixed grant value. The number of RSU is determined by dividing
the fixed grant value by the volume-weighted share price of the last ten days prior to the grant date.
One-third of the RSU each vest after the first, second and third anniversaries of the grant date,
respectively. Upon vesting, one vested RSU is converted into one share in Sulzer Ltd. The vesting
period for RSU granted to the members of the Board of Directors ends no later than on the date on
which the member steps down from the Board.

2023

Restricted Performance Performance Performance

share units share units share units share units
Sulzer shares (RSU) 1) (PSU) 2021 2) (PSU) 2022 3) (PSU) 2023 4)

Board of Directors 9’320 17’430 – – –

Suzanne Thoma 2’559 2’886 – – –

Markus Kammüller 536 3’085 – – –

Alexey Moskov 2’114 3’295 – – –

David Metzger 1’736 3’295 – – –

Per Utnegaard 1’375 1’623 – – –

Hariolf Kottmann 1’000 1’623 – – –

Prisca Havranek-Kosicek – 1’623 – – –

Executive Committee 11’114 – 4’264 14’362 36’548

Suzanne Thoma 2’559 – – 2’120 12’778

Thomas Zickler 3’402 – 1’212 5’074 5’112

Haining Auperin 5’153 – 1’364 1’142 4’217

Tim Schulten – – 1’212 5’074 5’112

Jan Lüder – – – – 5’112

Uwe Boltersdorf – – 476 952 4’217

1) Restricted share units assigned by Sulzer.

2) The average fair value of one performance share unit 2021 at grant date amounted to CHF 124.95.
3) The average fair value of one performance share unit 2022 at grant date amounted to CHF 84.69.
4) The average fair value of one performance share unit 2023 at grant date amounted to CHF 88.38.
Sulzer Annual Report 2023 – Financial reporting – Notes to the financial statements of Sulzer Ltd 196

2022

Restricted Performance Performance Performance

share units share units share units share units
Sulzer shares (RSU) 1) (PSU) 2020 2) (PSU) 2021 3) (PSU) 2022 4)

Board of Directors 23’434 21’095 – – –

Suzanne Thoma 744 4’701 – – –

Matthias Bichsel 12’600 4’406 – – –

Alexey Moskov 2’217 3’786 – – –

David Metzger 600 2’808 – – –

Hanne Birgitte Breinbjerg Sørensen 7’273 3’786 – – –

Markus Kammüller – 1’608 – – –

Executive Committee 32’723 – 16’827 12’412 20’640

Suzanne Thoma 744 – – – 2’120

Thomas Zickler 1’513 – 1’273 1’212 5’074

Armand Sohet 6’791 – 7’777 4’994 4’186

Tim Schulten – – – 1’212 5’074

Torsten Wintergerste 23’675 – 7’777 4’994 4’186

1) Restricted share units assigned by Sulzer.

2) The average fair value of one performance share unit 2020 at grant date amounted to CHF 78.18.
3) The average fair value of one performance share unit 2021 at grant date amounted to CHF 124.95.
4) The average fair value of one performance share unit 2022 at grant date amounted to CHF 84.69.

Granted Sulzer shares to members of the Board of Directors

2023 2022

Quantity Value in CHF Quantity Value in CHF

Allocated to members of the Board of Directors 10’128 780’000 11’637 905’000

13 Subsequent events after the balance sheet date

At the time when these financial statements were authorized for issue, the Board of Directors was not
aware of any events that would materially affect these financial statements.
Sulzer Annual Report 2023 – Financial reporting – Notes to the financial statements of Sulzer Ltd 197

Proposal of the Board of Directors for the

appropriation of the available profit

in CHF 2023 2022

Net profit for the year 95’734’000 1’802’000

Unallocated profit carried forward from previous year 31’684’494 48’819’259

Total available profit 127’418’494 50’621’259

Appropriation from free reserves 100’000’000

Ordinary dividend –126’792’360 –118’936’766

Balance carried forward 626’134 31’684’494

Dividend distribution per share CHF 0.01

Gross dividend 3.75 3.50

Withholding tax (35%) –1.31 –1.23

Net dividend 2.44 2.27

The Board of Directors proposes the payment of a dividend of CHF 3.75 per share to the Annual
General Meeting on April 16, 2024. The company will not pay a dividend on treasury shares held by
Sulzer Ltd or one of its subsidiaries.
Sulzer Annual Report 2023 – Financial reporting – Financial statements of Sulzer Ltd – Auditor’s report 198

