2 Invested capital

Consolidated Financial Statements 2 Invested capital

2.1 Net operating assets and operating free cash flow

Bystronic uses the key figures “Net operating assets”, “Return on net operating assets (RONOA)” and “Operating free cash flow” to manage its operating performance, among others.

Net operating assets and return on net operating assets

CHF million	12/31/2023	12/31/2022

Trade receivables	117.5	167.2
Prepayments to suppliers	4.6	6.0
Other receivables (without derivatives)	28.1	33.9
Inventories	237.9	287.7
Prepaid expenses and accrued income	14.4	14.0
Fixed assets	124.4	134.2
Intangible assets	10.8	11.0
Long-term receivables and loans	20.7	24.2
Deferred tax assets	22.4	24.2
Trade payables	–52.2	–69.9
Advance payments from customers	–95.3	–158.7
Other liabilities (without derivatives)	–17.3	–31.5
Accrued expenses and deferred income	–68.5	–83.7
Short-term and long-term provisions	–39.2	–50.4
Deferred tax liabilities	–17.1	–20.3
Net operating assets (NOA)	291.0	288.0

Net operating assets (NOA), average	289.5	253.4
Operating result (EBIT)	54.4	48.1
Applied tax rate	24.6%	20.3%
Return on net operating assets (RONOA) after tax	14.2%	15.1%

For the calculation of the net operating assets (NOA) effects from the disposals of discontinued operations are not taken into account. Therefore, in the calculation of the NOA, financial assets (non-current receivables and loans) are reduced by CHF 64.3 million (previous year: CHF 62.5 million). The interest on the vendor loan of CHF 1.7 million (previous year: CHF 1.7 million) is also not taken into account when calculating the allowable tax expense or the applied tax rate.

Return on net operating assets (RONOA) after tax is calculated from the operating profit (EBIT) after deduction of the chargeable tax expense in relation to the average net operating assets between January 1 and the relevant balance sheet date.

Operating free cash flow

CHF million	2023	2022

Cash flow from operating activities	53.6	–16.5
Investment in fixed assets	–13.2	–18.3
Divestment of fixed assets	1.2	0.2
Investment in intangible assets	–6.2	–5.1
Investment in financial assets	–2.0	–1.3
Divestment of financial assets	0.7	0.4
Operating free cash flow	34.0	–40.6
in % of net sales	3.7%	–4.0%

Sale of business activities		19.1
Purchase of marketable securities	–124.3	–125.0
Sale of marketable securities	125.0	30.0
Free cash flow	34.7	–116.4

Operating free cash flow is calculated on the basis of cash flows from operating activities less selected items of cash flows from investment activities. Compared to free cash flow, operating free cash flow excludes changes in marketable securities and money market instruments with a maturity of more than 90 days as well as the acquisition and divestment of business activities.

2.2 Net working capital

Trade receivables

CHF million	12/31/2023	12/31/2022

Gross values	129.5	176.7
Value adjustments	–12.0	–9.5
Net values	117.5	167.2

Specific and general value adjustments were recognized for receivables at risk. The general value adjustment is based on empirical values.

Other receivables

Other receivables mainly include recoverable value-added taxes, the positive market values of open derivative financial instruments as of the balance sheet date as well as other tax refund claims.

Inventories

CHF million	12/31/2023	12/31/2022

Raw materials, supplies and spare parts	143.5	145.4
Semi-finished goods and work in progress	26.6	45.2
Finished goods	123.1	148.2
Value adjustment on inventories	–55.4	–51.2
Total inventories	237.9	287.7

Due to the reduction of backlog and the decline in incoming orders, inventories decreased by CHF 49.8 million during the reporting year.

Advance payments from customers

After placing their orders, customers make corresponding advance payments. These decreased in the reporting year due to a decline in incoming orders and delayed machine acceptances in the previous year.

Other short-term liabilities

This position includes taxes owed, social security contributions, customers with credit balances and negative market values of open derivative financial instruments as of the balance sheet date. The decrease compared to the previous year is primarily due to the reduction in VAT owed.

