2025 Financial Report (KG Financial Report 2025 Published)

KUDELSKI GROUP FINANCIAL STATEMENTS 2025

CONTENTS

CONSOLIDATED INCOME STATEMENT

(FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024)

5 366 606 383 728

6 4 405 9 280

371 011 393 008

Revenues

Other operating income

-65 695 -78 358

7 -242 502 -251 154

8 -78 415 -76 563

9 -11 845 -107 132

10

11

17

-2 494 -18 452

-4 542 -1 950

376 3 168

12

-6 058 -13 724

40

- 161 731

-40 163 10 573

-40 163 -151 158

-34 105 -137 433

-27 445 -120 199

-15 600 -13 067

Cost of material, licenses and services Employee benefits expense

Other operating expenses

Depreciation, amortization and impairment

Interest expense

Other finance income/(expense), net Share of result of associates

Income tax expense

Net result from discontinued operations

• Equity holders of the company -42 412 11 412

• Non-controlling interests 2 249 -838

  Earnings per share (in USD)

  Attributable to shareholders of Kudelski SA for bearer shares : basic and diluted (in USD) 13 -0.7557 0.2036

• Continuing operations -0.7557 -2.6653

• Discontinued operations - 2.8689

  Attributable to shareholders of Kudelski SA for registered shares : basic and diluted (in USD) 13 -0.0756 0.0204

• Continuing operations -0.0756 -0.2665

• Discontinued operations - 0.2869

The accompanying notes form an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024)

The accompanying notes form an integral part of the consolidated financial statements.

CONSOLIDATED BALANCE SHEET

(AT DECEMBER 31, 2025 AND 2024)

14 6 421 5 921

15 218 404 206 256

16 31 198 34 717

17 10 694 9 946

18 17 254 20 319

19 18 157 17 240

19 35 494 34 324

28 9 952 -

21 15 689 14 738

22 30 167 35 856

22 1 663 2 866

23 14 852 14 497

24 51 887 48 035

35 63 -

25 100 376 126 336

26 347 181 346 624

-42 559 -39 707

304 622 306 917

27

4 718

7 469

16 57 014 58 558

28 3 846 23 043

29 25 838 5 432

30 5 716 673

16 10 245 9 805

32 33 916 30 414

33 48 721 55 977

34 63 863 71 310

1 866 1 406

35 33 28

36 1 871 19

562 271 571 050

252 931 256 665

166 232 169 631

86 698 87 034

309 340 314 385

562 271 571 050

214 699 242 327

347 572 328 722

Investments in associates Deferred income tax assets Financial assets at amortized cost

Financial assets at fair value through profit and loss Employee benefits assets

Inventories

Trade accounts receivable Contract assets

Other financial assets at amortized cost Other current assets

Derivative financial instruments Cash and cash equivalents

Non-controlling interests

Short-term financial debt Short-term lease obligations Trade accounts payable Contract liabilities

Other current liabilities Current income taxes

Derivative financial instruments Provisions for other liabilities and charges

The accompanying notes form an integral part of the consolidated financial statements.

CONSOLIDATED CASH FLOW STATEMENT

(FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024)

-40 163 10 573

6 058 15 992

-1 849 15 533

9 11 845 107 132

17 -376 -3 544

-4 011 2 694

1 771 -183

-3 003 -3 118

-3 418 1 227

- -169 097

-81 11

560 2 214

16 156 8 498

-12 308 -30 929

-13 316 -9 635

26 308 26 327

1 051 1 615

17 150 503

-2 192 -20 691

4 920 1 737

-3 717 -2 226

15

14

40

27

17

-589 -1 666

-3 022 -3 559

212 55

-444 -

- 105

- 339 261

- 5 945

- 5 061

- -221 774

- 16 435

-10 521 -14 539

39 51 52

-5 000 -6 081

8 969

-3 969

25 126 336 56 376

25 100 376 126 336

-25 960 69 960

-25 960 69 960

-15 470 -225 907

-3 843 345 202

-15 616 -45 366

Adjustments for net income non-cash items:

• Current and deferred income tax

• Interests, allocation of transaction costs and foreign exchange differences

• Depreciation, amortization and impairment

• Share of result of associates

• Non-cash employee benefits (income) / expense

• Additional provisions net of unused amounts reversed

• Non-cash government grant income

• Other non-cash (income) / expenses

  Adjustments for items for which cash effects are investing or financing cash flows:

• Net result on sales of subsidiaries and operations

• Other non-operating cash items Adjustments for change in working capital:

• Change in inventories

• Change in trade accounts receivable and contract assets

• Change in trade accounts payable and contract liabilities

• Change in accrued expenses

• Change in other net current working capital headings Government grant from previous periods received Dividends received from associated companies Interest paid

Interest received Income tax paid

Purchases of intangible fixed assets Purchases of tangible fixed assets

Proceeds from sales of tangible and intangible fixed assets Investment in financial assets and loans granted Divestment of financial assets and loan reimbursement

Net proceeds from the disposal of subsidiaries, expluding disposed cash

Net proceeds from the sale of controlling interest in subsidiary, excluding disposed cash Sale of associated companies

Reimbursement of bank overdrafts, long-term loans and other non-current liabilities Increase in bank overdrafts, long-term loans and other non-current liabilities Payments of lease liabilities

Proceeds from employee share purchase program Dividends paid to non-controlling interests

Effect of foreign exchange rate changes on cash and cash equivalents

Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

The accompanying notes form an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024)

Fair value and other reserves as of December 31, 2025 include an unrealized loss of kUSD -2 681 (2024: kUSD -2 681) on available-for-sale financial assets and an unrealized gain of kUSD 61 (2024: kUSD 0) relating to cash flow hedges.

The accompanying notes form an integral part of the consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

1. MATERIAL ACCOUNTING POLICIES

   1. Basis of preparation

      The consolidated financial statements of the Kudelski Group (Group or Company) have been prepared in accordance with International Financial Reporting Standards (IFRS®) and interpretations issued by the IFRS Interpretations Committee (IFRIC®) applicable to companies reporting under IFRS Accounting Standards. The financial statements comply with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB®).

      The preparation of the financial statements requires the use of accounting estimates which, by definition, will likely differ from actual results. Management also needs to exercise judgement in applying the Group's accounting policies. Areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 2.

      The financial statements are prepared on a historical cost basis, except for financial instruments measured at fair value. The following material accounting policies are applied consistently to all years presented, except where noted. Prior year figures have been reclassified where necessary to better enable comparison. Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided.

   2. Group accounting

      1. Subsidiaries

         Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power to direct the activities of the entity.

         Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date when control ceases.

         Intercompany transactions, balances, and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

      2. Associates

         Associates are entities over which the Group has significant influence but not control or joint control. Significant influence is presumed to exist when the Group holds between 20% and 50% of the associate's voting power. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost.

      3. Business combinations

         The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary consists of the fair values of the assets transferred, the liabilities incurred to the former owners of the acquired business, the equity interests issued by the Group and the fair value of any asset or liability resulting from any contingent consideration. Acquisition costs are expensed as incurred.

         Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination, with limited exceptions, are measured initially at their fair value at the acquisition date.

         The Group recognizes any non-control-ling interest in the acquired entity on an acquisition-by-acquisition basis, either at fair value or at the non-controlling in-terest's proportionate share of the acquired entity's net identifiable assets.

