Note 4 – Restructuring

Year ended 31 December 2018

million CHF

 

Pharma & Biotech

 

Specialty Ingredients

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

1

Net of reversal of impairment (2018: CHF 0 million; 2017: CHF 2 million)

Impairment of property, plant and equipment, intangible assets and goodwill1

 

32

 

10

 

35

 

77

Restructuring charges

 

6

 

5

 

0

 

11

Total

 

38

 

15

 

35

 

88

Year ended 31 December 2017

million CHF

 

Pharma & Biotech

 

Specialty Ingredients

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

1

Net of reversal of impairment (2018: CHF 0 million; 2017: CHF 2 million)

Impairment of property, plant and equipment, intangible assets and goodwill1

 

18

 

1

 

0

 

19

Restructuring charges

 

4

 

1

 

8

 

13

Total

 

22

 

2

 

8

 

32

In 2018, Lonza recognized an impairment loss of CHF 29 million related to production facilities in Walkersville, MD (USA) in conection with the transfer of cell-therapy activities to Portsmouth, NH (USA) and Houston, TX (USA). The costs were included in cost of goods sold of the Pharma & Biotech segment.

The Special Ingredients segment recognized impairment losses of CHF 10 million for production assets in Nansha (CN) and Visp (CH). These costs were included in cost of goods sold.

The impairment losses of Corporate are related to the site in Guangzhou (CN). The local government requested Lonza to close its Guangzhou (CN) manufacturing site several years ago. In response, Lonza entered into an agreement with a third-party property development company to develop jointly the land into commercial properties. According to the agreement, Lonza provided the land and the property development company offered the funds and assumed construction responsibilities. In 2017, Lonza obtained its entitled portion of commercial properties based on the agreement. A non-cash gain of the property’s estimated fair value was recognized in 2017 based on a valuation performed by an independent external property valuation specialist.

In 2018, Lonza made the decision to dispose of this property. In connection with this disposal effort, Lonza has classified this property as held for sale, and recorded an impairment in 2018 based on the estimated fair value less cost to sell. The related estimated impairment loss of CHF 35 million was included in other operating expense.

In 2017, Lonza recognized an impairment loss of Visp (CH) related property, plant and equipment of CHF 19 million, which was included within cost of goods sold.

Organizational changes of the Group’s finance and information technology functions in 2017 resulted in restructuring charges of CHF 7 million. These costs are included within the Corporate administration and general overheads.