Notes to the consolidated financial statements

The Comet Group (“Comet”, the “Group”) is one of the world’s leading vendors of x-ray and radio frequency (RF) power technology. With high-quality components, systems and services, marketed under the “Comet” and “Comet Yxlon” brands, the Group helps its customers optimize the quality, reliability and efficiency of their products and processes. Comet Yxlon x-ray systems for non-destructive inspection are supplied to end customers in the electronics, automotive and aerospace sectors. Under the Comet brand, the Group builds components and modules such as x-ray sources, vacuum capacitors, RF generators and impedance matching networks, marketed to manufacturers in the semiconductor, automotive and aerospace industries as well as the security sector.

The consolidated financial statements (except with respect to certain financial instruments) have been drawn up under the historical cost convention. The fiscal year-end for the financial statements of all Group companies is December 31. These consolidated financial statements have been prepared in compliance with IFRS Accounting Standards. All IFRS Accounting Standards in force at the balance sheet date and all interpretations (IFRIC) of the International Accounting Standards Board (IASB) were applied. Comet did not early-adopt new standards and interpretations unless specifically stated. The significant accounting policies applied are unchanged from the prior year except as set out below.

As a result of rounding and the presentation in thousands of Swiss francs, individual numbers in the consolidated financial statements may not sum precisely to the totals indicated.

With effect from January 1, 2025, Comet has applied the following new or adjusted IFRS Accounting Standards/IFRIC for the first time:

The new or amended standards and interpretations had no material effect on the Group’s financial position, results of operations and cash flows.

The consolidated financial statements for the 2024 reporting period have been restated to correct prior-period errors, as set out below.

In determining inventory write-downs, certain stock items totaling CHF 2.1 million were erroneously excluded in fiscal year 2024, and the Group’s policy was not applied correctly. The resulting overstatement of inventories arose from an error relating to a manual reversal of a write-off. This error has been corrected by retrospective restatement of the comparative information.

During the review of the 2024 financial statements, management identified that certain expenses and related liabilities totaling CHF 0.3 million had erroneously not been recognized at year-end in accordance with the Group’s accounting policies. These errors have been corrected by retrospective restatement of the comparative information.

The restatements described above did not affect the opening balance as of January 1, 2024, (including total equity) and therefore had no impact on the Group’s financial position at that date.

Comet’s consolidated financial statements contain assumptions and estimates that affect the reported financial position, results of operations and cash flows. These assumptions and estimates were made on the basis of management’s best knowledge at the time of preparation of the accounts. Actual results may differ from the values presented. The following estimates have the greatest effects on the consolidated financial statements:

Following the initial recovery observed in 2024, the semiconductor market showed further stabilization during 2025, primarily supported by sustained demand for AI-related applications, data centers, and advanced computing. However, market developments remained uneven across segments. While certain memory and NAND markets experienced gradual improvement over the course of the year, conditions in consumer-oriented sectors such as smartphones, PCs, and automotive continued to be impacted by cautious end-market demand and inventory normalization. Industrial segments faced ongoing challenges, which were reflected in subdued order intake for the x-ray divisions, while PCT benefited from the continued recovery of the semiconductor industry and improved customer demand.

With respect to ongoing sources of uncertainty, including geopolitical tensions, trade restrictions, and macroeconomic conditions, Comet continuously reviewed the underlying assumptions and estimates affecting its financial position, results of operations, and cash flows. Based on this review, no changes were identified that would have had a material impact on the consolidated financial statements.

In 2025, there were no changes in the basis of consolidation from the prior year.

The consolidated financial statements thus comprise the accounts of the companies listed below:

The consolidated financial statements represent the aggregation of the annual accounts of the individual Group companies, which are prepared using uniform accounting principles. Those companies controlled by Comet Holding AG are fully consolidated. This means that these companies’ assets, liabilities, equity, expenses and income are entirely included in the consolidated financial statements. All intragroup balances and transactions, unrealized gains and losses resulting from intragroup transactions, and dividends are eliminated in full.