         Contingent consideration is classified either as equity or as a financial liability. Amounts classified as a financial liability are subsequently measured to fair value, with changes in fair value recognized in profit or loss.

         The excess of the consideration transferred plus the fair value of non-control-ling interests over the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in profit or loss as a bargain purchase.

         Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange.

      4. Equity method

         Under the equity method of accounting, the investments are initially recognized at cost and adjusted thereafter to recognize the Group's share of the post-ac-quisition profits or losses of the investee in profit or loss, and the Group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognized as a reduction in the carrying amount of the investment.

         Where the Group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, the Group does not recognize further loss-

         es, unless it has incurred obligations or made payments on behalf of the associate.

         Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

      5. Changes in ownership interests

         The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group.

         When the Group ceases to consolidate or equity account for an investment because of a loss of control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

   3. Foreign currencies

      The consolidated financial statements of the Group are expressed in U.S. Dollars (USD), which is the presentation currency.

      The local currency is generally the functional currency throughout the world. In the respective entity financial statements, monetary assets and liabilities

      denominated in currencies other than the functional currency are translated at the rate prevailing at the balance sheet date. Transactions contracted in a currency other than the functional currency are recorded using the exchange rate at the time of the transaction. All resulting foreign exchange transaction gains and losses are recognized in the subsidiary's income statement.

      Income, expense and cash flows of the consolidated companies have been translated into U.S. dollars using average exchange rates. Assets and liabilities are translated at the closing rate at the date of the balance sheet. All resulting translation differences, including those arising from the translation of any net investment in foreign entities, are recognized in other comprehensive income. The loss of control or total disposal of a subsidiary results in the reclassification of any translation difference to the income statement.

   4. Revenue recognition

      Revenue is measured based on the consideration specified in a contract with a customer, and is shown net of value added tax, returns, rebates, discounts, commissions directly attributed to the sale, and after eliminating sales within the Group. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a product or service to a customer.

      The Group sells hardware and software products on both a stand-alone basis without any services and as solutions bundled with services.

      Generally, when we provide a combination of hardware and software products with the provision of services, we separately identify our performance obligations under the contract as dis-

      tinct goods and services that will be provided. The total transaction price for an arrangement with multiple performance obligations is allocated at contract inception to each distinct performance obligation in proportion to its stand-alone selling price. The standalone selling price is the price at which we would sell a promised good or service separately to a customer. Observable stand-alone selling prices are used when readily available. If not available, we estimate the price based on observable inputs, including direct labor hours and allocable costs.

      1. Hardware

         Revenue from hardware sales is recognized when control of the products has transferred, being when the products are delivered to the customer and there is no unfulfilled obligation that could affect the customer's acceptance of the products. Delivery occurs when the products have been shipped to a specified location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the agreement, the acceptance provisions have lapsed, or the Group has objective evidence that all the criteria for acceptance have been satisfied. In certain instances, we leverage drop-shipment arrangements with our partners and suppliers to deliver products to our clients without having to physically hold the inventory at our warehouses. We recognize revenue for drop-ship-ment arrangements on a gross basis as the principal in the transaction when the product is received by the customer because we control the product prior to transfer to the customer. We also assume primary responsibility for fulfillment in the arrangement, we assume inventory risk if the product is returned, we set the price charged to the customer

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

         and we work closely with our customers to determine their hardware needs.

      2. Software, licenses and royalties Revenue from software sales is recognized at the point in time when the customer acquires the right to use the software under license and control transfers to the customer. Revenue from licensing arrangements is recognized upon commencement of the term of the license agreement or when the renewal term begins, as applicable. Royalty revenue is recognized upon sale or usage of the product to which the royalty relates.

      3. Services

         We design, implement and manage security and access solutions that combine hardware, software and services for our customers. Such services rendered may include system integrations, specific developments and customization, maintenance and training, and may be provided by us or by third-parties as part of bundled arrangements or on a stand-alone basis as consulting or managed service engagements.

         If the services are provided as part of a bundled arrangement with hardware and software, the hardware, software and services are generally distinct performance obligations. In general, revenue from service engagements is recognized over time as we perform the underlying services by measuring progress toward complete satisfaction of the performance obligation. In contracts that contain a fixed fee per user, revenue is recognized in the amount in which we have the right to invoice the customer for services performed.

         Specific revenue recognition practices for certain of our service offerings are described in further detail below.

         1. Time and materials service contracts. Revenue for service engagements that are on a time and materials basis is recognized based upon the hours incurred for the performance completed to date for which we have the right to consideration, even if such amounts have not yet been invoiced as of period end.
         2. Fixed fee service contracts. Revenue from fixed fee service contracts is recognized using a proportional performance method based on the ratio of direct labor hours and other allocated costs incurred to total estimated direct labor hours and other allocated costs.

         Certain software maintenance agreements provide our customers the right to obtain software upgrades, help desk and other support services directly from the third-party software provider during the term of the agreement. We act as the selling agent in these arrangements and do not assume any performance obligation to the customer under the arrangement. As a result, we are the agent in these transactions and these sales are recorded on a net sales recognition basis. Under net sales recognition, the cost of the service is recorded as a reduction to sales, resulting in net sales equal to the gross profit on the transaction.

      4. Significant financing components Certain contracts with our customers may include payment terms that exceed one year. To the extent that a significant financing component exists in these arrangements, we record interest income associated with the financing component of the arrangement over the associated payment terms based on the prevailing market interest rate at the date of the transaction.

      5. Variable consideration

         For contracts that contain variable pricing elements, the variable consideration is estimated at contract inception and constrained until the associated uncertainty is subsequently resolved. The application of the constraint on variable consideration generally increases the amount of revenue that will be deferred. Variable consideration is reviewed at each reporting period and is measured using the most likely amount method which includes management appropriate estimates.

      6. Interest income

         Interest income is recognized according to the effective interest rate method.

   5. Government grants

      Grants from governments or similar organizations are recognized at their fair value when there is a reasonable assurance that the Group complies with all conditions associated with their grants receipt and use. Where a government grant is subject to audit before payment, the fair value is determined using management's best estimate of the audit risk. Grants are recognized in the income statement as operating income unless they are linked to a capitalized fixed asset, in which case they are deducted from the cost of the fixed asset.

   6. Cost of material, licenses and services The cost of material, licenses and services includes direct costs which are attributable to selected revenues. The cost of material includes only the cost of materials paid to external suppliers in connection with recognized sales transactions. It therefore does not include other direct and indirect costs associated with the manufacturing process, such as labor costs, utilities or depreciation of manufacturing assets.

      Cost of licenses includes amounts charged by external suppliers for sub-licenses on a per-unit basis for each unit of delivered product (e.g. CODEC licenses charged on each set-top-box sold). It therefore specifically excludes licenses paid independently of the number of units sold, deployed or used in a development process.

      Cost of services includes outsourced services that are directly connected to a recognized sales transaction, such as subcontracting a portion of a maintenance agreement or outsourcing the implementation of a revenue-generating customer solution.

   7. Derivative financial instruments Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered in to and subsequently remeasured to fair value at the end of each reporting period. The method of recognizing the resulting gain or loss is dependent on whether the derivative is designated to hedge a specific risk and therefore qualifies for hedge accounting.

      The currency instruments that are generally used include forward foreign exchange contracts, currency swaps and zero cost option strategies with terms generally not exceeding one year. Derivative financial instruments are entered into with high credit quality financial institutions, consistently following specific approval, limit and monitoring procedures.

