Notes to the separate financial statements of Comet Holding AG

Comet Holding AG has its registered office in Flamatt, Switzerland and is the Comet Group’s parent holding company listed on the Swiss stock exchange. The separate financial statements of Comet Holding AG at and for the year ended December 31, 2017 comply with the provisions of the Swiss Code of Obligations. The manner of the inclusion of Comet Holding AG in the consolidated accounts is governed by the measurement principles set out in the notes to the consolidated financial statements.

01 Accounting principles

These separate financial statements were prepared in accordance with the principles of the applicable Swiss Accounting Law (Title 32 of the Swiss Code of Obligations).

Receivables and loans

Receivables and loans are stated at nominal amounts less any necessary write-downs.

Intangible assets

Intangible assets – the rights to trademarks and names related to FeinFocus – are recognized at historical cost less necessary amortization and impairment.

Investments in subsidiaries

Investments in subsidiaries are recognized at historical cost less necessary impairment; they are individually tested annually for impairment.

02 Investments in subsidiaries

The following subsidiaries were consolidated in the Group financial statements of Comet Holding AG at December 31, 2017:

Company

Registered office

Currency

Capital stock

Equity interest in % *

2017

2016

Comet Holding AG

Flamatt, Switzerland

CHF

7,753,658

100%

100%

Comet AG

Flamatt, Switzerland

CHF

2,000,000

100%

100%

Comet Electronics (Shanghai) Co. Ltd.

Shanghai, China

CNY

5,466,148

100%

100%

Comet Mechanical Equipment (Shanghai) Co. Ltd.

Shanghai, China

CNY

1,655,420

100%

100%

Comet Technologies USA, Inc.

Shelton, CT, USA

USD

1,000

100%

100%

Comet Technologies Korea Co. Ltd.

Suwon, Korea

KRW

500,000,000

100%

100%

Yxlon International GmbH

Hamburg, Germany

EUR

110,000

100%

100%

Yxlon International A/S

Taastrup, Denmark

DKK

601,000

100%

100%

Yxlon International KK

Yokohama, Japan

JPY

10,000,000

100%

100%

Yxlon (Beijing) X-Ray Equipment Trading Co. Ltd.

Beijing, China

CNY

1,077,000

100%

100%

* Comet Holding AG also holds 100% of the voting rights in all companies.

03 Non-current financial assets – loans

Loans to subsidiaries were as follows:

In thousands of CHF

2017

2016

Comet AG

53,720

38,964

Comet Technologies USA, Inc.

39,165

39,580

Comet Technologies Korea Co. Ltd.

42

842

Yxlon International GmbH

22,689

19,536

Yxlon International A/S

2,980

3,002

Yxlon International KK

855

870

Total loans to subsidiaries

119,451

102,794

04 Listing and shareholders

Comet Holding AG (the “Company”) is the Group’s only company listed on a stock exchange. The Company’s registered office is in Flamatt, Switzerland. The registered shares of Comet Holding AG have been listed in the main market segment of the SIX Swiss Exchange in Zurich since December 17, 2002.

Ticker symbol

COTN

Security number

382 575

ISIN

CH0003825756

Closing price at December 31, 2017

CHF 153.4

Market capitalization at December 31, 2017

CHF 1,189 million

Assorted data on the stock of Comet Holding AG is provided inside the cover flap at the front of the annual report.

Listed and non-listed Group companies

Comet Holding AG has no publicly traded subsidiaries. The companies consolidated in the Comet Group are presented above in note 2, “Investments in subsidiaries”.

Registered shareholders

At December 31, 2017, Comet Holding AG had 3,303 voting shareholders of record (i.e., voting shareholders registered in the share register; prior year: 1,691). Of the total issued registered stock, 100% (prior year: 100%) represented free float.

The structure of share ownership size classes among the shareholders of record at December 31, 2017 was as follows:

Number of shares

Number of shareholders

1 to 1,000

2,941

1,001 to 10,000

313

10,001 to 50,000

33

50,001 to 100,000

13

More than 100,000

3

This analysis does not capture the stock of shareholders who were not registered in the share register. At December 31, 2017 these shares of unregistered owners amounted to 40% of the total (prior year: 34%).

Significant shareholders

Ownership interests in companies domiciled in Switzerland whose shares are listed at least partly in Switzerland must be notified both to the issuer company and to the SIX Swiss Exchange when the holder’s voting rights reach, increase above or fall below certain thresholds. These notification thresholds are 3%, 5%, 10%, 15%, 20%, 25%, 33 1/3%, 50% and 66 2/3% of voting rights. The relevant details are set out in the Swiss Stock Exchange Act (BEHG) and in the Ordinance of the Swiss Financial Market Supervisory Authority on Stock Exchanges and Securities Trading (the FINMA Stock Exchange Ordinance).

At December 31, 2017 the Company, according to disclosure notifications, had the following significant shareholders (defined for this purpose as holding voting rights in excess of 3% of the Comet capital stock recorded in the Swiss commercial register of companies):

Beneficial owner

Direct shareholder

Share of voting rights as disclosed by shareholders

Haldor Foundation

Tringle Investment Pte Ltd

10.13%

Pictet Asset Management SA (Direction de Fonds)

Pictet (CH) Swiss Mid Small Cap

4.82%

Cologny Advisors LLP

Camox Master Fund

3.26%

On February 8, 2018, Pictet Asset Management SA (Direction de Fonds) notified a reduction of its shareholding to 2.87%.

The Company has not been notified of nor is aware of any other shareholders that held more than 3% of its stock. To the best of the Company’s knowledge, there were no voting pool agreements.

Reportable changes during fiscal year 2017

In the fiscal year under review, eight reportable announcements were published. For a complete list of all announcements under section 20 BEHG, refer to the publication platform of the disclosure section of the SIX Swiss Exchange: www.six-exchange-regulation.com/publications/significant-shareholders.html

Cross-shareholdings

There were no cross-shareholdings with other publicly traded companies.

05 Equity capital structure

Capital stock

The capital stock at January 1, 2017 was CHF 7,745,430, divided into 7,745,430 registered shares with a par value of CHF 1.00 per share (restated to reflect the stock split). In fiscal year 2017 the capital stock was increased by 8,228 shares from the portion of authorized capital designated for equity-based compensation. Including the increase of 8,228 shares from this portion of authorized capital, Comet Holding AG at December 31, 2017 thus had a new total of CHF 7,753,658 of capital stock, divided into 7,753,658 registered shares with a par value of CHF 1.00 per share. The capital stock is fully paid in. At its meeting on August 10, 2017 the Board of Directors established that the capital increase from authorized capital for equity compensation was properly performed. The information in the commercial register, and the Bylaws of Comet Holding AG, were updated to reflect the change in capital stock.

2017

2016

Number of shares

Par value in CHF

Number of shares*

Par value in CHF

January 1

7,745,430

7,745,430

7,738,010

7,738,010

Increase in capital from the portion of authorized capital designated for equity compensation

8,228

8,228

7,420

7,420

December 31

7,753,658

7,753,658

7,745,430

7,745,430

* Number of shares restated to reflect the ten-for-one stock split of April 28, 2017.

At the balance sheet date, Comet Holding AG held no treasury stock (prior year: none).

Authorized capital for equity compensation

Under section 3b of its Bylaws, a portion of the Company’s unissued authorized capital is designated for use only as equity-based compensation (in German this portion is known as “bedingtes Aktienkapital”). In such an increase, stock is issued to Executive Committee members and / or Board members of Comet Holding AG. With respect to this portion of authorized capital, the other shareholders’ pre-emptive rights are excluded. The issuance of stock or stock subscription rights is based on a compensation plan (in the form of a written regulation) adopted by the Board of Directors.

In May 2017, in accordance with the compensation plan, the members of the Board of Directors were granted a total of 1,267 shares of stock in payment of CHF 100,303 of fixed retainers due for fiscal year 2016. In addition, as part of their compensation for 2017, the members of the Board of Directors were granted a total of 631 shares in payment of CHF 49,953 of fixed retainers due for the period from January 1, 2017 to the 2017 Annual Shareholder Meeting. The fully paid shares were applied to the retainers due at a price of CHF 79.17 per share.

Members of the Executive Committee were granted a total of 6,330 shares in payment of CHF 782,996 of profit-sharing compensation due for fiscal year 2017. The fully paid shares were applied to the compensation due at a price of CHF 123.70 per share.

As a result of these grants of a total of 8,     228 shares in 2017, the Company’s unissued authorized capital for equity-based compensation showed the following movement (after the stock split):

2017

2016

Number of shares

Par value in CHF

Number of shares*

Par value in CHF

January 1

217,690

217,690

225,110

225,110

Increase in capital (awards to Board of Directors for prior term's retainer and to Executive Committee for prior year's profit-sharing compensation)

(8,228)

(8,228)

(7,420)

(7,420)

December 31

209,462

209,462

217,690

217,690

* Number of shares restated to reflect the ten-for-one stock split of April 28, 2017.

At the end of the year, the remaining unissued authorized capital for equity-based compensation was CHF 209,462, or 2.7% of the existing capital stock.