Accrued expenses and deferred income

CHF million	12/31/2023	12/31/2022

Accruals for personnel expenses	18.7	20.6
Deferred income	14.7	20.7
Accruals and deferrals for current income taxes	15.1	19.5
Other accruals and deferrals	19.9	22.9
Total accrued expenses and deferred income	68.5	83.7

Accrued expenses and deferred income include amounts from the accrual of expenses and deferred income. Other accruals and deferrals include goods and services purchased from third parties but not yet invoiced commissions, consulting, audit as well as installation and service costs.

Significant estimates made by management

In assessing the recoverability of inventories, estimates are made on the basis of expected consumption, price trends (lower of cost or market principle) and loss-free valuation. The estimates used to determine value adjustments on inventories are reviewed annually and amended as necessary.

Accounting principles

Trade and other receivables are stated at nominal value, less value adjustments for doubtful accounts.

Inventories are valued at the lower of cost or market. Production costs are calculated without imputed interest. Risks arising in connection with inventories difficult to sell or with a long storage period are accounted for by means of value adjustments.

Liabilities are recognized in the balance sheet at nominal value.

2.3 Fixed assets

CHF million	Factory buildings	Plant and machinery	Tooling, furniture, vehicles	Assets under construc- tion	Undevelo- ped real estate	Total fixed assets

Cost at 12/31/2021	107.9	93.5	29.6	15.6	8.2	254.7

Additions	2.7	10.0	3.3	2.2		18.1
Disposals		–3.1	–1.3	–0.1		–4.6
Changes in scope of consolidation		–0.0	–0.1	–0.0		–0.2
Reclassifications	10.0	3.3	1.2	–14.5
Currency translation effects	–1.6	–1.8	–1.0	–0.4	0.1	–4.7
Cost at 12/31/2022	119.0	101.9	31.6	2.7	8.3	263.4

Additions	0.8	8.3	1.6	1.8		12.4
Disposals		–2.3	–0.6	–0.5		–3.4
Reclassifications	1.6	–1.1	1.4	–1.8
Currency translation effects	–5.7	–2.7	–1.5	–0.1	–0.5	–10.5
Cost at 12/31/2023	115.6	104.1	32.5	2.1	7.8	262.0


Accumulated depreciation at 12/31/2021	42.8	57.1	21.8			121.6

Ordinary depreciation	3.4	7.0	3.8			14.2
Impairments		0.3	0.1			0.4
Disposals		–3.1	–1.4			–4.5
Changes in scope of consolidation		–0.0	–0.1			–0.2
Currency translation effects	–0.6	–1.0	–0.7			–2.3
Accumulated depreciation at 12/31/2022	45.5	60.2	23.5			129.3

Ordinary depreciation	3.6	6.9	3.4			13.9
Impairments		0.0	0.0	0.5		0.5
Disposals	0.0	–1.2	–0.6	–0.5		–2.2
Reclassifications		–0.2	0.2			0.0
Currency translation effects	–1.2	–1.5	–1.1			–3.8
Accumulated depreciation at 12/31/2023	47.9	64.3	25.5			137.7

Net book value of fixed assets at 12/31/2022	73.5	41.6	8.1	2.7	8.3	134.2

Net book value of fixed assets at 12/31/2023	67.7	39.9	7.0	2.1	7.8	124.4

Additions to fixed assets in 2023 mainly relate to investments in operating facilities at the production sites in Niederönz (Switzerland) and Gotha (Germany), where a company-owned energy center was built for more sustainable energy production.

Significant estimates made by management

The recoverability of fixed assets is assessed when there are indications of impairment. If there are indications of impairment, the recoverable amount is calculated. If the carrying amount of an asset exceeds its recoverable amount, an additional value adjustment is recognized. The calculation of the recoverable amount includes the estimation of future cash flows, the determination of the discount factor and the growth rate based on forecasted expectations. Actual cash flows may differ from the discounted future cash flows based on these estimates. Likewise, useful lives may be shortened or values may decline as a result of changes in use due to the relocation or abandonment of sites or if sales are lower than expected in the medium term.