Companies are consolidated from the date on which effective control passes to the Group. Consolidation ends only when effective control ceases. On acquisition, the identifiable assets, liabilities and contingent liabilities are measured at fair value and included in the accounts using the acquisition method. For acquisitions, intangible assets that arise from a contractual or legal right or are separable from the business entity, and whose fair value can be measured reliably, are reported separately. Goodwill, being the excess of the aggregate consideration transferred over the fair value of the net assets of the acquired subsidiary, is initially measured at cost. If the aggregate consideration transferred is lower than the fair value of the acquired net assets, the difference is recognized as negative goodwill in other operating income at the acquisition date. Goodwill and other intangible assets are allocated on acquisition to those cash-generating units expected to benefit from the acquisition or to generate future cash flows as a result of it. When Group companies are sold, the difference between their sale price and their net assets, plus accumulated currency translation differences, is recognized as operating income in the consolidated statement of income.

The functional currency of the Group companies is usually the respective national currency. For Comet Technologies Malaysia Sdn. Bhd., the functional currency is the U.S. dollar (USD), as financing and operating cash flows are primarily denominated in USD. Transactions in a currency other than the functional currency are translated at the exchange rate prevailing at the transaction date. Financial assets and liabilities are translated at the balance sheet date at the exchange rate as of that date; the resulting currency translation differences are reported in the income statement. The consolidated financial statements are presented in Swiss francs. The financial statements of the Group companies are translated at the average exchange rates for the year (the “average rate” in the table below) for the income statement and at year-end rates (the “closing rate”) for the balance sheet. The resulting currency translation differences are recognized in other comprehensive income. Currency translation differences from intragroup loans for the long-term financing of Group companies are partly recognized in other comprehensive income, to the extent that repayment is neither planned nor is likely to occur in the foreseeable future.

The exchange rates used to translate the most important currencies are listed below:

The Group’s revenue is derived from the sale of goods (including spare parts) by the PCT and IXM divisions and the sale of systems (including services such as installation) by the IXS division. Revenue from the sale of goods, including spare parts, systems and system-related services, is as a rule recognized on the basis of a single performance obligation, which is satisfied at a specific point in time. The performance obligation is satisfied, and the revenue recognized, when the customer acquires control of the product or service. The sale of goods that are not systems, the transfer of control generally occurs at the time of delivery.

Generally, performance obligations for system sales (including for installation) are fulfilled at the time of acceptance by the customer.

In limited circumstances, the delivery of the system and the system installation can form two separate performance obligations. In connection with both non-system goods and with systems, Comet also offers services. Warranty obligations for providing an additional service to the customer (service-type warranties), such as an extension of the warranty period, are separate performance obligations and the revenue associated with them is recognized over time. For general maintenance services and defect correction intended to ensure that the delivered good is, or performs, as specified in the contract (assurance-type warranties), the estimated cost of the liability is recognized as a provision in accordance with IAS 37.

Customer contributions to development projects and payments for the delivery of the respective first prototype are recorded in other operating income; subsequent deliveries of prototypes are reported as sales.

Variable price elements (variable consideration) exist both in retro­active rebates when the quantity of products purchased exceeds a certain threshold in the calendar year, and in individual discounts on products. The amount of the rebate is estimated using the most-likely-amount method and as a rule is allocated proportionately to all performance obligations under the contract.

Sales commissions owed for agent activities are capitalized at contract inception as incremental costs attributable to obtaining a contract and a liability of equal amount is recognized for sales commissions. Their recognition as an expense occurs as soon as Comet has transferred control of the products to the customer. In principle, no interest effect is recognized for contract liabilities and prepayments by customers, as the period between the time of transfer of a promised good or service to the customer and the time of payment is not more than one year.

Government grants that compensate the company for expenses incurred are recognized as other operating income on a systematic basis in the same periods in which the expenses are incurred. Government grants that compensate the company for the acquisition of an asset are presented by deducting them from the acquisition cost of the related asset.

