G32 Divestments, assets held for sale and discontinued operations
The divestments of business combinations executed in 2020 and 2021 are set out below.
Business area |
Company/Unit |
Divestment date |
Annual revenue |
No. of employees |
|---|---|---|---|---|
2020 |
|
|
|
|
Other operations |
Sandvik Drilling & Completions (Varel) |
March 12, 2020 |
2,100 MSEK in 2019 |
1,100 |
Sandvik Materials Technology |
Sandvik Powder Solutions Business |
April 6, 2020 |
68 MSEK in 2019 |
30 |
|
|
|
|
|
2021 |
|
|
|
|
Sandvik Manufacturing and Machining Solutions |
OJSC SANDVIK-MKTC |
March 30, 2021 |
N/A |
14 |
Sandvik Materials Technology |
Tube Business |
May 31, 2021 |
51 MSEK in 2020 |
51 |
Sandvik Mining and Rock Solutions |
Shandong ZhongRui Mining Equipment Manufacturing Co., Ltd |
September 30, 2021 |
N/A |
N/A |
Sandvik Mining and Rock Solutions |
Exploration |
On-going |
450 MSEK 2019 |
39 |
Divestments
Sandvik had no divestments with major impact during 2021. One of the divestments, Exploration was presented as assets held for sale in 2020 and had still some items left as assets held for sale in 2021, See below under assets held for sale.
Assets and liabilities included in divestments 2021
|
Total |
|---|---|
Intangible assets |
4 |
Property, plant and equipment |
29 |
Other non-current assets |
– |
Inventories |
171 |
Receivables |
18 |
Other current assets |
13 |
Cash and cash equivalents |
48 |
Interest-bearing loans and borrowings |
– |
Other liabilities and provisions |
–25 |
Deferred tax assets/liabilities, net |
8 |
Net identifiable assets |
265 |
Gain (loss) on divestments of business combinations |
202 |
Consideration received after divestment costs |
471 |
Consideration not received |
–33 |
Less: Cash and cash equivalents in the divested entities |
–48 |
Impact on the Group’s cash and cash equivalents, divested operations |
391 |
Asset held for sale
During July 2021, management at Sandvik decided to sell the Jiading Real estate in China which is currently reported in Sandvik Mining and Rock Solutions and Sandvik Rock Processing Solutions. The process to find a buyer was started in 2021, the assets and liabilities were consequently classified as a disposal group held for sale. The disposal group was measured at fair value less costs to sell. The transaction is expected to close during the first quarter of 2022.
During October 2020, Sandvik signed an agreement to divest its Exploration business to Drillman, a subsidiary of the M Group of companies, which is 100 percent owned and operated in Australia. The deal includes exploration rigs, consumables and production stock, along with selected trademarks and patents. The business is currently reported in Sandvik Mining and Rock Solutions. The attributable assets and liabilities were classified as a disposal group held for sale. The disposal group was measured at fair value less costs to sell. The divestment process is ongoing and there are only minor items left. Final closing of the transaction is expected during the first quarter of 2022.
Assets and liabilities held for sale
|
2020 |
2021 |
|---|---|---|
Intangible assets |
2 |
42 |
Property, plant and equipment |
0 |
190 |
Other non-current assets |
53 |
48 |
Inventories |
245 |
2 |
Receivables |
61 |
41 |
Total assets |
361 |
323 |
Other liabilities and provisions |
171 |
107 |
Total liabilities |
171 |
107 |
Total equity and liabilities |
171 |
107 |
Discontinued operations
The Mining Systems business was divested to FLSmidth and Nepean already in 2017, however a number of ongoing projects were kept to be delivered by Sandvik in 2017–2019, through an operational agreement with FLSmidth. The majority of the projects were completed by the end of 2019, however Mining Systems still has some personnel and guarantee commitments.
Income statement for discontinued operations
|
2020 |
2021 |
|---|---|---|
Revenue |
6 |
5 |
Cost of sales and services |
–13 |
19 |
Gross profit |
–8 |
24 |
Selling expenses |
6 |
–10 |
Administrative expenses |
–27 |
–14 |
Other operating income |
2 |
6 |
Other operating expenses |
–5 |
–16 |
Operating loss |
–32 |
–10 |
Loss for the year |
–32 |
–10 |
Cash flow statement for discontinued operations
|
2020 |
2021 |
|---|---|---|
Cash flow from operating activities |
–67 |
–40 |
Cash flow from investing activities |
2 |
1 |
Cash flow from discontinued activities |
–66 |
–39 |
Accounting principles
Assets held for sale and discontinued operations
Disposal groups held for sale
Disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. To be highly probable, actions to complete the transaction are initiated and the transaction is expected to be completed within one year. The disposal group is measured at the lower of the carrying amount and fair value less costs to sell.
An impairment loss is recognized for any initial or subsequent write-down of the disposal group to fair value less costs to sell.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
Discontinued operations
To qualify as discontinued operations, a component of the Group must, in addition to having been classified as a disposal group held for sale, also represent a separate major line of business or be a part of a single coordinated plan to dispose of a separate major line of business.
Loss of control of a wholly-owned subsidiary with an interest retained
When the Group disposes of a significant part of its interest, and therefore loses control of a subsidiary, it deconsolidates the subsidiary. If the retained interest in the entity fulfills the criteria of being an associate, it is accounted for at fair value at the disposal date, and subsequently accounted for using the equity method. The gain or loss of the transaction is the difference between the fair value of the consideration received as well as the fair value of the retained interest, and the carrying value of the former subsidiary’s net assets (including any related goodwill), and is recorded in the income statement. Any portion of the gain or loss related to the remeasurement of the retained interest to fair value is disclosed separately.
Distribution to owners
When Sandvik is committed to distribute a disposal group to its owner, assets and liabilities will be reclassified to “held for distribution to owners”. Sandvik is committed to the distribution when the disposal group is available for immediate distribution and the distribution is highly probable. To be highly probable, actions to complete the distribution are initiated and the distribution is expected to be completed within one year. The decision of distribution shall be taken at the appropriate level within the organization.