      1. Derivatives that do not qualify for hedge accounting

         Certain derivatives transactions, while providing effective economic hedging under the Group's risk management policy, do not qualify for hedge account-

         ing under the specific rules of IFRS 9. Changes in the fair value of derivative instruments that do not qualify for hedge accounting under IFRS 9 are recognized immediately in the income statement as part of 'other finance income/(expense), net'.

      2. Cash flow hedge

         The Group designates the derivatives which qualify as hedges of a forecast transaction (cash flow hedge). The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the economic relationship exists between the hedged item and the hedging instrument. The Group enters into hedging instruments that have similar critical terms as the hedged items, such as reference rates, notional amounts and maturities.

         Changes in intrinsic value of derivative financial instruments that meet hedge qualifying criteria are recognized in the 'cash flow hedge reserve' within equity. Changes in fair value of derivative instruments attributable to time value are recognized in the 'cost of hedging reserve' within equity. The amounts accumulated in hedging reserves of OCI are reclassified to profit or loss in the same period during which the hedged expected future cash flow affects the income statement.

         In hedges of highly probable future sales transactions, ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated or if there are any changes in the credit risk of the derivative counterparty.

         When a cash flow hedge no longer meets the criteria for hedge accounting, the gains and losses that were previously recorded in equity remain deferred in equity until the hedged cash flow is recognized in the income statement. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred cost of hedging are immediately reclassified to the income statement. Gain or loss, as well as cost of hedging, related to the ineffective portion is recognized in the income statement within 'other finance income/(expense), net'.

   8. Taxes

      Taxes reported in the consolidated income statement include current and deferred taxes on profit, as well as non-reimbursable withholding taxes and tax adjustments relating to prior years. Income tax is recognized in the income statement, except to the extent that it relates to items directly taken either to equity or to other comprehensive income, in which case it is recognized either in equity or in other comprehensive income. Taxes on income are accrued in the same periods as the revenues and expenses to which they relate.

      Deferred taxation is the tax attributable to the temporary differences that appear when taxation authorities recognize and measure assets and liabilities with rules that differ from those of the consolidated accounts. Deferred taxes are determined using the comprehensive liability method and are calculated on the temporary differences at the substa-tively enacted rates of tax expected to prevail when the temporary differences reverse, except for those temporary differences related to investments in subsidiaries where the timing of their reversal can be controlled and it is probable

      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

      that the difference will not reverse in the foreseeable future.

      Temporary differences and tax losses carried forward are recognized only to the extent that it is probable that future taxable income will be available against which they can be utilized. Temporary differences and tax losses which generate deferred tax assets and liabilities based on their future probable use are combined within each legal entity to provide a net deferred tax asset or liability amount. Deferred income tax liabilities have not been recognized for withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries. Such amounts are either permanently reinvested or do not generate any taxation due to the application of tax treaties or tax reliefs.

   9. Tangible fixed assets

      1. General

         Property, plant and equipment is measured at cost, less subsequent depreciation and impairment. Cost includes any expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group, and the cost of the item can be measured reliably. All other repair and maintenance expenditures are charged to the income statement during the financial period in which they are incurred.

         Building acquisitions or construction and building improvements are allocated to components. The costs less residual values are depreciated over their useful lives on a straight-line basis. Depreciation starts when the underlying assets are ready for use.

         Depreciation is calculated on a straight-line basis over each asset's useful life, according to the following schedule:

         Technical equipment and machinery

         Useful life in years

         Machinery and measurement

         instruments 4 - 7

         Digital material and equipment 4 - 5 Computer and information networks 4 Fixed assets made available to clients 4 - 10

         Other equipment

         Useful life in years

         Office furniture and equipment 5 - 7

         Vehicles 4 - 5

         Each assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is impaired immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal or retirement of tangible fixed assets are determined by comparing the proceeds received with the carrying amounts, and are included in profit or loss.

   10. Intangible assets

       1. Goodwill

          Goodwill on acquisitions of subsidiaries is denominated in the functional currency of the related acquisition and is included in intangible assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if events or circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

          Goodwill is allocated to cash-generat-ing units for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill arose. The units are identified at the lowest level at which goodwill is monitored for internal management purposes, being the operating segments.

       2. Research and development

          Research and development expenditures with external parties that do not meet the criteria for capitalization are recognized as expense as incurred. When capitalized, they are amortized over 4 to 10 years once development is achieved and the resulting products are ready for sale. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

          Internal research and devlopment expenses are fully charged to the income statement when incurred. The Group considers that economic uncertainties inherent in the development of new products preclude it from capitalizing such costs.

       3. Software

          Purchased software is recorded at cost and amortized on a straight-line basis over its estimated useful life.

          Costs associated with maintaining computer software programs are recognized as expense as incurred.

       4. Customer lists, Trademarks and Brands

          Separately acquired customer lists, trademarks and brands are shown at historical cost. Customer lists, trademarks and brands acquired in a busi-

          ness combination are recognized at fair value at the acquisition date and subsequently carried at cost less accumulated amortization and impairment losses. They have a finite usefull life and are amortized on a straight-line basis over the following periods:

          Over the useful life, in years

          Core development technologies 4 - 10 Customer lists 10

          Trademarks and brands 5

          Internally generated customers listes, trademarks and brands are not capitalized.

   11. Leases

       The Group leases various properties, equipment and vehicles. Rental contracts typically cover fixed periods between one and 15 years and may contain extension options as described below. Lease terms are negotiated on an individual basis and include a wide variety of different terms and conditions. The lease agreements generally do not impose financial covenants, however, leased assets are not allowed to be used as collateral for borrowing purposes.

       Leases are booked as a right-of-use asset and as a corresponding lease liability at the date at which the leased asset is available for use by the Group. Each lease payment is apportioned between the reduction of the outstanding lease liability and finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life or the lease term on a straight-line basis. Assets and liabilties arising from a lease are initially measured on a present value basis. Lease liabilities are valued at the

       net present value of the future lease payments, which includes fixed lease payments, variable lease payments based on indexes and rates, residual value guarantees, purchase options and termination penalties. Lease payments are discounted using the interest rate implicit in the lease, or if that rate cannot be determined, the Group's incremental borrowing rate based on the currency in which it finances its local operations.

       Right-of-use assets are measured at cost, comprising the amount of the initial lease liability adjusted by any lease payments made at or before the commencement date of the lease, any lease incentives received, initial direct costs and any estimated restoration costs.

       Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are identified as leases with a term of 12 months or less. Low-value assets comprise general office furniture and IT equipment .

       Extension and termination options are included in a number of property and equipment leases throughout the Group. These terms are used to maximize operational flexibility, with the majority of extension and terminations options being exercisable only by the Group and not by the respective lessor.

   12. Financial assets

       1. Classification

          The Group classifies its financial assets in the following measurement categories: financial assets measured at fair value (either through other comprehensive income (OCI), or through profit or loss), and financial assets measured at amortized cost. The classification de-

          pends on the Group's business model for managing the financial assets and liabilities and the contractual terms of the cash flows.

          For assets measured at fair value, gains and losses will either be recorded in profit or loss, or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity instrument at fair value through OCI.

       2. Recognition and derecognition Purchases and sales of financial assets are recognized on trade date, being the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all of the risks and rewards of ownership.

       3. Measurement

          At initial recognition, the Group measures financial assets at fair value plus or minus any transaction costs that are directly attributable to the acquisition of the instrument. For financial assets that are carried at fair value through profit or loss, transaction costs are expensed as incurred.