Accounting principles

Land is carried at acquisition cost less any value adjustments. Other fixed assets are valued at acquisition or production cost less any necessary depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:



Factory buildings	30 to 40 years
Plant and machinery	5 to 12 years
Tooling, furniture and vehicles	2 to 8 years

2.4 Intangible assets

CHF million	Software	Other intangible assets	Total intangible assets

Cost at 12/31/2021	41.6	2.1	43.8

Additions	5.4	0.0	5.3
Disposals	–6.2		–6.2
Currency translation effects	–0.2	–0.0	–0.3
Cost at 12/31/2022	40.5	2.1	42.7

Additions	5.9		5.9
Disposals	–1.6	–0.6	–2.2
Reclassifications	0.0	–0.0
Currency translation effects	–0.5	–0.0	–0.5
Cost at 12/31/2023	44.4	1.5	45.9


Accumulated depreciation at 12/31/2021	30.9	1.4	32.5

Ordinary depreciation	5.5	0.3	5.8
Disposals	–6.2		–6.2
Currency translation effects	–0.2	–0.0	–0.3
Accumulated depreciation at 12/31/2022	30.1	1.6	31.7

Ordinary depreciation	5.5	0.2	5.7
Impairments	0.2		0.2
Disposals	–1.6	–0.5	–2.1
Currency translation effects	–0.4	–0.0	–0.4
Accumulated depreciation at 12/31/2023	33.8	1.3	35.1

Net book value of intangible assets at 12/31/2022	10.5	0.5	11.0

Net book value of intangible assets at 12/31/2023	10.6	0.2	10.8

The additions basically relate to investments in the digitalization and automation of business processes. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The useful lives are as follows:



Software	3 to 5 years
Other intangible assets	3 to 5 years

Goodwill

Theoretical capitalization of goodwill would result in the following effects on the consolidated financial statements:

Theoretical assets' analysis of goodwill:

CHF million	2023	2022

Cost at 1/1	85.4	90.8
Currency translation effects	–8.2	–5.4
Cost at 12/31	77.2	85.4


Accumulated depreciation at 1/1	82.6	81.6
Ordinary depreciation	2.3	6.1
Currency translation effects	–8.2	–5.1
Accumulated depreciation at 12/31	76.8	82.6

Net book value of goodwill at 1/1	2.8	9.2

Net book value of goodwill at 12/31	0.4	2.8

Theoretical impact on income statement:

CHF million	2023	2022

Operating result (EBIT)	54.4	48.1
EBIT margin in %	5.8%	4.7%
Amortization of goodwill	–2.3	–6.1
Theoretical operating result (EBIT) incl. amortization of goodwill	52.0	42.0
Theoretical EBIT margin in %	5.6%	4.1%

Net result	41.9	36.6
Amortization of goodwill	–2.3	–6.1
Theoretical net result incl. amortization of goodwill	39.6	30.5

Theoretical impact on balance sheet:

CHF million	12/31/2023	12/31/2022

Equity as per balance sheet	730.6	724.2
Theoretical activation of net book value of goodwill	0.4	2.8
Theoretical equity incl. net book value of goodwill	731.0	727.0

Shareholders’ equity in % of total assets	71.3%	63.4%
Theoretical equity incl. net book value of goodwill in % of total assets	71.4%	63.5%

Significant estimates made by management

The recoverability of intangible assets (including goodwill) is assessed when there are indications of impairment. If there are such indications, the recoverable amount is calculated. If the carrying amount of an asset or the cash-generating unit to which the asset belongs exceeds its recoverable amount, an additional impairment loss is recognized. The calculation of the recoverable amount includes the estimation of future cash flows, the determination of the discount factor and the growth rate based on forecasted expectations. Actual cash flows may differ from the discounted future cash flows based on these estimates.

