Notes 1–7

1Principles of Consolidation and Valuation

These consolidated interim financial statements of the Cicor Group as of 30 June 2024 are prepared in accordance with Swiss GAAP FER 31 “Complementary recommendation for listed companies” (GAAP = Generally Accepted Accounting Principles / FER = Fachempfehlungen zur Rechnungslegung). They do not include all of the information and disclosures required for full annual financial statements and should be read in conjunction with the Group’s annual report as at 31 December 2023. Furthermore, the accounting complies with the Swiss company law. The consolidated financial statements of the Group as at and for the year ended 31 December 2023 are available at www.cicor.com or upon request from the Company’s registered office.

These consolidated interim financial statements were approved by the Board of Directors on 23 July 2024.

When preparing the consolidated interim financial statements, Management is required to make estimates and assumptions. Any alterations to these estimates and assumptions are adjusted in the reporting period in which the estimates and assumptions are changed. Income taxes are calculated based on an estimate of the income tax rate expected for the whole year.

The group has adopted the following new accounting standards in financial year 2024.

Adoption of FER 30 (revised 2022) – Consolidated Financial Statements

The Group applied Swiss GAAP FER 30 (revised 2022) for the first time in the financial year 2024. The revised standard defines the accounting principles and disclosure for consolidated financial statements. Cicor determined that the revision of FER 30 did not have a material impact on the consolidated financial statements.

Adoption of FER 28 – Government Grants

The Group applied Swiss GAAP FER 28 for the first time in the financial year 2024. The new standard defines the accounting treatment and disclosure of government grants. Cicor determined that the application of FER 28 did not have a material impact on the consolidated financial statements.

2Change to the Consolidation and Valuation Principles - Accounting for Goodwill

In recent years, it has become standard practice for listed companies applying Swiss GAAP FER to offset goodwill against equity. For this reason, and to facilitate comparability with other stock listed companies, the Board of Directors of Cicor Technologies Ltd. (Cicor) has decided that, from 1 January 2024, goodwill from acquisitions will be offset directly against equity at the time of acquisition, using the accounting policy choice provided in Swiss GAAP FER 30 "Consolidated financial statements". The impact of theoretical capitalization and amortization, including any impairment arising from the assessment of recoverability, will be disclosed in the notes to the consolidated financial statements.

Previously goodwill was capitalized and amortized over its estimated useful life. As this is a change in accounting policy, prior periods have been restated accordingly. Cicor previously reported the alternative performance measures "Core EBIT", "Core net profit" and "Core earnings per share", which excluded the amortization of goodwill and other intangible assets that were capitalized as part of an acquisition. These Core results will no longer be reported. The revised consolidation and valuation principles are described below.

Goodwill from the acquisition of companies and businesses is equivalent to the difference between the total consideration (purchase price plus transaction costs) and the interest in revalued net assets of the acquired company and can be positive or negative. Goodwill is offset against equity at the date of acquisition. The impact of theoretical capitalization and amortization of goodwill is disclosed in the notes to the consolidated financial statements. In an acquisition achieved in stages (step acquisition), the goodwill of each separate transaction is determined.

Minority interests acquired are likewise measured using the purchase method. The difference between the total consideration and proportionate equity is offset as goodwill against equity.

Companies and businesses sold during the year are excluded from the consolidated financial statements from the date of sale. Where interests in fully consolidated companies or companies accounted for using the equity method are sold, goodwill acquired at an earlier date and offset against equity is recognized in the income statement at original cost for the purpose of calculating the gain or loss resulting from the sale.

Financial effects of the change to the consolidation and valuation principles

Goodwill from acquisitions (shadow accounting)

The goodwill from the acquisition of companies and businesses or the purchase of interests in associates or joint ventures is offset against equity at the date of acquisition. The theoretical capitalization of goodwill and its amortization over the expected useful life of usually 5 years would have the following effects on the consolidated interim financial statements as at 30 June 2024.

Theoretical movement schedule for goodwill

3Definition of Non-GAAP Measures

Cicor uses the below non-GAAP measures in the financial reporting.

EBITDA / EBIT

EBITDA as a subtotal includes EBIT before deduction of depreciation and impairment of tangible assets as well as amortization and impairment of intangible assets. EBIT as a subtotal includes all income and expenses before addition/deduction of financial income, financial expenses and income taxes.

Operating net working capital

The Cicor Group uses Operating net working capital as a measure to monitor net working capital. Operating net working capital considers Inventories, Trade receivables and Trade payables, as well as Prepayments from customers and to suppliers.

4Segment Reporting

Cicor defines its reportable segments based on the internal reporting to its Board of Directors. They base their strategic and operational decisions on these monthly distributed reports, which include the aggregated financial data for the Group and for the divisions. The two divisions, EMS and AS, have been identified as the two reportable segments.

The Electronic Manufacturing Services (EMS) division provides full-cycle electronic solutions from research and development to manufacturing and supply chain management for customers in the medical, industrial and aerospace and defense sectors, while the Advanced Substrates (AS) division provides its customers with high-quality printed circuit boards as well as thin-film substrates.