          Subsequent measurement of loans and debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. The Group classifies its debt instruments into three measurement categories, amortized cost, fair value through profit or loss, or fair value through OCI.

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

          Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these assets is included in 'other finance income/(expense), net' using the effective interest rate method. Any gain or loss arising on derecognition is recognized in profit or loss and presented in 'other operating expenses'. Foreign exchange gains and losses are presented in 'other finance income/(expense), net'.

          Assets that are held for collection of contractual cash flows and for selling the financing assets, where the assets' cash flows represent solely payments of principal and interest, are measured at fair value through OCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses, which are recognized in profit or loss. When the financing asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in 'other finance income/(expense), net'. Interest income from these financial assets is included in 'finance income' using the effective interest rate method. Foreign exchange gains or losses are presented in 'other finance income/(expense), net'.

          Assets that do not meet the criteria for amortized cost or fair value through OCI are measured at fair value through profit or loss. Gains or losses on a debt instrument that is subsequently measured at fair value through profit or loss is recognized in profit or loss and presented within 'other finance income/(expense), net' in the period in which it arises.

          The Group subsequently measures all equity investments at fair value. Where

          the Group has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as 'other finance income/(expense), net' when the right to receive payments is established.

          Changes in the fair value of financial assets at fair value through profit or loss are recognized in 'other finance income/ (expense), net' in the statement of profit or loss as applicable.

       4. Impairment

          The Group assesses on a forward-look-ing basis the expected credit losses associated with its financial assets carried at amortized cost and fair value through OCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

          The Group applies a simplified approach permitted by IFRS 9 for trade accounts receivables and contract assets, which requires expected lifetime credit losses to be recognized from initial recognition of the receivables.

          To measure expected credit losses, trade receivables and contract assets are grouped based on shared credit characteristics and days past due.

          Expected loss rates are based on the payment profiles of sales over the 36 month period preceding the financial statement reporting date and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current and forward-looking information affecting the ability of the customers to settle the receivables.

   13. Trade accounts receivable

       Trade accounts receivable are recognized inititally at the amount of consideration that is unconditional, unless they contain significant financing components, in which case they are recognized at fair value. They are subsequently measured at amortized cost using the effective interest rate method, less loss allowance.

   14. Contract assets

       A contract asset is the entity's right to consideration in exchange for goods or services that the entity has transferred to the customer. A contract asset becomes a receivable when the entity's right to consideration is unconditional, which is the case when only the passage of time is required before payment of the consideration is due. Contract assets relate to unbilled work in progress and have substantially the same risk characteristics as trade receivables.

   15. Inventories

       Inventories are stated at the lower of cost and net realizable value. Costs of purchased inventory are determined after deducting rebates and discounts using the weighted average cost method. Net realizable value is the estimated selling price in the ordinary course of business less any estimated costs of completion and estimated costs necessary to make a sale. Inventories which are no longer part of production and sales plans are charged to profit or loss.

   16. Cash and cash equivalents

       Cash and cash equivalents include cash in hand and highly liquid investments with original maturities of three months or less which are readily convertible to known amounts of cash. Bank overdrafts are included in short-term financial debt in current liabilities on the balance sheet.

   17. Share capital

       Ordinary and preferred shares of Kudelski SA are classified as equity and are presented at their nominal value. The difference between proceeds of share capital less directly attributable incremental costs and the nominal value of the share capital increase are considered as share premium and included in equity.

   18. Borrowings

       Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost. Any difference between the net proceeds and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

       Fees paid for the establishment of loan facilities are recognized as transaction costs of the loan if all of the facility will be drawn down. If there is no evidence that all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the loan facility.

   19. Provisions

       Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognized for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

       A restructuring provision is recognized when the Group has developed a formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected. Restructuring provisions comprise employee termination payments, lease termination penalties and dilapidation costs.

   20. Employee benefits

       1. Pension obligations

          The Group operates a number of defined benefit and defined contribution plans, the assets of which are generally held in separate trustee-administered funds. The pension plans are generally funded by payments from employees and by their employer, taking into consideration the recommendations of independent qualified actuaries. For defined benefit plans, the Group companies provide for benefits payable to their employees on retirement by charging current service costs to income.

          The liability for defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date minus the fair value of plan assets, together with adjustments for actuarial gains/losses and past service costs. Defined benefit obligations are in all material cases calculated annually by independent actuaries using the projected unit credit method, which reflects services rendered by employees to the date of valuation, incorporates assumptions concerning employees' projected salaries and uses interest rates of highly liquid corporate bonds which have terms to maturity approximating the terms of the related liability. Actuarial gains and losses arising from experience adjustments and changes

          in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

          The Group's contributions to the defined contribution plans are charged to the income statement in the year during which they are made.

       2. Other long-term employee benefits

          Other long-term employee benefits represent amounts due to employees under deferred compensation arrangements mandated by certain jurisdictions in which the Group conducts its operations. The cost of such deferred compensation arrangements is recognized on an accrual basis and included within employee benefits expense.

       3. Employee Share Purchase Program (ESPP)

          The Group's employee share purchase program allows certain employees to buy a specific number of shares on a preferential basis, subject to certain restrictions on the sales of the shares for a period of 3 years. The difference between the fair value of these shares and the employee' payments for the shares is expensed in the income statement on the subscription date. The fair value of the shares transferred is determined based on the market price of the shares adjusted for the estimated value of the restrictions on sales.

       4. Profit sharing and bonus plan

          The Group recognizes a liability and an expense for bonuses and profit sharing where contractually obliged or where there is a past practice that has created a constructive obligation. In addition, the Board of Directors may grant shares to certain employees. These shares may be subject to a blocking period of up to 7 years and are expensed in the income

          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

          statement at their fair value at grant date taking into account the estimated value reduction due to the blocking period.

       5. Other employee benefits

          Salaries, wages, social contributions and other benefits are recognized on an accrual basis in employee benefits expense in the year in which the employees render the associated services.

   21. Contract liabilities

       Contract liabilities represent the Group's current obligation to transfer goods or services to a customer for which the Group has received consideration from the customer. Contract liabilities primarily relate to billed work in progress and service contracts, whereby the customer has been invoiced in advance of the services being performed and are generally recognized within twelve months.

   22. Dividends

       Dividends are recorded in the Group's financial statements in the period in which they are approved by the Group's shareholders.

   23. New and amended accounting standards and IFRIC interpretations Standards and Interpretations effective in the current period and change in accounting policies

       The accounting policies adopted are consistent with those followed in the preparation of the Group's annual financial statements for the year ended December 31, 2024. Amendments to standards that became effective during the current year had no material impact on the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

       Standard and Interpretations in issue not yet adopted

       IFRS 18 Presentation and Disclosure in Financial Statements is effective for annual reporting periods beginning on or after 1 January 2027 and will replace IAS 1. The standard introduces new requirements for the presentation of the statement of profit or loss, including defined categories for income and expenses, new required subtotals such as operating profit, and new disclosure requirements for management-defined performance measures.

       The Group is currently assessing the impact of IFRS 18. The adoption is expected to result in changes to presentation and disclosures, particularly within the statement of profit or loss and related notes, but is not expected to have a material effect on recognition or measurement. The Group intends to adopt the standard when it becomes effective.

       Other new and amended standards and interpretations that are effective for annual periods beginning after 1 January 2026, and that have not been early adopted by the Group, are not expected to have a material impact on the Group's financial statements in the current or future reporting periods or on foreseeable future transactions.

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

   The preparation of financial statements requires the use of accounting estimates which, by definition, will likely differ from the actual results. Areas that involve a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to final outcomes deviating from estimates and assumptions made are described below.

   Fair value of financial assets

   The Group's residual interests in receivables securitization vehicles are measured at fair value using a discounted cash flow (DCF) model that estimates the present value of expected future residual cash flows after payment of senior noteholders and transaction fees. The DCF model reflects the legal waterfall, including priority of payments, sequencing of fees and interest, and triggers for early amortization.

   The key unobservable units are expected default and recovery rates, timing of cash flows, discount rates applied to reflect yields for comparable residual tranches, and other structural inputs including servicing and transaction costs. These inputs are derived from the Group's historical receivable performance and observable market data where available, adjusted to reflect market assumptions for the characteristics of the securitization.

   The fair value measurement is classified as Level 3 because it relies on significant unobservable inputs. The Group reviews the model and validates assumptions on an annual basis.

   Lease accounting

   Lease liabilities are valued at the net present value of the expected future lease payments. Lease payments are discounted using the interest rate implicit in the lease, or if that rate cannot be determined, the Group's incremental borrowing rate based on the currency in which it finances its local operations is used.

   To determine the incremental borrowing rate, the Group uses a build-up approach that starts with the risk-free interest rate adjusted for credit risk based on recent third-party financing and makes specific adjustments for each lease based on term, country and currency.

   The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.

   Impairment of goodwill

   Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires management's estimate of the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value (note 15). Actual cash flows and values could vary significantly from the forecasted cash flows and related values derived using discounting techniques.

   Income tax and deferred tax assets

   The recognition of deferred tax assets, particularly those arising from tax loss carryforwards, requires significant management judgement. Deferred tax assets are only recognized to the extent that it is considered probable that future taxable profits will be available against which the losses can be utilized. This assessment is inherently uncertain and involves estimates regarding the level and timing of future taxable profits, the reversal of existing temporary differences, and the availability of feasible tax planning strategies. Management also evaluates the period over which tax loss carryforwards can be utilized and whether it is probable that such carryforwards will expire unused. In addition, the measurement of deferred tax balances requires judgement in determining the applicable tax rates and assessing the

   impact of enacted or substantively enacted tax legislation. Changes in these assumptions, forecasts, or in the regulatory environment could materially affect the carrying amount of deferred tax assets and liabilities recognized in the financial statements.

   Retirement benefit plans

   The Group sponsors pension and other retirement plans in various forms covering employees who meet eligibility requirements. Several statistical and other factors that attempt to anticipate future events are used in calculating the expense and liability related to these plans. The factors include both financial and demographical assumptions. Financial assumptions comprise discount rate, salary and expected pension increases, interest rate credited in savings accounts, and returns on plan assets. Demographic assumptions include employee turnover, retirement payment forms (capital vs. annuity), mortality tables and disability assumptions. Demographic assumptions are based on past experience. In addition, the Group's actuarial consultants use statistical information such as withdrawal and mortality rates for their estimates.

   Assumptions used (note 28) may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants, among other factors. Depending on events, such differences could have a material effect on our total equity.

   Principal vs. agent consideration

   The determination of whether the Group acts as principal or agent in revenue arrangements requires significant judgement and impacts the presentation of revenue on either a gross or net basis.

   This assessment is critical in determining the appropriate revenue recognition treatment and is based on whether the Group controls the specified good or service before it is transferred to the customer.

   Key factors considered in this assessment include the following:

   • Control before transfer - the Group assesses whether it obtains control over a good or service before it is transferred to a customer. Control is evaluated based on the ability to direct the use of and obtain substantially all of the benefits from the good or service.

   • Inventory risk - the Group considers whether it bears inventory risk before a good or service is transferred to the customer or after transfer of control to the customer

   • Pricing discretion - the Group examines whether it has discretion in setting prices for a good or service, which may indicate control over the good or service before transfer

   • Fulfillment obligation - the Group evaluates whether it is primarily responsible for fulfilling the contract, which suggests that it is acting as a principal.

   Management exercises significant judgment in applying these criteria to complex transactions, particularly in arrangements involving multiple parties. Any changes in these judgments could have a material impact on the Group's reported revenue and financial performance.

   The Group continuously monitors and reassesses these judgments to ensure consistent application and compliance with IFRS requirements.

   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

   Impairment of trade accounts receivable The Group recognizes lifetime expected credit losses (ECL) on trade receivables using the simplified approach under IFRS 9. The determination of ECL allowances involves significant judgement, particularly in the development of provision matrices that estimate default rates based on historical loss experience, adjusted for current and forward-look-ing information. Management considers customer-specific factors, ageing profiles, industry risk and other macroeconomic indicators relevant to the countries in which the Group operates. Additional complexity arises from the Group's operations across multiple jurisdictions and currencies, which requires judgement in evaluating economic conditions, regulatory environments, and foreign exchange volatility, all of which may affect customer credit risk. Where historical patterns do not fully reflect expected future conditions, management applies qualitative adjustments. Changes in these estimates or in the underlying assumptions could have a material impact on the level of impairment recognized in the financial statements.

3. FINANCIAL RISK MANAGEMENT

   The Group's Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Group through exposure analyses. These risks include market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

   The Group seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group's treasury policies, which provide written princi-

   ples on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Internal control procedures ensure compliance with these policies. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Corporate Treasury function reports periodically to the Group's finance executive committee which monitors risks and policies implemented to mitigate risk exposures.

   Market risk

   The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group applies a natural economic hedging strategy and can enter into a variety of derivative financial instruments to manage its exposure to foreign currencies and interest rate risks, including forward foreign exchange contracts or option strategies to hedge the foreign exchange rate risks and interest rate swaps to mitigate the risk of rising interest rates.

   The Group does not enter into any financial transactions containing a risk that cannot be quantified at the time the transaction is concluded (it does not sell assets short). The Group only sells existing assets or hedges transactions and future transactions that are likely to happen. Future transaction hedges are contracted according to treasury policy based on a foreign exchange cash flow forecast. In the case of liquid funds, it writes options on assets it has, or on positions it wants to acquire, and for which it has the required liquidity. The Group therefore expects that any loss in value for these instruments would be generally offset by increases in the value of the hedged transactions.

   1. Foreign exchange risk

      The Group conducts business in a variety of countries using a variety of foreign currencies. However, the Group prepares its consolidated financial statements in U.S. Dollars. It is therefore exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Swiss franc and the Euro. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. In order to manage foreign exchange risks arising from future commercial transactions and certain assets and liabilities, the Group uses forward foreign exchange contracts and foreign currency zero cost option contracts.

      The Group enters into zero cost foreign currency option contracts to manage the risk associated with highly probable sales transactions for the next 12 months within a determined portion of the exposure generated, as defined in the treasury policy. These derivatives are generally qualified as cash flow hedges.

      The Group also enters into foreign exchange forward and swap contracts in order to hedge the risk attributed to changes in value of recognized assets and liabilities. The Group qualifies these derivatives as held-for-trading with gains and losses recognized through profit and loss.

      Net investments in Group affiliates with a functional currency other than the

      U.S. Dollar are of a long-term nature: the Group does not hedge such foreign currency translation exposures.

   2. Interest rates

   The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating interest rates. The Group manages this risk by maintaining

   an appropriate mix between fixed and floating rate borrowings. Interest risk exposure is evaluated regularly to align with interest rate views and the Group's defined risk appetite, which ensure that optimal hedging strategies are applied by either neutralizing the balance sheet exposures or protecting interest expense through different interest rate cycles.

   Other price risks

   The Group is exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments.

   Credit risk management

   Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group uses credit rating information supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group's exposure and the credit ratings of its counterparties are continuously monitored, and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved annually by the department in charge.

   In 2024, the Kudelski Group with certain of its subsidiaries implemented a trade receivables securitization program (Pro-gram") with a financial institution. The Program is designed to enhance the Group's financial flexibility by providing an additional source of liquidity for its operations.. The Group defines counterparties as having similar characteris-

   tics if they are related entities. With the exception of the Program and of cash balances deposited with a highly rated bank, concentration of credit risk did not exceed 10% of gross monetary assets at the end of the year, . The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The maximum amount of credit risk is the carrying amount of the financial assets.

   Liquidity risk management

   The Group has built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. Exposure arises in the event that debt obligations cannot be met when due, or external borrowings cannot be refi-nanced.

   The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecasts and actual cash flows and by matching the maturity profiles of financial assets and liabilities.

   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

4. RESTATEMENT DUE TO CHANGE IN OPERATING STRUCTURE

   In February 2025, the Group announced a significant reorganization of its operational structure following the divestment of SKIDATA during 2024. The transformation aimed to strengthen the Group's core digital security business and included cost reduction measures across the Group's business segments and corporate functions.

   Following the transformation, the Group is structured into three operating segments which are reflected in internal management reporting as follows:

   • Core Digital Security

   • Cybersecurity

   • Internet of Things (IoT)

   In connection with the reorganization, management has reassessed and realigned its reportable segments to better reflect the way in which the business is managed and reviewed internally. As a result, the Group has restated certain prior period information to conform to the current presentation. This restatement affects the allocation of revenues, operating income, and other segment-level financial data among the new operating segments. The restatement provides comparative segment results that are consistent with the current organizational structure and internal reporting framework. These changes have no impact on the Group's previously reported financial position, results of operations or cash flows.

5. OPERATING SEGMENTS

   IFRS 8 requires operating segments to be identified based on internal reporting that is regularly reviewed by the chief operating decision maker. Group operating segments represent strategic business units that offer products and services for which such internal reporting is maintained. The chief operating decision maker reviews the internal segment reporting in order to allocate resources to the segments and assess their performance.

   As noted above, the Group is structured into three operating segments: Core Digital Security, Cybersecurity and Internet of Things (IoT).

   Core Digital Security renews the Group's focus on providing end-to-end digital and media content security, including chipset security and security labs certification. Core Digital Security also includes the Group's intellectual property activities as well as the development of new business initiatives such as watermarking, Insight and Sporfie.

   Cybersecurity leverages the Group's long-standing expertise to provide cybersecurity solutions and services focused on protecting data, processes and systems for companies and organizations around the world, safeguarding assets at a time of rapidly increasing cyberthreats.

   IoT designs and delivers asset tracking solutions for automotive retail and other industries, monitoring location, utilization and condition of goods and equipoment.

   The measure of income presented to manage segment performance is the segment operating income before depreciation, amortization and impairment. This measure is based on the same accounting policies as consolidated total except that intersegment sales are eliminated at the consolidation level. Income and expenses relating to Corporate include the costs of Group headquarters and the items of income and expense which are not directly attributable to specific divisions. These elements are reported under the 'Corporate common functions'. Reportable segment assets include total assets allocated by segment with the exclusion of intersegment balances, which are eliminated. Unallocated assets include assets managed on a centralized basis, included in the reconciliation to balance sheet assets.

   Core Digital

   Security

   Internet of

   Things

   Cyber-

   security

   Corporate Common

   Functions Total

   In USD'000 2025 2025 2025 2025 2025

   Total segment revenue and other operating income

3 711

122

73

500

4 405

-23 139

-184 480

-25 376

-27 271

-17 113

-93 397

-66

-15 769

-65 695

-320 917

-8 010

-950

-2 885

-

-11 845

376

-

-

-

-7 036

376

-34 105

17 096 -14 350 -14 855 -15 336 -27 445

25 106 -13 400 -11 970 -15 336 -15 600

232 725 39 247 98 539 500 371 011

Revenues from external customers 229 014 39 125 98 467 - 366 606 Other operating income - operating segments

Cost of materials, licenses and services Operating expenses

Depreciation, amortization and impairment

Interest expense and other finance income/(expense), net Share of result of associates

Security

Things

security

3 409

122

9

5 740

9 280

-31 789

-193 362

-22 542

-26 676

-24 027

-89 269

-

-18 410

-78 358

-327 717

-90 911

-755

-2 726

-12 740

-107 132

3 168

-

-

-

-20 402

3 168

-137 433

-79 088 -8 159 -7 542 -25 410 -120 199

11 823 -7 404 -4 816 -12 670 -13 067

236 974 41 813 108 480 5 740 393 008

Revenues from external customers 233 565 41 691 108 471 - 383 728 Other operating income - operating segments

Cost of materials, licenses and services Operating expenses

Depreciation, amortization and impairment

Interest expense and other finance income/(expense), net Share of result of associates

INFORMATION ABOUT MAJOR CUSTOMERS

No aggregate revenues resulting from transactions with a single external customer amount to 10% of the Group's total revenues.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

GEOGRAPHICAL INFORMATION

The Group's country of domicile is Switzerland. The Group's revenue from external customers and information about its non-current assets by country are presented below:

Revenues from external

customers Non-current assets

Non-current assets exclude financial instruments, deferred tax assets and employment benefit assets. Revenues are allocated to countries on the basis of the end-customer's location.

REVENUE CATEGORIES

1. OTHER OPERATING INCOME

   In USD'000 2025 2024

   Government grants (research, development and training) 3 003 3 088

   Income from rental of property 326 4 999

   Gain on disposal of assets 81 -11

   Transition services - SKIDATA 502 -

   COVID-19 subsidies - 31

   Others 492 1 174

   4 405 9 280

2. EMPLOYEE BENEFITS EXPENSE

   In USD'000 Note 2025 2024

   Wages and salaries 203 672 205 576

   Social security costs 26 384 27 099

   Defined benefit plans expenses 28 3 086 8 981

   Defined contribution plans expenses 4 981 4 580

   Other personnel expenses 4 379 4 917

   242 502 251 154

3. OTHER OPERATING EXPENSES

   In USD'000 2025 2024

   Development and engineering expenses 12 091 11 363

   Travel, entertainment and lodging expenses 16 132 16 352

   Legal, experts and consultancy expenses 12 417 11 975

   Administration expenses 3 834 3 830

   Computer and telecommunications expenses 18 370 21 995

   Building and infrastructure expenses 6 187 6 082

   Marketing and sales expenses 4 962 5 290

   Taxes other than income tax 1 526 1 677

   Change in provisions -1 105 -4 559

   Insurance, vehicles and others 4 001 2 558

   78 415 76 563

4. DEPRECIATION, AMORTIZATION AND IMPAIRMENT

14

14

1 427 14 018

1 598 1 720

16

16

8 302

74

7 646

25

15

444 83 722

11 845 107 132

444 83 722

8 376 7 671

3 025 15 739

Land and buildings Equipment and machines

Land and buildings

Vehicles, equipment and other

Intangible assets

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

In 2024, the Group entered into a CHF 150 million senior secured bridge loan agreement to reinforce its liquidity position. The facility served as a contingency measure in the event the sale of SKIDATA did not conclude prior to maturity of the outstanding bond. The loan carried a contractual maturity of 18 months from the closing date. During 2024, the Group utilized CHF 15 million, which was subsequently repaid in full following the completion of the SKIDATA transaction. The agreement provided for a commitment fee of 6% per annum on the undrawn portion of the facility for a period of one year, as well as a prepayment fee applicable to the drawn amount. The total cost of this credit facility, including transaction-related costs directly attributable to the borrowing, is presented as 'Bridge loan' in the table above.

The tax on the Group's income before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated companies as follows:

Income before tax for tax-transparent companies includes the full pre-tax income of non-fully-owned subsidiaries, for which income taxes are paid directly by the subsidiaries' shareholders. The Group, however, recognized only the portion of tax attributable to its ownership interest. The theoretical tax impact if the Group had recognized 100% of the taxes on these subsidiaries amounts to kUSD 585 (2024: kUSD 1 207) and is included in 'Other' in the above table.

The weighted average applicable tax rate decreased from 24.3% in 2024 to 14.1% in 2025. The decrease is primarily due to shifts in profit contributions by country.

1. EARNINGS PER SHARE (EPS)

   Basic and diluted earnings per share

   Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of shares outstanding during the year.

   In USD'000	2025	2024
   Net income attributable to bearer shareholders	-38 914	10 469
   - Continuing operations	-38 914	-137 064
   - Discontinued operations	-	147 533
   Net income attributable to registered shareholders	-3 499	943
   - Continuing operations	-3 499	-12 340
   - Discontinued operations	-	13 283
   Total net income attributable to equity holders	-42 413	11 412
   Weighted average number of bearer shares outstanding	51 494 627	51 425 543
   Weighted average number of registered shares outstanding	46 300 000	46 300 000
   Basic and diluted earnings per share (in USD)
   Attributable to shareholders of Kudelski SA for bearer shares : basic and diluted (in USD)	-0.7557	0.2036
   - Continuing operations	-0.7557	-2.6653
   - Discontinued operations	-	2.8689
   Attributable to shareholders of Kudelski SA for registered shares : basic and diluted (in USD)	-0.0756	0.0204
   - Continuing operations	-0.0756	-0.2665
   - Discontinued operations	-	0.2869

   The company has no share options nor share subscription rights outstanding which could lead to a dilution of earnings per share.

   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

2. TANGIBLE FIXED ASSETS Technical Building equipment improve- and Other In USD'000 Land Buildings

   As of January 1, 2025

- 111 1 040 1 862 546 3 559

- -10 -17 -7 913 -1 018 -8 958

-6 880 -51 806 -4 905 -45 291 -4 436 -113 319

- -453 -374 -2 112 -677 -3 616

- 38 93 -187 26 -30

-

-

-

-

-

-

1 641

-147

734

920

-5 947

2 259

461

-632

1 027

3 022

-6 727

4 020

- -90

- -12 739

- -

- 26 375

- 256

- -

-1 184 -969 -738 -2 980

-6 -13 -1 -12 758

17 7 882 993 8 892

3 079 33 008 3 420 65 882

146 1 716 559 2 677

0 15 -16 -

-

-

-

-

-

-

-

-

-1 427

-144

-374

-888

-5 919

-2 129

-710

-0

533

-884

-3 025

-0

6 596

-3 386

- - 3 244 1 905 1 272 6 421

- - 2 674 1 771 1 477 5 921

- - -8 432 -24 111 -9 673 -42 216

- - -6 775 -27 014 -8 613 -42 401

- - 11 676 26 016 10 945 48 637

- - 9 448 28 785 10 089 48 322

Additions

Disposals and retirements Change in scope

Currency translation effects Reclassification & others

Additions

Disposals and retirements Currency translation effects

Disposals and retirements Change in scope

Currency translation effects Reclassification & others

Systematic depreciation Impairment

Disposals and retirements Currency translation effects

Useful life in years Indefinite 10 - 50 4 - 8 4 - 10 4 - 7

The Group regularly reviews the estimated useful lives and residual values of its fixed assets, taking into consideration, among other factors, its experience with similar assets, current market conditions, and prevailing industry practices.

In 2024, the Group recognized an impairment adjustment on certain real estate assets in connection with the planned sale of a subsidiary. The impairment primarily reflects a decline in market rental values and the termination of a significant lease agreement (note 27).

1. INTANGIBLE ASSETS

   		Customer
   		lists,
   		Trade-
   	Technol-	marks			Other
   In USD'000	ogy	& Brands	Software	Goodwill	intangibles	Total
   GROSS VALUES AT COST
   As of January 1, 2024	98 363	63 755	79 154	334 947	441	576 660
   Additions	1 437	-	229	-	-	1 666
   Disposals and retirements	-47	-	-13 312	-	-	-13 359
   Change in scope	-29 235	-10 270	-17 154	-34 964	-171	-91 795
   Reclassification & others	-1 096	-	1 126	-	-	30
   Currency translation effects	-4 059	-4 398	-3 927	-12 531	-17	-24 932
   As of January 1, 2025	65 362	49 087	46 118	287 451	253	448 271
   Additions	44	-	545	-	-	589
   Disposals and retirements	-6 939	-	-3 032	-	-	-9 971
   Currency translation effects	6 383	4 636	5 781	11 928	26	28 754
   As of December 31, 2025	64 851	53 723	49 411	299 380	279	467 643
   ACCUMULATED DEPRECIATION AND IMPAIRMENT
   As of January 1, 2024	-93 525	-61 006	-73 273	-	-441	-228 245
   Systematic amortization	-107	-931	-390	-	-	-1 428
   Impairment	-39	-	-171	-82 084	-	-82 294
   Recovery of amortization on disposal and retirements	47	-	13 312	-	-	13 359
   Change in scope	24 435	8 701	11 258	-	171	44 567
   Currency translation effects	3 940	4 289	3 782	-	17	12 028
   As of January 1, 2025	-65 249	-48 947	-45 482	-82 084	-253	-242 015
   Systematic amortization	-48	-102	-294	-	-	-444
   Recovery of amortization on disposal and retirements	6 939	-	3 032	-	-	9 971
   Currency translation effects	-6 367	-4 621	-5 736	-	-26	-16 751
   As of December 31, 2025	-64 726	-53 670	-48 480	-82 084	-279	-249 239
   Net book values as of December 31, 2024	113	140	636	205 367	-	206 256
   Net book values as of December 31, 2025	125	53	930	217 296	-	218 404
   Useful life in years	4 - 10	5 - 10	3 - 4	Indefinite	4

   Intangible assets with indefinite useful lives are subject to a yearly impairment review.

   Goodwill is tested for impairment at least annually and when there is an indication of impairment. The impairment tests of goodwill are performed at the same time each year and at the cash-generating unit (CGU) level, defined within the framework of the Group as its operating segments. In accordance with IFRS 8, the Group reports three operating segments: Core Digital Security, Cybersecurity and Internet of Things (IoT) (note 5).