Accounting principles

Intangible assets are carried at acquisition cost less any value adjustments. Amortization is calculated on a straight-line basis over the estimated useful lives of the assets, which is normally between three and five years for software.

Research and development costs are reflected in the income statement.

Goodwill resulting from acquisitions of control is offset against retained earnings at the time of acquisition. On disposal or liquidation of a business unit, the goodwill previously offset against equity is reflected in the income statement. For shadow accounting purposes, goodwill is generally amortized on a straight-line basis over its useful life, which is normally five years.

2.5 Other financial assets

CHF million	12/31/2023	12/31/2022

Assets from employer contribution reserves	16.0	20.4
Long-term receivables and loans	85.0	86.8
Securities held as non-current assets	4.0	3.4
Total financial assets	104.9	110.6

Further details on the change in assets from employer contribution reserves can be found in note 5.1. Non-current receivables and loans include long-term customer loans, deposits for rents and the granting of a vendor loan (including accrued interest) of CHF 64.3 million (previous year: CHF 62.5 million) in connection with the sale of Mammut Sports Group, which must be repaid by the buyer by January 2027 at the latest. Financial assets are value adjusted by CHF 3.2 million (previous year: CHF 3.7 million). There are value adjustments on long-term customer loans due to outstanding payments of CHF 3.0 million (previous year: CHF 2.4 million) and on non-recoverable securities of CHF 0.2 million (previous year: CHF 1.3 million).

Accounting principles

Financial assets are recorded at acquisition cost, less any value adjustments.

2.6 Provisions and contingent liabilities

CHF million	Warranty	Litigation	Other	Total provisions

Provisions at 12/31/2021	23.5	4.6	20.1	48.2
Additions	27.0	0.1	2.1	29.2
Use	–18.7	–0.0	–0.7	–19.5
Release	–3.9	–1.8	–0.4	–6.2
Changes in scope of consolidation	–0.0			–0.0
Currency translation effects	–0.9	–0.0	–0.4	–1.3
Provisions at 12/31/2022	26.9	2.8	20.6	50.4

Additions	27.0	0.1	3.0	30.1
Use	–26.4	–0.1	–3.5	–30.0
Release	–3.6	–1.1	–4.5	–9.1
Currency translation effects	–1.5	–0.0	–0.6	–2.2
Provisions at 12/31/2026	22.5	1.7	15.0	39.2

of which short-term 2022	22.4	0.0	5.9	28.3
of which short-term 2023	18.0	0.0	4.6	22.6

Warranty provisions relate to the sale of products and are based on empirical values. Experience shows that the corresponding cash outflow occurs evenly over the warranty period of one to five years.

Provisions for litigations mainly relate to legal cases arising from intellectual property rights and potential guarantees and indemnities in connection with the sale of discontinued operations, where the timing of the cash outflow of the liabilities is uncertain as it depends on the progress of negotiations or proceedings.

Other provisions include in particular those for long-service awards and retirement benefits that do not qualify as employee benefit obligations, provisions for impending losses on purchase commitments under master purchase agreements and provisions for tax liabilities.

Contingent liabilities

In connection with customer financing, there were repurchase obligations for machines to leasing companies for CHF 27.4 million (previous year: CHF 31.2 million). Bystronic companies guarantee to beneficiary leasing companies that it will take the machines back if the lessees fail to pay the agreed installments.

Significant estimates made by management

The amount of provisions is primarily determined by the estimated future costs. The calculation for warranty claims is based on sales of products, contractual agreements and empirical values. In addition to the lump-sum calculation, individual provisions are taken into account for claims that have occurred or have been reported based on the management’s assessment. The lump-sum provision is reduced by the individual provision.

Accounting principles

Provisions are recognized when an event has occurred prior to the balance sheet date that gives rise to a probable obligation where the amount and/or timing is uncertain but can be estimated. This obligation may be based on legal or factual grounds.