Authorized capital for other capital increases

At December 31, 2017, in addition to shares outstanding and unissued authorized capital for equity compensation, the Company had unissued authorized capital for purposes set out in section 3a of the Bylaws (in German: “genehmigtes Aktienkapital”). The Board of Directors is authorized, at any time until April 21, 2018, to increase the capital stock by a maximum of CHF 1.4 million by issuing up to 1,400,000 fully payable registered shares with a par value of CHF 1.00 per share, which represents 18% of the existing capital stock. Increases by firm commitment underwriting and increases by part of the total authorized amount are permitted. The amount of the respective issue, the date when entitlement to dividend commences, the terms of any exercise of pre-emptive rights and the nature of the contributions are determined by the Board of Directors.

The Board of Directors is authorized to exclude shareholders’ subscription rights and assign these rights to third parties if the shares in question are to be used for the acquisition of companies via equity swaps or to finance the cash purchase of companies or parts of companies, or to finance new investment projects of Comet Holding AG, or for providing an ownership interest to an industrial partner (either in order to cement a strategic alliance or in the event of a takeover offer for the Company). Stock for which pre-emptive rights are granted but not exercised must be sold by the Company at market prices.

06 Disclosure of shareholdings of the Board of Directors and Executive Committee

The ownership interests in Comet Holding AG held by current members of the Board of Directors and of the Executive Committee are disclosed below. This disclosure covers all persons who held Board or Executive Committee positions for all or part of the year under review or of the prior year, regardless of whether they still did so at the balance sheet date. The shareholdings shown include those of respective related parties.

Total number of shares

Of which: number of shares* subject to holding periods ending

Share of voting rights

2017

2016*

4/22/2018

4/21/2019

4/20/2020

2017

2016

Hans Hess Chairman of the Board

36,733

48,700

2,340

1,040

543

0.5%

0.6%

Lucas A. Grolimund Vice Chairman and member of the Board

9,621

9,350

1,200

520

271

0.1%

0.1%

Gian-Luca Bona Member of the Board

5,421

5,150

1,360

520

271

0.1%

0.1%

Rolf Huber Member of the Board

13,361

13,090

1,280

520

271

0.2%

0.2%

Mariel Hoch Member of the Board

271

0

0

0

271

0.0%

0.0%

Franz Richter Member of the Board

271

0

0

0

271

0.0%

0.0%

Ronald Fehlmann Chief Executive Officer (until April 30, 2017)

8,376

8,900

3,400

1,510

1,966

0.1%

0.1%

Rene Lenggenhager Chief Executive Officer (from May 1, 2017)

5,500

0

0

0

0

0.1%

0.0%

Markus Portmann Chief Financial Officer

2,469

7,140

1,220

540

709

0.0%

0.1%

Thomas Polzer Chief Operating Officer

269

0

0

0

269

0.0%

0.0%

Detlef Steck Segment President of X-Ray Systems

697

250

0

0

597

0.0%

0.0%

Michael Kammerer Segment President of Plasma Control Technologies

2,361

2,360

1,140

530

691

0.0%

0.0%

Charles Flükiger Segment President of ebeam Technologies

2,361

2,380

1,140

530

691

0.0%

0.0%

Eric Dubuis Chief Information Officer and CHRO

1,754

2,770

870

380

504

0.0%

0.0%

* Number of shares restated to reflect the ten-for-one stock split of April 28, 2017.

Each 10,000 registered shares of Comet Holding AG, of a par value of CHF 1.00 per share, represented a total of 0.1290% of all voting power (prior year: 0.1291%). The members of the Board of Directors and Executive Committee held a total of 1.2% of voting rights (prior year: 1.3%). No material changes in ownership interests arose after the balance sheet date of December 31, 2017.

07 Options, conversion rights and treasury stock

Comet Holding AG has not issued any conversion rights or stock options.
In fiscal year 2017 and the prior year, Comet Holding AG held no treasury stock.

08 Bond

On April 20, 2016, Comet Holding AG issued a bond with a total nominal value of CHF 60 million (denomination of CHF 5,000). The term is five years and the bond matures on April 20, 2021. The fixed coupon over the term of the bond is 1.875%, is payable annually on April 20, and was due for the first time on April 20, 2017.

Listing: SIX Swiss Exchange (security number 32 061 943, ISIN number CH0320619437, ticker symbol COT16).

09 Guarantees and pledged assets

As the Group is taxed as a single entity for purposes of value-added taxation, Comet Holding AG has joint and several liability for the value-added tax obligations of its Swiss subsidiary.

10 Number of full-time equivalents

The annual average number of full-time equivalents in 2017 and 2016 was less than 10.

11 Stock split

In order to increase the liquidity and marketability of the shares, the Annual Shareholder Meeting on April 20, 2017 approved the Board's proposal for a ten-for-one stock split.

12 Release of the separate financial statements for publication

The Board of Directors released these financial statements on March 8, 2018 for publication and will present them to shareholders for approval at the Annual Shareholder Meeting on April 26, 2018.