   Goodwill allocated to each operating segment is tested for impairment using a value-in-use calculation, which corresponds to the segment's future projected cash flows discounted at an appropriate pre-tax rate of return. Cash flow projections are based on the financial plans and business strategies of Group management covering a period of five years and projected to perpetuity using a multiple which corresponds to a steady or declining growth rate. The Group assesses the uncertainty of these estimates by making sensitivity analyses. The discount rates used reflect the current assessment of the time value of money and the risks specific to each operating segment. Any impairment loss in respect of goodwill is never subsequently reversed.

   Management believes that the current market value of the company does not accurately reflect its intrinsic value. This assessment is based on several factors, including, the long-term growth potential of the different businesses, the Group's cash position at the end of the reporting period, as well as unsolicited offers received for a division.

   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2025

   The following sets out the allocated goodwill and key assumptions used in the impairment test for each segment:

   2025	Carrying amount	Period of cash flow projections	Annual sales growth	Compound annual growth rate	Annual margin evolution	Terminal growth rate	Pre-tax discount rate
   Goodwill CGU
   Core Digital Security	120 061	5 years	-3% to 6%	2.8%	Improvement	2.0%	11.9%
   Cybersecurity	62 653	5 years	7% to 12%	10.7%	Improvement	1.8%	12.2%
   IoT	34 582	5 years	13% to 21%	16.6%	Improvement	2.2%	13.2%
   	217 296
   	Carrying	Period of cash flow	Annual sales	Compound annual growth	Annual margin	Terminal growth	Pre-tax discount
   2024	amount	projections	growth	rate	evolution	rate	rate
   Goodwill CGU
   Core Digital Security	113 469	5 years	-4% to 4%	0.8%	Declining	2.0%	13.0%
   Cybersecurity	59 215	5 years	9% to 20%	11.8%	Improvement	2.0%	13.5%
   IoT	32 684	5 years	18% to 26%	23.7%	Improvement	2.0%	13.0%
   	205 367

   The following has been taken into consideration in the impairment tests:

   • Assumed cost of capital for each segment is based on the cost of equity of comparable businesses adjusted for the segment capital structure. The resulting weighted average cost of capital is then adjusted to include tax effects specific to the jurisdiction in which the segment operates. Net operating loss carryforwards are not considered when determining the tax effects.

   • Cash flows for the first five years were based upon financial plans approved by Group management which are consistent with the Group's approved strategy for this period. They are based upon past performance and current initiatives.

   • Terminal growth rates have been determined to reflect the long-term view of the nominal evolution of the business.

In 2024, the Group recognized a goodwill impairment for the Core Digital Security division following a deterioration in operating performance and revisions to the underlying business plan. In response, management initiated targeted cost reduction measures and refocused strategic efforts on core products and customer segments. These actions contributed to a stabilization of the business, leading the Core Digital Security segment to materially outperform expectations in 2025. Year-over-year revenues stabilized and gross margins improved reflecting the continued migration away from hardware-based security solutions to software. Revenues from legacy products continue to decline, while new product initiatives including watermarking/ streaming/anti-piracy solutions and OpenTV Enterprise continue to demonstrate encouraging growth.

Segment management assumes a moderate growth in revenue over the first years of the planning period, while continuing to invest in the development of new products. In the later years, the rate of growth is expected to accelerate driven by new business lines expected to maintain their current momentum. Given the high operating leverage of the business, operating costs are expected to grow at a slower pace than revenues resulting in operating income improvements.

Core Digital Security revenue assumptions are based on bottom-up projections by product groups and regions. Such projections are completed by segment management in collaboration with product managers and account managers. Projections are subsequently adjusted at the Group management level to include contingencies related to uncertainties of the business development. Margin assumptions are derived from historical performance, pricing trends, and expected product mix. Operating cost assumptions are based on historical expenditures and projected based on anticipated business actions and outlook over the forecast period.

In 2025, revenues of Kudelski Security declined significantly compared to prior year, primarily driven by a decrease in the U.S. technology resell business and lower service revenues in Europe and the United States following a strategic refocusing of the service portfolio. Managed Security revenues increased slightly year-on-year but remained below expectations due to underperformance in the Managed Detection and Response (MDR) business, which was impacted by suboptimal technology choices made in prior years. Operating expenses increased as a result of continued investment in strategic development areas, including Cybersecurity AI and OT security, leading to an EBITDA loss of USD 13.9 million.

From 2026, Kudelski Security expects to return to growth, supported by the recovery of service revenues to historical levels, normalization of U.S. technology resell revenues, and growth in European technology and service revenues driven by new MDR deployments. Gross margins are forecast to improve modestly, and EBIDTA losses are expected to narrow slightly in 2026. With accelerating growth in Managed Security and other services and moderation in operating expense growth, Kudelski Security is expected to reach EBITDA break-even in 2027, with further margin improvement thereafter supported by operating leverage.

Cybersecurity revenue assumptions are developed from its internal business structure (technology resale, advisory, managed services, innovation, etc.) and by primary geographical region. Projections are subsequently adjusted at the Group management level to include contingencies related to uncertainties of the business development. Margin assumptions are derived from historical performance, pricing trends, and expected product mix. Operating cost assumptions are based on historical expenditures and projected based on anticipated business actions and outlook over the forecast period.

In 2025, the IoT segment delivered lower than expected revenues, primarily due to delays in the planned transition of the goto -market model from a captive sales organization to indirect distribution channels. The rollout of partnerships with financial services providers, including car financing, leasing, insurance and extended warranty partners, progressed more slowly than anticipated due to the complexity of contract negotiations, system integrations, salesforce training, and dealership deployment. In parallel, the segment exited certain dealer relationships due to underperformance in order to reduce working capital intensity and improve cash flow quality, which further weighed on revenues. As a result, short-term growth expectations were revised downward for the 2026-2027 period, before a planned recovery to higher growth later from 2028 onward.

In 2025, the IoT segment incurred approximately USD 4.0 million of one-off costs related to technical issues affecting early RecovR product releases, with all affected devices replaced. This resulted in a decline in forecast gross margins compared to prior year. Gross margins are expected to normalize in 2026 and improve further from 2027 onward, supported by the introduction of lower-cost devices and continued cost optimization. The revenue shortfall and one-off costs led to an EBITDA loss in 2025 that was significantly higher than in the prior year. For 2026, the segment projects a material EBIDTA improvement with an expected return to positive EBITDA from 2028 onward.

The IoT forecast is developed around its primary product line, RecovR. Revenue growth assumptions are based on existing customer mix as well as new financial services channels. Gross margin assumptions are based on historical trends and contractual relationships with service providers. Projections are subsequently adjusted at the Group management level to include contingencies related to uncertainties of the business development. Operating cost assumptions are based on historical expenditures and projected based on anticipated business actions and outlook over the forecast period.

For Cybersecurity and IoT, reasonably possible changes in the revenue growth assumptions could result in a potential Goodwill impairment. Although the annual growth assumptions in the 2026 plans have been reduced, with planned compound annual growth rates of 10.7% for Cybersecurity and 16.6% for IoT, a decrease in the Cybersecurity segment from 10.7% to 9.9% (2024: from 11.8% to 11.0%) and a decrease in IoT from 16.6% to 15.2% (2024: from 23.7% to 18.3%), with no adjustment to operating expenses, would lead to value-in-use equal to the carrying amount of goodwill at the end of the planning period. The headroom for Cybersecurity and IoT are USD 67.6 million and USD 19.8 million respectively (2024: USD 33.6 million and USD 69.9 million).