Operational Free Cash Flow

In 2018 and 2017, the development of operational free cash flow by component was as follows:

Components of Operational Free Cash Flow

million CHF

 

2018

 

12017

 

 

 

 

 

1

Restated to reflect adoption of IFRS 15 (see note 1)

2

Gain from Guangzhou, CN land transaction: 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 jointly develop the original 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 efforts, Lonza has classified this property as held for sale, and recorded an impairment in 2018 based on estimated fair value less cost to sell. The impairment loss has been included in «Other operating expense»

Earnings before interests, taxes and depreciation (EBITDA)

 

1,442

 

1,131

Change of operating net working capital

 

(29)

 

(41)

Capital expenditures in tangible and intangible assets

 

(575)

 

(451)

Disposal of tangible and intangible assets

 

8

 

8

Change of other assets and liabilities

 

2

 

46

Gain from Guangzhou (CN) land transaction2

 

0

 

(74)

Operational free cash flow (before acquisitions / disposals)

 

848

 

619

Acquisition of subsidiaries

 

(28)

 

(3,310)

Operational free cash flow

 

820

 

(2,691)