Full Year Results 2018/19

1 April 2018 to 31 March 2019

Agenda

Our New Brand Frank Rehfeld

Business Performance Frank Rehfeld

Financial Results Andrea Borla

Accelerating Change Frank Rehfeld

Outlook Frank Rehfeld

Proposal to Shareholders Andreas Hürlimann

22.05.2019 2
Who We Are

• A leading company in electrical measurement, LEM engineers the best

solutions for energy and mobility, ensuring that our customers’ systems
are optimized, reliable and safe.

• Our 1,500 people in over 15 countries transform technology potential

into powerful answers. We develop and recruit the best global talent,
working at the forefront of mega trends such as renewable energy,
mobility, automation and digitization.

• With innovative electrical solutions, we are helping our customers and

society accelerate the transition to a sustainable future.

22.05.2019 3
22.05.2019 4
Our logo and claim
A modern evolution

LEM products help control energy The world’s demand for electrical
consumption, encourage renewable motion is ever increasing. With nearly
energy, and provide continuous 50 years as market leader with best-
power supply. We play our role in in-class products, LEM is at the
improving quality of life and creating forefront of engineering sensors that
a more sustainable future. play a role in our everyday lives.

Providing affordable and clean

energy is critical for a sustainable
future. LEM develops sensors that
meet the most demanding
standards of accuracy and safety.

22.05.2019 5
Name of document 01.02.2022 6
Name of document 01.02.2022 7
Name of document 01.02.2022 8
Benefits of the Brand

We have a strong brand heritage with customers. We are proud of the

LEM blue and our magnetic coil.

Our future is driven by various mega trends, such as renewable energy,

mobility and automation. The common thread is society’s transition to a
sustainable future.

Changes in markets and technologies mean that the time is right to tell
our story in a clearer way and give LEM the vibrant identity it deserves.
This should better match LEM today and our bright future.
A strong brand tells engaging, memorable stories. It enhances investor
relations, attracts great talent, helps build long-term business
partnerships, and fosters relationships in local communities.

So now everyone can see who we really are: new LEM blue and green at
heart

22.05.2019 9
Agenda

Our New Brand Frank Rehfeld

Business Performance Frank Rehfeld

Financial Results Andrea Borla

Accelerating Change Frank Rehfeld

Outlook Frank Rehfeld

Proposal to Shareholders Andreas Hürlimann

22.05.2019 10
Frank Rehfeld, CEO, Opening Remarks

• Another year of robust results, a more than satisfactory performance.

• 61% of top-line growth came from Automotive, led by green cars.
• The fundamental prospects for LEM remain strong, driven by mega
trends.
• China is the biggest strategic opportunity for growth in the medium-
term.
• We continue to increase our investments in R&D, now at 8.6% of sales;
and we launched eight new products.
• This year was one of accelerating change for our markets and for LEM.
• We are making our organization more agile to ensure we capture and
manage significant growth opportunities.

22.05.2019 11
A leading company in
electrical measurement
Core applications Motor Power Storage, Energy
Drives Generation, Conversion Measurement

Businesses Automotive Industry

Green Conventional Drives & Renewable High-
Traction
cars cars Welding energies Precision

2018/19 Sales 71.4 250.2

(CHF m)

FY vs. FY +21.0% +3.3%

22.05.2019 12
Global Sales Spread Steady
Across Regions
Growth
Sales FY 2018/19 Q4 2018/19
CHF m vs 2017/18 vs 2017/18
20% China 106.3 +8.0% +4.9%
33%
Europe 107.2 +5.8% -6.6%

13% North America 43.2 +0.7% -0.3%

RoW 64.8 +10.8% +10.5%

Total 321.6 +6.8% +0.3%

33%

• Close to customers on the ground in all key markets

• Balanced geopolitical and economic exposure

22.05.2019 13
China is biggest strategic opportunity

Sales in China Production in China

Market share of over 50% China is the largest manufacturing site: 61% of total
Key market with 33.1% of total global sales production (59% in financial year 2017/18)
“Made by LEM” quality
CHF m CHF m
120.0 220.0

110.0 200.0
100.0 180.0
90.0
160.0
80.0
140.0
70.0
120.0
60.0
100.0
50.0
80.0
40.0
60.0
30.0