In addition to cash on hand and balances in checking accounts at banks, cash and cash equivalents include short-term highly liquid cash investments and time deposits with original maturities of up to three months. Time deposits and similar instruments with original maturities of more than three months, but less than twelve months, are classified as other current financial assets.

Comet provides for impairment using the simplified approach by recognizing an allowance in the amount of the losses expected over the remaining life of the instruments (known as the expected credit loss model). For specific doubtful arrears with objective indications of impairment, impairment charges are applied individually.

Whether a receivable or a contract asset is recognized is governed by whether the right to consideration is unconditional (leading to recognition of a receivable) or conditional (leading to recognition of a contract asset).

Financial assets and liabilities are initially measured at fair value (market value), including transaction costs, except in the case of financial assets categorized as at fair value through profit or loss, for which transaction costs are recorded directly in financing expenses. All purchases and sales of financial assets are recognized at the transaction date.

In the fiscal year as in the prior year, no hedge accounting under IFRS 9 was applied to any hedging transactions.

Inventories are recorded at the lower of cost and net realizable value. Net realizable value represents the estimated normal sale price less the costs of completion, marketing, selling and distribution. Raw materials and purchased products are measured using the weighted-average method; internally produced goods are measured at standard costs. Inventories include proportionate shares of production overheads.

Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Borrowing costs related to qualifying assets form part of the historical cost. Depreciation is provided on a straight-line basis over the estimated useful life of the assets. The expense for depreciation of property, plant and equipment is recognized in the income statement under that expense category which corresponds to the function of the particular asset in the Group. Land values are not depreciated. Impairment charges are recognized as a separate line item under accumulated depreciation and impairment. Maintenance costs are recognized as assets only if the maintenance extends the expected life of the asset, expands production capacity or otherwise increases asset values. The costs of maintenance and repair that do not increase asset values are charged directly to the income statement. The following estimated useful lives are applied in determining depreciation:

At the inception of every contract, Comet assesses whether it includes a lease, separating lease components from non-lease components. No assets and liabilities are recognized for leases with a term of one year or less and for leases of low-value assets (with a value when new of less than CHF 5,000); the expenses for these are recognized directly in the income statement. The initial measurement of the right of use for a leased asset is made by calculating the present value of the lease payments, plus initial direct costs, plus estimated costs for dismantling, removal and restoration, less lease incentives received. The lease liabilities correspond to the present value of the payment obligations. For discounting the lease payments, Comet uses the interest rate implicit in the lease. In doing so, the currency area in which the leased asset is located and the Comet-specific credit risk are taken into account. Comet primarily has leases with fixed payments, which includes leases with rent-free periods and ones with rising payments. Leases with variable payments are immaterial.

Comet’s leases may include renewal options. These are included in the calculations only if, taking into account all significant determining factors, they are considered reasonably certain to be exercised. For indefinite leases, the following principles apply (the extension periods cited are from the lease inception or from the expiry of the minimum lease term):

Goodwill is initially recognized during a business combination. Acquired rights to trademarks can be renewed without significant cost and are supported by ongoing marketing activities. They are not amortized but are tested annually for impairment (see note 2, section “Impairment of non-current assets”).

Intangible assets other than goodwill and acquired rights to trademarks are recognized at cost and generally amortized on a straight-line basis over their expected useful life. The expense for amortization of intangible assets with finite useful lives is recognized in the income statement under that expense category which corresponds to the function of the particular asset in the Group. The following estimated useful lives are generally applied in determining amortization:

Provisions are recognized only where Comet has a present obligation to a third party arising from a past event, the amount of the obligation can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. No provisions are recognized for possible losses that may result from future events.

Provisions are classified as current to the extent that the related cash outflows are expected to occur within one year from the balance sheet date. Conversely, the cash outflows in respect of non-current provisions are expected to occur more than twelve months after the balance sheet date. If the interest effect is material, the cash outflows are discounted.