Report on the Audit of the Financial Statements

Opinion
We have audited the financial statements of Sulzer Ltd (the Company), which comprise the “Balance
sheet of Sulzer Ltd” as at December 31, 2023, the “Income statement of Sulzer Ltd” and the “
Statement of changes in equity of Sulzer Ltd” for the year then ended, and “Notes to the financial
statements of Sulzer Ltd”, including a summary of significant accounting policies.

In our opinion, the financial statements for the year ended December 31, 2023, comply with Swiss law
and the Company’s articles of incorporation.

Basis for Opinion

We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our
responsibilities under those provisions and standards are further described in the “Auditor’s
Responsibilities for the Audit of the Financial Statements” section of our report. We are independent
of the Company in accordance with the provisions of Swiss law, together with the requirements of the
Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these
requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. We have determined that there are no key
audit matters to communicate in our report.

Board of Directors’ Responsibilities for the Financial Statements

The Board of Directors is responsible for the preparation of the financial statements in accordance
with the provisions of Swiss law and the Company’s articles of incorporation, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Board of Directors is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either intends
to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Sulzer Annual Report 2023 – Financial reporting – Financial statements of Sulzer Ltd – Auditor’s report 199

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with Swiss law and SA-CH will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made.
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.

We communicate with the Board of Directors or its relevant committee regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.

We also provide the Board of Directors or its relevant committee with a statement that we have
complied with relevant ethical requirements regarding independence, and communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Board of Directors or its relevant committee, we determine
those matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor’s report,
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Sulzer Annual Report 2023 – Financial reporting – Financial statements of Sulzer Ltd – Auditor’s report 200

Report on Other Legal and Regulatory Requirements

In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control
system exists, which has been designed for the preparation of financial statements according to the
instructions of the Board of Directors.

We further confirm that the proposed appropriation of available earnings complies with Swiss law and
the Company’s articles of incorporation. We recommend that the financial statements submitted to
you be approved.

KPMG AG

Rolf Hauenstein Miriam von Gunten

Licensed Audit Expert Licensed Audit Expert
Auditor in Charge

Zurich, February 21, 2024

KPMG AG, Badenerstrasse 172, CH-8036 Zurich

© 2024 KPMG AG, a Swiss corporation, is a subsidiary of KPMG Holding AG, which is a member firm of the KPMG global organization of independent
member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Sulzer Annual Report 2023 – Investor contact 201

Investor contact

Thomas Zickler
Chief Financial Officer

Sulzer Ltd
Neuwiesenstrasse 15
8401 Winterthur
Switzerland

Phone +41 52 262 33 15

Contact form | Route

Sulzer Annual Report 2023 – Imprint 202

Imprint

Published by:
Sulzer Ltd, Winterthur, Switzerland
© 2024

Layout/graphics:
Office for spatial identity, Zurich, Switzerland
Sergeant, Zurich, Switzerland

Publishing system:
ns.wow by mms solutions AG, Zurich, Switzerland

Photographs:
Sulzer Management Ltd, Winterthur, Switzerland
Geri Krischker, Zurich, Switzerland (management portrait, Suzanne Thoma)
Fabian Hugo, Bern, Switzerland (management portrait, Thomas Zickler)
Max Schwank, Basel-Landschaft, Switzerland (Executive Committee photo)
Sulzer Annual Report 2023 – Disclaimer 203

Disclaimer

This report may contain forward-looking statements, including, but not limited to, projections of
financial developments and future performance of materials and products, containing risks and
uncertainties. These statements are subject to change based on known and unknown risks and
various other factors that could cause the actual results or performance to differ materially from the
statements made herein.

Rounding
Due to rounding, numbers presented throughout this report 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.

Languages
Parts of the Sulzer Annual Report 2023 have been translated into German. Please note that the
English-language version of the Sulzer Annual Report is the binding version.