20.0 40.0

10.0 20.0

14/15 15/16 16/17 17/18 18/19 14/15 15/16 16/17 17/18 18/19

22.05.2019 14
Industry Segment

22.05.2019 15
Industry Segment
Sales Performance

CHF m
Businesses 2018/19 2017/18 Change Comments
Drives 113.3 113.3 +0.1% • China & Japan sluggish demand
• Other markets good growth across
portfolio
• Strong interest in new products
Renewable Energy 77.0 74.6 +3.2% • Gained market share in Europe and India
• Won designs with new products
• China lower due to solar policy changes
Traction 48.6 45.0 +8.0% • Growth in China and India
• Higher investment Eastern Europe &
Russia
High precision 11.3 9.4 +20.2% • Strong demand for EV car test benches
• New products well received
Total Industry 250.2 242.2 +3.3%

22.05.2019 16
Industry Segment
Regional Markets

Growth

Sales FY 2018/19 Q4 2018/19

18%
CHF m vs 2017/18 vs 2017/18
China 73.1 -3.6% -1.2%
41%
Europe 102.9 +5.2% -7.2%
11%
North America 28.7 +9.6% +7.6%

RoW 45.6 +7.3% +5.3%

29% Total 250.2 +3.3% -2.0%

• FY sales at CHF 250.2m, up 3.3% (at constant exchange rates, up 2.4%)

• Sales decreased by 3.6% in China, but grew in Europe by 5.2%, in North
America by 9.6%, and RoW by 7.3%

22.05.2019 17
Industry Segment
The Future

Total addressable market for LEM Industry to increase by up to 75% by 2024

Integrated Sensors Chargers and Smart Grid

(excl. Automotive) Storage Systems

100 CHF m 80 CHF m 180 CHF m

90 160
70
80
140
60
70
120
50
60
100
50 40
80
40 30
60
30
20
40
20
10 20
10

0 0 0
17

17

4
17

4
FC

/1

/1

/2

/2

/2

/2

/2

/1

/1

/2

/2

/2

/2

/2
/1

/2

/2

/2

/2

/2

/
/

16

17

18

19

20

21

22

23

16

17

18

19

20

21

22

23
16

17

19

20

21

22

23
/1

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
20

20

20

20

20

20

20
18
20

EU USA China Rest of the world

22.05.2019 18
Automotive Segment

22.05.2019 19
Automotive Segment
Sales Performance

CHF m
Businesses 2018/19 2017/18 Change Comments
Green 48.6 33.1 +46.7% • All markets continue to grow
• China influenced by policies
• New motor control an charging system
products developed
Conventional 22.8 25.9 -11.9% • US overall passenger car usage is down
• Old sensor technology being replaced as
anticipated
Total Automotive 71.4 59.0 +21.0%

22.05.2019 20
Automotive Segment
Regional Markets

Growth
6% Sales FY 2018/19 Q4 2018/19
CHF m vs 2017/18 vs 2017/18
27%
China 33.2 +46.8% +24.1%

Europe 4.3 +21.4% +14.4%

North America 14.5 -13.3% -19.5%

47%
RoW 19.2 +20.2% +22.5%
20%
Total 71.4 +21.0% +10.3%

• FY sales CHF 71.4m, up 21.0% (at constant exchange rates, up 19.6%)

• China sales +46.8%, but susceptible to changes in government policies
• Both the US (-13.3%) and Europe (+21.4%) have seen announcements of
factory closures, but manufacturers increasing commitment to electric

22.05.2019 21
Automotive Segment: The Future

22.05.2019 22
Agenda

Our New Brand Frank Rehfeld

Business Performance Frank Rehfeld

Financial Results Andrea Borla

Accelerating Change Frank Rehfeld

Outlook Frank Rehfeld

Proposal to Shareholders Andreas Hürlimann

22.05.2019 23
Performance at a Glance

FY 2018/19 FY 2018/19 vs Q4 2018/19 vs

CHF m 2017/18* 2017/18*
Orders 320.5 +0.2% -2.8%
Sales 321.6 +6.8% +0.3%
EBIT 64.8 +2.6% -10.2%
Net profit 52.4 -3.8% -13.7%
*restated

• Good sales performance amongst growing economic uncertainties

• Profitability on track, with vigilance over SG&A costs
• EBIT margin maintained despite R&D increase of CHF 6.3m (29.7%)
• Net profit comparison impacted by one-offs and adjusted accounts for
last year

22.05.2019 24
Restatement of Accounts 2017/18

We have restated the financial statements for the year 2017/18 as a wrong
conversion rate was applied for the actuarial calculation of our Swiss
pension plan obligation.

This rate impacts the plan’s service costs and also our balance sheet.

The restatement has resulted in

• an increase of CHF 1.4 million to EBIT (revised to CHF 63.1 million)
• an increase of CHF 1.1 million to net profit (revised to CHF 54.4 million) for
the year 2017/18.

These income adjustments, and those to the balance sheet, are reflected
in this year’s published Financial Report, and explained in note 3 to the
consolidated financial statements.

22.05.2019 25
Gross Margin

CHF m
FY FY Q4 Q4
165 48%
2018/19 2017/18* 2018/19 2017/18*
150 47% Gross margin 146.5 138.9 32.8 35.6
CHF m
135
46% Gross margin 45.6% 46.1% 42.8% 46.7%
in % of sales
120 *restated
45%

105
44% Gross margin down by 0.5% pts
90
43%
• Non recurring impairment of CHF 2.7m
75 industry machinery
42%
60 • One-off provision of CHF 1.8m for
45
41% unused automobile stock

30
40% • Continuous price pressure, especially in
Automotive
15 39%

• Production transfer to lower cost sites

0 38%
14/15 15/16 16/17 17/18* 18/19 and continuous efficiency improvements

22.05.2019 26
SG&A

CHF m
60 30% FY FY Q4 Q4
2018/19 2017/18* 2018/19 2017/18*
SG&A 54.1 54.5 11.5 13.9
50 CHF m

SG&A 16.8% 18.1% 15.0% 18.2%

in % of sales
*restated
40 20%

• SG&A flat, below sales growth of 6.8%

30

• SG&A in % of sales dropped by 1.3% pts

20 10% • Launched programme for efficiency
improvements within supply chain

10

0 0%
14/15 15/16 16/17 17/18* 18/19

22.05.2019 27
R&D

CHF m
30 10% FY FY Q4 Q4
2018/19 2017/18* 2018/19 2017/18*
27
R&D expense 27.6 21.3 7.3 6.1
CHF m
24 8%
R&D expense 8.6% 7.1% 9.5% 8.0%
in % of sales
21
*restated

18 6%
• R&D investments increased by 29.7%,
15 to assure long term growth
12 4% • Ongoing renewal of product portfolio
9 • Acquisition of new technologies and
talent to address new markets
6 2%

0 0%
14/15 15/16 16/17 17/18* 18/19

22.05.2019 28
Financial Expense

FY FY Q4 Q4
CHF m 2018/19 2017/18* 2018/19 2017/18*
Exchange effect (2.5) 1.3 (1.1) (0.4)
Other financial expense & income - (0.2) - -
Total (2.5) 1.2 (1.1) (0.4)
*restated

• Negative exchange effect of CHF -2.5m mainly caused by losses on USD

hedges
• Compensated by positive currency impact on EBIT by CHF 1.5m

22.05.2019 29
Income Taxes

FY FY
2018/19 2017/18*
Expected income tax rate 15.0% 12.0%
Expected withholding tax rate 1.6% 1.2%
Expected tax rate 16.6% 13.2%
Other differences -0.8% +2.5%
Effective tax rate 15.9% 15.7%
*restated

• Low tax rate mainly thanks to High New Technology Enterprise (HNTE) status
granted in China (15% tax rate)
• Last year income tax included a one-off income of CHF+3.4m

22.05.2019 30
Income Statement

2018/19 2017/18* Change Q4 Q4

CHF m 2018/19 2017/18*
Sales 321.6 301.2 +6.8% 76.5 76.2
Gross margin (in %) 45.6% 46.1% -0.5%pt 42.8% 46.7%

Operating expense (81.7) (75.7) +7.9% (18.7) (20.0)

EBIT 64.8 63.1 +2.6% 14.0 15.6
EBIT margin (in %) 20.1% 21.0% -0.8%pt 18.3% 20.5%

Net financial exp. (2.5) 1.2 N/A (1.1) (0.4)

Income tax (9.9) (9.9) -0.2% 0.4 0.3
Net profit 52.4 54.4 -3.8% 13.4 15.5
Net profit margin (in %) 16.3% 18.1% -1.8%pt 17.5% 20.4%
*restated

22.05.2019 31
Balance Sheet

CHF m 31.3.2019 31.3.2018*

Net working capital 56.2 45.5
Fixed assets 61.9 63.1
Noncurrent liabilities (9.5) (9.7)
Net operating assets 108.6 98.9
Net cash/(debt) 4.5 12.6
Equity 113.1 111.6
Equity ratio 60.5% 60.0%
Days of sales outstanding 75 72
Days of inventory outstanding 92 87
Days of payables outstanding 41 47
*restated

• Balance sheet remains strong and is essentially debt-free

22.05.2019 32
Cash Flow

FY FY
CHF m 2018/19 2017/18*
Profit before taxes 62.3 64.3
Adjustment for non-cash items and taxes paid 0.1 (2.6)
Cash flow from changes in net working capital (8.8) (7.6)
Cash flow from operating activities 53.5 54.1
Cash flow from investing activities (14.8) (15.1)
Free cash flow 38.8 39.0
Cash flow from financing activities (42.8) (34.8)
Change in cash and cash equivalents (4.0) 4.2
Cash and cash equivalents at the end of the period 12.5 17.6
*restated

• Cash flow from operating activities was CHF 53.5 million (-1.1%), and free cash
flow was CHF 38.8 million (-0.6%)

• These decreases are a consequence of increases in net working capital

22.05.2019 33
Agenda

Our New Brand Frank Rehfeld

Business Performance Frank Rehfeld

Financial Results Andrea Borla

Accelerating Change Frank Rehfeld

Outlook Frank Rehfeld

Proposal to Shareholders Andreas Hürlimann

22.05.2019 34
Mega Trends Accelerating Change

Mega trends drive demand for electrical

sensors:
• renewable energy
• reliable energy
• distributed energy
• mobility
• automation
• digitization

Far from being a mature market, the

current sensing products are undergoing
significant mutations, driven by new
applications and technologies.

22.05.2019 35
Strategic Priorities

Strengthen technology leadership

• 8-10% of sales invested in R&D

Ensure quality mindset for customer satisfaction

• Aim for 0km ppm target
• Quality management system

Operational excellence
• Global integrated purchasing & supplier management processes
• Digitalization of production

Accelerating the organization

22.05.2019 36
Accelerating the Organization

• Increasing LEM’s speed and agility

• Talent and capability development

• Decentralization

• Leadership and empowerment

• Communications and branding

22.05.2019 37
R&D Focus

Four main trends drive our investments:

• the increase in electromobility especially in Asia
• measurement of energy flows in smart grids
• requests from Automotive customers for functional safety
• demand for tailored solutions in high volume applications

Technical focus:
• battery management systems, integrated current sensors, increasing miniaturization
• embedded software, added functionalities
• semiconductor-based products
• increased knowledge on semiconductor packaging, supply chain and testing
• new DC meter for electric vehicle fast charging stations
• digital integrator product for smart grid

22.05.2019 38
Developing Global Talent

Name of document 01.02.2022 39

Developing Global Talent

• High quality global employer, human-sized with a

collaborative culture

• Focused on hiring core competencies in smart grid,

semiconductors, embedded software and e-mobility

• Developing internal talents through job rotation, global

projects, international mobility and promotion

• New recruit qualities: leadership, entrepreneurship,

empowerment, accountability, continuous improvement
mindset, innovation and ambition

• 2018 external employee engagement survey: better

results than external benchmark and 2016 survey

22.05.2019 40
Agenda

Our New Brand Frank Rehfeld

Business Performance Frank Rehfeld

Financial Results Andrea Borla

Accelerating Change Frank Rehfeld

Outlook Frank Rehfeld

Proposal to Shareholders Andreas Hürlimann

22.05.2019 41
Outlook

• Fundamentals remain strong based on mega trends which drive structural growth

• Performance susceptible to global economic activity and geopolitical tensions

• Top line growth in Industry segment steady with momentum of market leadership

• Green cars business has most growth potential. Government policies remain an important
volatile factor, while increasing competition will bring price pressure

• Continued investment in R&D, leveraging new technologies in electric powertrains,

smarter sensors, DC metering and charging systems

• Improve efficiency of production, empower global sites with full capabilities in R&D,
operations, sales and quality management

• Make LEM more agile, increase speed of execution and reduce time to market

• We expect another solid financial performance in the coming year

22.05.2019 42
Agenda

Our New Brand Frank Rehfeld

Business Performance Frank Rehfeld

Financial Results Andrea Borla

Accelerating Change Frank Rehfeld

Outlook Frank Rehfeld

Proposal to Shareholders Andreas Hürlimann

22.05.2019 43
The Longterm View

• Share price development (31.03.2004 – 31.03.2019)

• Distributed dividends since 2004/05: CHF 388m

22.05.2019 44
Proposal to Shareholders

• Dividend policy of distributing

47.8
42 46.0 significantly more than 50% of
40 40 40
consolidated net profit to
40.1
35 35 39.1 shareholders
37.9 38.2

• Proposed ordinary dividend of CHF

42 per share

• Payment corresponds to a payout

ratio of 91.4%

• Represents a dividend yield of 3.3%

(as per 31 March 2019)
13/14 14/15 15/16 16/17 17/18 18/19
restated
Dividend Earnings per share • Sign of trust in the Company’s future

22.05.2019 45
Q&A

22.05.2019 46
Appendix

22.05.2019 47
Net Sales

350 CHF m, % Sales As At constant Q4 2018/19

325 reported currencies vs 2017/18

300 Industry 250.2 +3.3% +2.4% -2.0%

275 Automotive 71.4 +21.0% +19.6% +10.3%

250 Total 321.6 +6.8% +5.8% +0.3%

225

200
• Well established Industry applications
175
• Growth potential Auto applications
150

125
• Positive currency impact on sales
equivalent to +CHF 3.0m
100

75

50

25

0
14/15 15/16 16/17 17/18 18/19

22.05.2019 48
Quarterly View

CHF m
100 1.2
• Economic uncertainty
90 88.0 translated into short-
80.9
1.1 term bookings
80 76.5
• Headwinds for
75.9 76.3 76.2 76.1
72.8

70 66.9
65.7 65.1
66.8
1.1
industry and
60
conventional cars
1.0

50
• Green cars buoyant
1.0
40

30
0.9

20

0.9
10

0 0.8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
16/17 16/17 16/17 16/17 17/18* 17/18* 17/18* 17/18* 18/19 18/19 18/19 18/19

Orders received Sales Book-to-Bill ratio

*restated

22.05.2019 49
Results by Quarter

In % of sales

24%

22%
Avg. EBIT margin
20.7%
20%

18%
Avg. Net Profit margin
17.1%
16%

14%

12%

10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
16/17 16/17 16/17 16/17 17/18* 17/18* 17/18* 17/18* 18/19 18/19 18/19 18/19
*restated
EBIT margin Avg. EBIT margin Net Profit margin Avg. Net Profit margin

22.05.2019 50
Shareholder Structure per
31 March 2019

29.6%

Werner O. Weber and Ueli Wampfler

Ruth Wertheimer / 7-Industries Holding

0.2%
3.2% Columbia Threadneedle

4.2% J. Safra Sarasin Investmentfonds

LEM Board and Management*

50.4%
12.4% Other

* Excludes shareholdings of Ueli Wampfler and Werner C. Weber

22.05.2019 51
Financial Calendar and Contact Details

The financial year runs from 1 April to 31 March For further information

22 May 2019 Year-end results 2018/19 Andrea Borla, CFO

27 June 2019 Annual General Meeting 2018/19 Phone: +41 22 706 12 50
2 July 2019 Dividend ex-date E-mail: [email protected]
4 July 2019 Dividend payment date
30 July 2019 First quarter results 2019/20
5 November 2019 Half-year results 2019/20
31 January 2020 Third-quarter results 2019/20
19 May 2020 Year-end results 2019/20
25 June 2020 Annual General Meeting 2019/20
30 June 2020 Dividend ex-date
2 July 2020 Dividend payment date

22.05.2019 52