For internal reporting and therefore the segment reporting, the applied principles of accounting and valuation are the same as in the consolidated financial statements. Intersegment sales are recognized at arm’s length.

Sales by Region and by Industry

Major Customers

Cicor Group’s biggest customer contributed less than 5% (2023: less than 7%) to the Group’s consolidated sales.

5Change in Scope of Consolidation

Acquisitions in 2024

Effective 24 January 2024, Cicor Group acquired 100% of the shares of STS Defence Ltd (STS), located in Gosport, England, for a total consideration of GBP 27.8 million (CHF 30.7 million). The site was integrated into the organizational unit “Cicor UK” of the Electronic Manufacturing Services (EMS) Division. The preliminary purchase price allocation resulted in goodwill of GBP 19.3 million (CHF 21.3 million) which has been offset against equity.
The company was consolidated as of 24 January 2024. Net sales from 1 January 2024 to 23 January 2024 amounted to GBP 1.3 million (CHF 1.4 million) and net sales from 24 January 2024 to 30 June 2024 amounted GBP 20.8 million (CHF 23.4 million).

Effective 28 February 2024, Cicor Group acquired 100% of the shares of Evolution Medtec Srl (EM), located in Bucharest, Romania, for a total consideration of RON 9.7 million (CHF 1.9 million). The site was integrated into the organizational unit “Cicor Europe” of the Electronic Manufacturing Services (EMS) Division. The preliminary purchase price allocation resulted in goodwill of RON 6.8 million (CHF 1.3 million) which has been offset against equity.
Evolution Medtec was consolidated as of 1 March 2024. Net sales from 1 January to 28 February 2024 amounted to RON 2.0 million (CHF 0.4 million) and net sales from 1 March to 30 June 2024 amounted RON 3.1 million (CHF 0.6 million).

Effective 31 March 2024, Cicor Group acquired 100% of the shares of TT Electronics IoT Solutions Ltd (IoT) for a total consideration of GBP 21.3 million (CHF 24.2 million). The transaction includes a total of seven companies, thereof two production sites in England (Newport and Hartlepool) that were integrated into the organizational unit “Cicor UK” and one production site in China (Dongguan) that became part of "Cicor Asia", all in the Electronic Manufacturing Services (EMS) Division. The preliminary purchase price allocation resulted in a bargain purchase of GBP -6.6 million (CHF -7.5 million) which has been offset against equity.
The IoT business was consolidated as of 31 March 2024. Net sales from 1 January to 31 March 2024 amounted to GBP 16.1 million (CHF 18.1 million) and net sales from 1 April to 30 June 2024 amounted to GBP 17.4 million (CHF 19.6 million).

Preliminary financial information on the transactions as per the acquisition date is disclosed in below table.

6Equity

Share capital

 The ordinary share capital was increased by 67 447 ordinary shares with a par value of CHF 10.00 each out of conditional capital according to Art. 5 bis of the Company's Articles of Association in the period under review. The increase was caused by the conversion of Mandatory Convertible Notes (MCNs) with a nominal value of CHF 3.2 million.

The ordinary share capital as of 30 June 2024 consisted of 3 478 616 registered shares with a par value of CHF 10.00 each (31 December 2023: 3 411 169 registered shares with a par value of CHF 10.00 each).

Mandatory convertible note

On 20 January 2022, Cicor issued a five-year, interest-free mandatory convertible note (MCN) with a principal amount of CHF 20.0 million. On 27 September 2022 Cicor exercised its option to reopen the issuance of the MCN in the amount of an additional CHF 40.2 million and to sell these additional notes to OEP, resulting in a total of CHF 60.2 million of MCNs outstanding.

The conversion price is fixed at CHF 47.50 per share, subject to subsequent adjustment for anti-dilution events. Shares to be delivered upon conversion of a MCN are new shares issued from the conditional capital according to Art. 5 ter of the Company's Articles of Association. No fractions will be delivered, and no cash payments will be made to the holders.

The MCNs contain the following early conversion option for holders: Each holder may elect to early convert MCNs during the optional conversion period starting 730 days after issuance up to ten days prior to maturity or following the formal announcement of a take-over bid to Cicor’s shareholders.

Until 30 June 2024, MCNs with a nominal value of CHF 3.2 million were converted into 67 447 new ordinary shares with a par value of CHF 10.00 that were created from the conditional capital according to Art. 5 ter of the Company's Articles of Association.

Upon occurrence of certain predefined events, the MCNs will be subject to an accelerated conversion and will be mandatorily converted on the maturity date, unless previously converted under the early conversion options or following an accelerated conversion. In accordance with Cicor’s accounting policy for interest-free mandatorily convertible notes, the MCN is classified as an equity instrument in its entirety, as it does not contain any obligations to deliver cash and does not require settlement in a variable number of the Group’s equity instruments.

7Subsequent Events

There were no events between 30 June 2024 and 23 July 2024 that would require an adjustment to the carrying amounts of assets and liabilities or need to be disclosed under this heading.