Comet maintains post-employment benefit plans for its employees which differ according to the local circumstances of the individual Group companies. The benefit plans are financed by contributions to benefit arrangements that are separate legal entities (foundations or insurance companies) or by the accumulation of reserves in the balance sheet of the respective Group company. In the case of defined contribution plans or economically equivalent arrangements, the expenses accrued in the reporting period represent the agreed contributions of the Group company.

For defined benefit plans, the service costs and the present value of the defined benefit obligation are calculated in actuarial valuations by independent experts, using the projected unit credit method. The calculations are updated annually. The surplus or deficit recognized in the balance sheet is equal to the present value of the defined benefit obligation as determined by the actuary, less the fair value of plan assets. Any resulting net surplus is recognized as an asset only to the extent of the potential economic benefit that may be realized from this asset in the future, taking into consideration IFRIC 14. The expense charged to the income statement is the actuarially determined service cost plus the net interest cost. Actuarial gains and losses are recognized in other comprehensive income. They comprise experience adjustments (the effects of differences between the previous actuarial assumptions and the observed outcomes) and the effects of changes in actuarial assumptions (particularly regarding the discount rate and life expectancy).

Comet grants length-of-service awards to its employees after a certain number of years of service, in the form of lump-sum payments that increase in amount with the number of years of employment. Comet calculates the resulting obligation using the projected unit credit method. The calculation is updated annually. Any actuarial gains or losses from the remeasurement are immediately taken to the income statement.

Part of the fixed compensation of the Board of Directors is paid in shares. In addition, the Executive Committee is granted shares under a long-term incentive plan (LTIP). The expense is recognized at the value of the shares earned, measured at the quoted market price (fair value) at the grant date. The amount accrued for those components of compensation which must be equity-settled (i.e., for which there is no option of cash payment) is recognized directly in equity.

Comet purchases treasury shares for share-based compensation of the Executive Committee and Board of Directors. Treasury shares are recognized at acquisition cost and deducted from shareholders’ equity at the time of acquisition. Comet applies the first-in-first-out (FIFO) principle when using treasury shares for share-based compensation programs. In general, treasury shares are not held for more than six years at maximum.

The income tax expense for the reporting period is composed of current taxes and deferred taxes.

Current tax liabilities and assets for the current period and prior reporting periods are measured at the amount expected to be recovered from or paid to the tax authorities. They are calculated based on the tax regulations and tax rates in effect at the balance sheet date.

Deferred taxes are accounted for by the liability method. Under this approach, the income tax effects of temporary differences between the tax bases and the values used in the consolidated financial statements are recorded as non-current liabilities or non-current assets. Deferred taxes are calculated at actual or expected local tax rates. Changes in deferred taxes are included in income tax expense in the income statement, except for deferred taxes in respect of items that are recognized outside profit or loss. These latter deferred taxes are likewise recognized outside profit or loss; according to the underlying accountable event, they are recognized either in other comprehensive income or directly in equity. Deferred tax liabilities are recognized on all taxable temporary differences except for goodwill. Deferred tax assets are recognized for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carryforward of unused tax credits and unused tax losses can be utilized, except:

The value of property, plant and equipment and other non-current assets, including intangibles, is reviewed whenever it appears possible, as a result of changed circumstances or events, that the assets’ carrying amount represents an overvaluation. In addition, Comet evaluates at year-end whether there are any indications of impairment of non-financial assets. Intangible assets that are in the process of being generated are tested for impairment annually. If the carrying amount exceeds the amount recoverable through use or sale of the asset, the carrying amount is reduced to this recoverable amount and the difference is recorded as an impairment charge in the income statement. The recoverable amount is the higher of realizable value or value in use.

Value in use is determined on the basis of discounted expected future cash flows. Any acquired goodwill and any rights to trademarks or names with an indefinite useful life are not amortized but are reviewed annually at the same date for impairment. This impairment test is performed at the cash-generating unit (CGU) level and is based on the results for the fiscal year, the rolling multi-quarter forecast and multi-year plan, as well as the Group’s strategy.

