Notes to the separate financial statements of COMET Holding AG

These separate financial statements were prepared in accordance with the principles of the 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 are recognized at historical cost less necessary impairment; they are individually tested annually for impairment.

The following subsidiaries were consolidated in the Group financial statements of COMET Holding AG at December 31, 2016:

Loans to subsidiaries were as follows:

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.

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

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, 2016, COMET Holding AG had 1,691 voting shareholders of record (i.e., voting shareholders registered in the share register; prior year: 1,627). 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, 2016 was as follows:

This analysis does not capture the stock of shareholders who were not registered in the share register; at December 31, 2016 these shares of unregistered owners amounted to 34% 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, 2016 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):

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

Reportable changes during fiscal year 2016

In the fiscal year under review, ten 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.

Capital stock

The capital stock at January 1, 2016 was CHF 7,738,010, divided into 773,801 registered shares with a par value of CHF 10 per share. In fiscal year 2016 the capital stock was increased by 742 shares from the portion of authorized capital designated for equity-based compensation. Including the increase of 742 shares from this portion of authorized capital, COMET Holding AG at December 31, 2016 thus had CHF 7,745,430 of capital stock, divided into 774,543 registered shares with a par value of CHF 10 per share. The capital stock is fully paid in. At its meeting on August 11, 2016 the Board of Directors established that the capital increase from authorized capital for equity compensation was properly performed. The information on COMET Holding AG in the commercial register was updated to reflect the change in capital stock.

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, shares are 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. Grants of stock and of subscription rights may be made at less than the market price.

In May 2016, in accordance with the compensation plan, the members of the Board of Directors were granted a total of 208 shares of stock in payment of CHF 85,605 of fixed retainers due for fiscal year 2015. In addition, under fixed retainers for 2016, the members of the Board of Directors were granted a total of 104 shares in payment of CHF 42,803 of compensation due for the period from January 1, 2016 to the 2016 Annual Shareholder Meeting. The fully paid shares were applied to the compensation due at a price of CHF 411.56 per share.

Members of the Executive Committee were granted a total of 430 shares in payment of CHF 276,520 of profit-sharing compensation due for fiscal year 2016. The fully paid shares were applied to the compensation due at a price of CHF 643.07 per share.

As a result of these grants of a total of 742 shares during the year under review, the Company’s unissued authorized capital for equity-based compensation showed the following movement:

Authorized capital for other capital increases

At December 31, 2016, 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 140,000 fully payable registered shares with a par value of CHF 10.00 per share. 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.

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.

Each 1,000 registered shares of COMET Holding AG, of a par value of CHF 10 per share, represented a total of 0.1291% of all voting power (prior year: 0.1292%). The members of the Board of Directors and Executive Committee held a total of 1.9% of voting rights (prior year: 1.9%). No material changes in ownership interests arose after the balance sheet date of December 31, 2016.

COMET Holding AG has not issued any conversion rights or stock options. In fiscal year 2016 and in the prior year, COMET Holding AG held no treasury stock.

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%, payable annually on April 20 and due for the first time on April 20, 2017.

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

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.

The annual average number of full-time equivalents in 2016 and 2015 was less than 10.

The Board of Directors released these financial statements on March 7, 2017 for publication and will present them to shareholders for approval at the Annual Shareholder Meeting on April 20, 2017.