In the following tables, sales revenue by division is analyzed first by region and then by market sector.

The unsatisfied or partly unsatisfied performance obligations (so-called order backlog) as of December 31, 2025, amounted to CHF 125.4 million (prior year: CHF 140.7 million). Comet will realize this revenue as soon as the performance obligations have been fulfilled and the customers have acquired control of the products or services. This is expected generally to be the case within the next 12 months.

Opening and closing balances of receivables and contract assets are reported in note 12. Contract liabilities from contracts with customers are presented on the face of the balance sheet. The contract assets consisted mainly of the rights to consideration for product deliveries and services of the X-Ray Systems division that were completed but not yet billed at the balance sheet date. The contract liabilities consisted of prepayments received from customers. The revenue recognized in 2025 from contract liabilities existing at the beginning of the reporting period amounted to CHF 13.1 million (prior year: CHF 12.8 million). Material changes in contract balances result from the receipt of customer payments and the invoicing of satisfied performance obligations.

The Group is managed on the basis of the following three operating divisions, which are delineated based on their products and services. For financial reporting purposes the divisions are also referred to here as “operating segments” or “segments”.

Segment operating income represents all revenues and expenses attributable to a particular division. The only revenues and expenses not allocated to the segments are those of Comet Holding AG, as well as financing income, financing expenses and income taxes. These unallocated expenses and revenues are reported in the “Corporate” column. Transactions between the segments are invoiced at prices also charged to third parties.

The segment assets and liabilities represent all operating items. The following assets and liabilities are not allocated to operating segments: the assets and liabilities of Comet Holding AG, all cash and cash equivalents, all debt and all income tax assets and liabilities. These unallocated assets and liabilities are reported in the “Corporate” column.

¹ Further explanations on the restatement are set out in note 2.3, “Restatement”.

Comet markets its products and services throughout the world and has its own companies in Switzerland, Germany, Denmark, the USA, China, Japan, South Korea, Malaysia, Canada and Taiwan. Net sales are allocated to countries on the basis of customer location.

Property, plant and equipment, right-of-use assets and intangible assets are allocated to the regions based on the country entities’ location.

In the year under review, the Plasma Control Technologies division recorded sales of CHF 104.4 million with its largest customer, which represented 22.8% of Group sales (prior year: CHF 106.2 million and 23.8%, respectively).

In the fourth quarter of 2025, a localized fire occurred in a section of the production area at the Comet Group’s headquarters. The fire was rapidly extinguished by the municipal fire department and the Group’s in-house response teams, without injuries. Production resumed shortly thereafter. Other operating income for the year ended December 31, 2025, included insurance recoveries of approximately CHF 2.1 million relating to this event. As of December 31, 2025, CHF 1.6 million had been received and is presented within cash and cash equivalents, with a corresponding credit to other operating income. The remaining amounts, to the extent considered virtually certain to be received, are recognized as prepaid expenses. Fixed assets amounting to CHF 0.3 million were impaired as a result of the fire incident.

Development expenses comprise the costs of new-product development, improvement of existing products, and process engineering. Comet’s development activities focus on the fields of vacuum technology, high voltage engineering and material science, and on the further development of the divisions’ core products. In view of the uncertainty of future economic benefits that may flow from development projects, Comet as a rule does not capitalize development costs but charges them directly to the income statement.

CHF 0.3 million impairment relates to fixed assets that were impaired as a result of the fire incident. The amount relates to the PCT segment. Detailed information on the fire incident can be found in note 5.

Foreign currency translation gains and losses resulted largely from items denominated in U.S. dollars and euros.

The expected income tax expense is calculated using the domestic income tax rate of the parent company domiciled in Flamatt, Switzerland, and applied to the Group result before taxes.

The Group has changed the basis of its income tax expense reconciliation to the domestic tax rate of the parent company. Prior-year comparative figures have been adjusted to reflect this change in presentation.

Deferred tax assets and liabilities can be analyzed as follows: