Annual Report
2017/18
At the heart of power electronics

3

2

A

1

4

Stationary battery
Utility-scale battery storage is used
to stabilize the grid in remote areas
with distributed energy resources.
The control, protection, and state of charge calculation of
the battery require an accurate measurement of the current into or out of the battery. The biggest challenge is withsmall standby currents that are very difficult to measure.
Accumulated over a long period of time, these small currents may bias the state of charge estimation.

A

CAB

1

Battery
InverterGrid
Photovoltaic plant

LEM's CAB 500 provides excellent accuracy for both large
and small currents. This allows for an accurate state ofcharge calculation, which improves the performance,
working life, and reliability of the battery.

2
3
4

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Annual Report 2017/18 | LEM

Table of Contents
Foreword 5
LEM at a Glance 6
Business Report 9
LEM's Core Values 15
Corporate Governance Report 16
Compensation Report 26
LEM Group Consolidated
Financial Statements 31
LEM Holding SA
Financial Statements 63
Information for Investors 72
Group Subsidiaries 73

Reporting period 1 April 2017 to 31 March 2018

LEM | Annual Report 2017/18

3

4

Annual Report 2017/18 | LEM

Foreword
Dear Shareholders,
LEM achieved the strongest sales growth since 2010/11, lifting sales over the CHF 300 million mark for the first time. The
trends to automation, environmentally friendly energy andelectro-mobility were LEM's most important growth drivers,
with the renewable energies business and the green cars
business delivering the strongest growth contribution. Again,
we achieved robust operating margins while at the same timestrengthening R&D and our global footprint.
Prepare for the future
We maintained our leading market position not only in termsof market share, but also product quality and responsiveness.
We believe innovation is of critical importance in view of the
fast-developing power electronics industry, so we planted newseeds for future growth. To remain at the forefront of innovation, we have continued to strengthen our leadership: weincreased our R&D team by more than 20 % as we hired 18
engineers for our new R&D center in Lyon and added R&D
resources in Beijing and Sofia. We launched six new productswith distinctive value-adding features and we have a long pipeline of new products to be launched shortly. Our main production sites in Sofia (Bulgaria) and Beijing (China) increased production capacities, which will allow us to cope with theanticipated growth of the coming years.
At the same time, we keep a careful watch on the efficiencyof our operations. The share of production from our costcompetitive sites in Beijing and Sofia reached 81 % of the
global output, an increase of 4 percentage points comparedwith last year. We started initiatives to implement Industry 4.0
methods in operations and logistics and increased automation in all production sites.
Strong growth – resilient operating margins
These operational accomplishments are the basis of a solid
performance. We were able to strengthen our results with theobjective of creating value for our shareholders.

On behalf of the Board of Directors and the Executive Management, we would also like to express our gratitude to ouroutgoing CEO, François Gabella, who has successfully led
LEM for eight years through a challenging period and laid thefoundation for a strong future. LEM's Board of Directors willpropose Mr. Gabella for election as a new Board member at
the next Annual General Meeting on 28 June 2018 to benefit
from his know-how and industry insights.
Norbert Hess, member of the Board of Directors since 2013,
has announced his resignation on the date of the next Annual
General Meeting. During his tenure, Mr. Hess strongly contributed to the successful development of LEM Group. Board
and Management thank Mr. Hess for his highly valuable work
and wish him all the best for his future.
For the financial year 2017/18, the Board of Directors is
pleased to propose at the next Annual General Meeting adividend of CHF 40 per share, which represents a dividend
payout ratio of 85.5 %. This dividend proposal is a sign ofconfidence in the future success of LEM. It is in line with
LEM's dividend policy of distributing significantly more than
50 % of its consolidated net profit to shareholders.
ThanksOn behalf of the entire Board of Directors and the Executive
Management, we thank you for the confidence you haveplaced in our Company. Special thanks go to our more than
1'500 employees worldwide for their commitment and hard
work. We would also like to extend our gratitude to our customers, suppliers and business partners for the successful
cooperation.

Andreas Hürlimann
Chairman of the Board of Directors

Sales reached CHF 301.2 million, representing growth of
13.9 %, or 13.2 % in constant currencies. All but the conventional cars business contributed to this positive performance. EBIT improved by 10.7 % to CHF 61.7 million. Our
EBIT margin reached 20.5 %. Net profit for the reporting year
amounted to CHF 53.3 million, exceeding last year's result
by CHF 8.7 million.

François Gabella
Chief Executive Officer until 30 March 2018

New CEO and changes in the Board of Directors
With the appointment of Frank Rehfeld as Chief Executive
Officer starting 1 April 2018, the Board of Directors is confident that LEM is well placed to begin a new phase of growthand strengthen its global market position.

Frank Rehfeld
Chief Executive Officer from 1 April 2018

LEM | Annual Report 2017/18

5

LEM at a Glance

LEM – at the heart of power electronics
LEM is a focused manufacturer and a global market leader.
Its core products, transducers for measuring electrical parameters like current and voltage, are used in a broad range ofapplications. Although these devices are not visible to theoutside world, they are vital for application functionality andthe benefits provided to the end users. Starting with products
for locomotives in the seventies, LEM expanded into a vast
area of industrial applications, including variable speed drives
for motors and power supplies for industrial applications.
Today, LEM's current and voltage transducers are also usedin AC/DC converters, uninterrupted power supply systems
for computers as well as in new innovative energy applications
like microturbines and wind and solar power generation. Additional opportunities have been developed in the Automotive
market, such as battery management and start/stop applications for conventional cars and electrical motor controls, battery pack management and embedded chargers for green
cars. This evolution underscores the company's exceptional
skills in adapting to rapidly changing industrial trends, suchas miniaturization, higher performance levels and a greater
degree of application, integration and complexity.

LEM Holding SA, Fribourg, Switzerland
R&D Centers
Geneva, Switzerland
Lyon, France
Beijing, China
Sofia, Bulgaria
Sales Offices
Geneva, Switzerland
Frankfurt, Germany
Vienna, Austria
Brussels, Belgium
Randers, Denmark
Paris, France
Padova, Italy

LEM has the strongest brand recognition in its markets. Its
products – commonly called "LEMs" – are at the heart of many
power electronics applications. LEM's strategy is to increase
its technology leadership, efficiency and production flexibility.
At the same time, LEM is committed to maintaining customer
focus and operational excellence by running cost-effective
and service-oriented production platforms. Profitable growth
is a key objective.

Skelmersdale, UK
Tver, Russia
Beijing, Shanghai, Shenzhen, Xian, Hefei, China
Tokyo, Japan
Pune, India
Seoul, South Korea

Taipei, Taiwan
Milwaukee, Columbus, Amherst,
Los Angeles, USA

Worldwide presence
LEM is a global organization with production plants in Beijing(China), Sofia (Bulgaria), Geneva (Switzerland) and Tokyo(Japan). The company has sales offices close to its main clients' locations and offers seamless service around the globe.

Agents/Distributors
Adaptation Centers
Milwaukee, USA
Tver, Russia
Production Centers (PDCs)
Beijing, China
Geneva, Switzerland

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Annual Report 2017/18 | LEM

Tokyo, Japan
Sofia, Bulgaria

Key figures 2013/14 to 2017/18
In CHF millions, %2013/142014/15

2015/162016/172017/18

Orders received
Book-to-bill ratio
Sales

246.4
1.00
245.6

251.0
0.97
257.8

256.5
0.98
261.5

271.2
1.03
264.5

319.7
1.06
301.2

Gross profit
In % of sales
EBIT
In % of sales

115.4
47.0 %
55.7
22.7 %

118.4
45.9 %
54.2
21.0 %

120.4
46.0 %
52.9
20.2 %

123.6
46.7 %
55.8
21.1 %

138.4
45.9 %
61.7
20.5 %Net profit for the year
EPS basic (CHF)
Dividend per share (CHF)

45.6
40.09
40.00

43.1
37.86
40.00

43.5
38.18
35.00

44.6
39.11
35.00

53.3
46.78
40.001

Operating cash flow
Investing cash flow

40.6
– 8.7

50.2
– 9.7

45.6
– 6.6

52.8
– 13.254.1– 15.1

In CHF millions, %31.3.201431.3.2015

31.3.201631.3.201731.3.2018

Net financial assets/(liabilities)
Shareholders' equity
Equity ratio (in % of assets)

24.6
94.2
65.1 %

20.9
91.9
65.0 %

13.6
85.9
61.3 %

12.8
90.5
60.7 %

12.6
109.0
59.2 %

Market capitalization
Employees (in FTEs)

801.4
1'241

910.3
1'274

929.1
1'388

1'064.8
1'453

1'812.6
1'527

1

Proposal of the Board of Directors to the Annual General Meeting of Shareholders on 28 June 2018.

Sales per segment

Regional sales breakdown

In CHF millions

In CHF millions
350 350350 350300 300

300 300

250 250250 250200 200
150 150242.2242.2
211.1211.1

221.0221.0

215.2215.2

50

100 100

0034.6 34.6

36.7 36.7

46.3 46.3

13/1413/14

14/1514/15

15/1615/16

Industry
Industry
segment
segment
Automotive
Automotive
segment
segment

157.0157.0
103.2103.2

117.5117.5

125.5125.5

129.9129.9

45.1 45.1

42.7 42.7

44.6 44.6

46.4 46.4

97.4 97.4

97.5 97.5

91.3 91.3

88.2 88.2

101.4101.4

13/1413/14

14/1514/15

15/1615/16

16/1716/17

17/1817/18

150 150214.3214.3

100 10050

200 200

50.2 50.2

59.0 59.0

16/1716/17

17/1817/18

50

50

0

0

42.9 42.9

AsiaAsia
andandrestrestof worldof world
North
North
America
America
EuropeEuropeLEM | Annual Report 2017/18

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2

1

A
4
3

Refrigerator truck
The refrigerated truck is used tostore and deliver fresh goods likefruits, vegetables, or meat. Its
electricity-powered refrigeration unit
is rooftop mounted and driven by thevehicle's battery.

A

GO

1

Evaporator
Front mount condenser
Compressor
Controller

The refrigeration system has to be highly efficient, i.e.
energy efficient, quick to cool, and reliable. This requires
good control of the compressor's motor, where current
measurement is a key parameter.
LEM's GO is an economical, compact, reliable, and accurate current measurement solution for refrigeration andair-conditioning applications.

2
3
4

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Annual Report 2017/18 | LEM

Business Report
On the back of strong sales growth, resilient operating
margins and reduced tax rates, net profit increased from
CHF 44.6 million in the previous year to CHF 53.3 million
in the reporting year. We benefitted from the positive
economic momentum worldwide and the long-term
trends supporting automation, renewable energies andgreen cars. The conventional cars business continued tocontract as expected. Our main challenge was toincrease production capacity and flexibility in order tobetter meet growing demand. Business conditions
remained favorable throughout the year and resulted inrecord orders. Our outlook for 2018/19 is confident.
Financial result
Sales in the financial year 2017/18 totaled CHF 301.2 million,
an increase of 13.9 % compared with the previous year. At
constant exchange rates, Group sales increased by 13.2 %.

China represented 33 % (30 % in 2016/17), Asia excluding
China 17 % (17 % in 2016/17), Europe 34 % (33 % in 2016/17),
and North America 14 % (18 % in 2016/17) of Group sales.
Sales growth was robust in China (+25 %), in Asia excluding
China (+14 %) and Europe (+15 %), but sales performance
was slow in North America (–7 %).
In the financial year 2017/18, orders increased by 17.9 % to
CHF 319.7 million and the full-year book-to-bill ratio reached1.06, pointing to robust business conditions and continued
growth.
Strong sales growth lifted gross profit by 12.0 % to CHF 138.4
million and the gross margin reached 45.9 %. This is 80 basis
points lower than in the prior year, reflecting the constantprice pressure, a change in product mix and the one-off cost
for a footprint optimization executed in the first half of thefinancial year. Increasing the share of cost-competitive production and efficiency improvements counteracted some ofthese negative effects.

Key figures
In CHF millions

Orders received
Sales
Book-to-bill
EBIT
Net profit

Financial year
2016/17

Q1
2017/18

Q2
2017/18

Q3
2017/18

Q4
2017/18

Financial year
2017/18

271.2
264.5
1.03
55.8
44.6

78.8
75.9
1.04
16.0
13.3

78.0
76.3
1.02
15.9
13.2

78.7
72.8
1.08
14.6
11.6

84.2
76.2
1.10
15.3
15.3

319.7
301.2
1.06
61.7
53.3

Sales, general and administrative spending (SG&A) rose by
6.3 % to CHF 55.0 million. However, SG&A relative to sales
decreased by 1.3 percentage points to 18.3 %. Our strategic
decision to focus on innovation was reflected in increased
Research and Development (R&D) expense. As a percentage of sales, R&D expense rose from 6.1 % to 7.2 %.
EBIT for the full financial year 2017/18 increased to CHF 61.7
million from CHF 55.8 million in the previous reporting period.
Our EBIT margin for the financial year 2017/18 came in at
20.5 %, down from 21.1 % in the previous year.
Financial income amounted to CHF 1.2 million and the tax
rate was lowered to 15.2 % from 18.9 % in the previous year.
The decrease in the tax rate results from a deferred tax asset
recognized in China.
We posted a net profit for the year of CHF 53.3 million, an
improvement of CHF 8.7 million compared with last year.
Cash flow from operating activities in the financial year was
CHF 54.1 million (+2.5 %) and free cash flow was CHF 39.0
million (–1.5 %). This decrease is a consequence of increases
in net working capital and higher capital expenditure linked
to the accelerated sales growth.

Our balance sheet remains strong. As at 31 March 2018,
total assets increased to CHF 184.2 million. Shareholders'equity reached CHF 109.0 million, representing an equity
ratio of 59.2 % (60.7 % as of 31 March 2017).
Dividend
Based on the results for 2017/18 and the confident outlook,the Board of Directors proposes a dividend of CHF 40 per
share, payable on 5 July 2018. The proposal follows LEM's
dividend policy of distributing significantly more than 50 %of its consolidated net profit to shareholders and corresponds to a payout ratio of 85.5 %.
Industry segment
Sales in the Industry segment increased by 13.0 % to
CHF 242.2 million in the financial year 2017/18; at constantexchange rates the sales increase was 11.9 %. The positive
economic environment provided a boost for all businesses
in most regions. Orders rose by 16.6 % to CHF 256.1 million,
resulting in a full-year book-to-bill ratio of 1.06. Sales in Chinagrew by 18 % and as a result China has expanded its position as our most important single country, representing 31 %of Industry sales. Sales grew in the rest of Asia by 7 % andby 16 % in Europe. Sales in North America were negatively
affected by exchange rate development and decreased by
LEM | Annual Report 2017/18

9

2 %. EBIT increased from CHF 43.9 million in the previous
year to CHF 51.2 million in the reporting year. The EBIT margin improved from 20.5 % to 21.1 %.
Last year's main challenge was to increase production
capacity to keep pace with constantly growing demand.
Thanks to our forecasting models we anticipated the growthtrend and early on added production lines in Beijing and
Sofia. We closely cooperated with our supply chain and in
this way controlled potential shortages of raw materials andcomponents. Thus, we even improved delivery performanceof high quality products for which LEM is well known. We areextending our sales network in Asia with the establishmentof a new branch office in Taiwan, a market we expect to growin the coming years. This new set-up will allow us to bettersupport Taiwanese customers. We did not observe majorchanges in the competitive landscape and we maintained astable market share above 50 % in most regions.
The global economic activity continued to be firm throughout
the reporting period with positive broad-based development
in all our target regions. The global growth caused increased
investment in automation in advanced economies andincreased manufacturing output in Asia. The strong momentum experienced in the past year is expected to carry into thecoming year. Purchasing managers' indices indicate firm
manufacturing activity ahead, pointing to ongoing healthy
demand. We expect continued economic tailwind in our target markets in Asia, Europe and North America. Potential
economic risks arise from the tightening of global financial
conditions and the ongoing US-China trade dispute.
Sales in the drives & welding business increased by 8 % overthe previous year. We achieved robust growth in all regionswith the strongest sales performance in Europe and Asia.
Automation and energy savings applications were the main
growth drivers. We recorded strong interest in our new product family with integrated primaries for small drives and maintained our market share.
Solar equipment production continued to move from North
America to Europe and China. Thus, the renewable energies& power supplies business is driven by the Chinese andEuropean solar industry producing for the world market.
Wind activity was weak in most regions. We started to build
a pipeline of smart-grid projects. Overall sales increased by
15 % and we defended our market share well above 50 %.
A global catch-up of infrastructure investments and someindividual projects supported our traction business, whichgrew by 24 %. We achieved strong sales with light rail andlocomotive projects in India and China as well as energymetering and track-side (security and maintenance) projects
in Europe. On the downside, there was hardly any activity in
the US market. Our global market share remained stable.
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Annual Report 2017/18 | LEM

In the project-driven high-precision business, sales were up
by 7 %. Sales in China slowed with no repeat of last year's
HVDC sales. Activity in the global Medical market was stable,
but the Test & Measurement market boomed in the US andEurope. Growth was driven from green cars test bench applications. Overall, our market share was unchanged and well
above 50 %.
We have carefully analyzed our market and defined new
growth opportunities in the Industry segment. To this end,
we continue to build our pipeline of innovations and to launch
new products with new features. In the financial year 2018/19
we aim to leverage the strong market conditions in order togrow our market share.
Automotive segment
Sales in the Automotive segment reached CHF 59.0 million
in the financial year 2017/18, representing an increase of
17.5 % on the financial year 2016/17. At constant exchange
rates, sales grew by 19.0 %. For the first time, sales in ourgreen cars business exceeded sales in our conventional car
business. We recorded the strongest growth in China(+53 %), South Korea (+91 %) and Japan (+17 %). China is
our largest market with 38 % of Automotive sales, followedby the US (28 %), South Korea (14 %) and Japan (11 %). EBIT
reached CHF 10.5 million, down 11.0 % on the financial year
2016/17. The EBIT margin was 17.8 %, compared with
23.5 % one year ago. The margin decrease resulted fromincreased competitive pressure in the green cars market on
the one hand, and higher operating expense due to thedevelopment of new R&D and sales resources on the otherhand. We offset part of these effects with volume growthand efficiency gains in production and administration.
The green cars business is characterized by accelerated
momentum and intensifying competition. We ramped up
production volumes, and will continue to add production
capacities to meet the growing demand as we develop our
project pipeline. In many instances we provide value-adding
service to OEMs and Tier-1 suppliers with customer-specificversions of our products. In the financial year 2017/18, themajority of our products are customer-specific developments. We continued to strengthen the Automotive organization with an increased marketing and sales team in Asia,
Europe and the US. We participated in multiple trade fairs
in order to develop our market position in the global car
industry and won awards from two customers for our overall quality performance.
Growth in China, Europe and Japan pushed the global car
market to a new record level in 2017. Amongst major markets, only US production declined (– 8.1 %). Global vehicle
production increased by 2.4 % to 97.3 million (source: OICA).
Green cars again saw new record production levels last year
due to more government incentives, new models and inten-

sifying consumer appetite for alternative fueled vehicles.
Global New Electric Vehicles (NEV, plug-in hybrids, batteryelectric vehicles) deliveries reached 1.2 million, 58 % higher
than for 2016 (source: EVvolumes.com). China remained
the unchallenged leader in NEVs; the volume increased by
73 % to 0.6 million units and represented 49.5 % of NEV
sales. Japan and South Korea contributed further to themomentum in the Asia-Pacific Region while the development in the US lagged behind (0.2 million units) (source:
EVvolumes.com).
Sales in LEM's green cars business jumped by 75 %. We
achieved strong growth across all important markets. Our
business in Asia, especially in China, South Korea and Japan
is growing fast. We benefit from our leading market positionin China. We see increasing commitment from large European and US car manufacturers to launch new electric or
hybrid-electric car platforms.
Year-on-year sales in the conventional cars businessdecreased by 17 %. The decline was caused by the ongoing
technological shift and the weak US car market.
We expect the green cars boom, mainly in Asia, to continue.
The new regulations in China will likely be a supportive factor. The emerging trends of autonomous driving, connectivity and digitization will likely further increase demand forelectric vehicles. We reinforced our R&D activity and intend
to launch a series of new products for motor control andbattery management applications. We will defend our market share in the green cars business and expect our greencars growth to more than offset our slowing conventionalcars business.
Strategy implementation
The focus of our strategy is on three priorities, which arereviewed annually by the Board of Directors. This strategy
translates into clearly defined deliverables whose key performance indicators are continuously monitored.
–– Increase our technology leadership
Our new products and the strength of our pipeline keep us
at the leading edge of our market. Last year we decided tosignificantly increase R&D investments and have since executed this strategy. We increased our R&D team by morethan 20 %. We hired 18 engineers for our new R&D centerin Lyon, France, and we added R&D resources in Beijing
and Sofia. As a result, R&D expense increased from
CHF 16.0 million in 2016/17 to CHF 21.7 million in 2017/18.
More intelligent sensors, i.e. transducers with embedded
software or Field Programmable Gate Array (FPGA), is themain trend in product development. We constantly expand
these core competences, which will be reflected in future
product launches. For drive applications we launched two

new product families, LESR and LXSR, with higher accuracy at better performance/cost ratio to replace some older
families. HAT, a new open-loop design for solar and windapplications, offers better performance at similar cost to
older products. For Automotive applications, we launched
HAM, a fuel cell DC/DC sensor, with a patented very highbandwidth sensor and integrated busbar, HAH3DR, a3-phase sensor with very high accuracy for green cars drive
applications and HSNDR / HSNBV, a compact open-loop
sensor with customizable, integrated busbar for green cars
battery management or drive applications.
We increased our patent portfolio by additional ten newpatents, and kept a strong emphasis on IP creation and IP
protection.
–– Increase our efficiency of operations
Ongoing transfer of production to Sofia and Beijing,increased automation and reduction of our supply chain
cost were the main cost management contributions in
2017/18. We successfully transferred five high-productionvolume lines to Bulgaria and Beijing. Production in Sofia
increased in 2017/18 to 16.5 % of global output (14.2 % in
2016/17). During the reporting year, the share of cost-competitive production in Sofia and Beijing increased to 81 %of global output. We accelerated automation in our production sites and started to introduce collaborative robots torelieve our employees of onerous and repetitive tasks. In
order to handle the expected growth of the next years, we
increased the work floor space in Sofia by an additional
20 %.
–– Increase our production flexibility
Reliable forecasting is a key value driver for LEM. To thisend, we introduced new tools to support planning andprocurement, which will allow internal lead time reductions
and optimization of safety stocks. Increasingly, we automatically record, monitor and analyze our key production
process parameters and use them to improve processes.
Responsibility: ethical standards
Our core values (page 15) have laid a strong foundation for
our achievements. We have been embracing the Ten Principles of the United Nations Global Compact (UNGC) since2006. These principles, which relate to human rights, labor,
environment and anticorruption, are embedded in every
aspect of our Company, from our strategy to our recurring
actions. As we do every year, we provided an update on our
progress and made it available on our website (www.lem.
com/en/company-information#code-conduct). We also follow other best practice policies such as the Universal Declaration of Human Rights and the recommendations of the
UK Ministry of Justice relating to antibribery.

LEM | Annual Report 2017/18

11

The LEM Code of Conduct (CoC; www.lem.com/en/company-information#code-conduct) connects these principles
to a binding behavior for all stakeholders. Every LEM employee
receives training on the CoC (including instructions and casestudies) and signs the CoC. The Code of Conduct also applies
to all business partners we use, whether suppliers, consultants or agents. They need to sign the LEM CoC prior to thestart of any activities. We regularly audit compliance anddetected no violation during 2017/18.
Responsibility: environmental standards
The trend to environmentally friendly energy and electromobility is one of LEM's key growth drivers. We are launching
increasingly accurate sensing solutions, which give our customers a competitive edge in energy management solutions;for example, LEM transducers' accuracy directly impacts thebattery pack size of an electric or hybrid-electric car, andhence improves car weight and energy consumption.
All our production sites are ISO 14001:2015 certified, an environmental certification, which we renew regularly. Our production activities are compliant with REACH (European Regulation
for Registration, Evaluation, Authorization and Restriction ofChemicals), RoHS (Restriction of Hazardous Substances) andconflict minerals reporting and obligations. LEM regularly publishes updates to its standards and reporting on its website(www.lem.com/en/quality-environment#environment).
All LEM manufacturing sites apply waste-sorting solutions
and route all waste into dedicated waste treatment solutions.
We perceive the improvement of our internal procedures toreduce internal MUDA (waste) an effective way to increase
profitability. During 2017/18, all LEM sites have been equippedwith energy-metering systems to measure and evaluateenergy consumption. With the support of specialized partners, some improvements have been planned to reduce electricity consumption at the Geneva site by 5 %.
We develop an environmental profile for each new productbefore launch, which includes recyclability rate and materialsaving compared to previous or equivalent models.
Quality management
Quality and reliability are key strengths of LEM transducers
and well-known features to our customers, as evidenced byour regular customer surveys. We consistently apply quality
improvement techniques such as LEAN and Six Sigma. It is
our hallmark that we maintain the same high quality standards
for all four production sites. Our customers rely on the "madeby LEM" mark rather than the country of origin.

12

Annual Report 2017/18 | LEM

We follow ISO standards depending on the market supplied.
In 2017/18 we introduced new automotive standards related
to the latest releases of the International Automotive Task
Force (IATF) and new traction standards of the Union desIndustries Ferroviaires Européennes (UNIFE). We currently
apply ISO9001:2015 for Industry, AITF 16949:2016 for Automotive, and ISO/TS 22163:2017 for traction. Our laboratories
are ISO/CEI17025:2015 certified for test and calibration. The
latest updates on our certifications can be found on our website www.lem.com/en/quality-environment.
Employees
31.3.201831.3.2017

Permanent employees (FTE)
Temporary employees (FTE)
Apprentices (FTE)
Total

1'382
139
7
1'527

1'292
148
13
1'453

Women in overall workforce ( %)Women in non-productionrelated activities ( %)

53 %
33 %

55 %
33 %

Fluctuation in non-productionrelated activities ( %)11.9 %

7.7 %A committed workforce is essential for LEM's lasting success.
To this end, we support our employees to attend regular jobspecific training and develop their personal skills. We invest
1.5 % (unchanged) of group salary for internal courses andparticipation in external training. Technical competencies for
new products and applications and leadership development
were the primary focus. In 2017/18 we created specific leadership assessment and development programs in Bulgaria
and China. Leadership development programs in Switzerland
focused on change management and delegating responsibilities.
Our annual evaluation shows that job content, work climate / team and work-life balance are the most important drivers of employee engagement. These drivers remained stable
over the past years. As a result of last year's employee survey,
we improved internal communications, particularly when it
comes to important, strategic decisions. In 2017/18 we held
regular town hall meetings at all sites during Executive Management visits.
LEM provides equal opportunity to all qualified individuals. The
share of female employees is 53 % in the overall workforce.
However, given the high share of engineering positions in product development, sales & marketing and management, theshare of female employees in the non-production-related activities is 33 %. We actively seek female candidates in order toincrease their share in the higher-qualification positions. Fluctuation in the non-production-related activities increased from
7.7 % last year to 11.9 % in the reporting year. This increase isin line with benchmarks in our industry and linked to growing
market dynamics.

We continue to enhance health and safety at the workplace.
The most important measures include systematic health andsafety training for newcomers, employee well-being programsfor the prevention of excessive stress at the workplace, annual
evacuation trainings and signage in all areas. All sites have aclear evacuation plan in place. As a result of our efforts werecorded no major work-related accident in 2017/18. We perform regular internal and external audits to analyze the effectiveness of the measures and the development of improvements.

Outlook
We believe the positive economic momentum to accompany
the Industry businesses. LEM's growth in the green cars business is forecast to continue and to outgrow the slow conventional cars business. However, government policies remain
an important factor that may result in a volatile trend. In addition, increasing competition in green cars will put additionalpressure on prices. Geopolitical tensions or new trade barriers may pose a downward risk to global growth and ourbusinesses.

Employees per function

Executing our innovation strategy, we plan to further increase
investment in R&D. We want our R&D teams to grow and to
add new know-how around current industry trends. Again in
2018/19, we expect a high number of product launches. To
improve efficiency of operations we plan numerous initiatives,amongst others the implementation of Industry 4.0 tools suchas additional collaborative robots and flexible productionlines.

10 %
16 %

7%
67 %

Taking all internal and external factors into account, we
expect a robust financial year for LEM.

Production
Sales & Marketing
Logistics, Admin
R&D

Employee and customer survey
Every second year LEM performs a worldwide employee andcustomer survey. The next survey is scheduled for 2018. The
results of the latest survey can be found in the annual report
2016/17 (page 12/13).

LEM | Annual Report 2017/18

13

1
2

4
3
A

Track circuit monitoring
The purpose of a track circuit is todetect the presence of a train on adesignated rail block. A track circuit
typically has power applied to eachrail and a relay wired across them.
When no train is present, the relay isenergized. When a train approaches,
its axles connect the rails. The
current to the track relay drops andthe relay is de-energized.

A

ATO

1

Crossing gate
Lamp monitoring
Track circuit monitoring
Point machine

The condition-monitoring system reliably identifies deterioration in track circuit performance and issues alerts to allow
maintenance before failure. It provides early-stage detection of rail head or wheel contamination, ballast or insulation problems, and track circuit equipment faults. This
helps to significantly reduce the downtime of a railway line.
Since existing signaling systems cannot be modified without costly recertification, the ATO, with its nonintrusive andeasy setup, is an ideal solution for retrofit purposes on
track circuit monitoring systems.
14

Annual Report 2017/18 | LEM

2
3
4

LEM's Core Values
It is vital for all of LEM to share common values andworking principles. All employees understand what
LEM wants to achieve so that everyone works together
for the same purpose.
These values link all LEM employees together and make usa team. They are the common beliefs we share. They are thespirit and intent of everything we do at LEM.
There are six core values, each one guiding us throughout all
our activities.
– –We are customer driven– –We operate with integrity– –We value teamwork– –We commit– –We strive for excellence– –We lead innovation
We are customer driven
We succeed by exceeding our customer expectations witha "yes customer" attitude. All our activities are driven by thedesire to provide best quality service to our customers. We
aim to listen to, anticipate and respond to our customers'
needs. For this reason, we collaborate closely with our customers and form true relationships. We target "customer
delight."

We commit
We set our goals high because we know we can reach them.
We honor these goals as promises to our customers, ourshareholders and ourselves. Our continued success depends
on keeping our promises and taking responsibility for all our
actions. Success is measured by the results we produce incustomer satisfaction, sales, profitability, value creation to
our shareholders and the scope of opportunities we provide
for our employees.
We strive for excellence
No matter how good our products, services, processes andresults, we are dedicated to making them better. We aim forthe highest standards of quality for our customers. By
approaching our daily work with a passion for perfection,
avoiding incidents by managing the risks of our activities,
taking initiatives and a desire to learn and share that learningwith colleagues, we all can make a difference.
We lead innovation
Innovation is the cornerstone of our success and our future
depends on it. Innovation will ensure that we have attractive
products for our markets, and a steady supply of new technologies, products, applications and customers. We aim tobe the leaders in our industry and not the followers.

We operate with integrity
Basic ethical behavior and integrity in business relationships
determine the essence of all our actions. As a company andas individuals, we do the right things right and never compromise our values and principles. We honor our agreements
and are honest in our communications.
Our relationships with coworkers, customers, suppliers, partners and the investor community are based on openness andfairness.
We value teamwork
LEM forms a worldwide community. Close collaboration andnetworking across functions, departments and cultures iscritical for the success of the Company. To cooperate, weneed to be open and honest and willing to share and trust
each other. Accountability is a key factor to our success. We
are committed to a workplace where individuals are treatedfairly and with respect, where all employees have the opportunity to expand their skill, and accomplishments are recognized. Teamwork is more than just working together, it isbringing out the best of everyone's strengths.

LEM | Annual Report 2017/18

15

Corporate Governance Report
The following information complies with the Corporate
Governance Directive of the SIX Swiss Exchange (SIX)
and the disclosure rules of the Swiss Code of Obligations. In order to enhance the clarity of this chapter,
reference is made to other parts of the Annual Reportand our website (www.lem.com). Key elements arecontained in the Articles of Incorporation.

1 	 Group structure and shareholders
Group structure
LEM Holding SA is domiciled at Avenue Beauregard 1,
CH-1700 Fribourg. LEM's registered shares are listed on themain segment of the SIX Swiss Exchange (LEHN, security no.
2 242 762; ISIN 0022427626). On 31 March 2018, the market
capitalization was CHF 1'813 million.
LEM Group is structured into the Industry and the Automotive segments. Appropriate segment reporting pursuant to
IFRS is contained in note 3 to the consolidated financial statements. All companies in LEM Group are listed under "Scopeof consolidation" in note 24 of the consolidated financial
statements, with their respective company names, registeredoffices, share capitals and the relevant percentages of shares
held. There are no other listed companies in the scope of
consolidation.

Shareholdings of nonexecutive Directors

Andreas Hürlimann
Ilan Cohen
Norbert Hess
Ueli Wampfler
Ulrich Jakob Looser
Werner C. Weber
Total

31.3.2018
Number ofshares held

31.3.2017
Number ofshares held

1'001
300
0
68'0100069'3111'001
300
072'5000073'801Significant shareholders
The following shareholders held 3 % or more of the sharecapital and voting rights:

In number of shares, per cent of shareholding

31.3.2018
SharesIn %31.3.2017
SharesIn %Werner O. Weber and Ueli Wampfler, in Zollikon/Wollerau, Switzerland,through WEMACO Invest AG and Swisa Holding AG, in Zug/Cham,
Switzerland

570'14850.0 %

548'78648.1 %

Ruth Wertheimer, in Kfar Shmaryahu, Israel,through 7-Industries Holding B.V., in Amsterdam, Netherlands

141'58112.4 %

141'58112.4 %

J. Safra Sarasin Investmentfonds AG, in Basel, Switzerland
Total shareholders < 3 %Total

36'000392'271
1'140'000

3.2 %34.4 %
100.0 %

36'000413'633
1'140'000

3.2 %36.3 %
100.0 %The notifications which have been sent to the Company andthe disclosure office of the SIX Swiss Exchange AG during thefinancial year pursuant to article 120 of the Federal Act on
Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading may be viewed via the searchfunction on https://www.six-exchange-regulation.com/en/
home/publications/significant-shareholders.html/.

16

Annual Report 2017/18 | LEM

3 	 The Board of Directors

Shareholdings of Executive Management

François Gabella, CEO
Andrea Borla, CFO
Frank Rehfeld, SVP Industry
Rainer Bos, SVP Automotive
Total

31.3.2018
Number ofshares held

31.3.2017
Number ofshares held

600
0
0
0
600

600
0
0
0
600

Trading LEM shares for both Board of Directors and Executive Management has to respect LEM's disclosure, insidertrading policy as well as all applicable rules and legislation.
Cross-shareholdings
LEM has no cross-shareholdings with other joint-stock companies.

Election, terms of office and cross-involvement
The Board of Directors is comprised of at least three members who are individually elected at the Annual General Meeting for a mandate of one year, which is renewable up to an
age limit of 70. The Board of Directors constitutes itself,
except for the Chairman of the Board of Directors and themembers of the Compensation Committee who are electedby the Annual General Meeting of Shareholders.
At the Annual General Meeting on 29 June 2017, Andreas
Hürlimann, Ilan Cohen, Norbert Hess, Ueli Wampfler and
Ulrich J. Looser were re-elected and Werner C. Weber was
elected as members of the Board of Directors. Andreas Hürlimann was re-elected as Chairman of the Board of Directors.
In addition, shareholders elected Andreas Hürlimann, Norbert
Hess and Ulrich J. Looser to the Compensation Committee.
Ulrich J. Looser chairs the Committee.

2 	 Capital structure
Capital and shares
The nominal value of the share capital of LEM Holding SA is
CHF 570'000, which is divided into 1'140'000 fully paid-up
registered shares with a par value of CHF 0.50 each. There
are no shares with preferred voting rights. All shareholders
are entitled to the same dividends. There are no restrictions
on the transfer of shares. In order to be registered in the shareregister, each shareholder shall declare that he holds theshares for his own account.

All members of the Board of Directors are nonexecutive andhave at no time been part of the executive management of
LEM.
Servotronix Motion Control Ltd, a company presided by Ilan
Cohen, has bought transducers for CHF 1'155 thousand in
2017/18 (CHF 751 thousand in 2016/17), including purchases
done by its subsidiaries and subcontractors, from LEM Groupat market price. No other member of the Board of Directors
has any significant business connection with LEM Group.

On 31 March 2018, LEM Holding SA held 652 treasury shares.
Authorized and conditional capital
There is no authorized or conditional capital, nor are there
any profit-sharing certificates or participation in certificatesor any convertible bonds outstanding.

The Board of Directors was comprised of the following members as of 31 March 2018:

LEM | Annual Report 2017/18

17Andreas Hürlimann Position Chairman of the Board of Directors, Chairman of the Strategy Committee,
Member of the Nomination and Compensation Committee
Nationality Swiss
Entry 2011
Professional background
Born in 1964
– – Since 2011, Entrepreneur– – 2005 – 2010, Managing Director, Spencer Stuart, Zürich
– – 1999 – 2005, Global Director of Industry Practices and Member of the Executive
Board, Arthur D. Little Inc., Zürich, Lisbon, London and Paris– – 1990 – 1999, international business development, sales and management roles
with Siemens Schweiz AG, ABB Power Generation AG and Oerlikon Aerospace Inc.,
Zürich, Baden, Montréal
Other notable activities– – Vontobel Real Estate Investments SICAV, Zürich,
Chairman of the Board of Directors– – Sobrado Software AG, Cham, Chairman of the Board of Directors– – ElectricFeel AG, Zürich, Member of the Board of Directors– – themissinglink ag, Cham, Member of the Board of Directors
Education– – M. Sc. Electrical Engineering, ETH Zürich, Switzerland– – DAS Finance, University of Zürich, Switzerland
Ilan Cohen

Position Member of the Board of Directors, Member of the Strategy Committee

Nationality Israeli

Entry 2010
Professional background

Born in 1956

– – Since 2010, President, Servotronix Motion Control Ltd.
– – 2 008 – 2009, General Manager, Kollmorgen Industrial & Commercial
Engineered Solutions Ltd. (Danaher Group)– – 1997 – 2008, President and CEO, Kollmorgen Servotronix Ltd.
– – 1987, Founder, Servotronix Ltd.
– – 1983 – 1990, Associate professor, University of Tel Aviv, Israel
Other notable activities– – Board member, Servotronix Motion Control Ltd., Israel– – Chairman of the Board, Negba Houses for Children at Risk in Israel
Education– – Ph.D. Control System, Ecole Polytechnique de Bruxelles, Belgium– – MSEE, CALTECH Pasadena, USA– – M .Sc. and BSEE Electro-mechanical engineer,
Ecole Polytechnique de Bruxelles, Belgium
Norbert HessNationality German
Born in 1960

Position Member of the Board of Directors, Chairman of the Nomination andCompensation Committee
Entry 2013
Professional background– – S ince 2012, Member of the Management Board, Chief Operating Officer (COO),EPCOS AG, Munich, Germany– – 2 005 – 2012, Head of Ceramic Components Division, EPCOS OHG,
Deutschlandsberg, Austria– – 1999 – 2005, Head of Surge Arresters Business Division, EPCOS AG, Berlin, Germany– – 1987 – 1999, business, marketing and R&D roles at Siemens AG, Berlin/Erlangen,Germany
Other notable activities– – None
Education– – Ph.D., Technical University of Berlin, Germany– – M. Sc. Mat. Eng., Technical University of Berlin, Germany

18

Annual Report 2017/18 | LEM

Ulrich J. Looser
Nationality Swiss

Position Member of the Board of Directors, Chairman of the Nomination andCompensation Committee, Member of the Audit and Risk Committee
Entry 2015

Born in 1957

Professional background– – Since 2009, Berg Looser Rauber & Partner (BLR&Partners)– – 2 001 – 2009, Accenture, various positions including Managing Director
Austria/Switzerland/Germany Management Consulting and Chairman
Accenture AG (Switzerland)– – 1987 – 2001, McKinsey & Company, industry, energy, pharma and public sector
practices, partner election 1993
Other notable activities– – Straumann Holding AG, Member of the Board of Directors– – Kardex AG, Member of the Board of Directors– – Bachofen Holding AG, Chairman of the Board of Directors– – Spross Entsorgungs Holding AG, Member of the Board of Directors– – University of Zürich, Member of the University Council– – Economiesuisse, Member of the Board– – University Hospital Balgrist, Member of the Board– – Swiss-American Chamber of Commerce– – Swiss Study Foundation, Head of Finance Committee– – S wiss National Science Foundation, Member of the Executive Committeeof the Foundation Council
Education– –M.Sc. Physics, ETH Zürich, Switzerland– –M.A. HSG, University of St.Gallen, Switzerland
Ueli Wampfler
Nationality Swiss
Born in 1950

Position Member of the Board of Directors, Chairman of the Audit and Risk Committee
Entry 2007
Professional background– – Since 2004, Founder and Senior Partner, Wampfler & Partner AG, Zürich
– – 1998 – 2004, Director, STG Schweizerische Treuhandgesellschaft, Zürich
– – 1974 – 1998, STG Coopers & Lybrand, Zürich (Partner since 1991)
Other notable activities– – Chairman of the Board of Directors, Swisa Holding AG, Cham (Swisa Group)– – Chairman of the Board of Directors, Arcotempo Holding AG, Cham
– – Vice Chairman of the Board of Directors, Merbag Holding AG, Cham (Merbag Group)– – Member of the Board of Directors, Caspar Finanz AG, Baar (Traco Power Group)– – Member of the Board of Directors, Rebew AG, Zürich
Education– – Lic. oec., University of Zürich, Switzerland– – Certified auditor
Werner C. Weber
Nationality Swiss
Born in 1960

Position Member of the Board of Directors
Entry 2017
Professional background– – Since 1998, weber schaub & partner ag, Partner– – P rior thereto in particular Freddy Burger Management Group in Zürich as legal
counsel and general secretary and PricewaterhouseCoopers AG in Zürich as legal
and tax counsel
Other notable activities– – WEMACO Invest AG, Zug, Member of the Board of Directors– – weber schaub & partner ag, Zürich, Member of the Board of Directors– – Arosa Bergbahnen AG, Arosa, Member of the Board of Directors– – Schilthornbahn AG, Lauterbrunnen, Member of the Board of Directors– – City Parkhaus Aktiengesellschaft, Zürich, Member of the Board of Directors– – MedicoSearch AG, Bern / SkySmile AG, Zürich, Member of the Board of Directors
Education– – Dr. iur. University of Zürich, Switzerland– – Admitted as an attorney-at-law in Zürich, Switzerland– – Mediator SAV, Zürich, Switzerland

LEM | Annual Report 2017/18

19

External mandates
Pursuant to Article 31 of the Articles of Incorporation, members of the Board of Directors may not hold more than ten
additional mandates of which no more than four may be inlisted companies. The following mandates are not subject tothe above limitations: (a) mandates in companies which arecontrolled by LEM or which control LEM; (b) up to five mandates held at the request of LEM or companies controlled by
it; and (c) up to six mandates in associations, charitable organizations, foundations, trusts and employee welfare foundations. Mandates shall mean mandates in the supreme governing body of a legal entity, which is required to be registeredin the commercial register or a corresponding foreign register.
Up to 20 mandates in different legal entities, which are underjoint control or same beneficial ownership are deemed one
mandate.

Definition of areas of responsibility
The Board of Directors delegates the Management of theCompany to the CEO to the fullest extent permitted by the
Swiss Code of Obligations. The Board of Directors reviews
and assesses at least on an annual basis and takes decisions
in the following areas:– –review and approval of the strategy, business plan, annual
business objectives and budget for the LEM Group;– –approval of creation/closing of any subsidiary and purchase/sale of any interest in any company or entry into any
merger or joint venture agreement;– –appointment/dismissal of the Executive Management;– –monitoring the ethical and legal behavior of LEM;
– – review of human resources management, including employee
satisfaction and management development and legal, intellectual property, social and environmental aspects.

Internal organizational structure
The Board of Directors meets as often as necessary, but six
annual meetings are planned in advance. In the completed
financial year, six full-day meetings were held. The meetings
usually take place at the Company's seat in Fribourg. The
Chairman, after consultation with the CEO and the Chairmenof the committees, determines the agenda for the Board
meetings. The members of the Board of Directors can ask
for additional items to be included on the agenda. They
receive supporting documents beforehand, allowing for acomprehensive preparation of the meeting. As a rule, theCEO and CFO attend the meetings of the Board of Directors
without having a right to vote. Depending on the topics, othermembers of Executive Management participate in the meetings in order to respond to specific questions. Decisions canbe taken by the Board of Directors if at least half of the Directors are present, and a simple majority of them is sufficient.
In the event of tie, the Chairman has the casting vote. Minutesof the meetings including decisions taken are prepared by
the CFO and distributed to the members of the Board of
Directors, the CEO and the CFO.

Information and control systems of the Board of
Directors vis-à-vis Executive Management
The Board of Directors ensures that it receives sufficient information from the Management to perform its supervisory duty
and to make the necessary decisions.
The Board of Directors obtains the information required toperform its duties through several means:– –the Board of Directors receives monthly and quarterly
reports on the current development of the business;– –informal meetings and teleconferences are held as required
between the Chairman and the CEO as well as between the
Chairman and individual members of the Board of Directors;– –the Committees meet at regular intervals and exchangedetailed information with the Executive Management;– –the Board of Directors receives detailed information to eachagenda item one week before the Board meeting;– –each Executive Manager joins at least one but usually multiple Board sessions in any given year.

The Board of Directors reflects, in its working procedures,the efficiency and effectiveness of the teamwork as well as
its interaction with the Management of the Company on aregular basis. Regular feedback sessions at the end of ameeting provide valuable inputs for the continuous improvement of the Board's coherence and leadership.

20

Annual Report 2017/18 | LEM

Business risk management
In compliance with Swiss law, LEM is using a standardized
procedure to analyze its business risks. LEM's risk management covers all types of risk: financial, operational and strategic – including the external business environment, complianceand reputational aspects.
The Executive Management conducts an annual risk analysis.
The results and consecutive action plans are thereafter presented to and formally approved by the Board of Directors.
The risk management approach follows five steps: in a firststep, potential hazards are evaluated and a consolidated list
with 5 to 10 main hazards is set up. In a second step, eachhazard is assessed by a product of probability and quantified
impact. Step two results in a risk map, which visualizes LEM's
potential risk environment. In step three, an action plan is put
in place to mitigate the risks. The hazards thereafter are revalued a second time, taking into consideration the mitigation
measures. In step four, the action plan is validated and thereafter monitored on a bi-annual basis (step five).
Internal control system
In compliance with Swiss law, LEM has put in place an internal control system.
Starting from the material positions in the financial result of
the Annual Report, the important underlying processes andprocess owners have been identified. For each process, key
risks that could lead to errors in the financial reporting havebeen identified. For each key risk, key controls have been
defined and responsibilities assigned to assure effective compliance and documentation of the key controls. The process
has been presented to and approved by the Audit & Risk
Committee.
Looking forward, the process owners will perform an annual
process review whereby identified weaknesses shall be continuously improved and key risks and controls shall be
updated. Based on the input of the process owners, the CFO
prepares an annual report on the internal control system,
which is presented to and discussed with the Audit & Risk
Committee.

Committees
Three standing committees support the Board of Directors.
They are comprised of at least two nonexecutive membersof the Board of Directors. They meet whenever necessary
but at least twice a year.
– –The primary objective of the Audit & Risk Committee (ARC)
is to provide the Board of Directors with effective support
in financial matters, in particular the selection and supervision of the external auditor, assessment of the effectiveness,compliance and clarity of the Group financial reporting andthe assessment and preparation of the financial reports tothe shareholders. Furthermore, it reviews critical accounting policies, financial control mechanisms and compliancewith corresponding laws and regulations as well as thedevelopment and continuous improvement of the internal
control system. If required, the external Group auditors areinvited to participate at the meeting. The ARC prepares proposals to be decided by the Board of Directors. In the completed financial year, three half-day meetings were held.
– –The Nomination & Compensation Committee (NCC) deals
with succession, recruitment and compensation of themembers of the Board of Directors and the Executive Management. It ensures and monitors the personnel development plan and adequate succession planning for the middle and top management. It supports the Board of Directors
in establishing and reviewing the compensation strategy
and guidelines and the performance objectives as well asin preparing the proposals to be submitted to the General
Meeting regarding the compensation of the Board of Directors and of the Executive Management. It reviews andupdates the compensation policy for the members of theBoard of Directors and the Executive Management and theperformance-based compensation system for the Executive Management. The NCC prepares proposals to be
decided by the Board of Directors. In the completed financial year, three half-day meetings and three telephone conferences were held.
– –The primary objective of the Strategy Committee (SC) is toassist the Board of Directors in fulfilling its duties withrespect to determining the Company's strategy and theappropriate means to pursue it, including LEM's organizational setup. As strategic work and its successful implementation is based upon coordinated and interlocking
activities between Executive Management and the Boardof Directors, the SC ensures close collaboration with the
CEO and the Executive Management. The SC prepares
proposals to be decided by the Board of Directors. The
Board of Directors may also decide to delegate membersof the SC to assist in steering longer-term strategic initiatives by joining the project-steering committee. In the completed financial year, four half-day meetings and two telephone conferences were held.
LEM | Annual Report 2017/18

21

4 	 Executive Management
The Executive Management was comprised of the following members as of 31 March 2018:

From left to right: Frank Rehfeld, Andrea Borla, François Gabella, Rainer Bos

François Gabella
Nationality Swiss
Born in 1958

Function CEO LEM Group
With LEM since 2010
Previous companies and positions– – 2006 – 2010, CEO, Tesa SA– – 2002 – 2006, SVP, Areva– – 1996 – 2002, Business Area Manager, ABB Power Transformers
Education– – M. Sc. Microtechnics EPFL, Lausanne, Switzerland– – MBA, IMD, Lausanne, Switzerland
Andrea Borla
Nationality Swiss
Born in 1967

Function CFO LEM Group
With LEM since 2015
Previous companies and positions– – 2008 – 2015, CFO, Schindler France– – 2003 – 2007, Field Operations Manager, Schindler China– – 1999 – 2003, Area Controller, Schindler Asia Pacific– – 1996 – 1999, Head of Group Consolidation, SAirGroup
Education– – Ph.D., M.A. HSG, Finance and Accounting, St.Gallen, Switzerland
Rainer Bos

Function Senior Vice President Automotive

Nationality German

With LEM since 2015

Born in 1962

Previous companies and positions– – 2011 – 2015, General Manager, Amphenol Tuchel Electronics GmbH– – 2001 – 2011, Business Unit Director, Delphi Deutschland GmbH– – 1991 – 1999, Key Account Manager, Continental-Teves KGaA
Education– – Dipl. Eng. Industrial Engineering, TU Darmstadt, Germany
Frank Rehfeld
Nationality German
Born in 1968

Function Senior Vice President Industry
With LEM since 2016
Previous companies and positions– – 2009 – 2015, VP Drives, Brose China Co., Ltd.
– – 2006 – 2009, Managing Director, Hella Shanghai Electronics Co., Ltd.
– – 2004 – 2006, Siemens VDO China, Director Body/Chassis Electronics– – 1996 – 2004, Siemens VDO Germany, Director R&D Body/Chassis Electronics
Education– – Dipl. Eng. Electrical Engineering, Erlangen-Nuremberg, Germany

22

Annual Report 2017/18 | LEM

François Gabella is member of Swissmem's Executive Committee and of the Board of Directors of Optotune AG locatedin Dietikon. Apart from that, none of the members of the
Executive Management have other activities in governing or
supervisory bodies, any official functions or political posts
nor any permanent management functions for important
Swiss and foreign interest groups.
External mandates
Pursuant to Article 31 of the Articles of Incorporation, andsubject to approval by the Board of Directors, members of
the Executive Management may not hold more than three
additional mandates of which no more than one may be inlisted companies. The following mandates are not subject tothe above limitations: (a) mandates in companies which arecontrolled by LEM or which control LEM; (b) up to five mandates held at the request of LEM or companies controlled by
it; and (c), subject to approval by the Board of Directors, up
to three mandates in associations, charitable organizations,foundations, trusts and employee welfare foundations. Mandates shall mean mandates in the supreme governing bodyof a legal entity, which is required to be registered in the commercial register or a corresponding foreign register. Up to 20
mandates in different legal entities, which are under joint control or same beneficial ownership are deemed one mandate.
Management contracts
There are no management contracts with companies or individuals outside LEM Group.

5 	 Compensation
Please refer to the section "Compensation Report" following on
page 26.

6 	 Shareholders' participation rights
The rules on shareholders' participation rights are outlinedin the Articles of Incorporation. The rules for the conveningof General Meetings, the participation rights and the majority
rules for decisions are all following the Swiss law. The complete Articles of Incorporation can be downloaded from theInvestor Relations pages on the internet page www.lem.com/en/Investors > Corporate Governance.
Voting rights and representation restrictions andinscription in the share register
There are no limitations on voting rights for shareholders whoare entered into the shareholders' register with voting rights.
Anyone purchasing registered shares is registered by the
Board of Directors in the share register on request as a shareholder with voting rights, provided he expressly declares thatthe shares have been bought and will be held for his own
account.

Each shareholder may be represented by the independent
representative or by a third party who need not be a shareholder of LEM Holding SA.
Statutory quorums
The Articles of Incorporation contain no deviation from theapplicable law. In case a second vote is necessary for elections, a relative instead of the absolute majority of the votes
represented is required.
Convocation of the General Meeting of the Shareholders
Registered shareholders are convened to General Meetingsby ordinary mail and by publication in the Swiss Official
Gazette of Commerce at least 20 days prior to the day ofthe meeting.
AgendaAccording to Article 12 of the Articles of Incorporation, one
or several shareholders who collectively hold 10 % of theshare capital can call for a shareholders' meeting and submit
matters to be placed on the agenda.
Dividend policy
LEM targets a payout ratio significantly above 50 % of theconsolidated net profit for the year, to be proposed by the
Board of Directors to the Annual General Meeting.

7 	 Change of control and defensive measures
Opting-out clause
In June 2010, the Annual General Meeting introduced an
opting-out clause according to article 32 of the Federal Act
on Stock Exchanges and Securities Trading (now: article
125 of the Financial Market Infrastructure Act, FMIA) in the
Articles of Incorporation of the Company. This clausereleases any shareholder from the obligation to submit apublic takeover offer to all shareholders if his participation
in LEM exceeds 331/ 3 % of the voting rights. The Swiss
Takeover Board has decided on 22 September 2011 thata passing of the 331/3 % threshold by the shareholder group
Weber & Wampfler would not trigger the obligation for a
public takeover offer.
Clauses on changes of control
There is no particular clause in the Articles of Incorporation
for changes of control. No member of the Executive Management will receive additional severance payments if dismissedin the case of a change of control of the Company.

LEM | Annual Report 2017/18

23

8 	 Auditors

9 	 Information policy

The duration of the auditors' mandate is one year. Ernst &Young has been auditing LEM since the financial year
2005/06, with Fredi Widmann bearing the responsibility forthe audit since 2017/18. As required by law, the auditor-incharge is changed every seven years. Ernst & Young audits
the Group's consolidated financial statements as well as the
majority of LEM's Group companies in Switzerland andabroad. The audit fees and fees for additional services are
as follows:

LEM informs its shareholders on the business status and its
results on a quarterly basis. After the first six months, a halfyear report is published. This report, as well as the Annual
Report, is made publicly available on its website www.lem.com/en/Investors > Financial Reports. and may be obtained inprint from the Company's headquarters. Once a year, LEM
holds a presentation for the media, investors and financial
analysts. Internal processes assure that price-sensitive facts
are published without delay in accordance with the ad hoc
publicity rules of the SIX Swiss Exchange.

Type of service
In CHF thousands

2017/18

2016/17

Audit fees
Additional fees
Total

350
15
365

350
0
350

Evaluation and control of the auditors is done by the ARC
which makes recommendations to the Board of Directors. In
particular, the ARC evaluates the performance, the fees andthe independence of the auditors.
The auditors report on the results of their audits both orally
and in writing. Financial statements as well as management
letters are discussed in the ARC in the presence of the external auditors.
During 2017/18 Ernst & Young attended three regular ARC
meetings.

24

Annual Report 2017/18 | LEM

At www.lem.com, detailed information is available, e.g., theArticles of Incorporation, interim and annual reports, investor
presentations, press releases as well as the financial calendar.
Contact for investors and media: Andrea Borla, CFO, Chemindes Aulx 8, CH-1228 Plan-les-Ouates, or send an e-mail toinvestor@lem.com (phone: +41 22 706 12 50).

5

6

4
3

2

A

1

Fuel cell car
Fuel cell electric vehicles (FCEVs)
use a propulsion system similar toelectric vehicles, where energy isstored as hydrogen converted toelectricity by the fuel cell. The power
converter regulates the power
between the fuel cell and the electric
drive.

A

HAM

1

Battery 12 V
Electric traction motor
DC-Dc converter
Fuel-cell stack
Battery pack
Fuel tank (hydrogen)In order to adapt the power between the fuel cell and theelectric drive, the converter monitors current and voltage
from energy storage elements (fuel cell, battery pack) to
respond to the powertrain's power needs.
LEM's HAM measurement frequency is considerably
higher than standard sensors. This is particularly importantfor power electronics based on silicon carbide (SiC) or gallium nitride (GaN) technologies with increased efficiency
and switching frequency. Thus, HAM is highly suitable fortechnologies used in fuel cell power converters. HAM uses
LEM's patented technology to monitor the current.

2
3
4
5
6

LEM | Annual Report 2017/18

25

Compensation Report
The future of LEM depends on our ability to attract,develop and retain talented people. Among the manymeasures we use to achieve this goal are competitive
remuneration policies. Our compensation policies
are designed to align the Executive Management's andthe Board of Directors' interest with shareholders'interest.
In brief:– –Core principles
	LEM's compensation policies are designed to reward
results and performance as well as to create long-termvalue for shareholders. The compensation policies arereviewed on an annual basis.

LEM's Articles of Incorporation (www.lem.com/en/
Investors > Corporate Governance) contain provisions
regarding the approval of compensation of the Board of
Directors (BoD) and the Executive Management (EM) (Article27), the supplementary amount for new members of the Executive Management (Article 28), the general compensation
principles (Article 29) as well as provisions regarding theagreements with members of the Board of Directors and the
Executive Management (Art. 30).
The Compensation Report is based on section 5 of the annex
to the Corporate Governance Directive issued by SIX Swiss
Exchange and Art. 13 to 17 of the Ordinance Against Excessive Compensation in Listed Stock Companies (OaEC).
The compensation authorities are summarized in the following table:

Beneficiary

Compensation element

ProposalApproval

BoD and Executive
Management

Compensation principles

NCC

BoD

BoD

Aggregate maximum amount
fixed compensation

BoD based on NCC proposal

Annual General Meeting(prospective approval)

BoD

Individual compensation

NCC

BoD

Executive Management

Aggregate maximum amount
fixed compensation

BoD based on NCC proposal

Annual General Meeting(prospective approval)

Executive Management

Aggregate amount short-term
incentive

BoD based on NCC proposal

Annual General Meeting(retrospective approval)

Executive Management

Aggregate maximum amountlong-term incentive

BoD based on NCC proposal

Annual General Meeting(prospective approval)

Executive Management

Individual compensation

NCC based on proposal from
CEO

BoD

CEO

Individual compensation

Chairman of the BoD

BoD– –C ompensation of the Board of Directors
	The compensation of the Board of Directors consists exclusively of a fixed fee paid in cash. There is no variable compensation. The compensation of the Chairman and themembers of the Board of Directors depends on the amountof responsibility of each member and the work related to
the Board of Directors membership such as Committee
activity.
– –C ompensation of the Executive Management
	In order to encourage and reward results that contribute to
the sustainable success of LEM, the total compensation of
the Executive Management consists of three elements:base salary, variable compensation and nonwage compensation. The target-setting process for the variable compensation is carried out on an annual basis and includes quantitative and qualitative performance criteria, including
LEM's financial results.

26

Annual Report 2017/18 | LEM

1 	 Board of Directors
1.1 	 General principles for compensation ofnonexecutive Directors
The compensation of the Board of Directors is approved by
the Annual General Meeting upon proposal by the Board of
Directors based upon recommendation from the NCC. The
remuneration of the Board of Directors consists of a fixedcash payment and is reviewed on an annual basis. The remuneration compensates for the personal responsibility andexposure as a nonexecutive member of the Board of Directors and the work related to the Board of Directors membership. There is neither a variable compensation nor any participation in an equity-based compensation plan.

1.2 	 Remuneration of nonexecutive Directors
The Board of Directors adopted a remuneration scheme witha fixed fee paid in cash in the amount of CHF 220'000 for the
Chairman, CHF 130'000 for the Vice Chairman and
CHF 80'000 for each member. Committee activity will becompensated with CHF 40'000 for the Committee's chairman and with CHF 20'000 for each member. As long as noVice Chairman is appointed, the Chairman receives a supplementary amount of CHF 30'000 for the additional workload.

The tables below show the compensation per Board memberin the financial years 2016/17 and 2017/18. The shareholders
approved at the Annual General Meeting on 29 June 2017, amaximum compensation amount for the term of office fromthe ordinary General Meeting 2017 until the ordinary General
Meeting 2018 of CHF 1'100'000. The actual costs for theCompany are below at CHF 939'000.

2017/18

In CHF thousands

Andreas Hürlimann 1, 2, 6, 7
Ueli Wampfler 3
Ulrich Jakob Looser 4, 5
Norbert Hess 6
Ilan Cohen 8, b
Werner C. Weber
Total

Annual fees
(A)

Total
compensation

Taxes, social-security
charges and similar contributions paid by the Company
(B)

310
120
140
100
120
80
870

310
120
140
100
120
80
870

27
11
13
0
11
7
69

337
131
153
100
131
87
939

Annual fees
(A)

Total
compensation

Taxes, social-security
charges and similar contributions paid by the Company a)(B)Total costs for the Company(A) + (B)

290
120
120
120
100
750

290
120
120
120
100
750

26
11
11
0
100
148

316
131
131
120
200
898

2016/17

In CHF thousands

Andreas Hürlimann 1, 2, 7
Ueli Wampfler 3
Ulrich Jakob Looser 4, 6
Norbert Hess 5Ilan Cohen 8
Total

Total costs for theCompany (A) + (B)a) These amounts also include one-time, nonrecurring contributions to tax and social-security authorities.
b) Including CHF 20'000 for R&D contribution
5 Chairman of the Nomination & Compensation Committee
1 Chairman of the Board
6 Member of the Nomination & Compensation Committee
2 Vice Chairman of the Board
7 Chairman of the Strategy Committee
3 Chairman of the Audit & Risk Committee
8 Member of the Strategy Committee
4 Member of the Audit & Risk Committee

2 	 Executive Management
2.1 	 General principles for compensation of
Executive Management
Remuneration of the Executive Management is approvedby the shareholders at the Annual General Meeting upon
proposal by the Board of Directors. The proposal of the
PurposeBoard of Directors is based on a NCC recommendation. The
remuneration of the Executive Management is reviewed on
an annual basis.
The total compensation of the Executive Management iscomposed of the following elements:

Compensation element

Instrument

Annual basesalaryMonthly cash Pay for the function
payments

Scope and responsibili- N/Aties, profile andcompetencies

Drivers

Prospective max
amount (October –September)

Variable short-term
incentive

Annual cash
payment

Pay for annual
performance

Business and individual 0 %–139 % of
performance throughtarget amountout the fiscal year

Retrospective

Variable long-term
incentive

Annual cash
payment

Participation in sustainable
Achieved value creation 0 %–200 % ofcompany success, alignment over three consecutive target amountwith shareholder interests
business years

Nonwagecompensation

Pensioncontributions

Protect against risks plus
retirement and dependents'
coverage

Local legislation andmarket practiceRange and cap

Shareholder approval

Prospective max
amount for payout
three years later

N/A

LEM | Annual Report 2017/18

27

Total compensation is in line with the market for comparable
industrial companies considering the various remuneration levels for different functions and locations. Furthermore, the compensation mix between base salary, variable compensation andnonwage compensation reflects sectorial and functional market practice. Benchmarking is carried out periodically.

In addition, a one-time variable short-term incentive will beawarded to each member of the Executive Management andother Senior Managers for reaching two significant financial
milestones of LEM Group (sales exceeding CHF 300 million
and operating profit exceeding CHF 60 million) that had beenpreviously communicated to the Executive Management.

2.1.1 Base salary of Executive Management
Base salaries are paid monthly as fixed cash amounts.

The short-term incentive payout is presented for retrospective approval to the shareholders along with the Annual
Report and the financial statements of the same businessyear at the Annual General Meeting 2018 prior to being paidout.

2.1.2 Variable compensation of Executive Management
The target-setting process for the Leadership-for-Results(L4R) plan is part of the LEM performance management andis carried out on an annual basis by the NCC. All variable
compensation is paid in cash and after approval by the shareholders. The Chairman of the BoD prepares objectives andperformance evaluations for the CEO and the NCC for theother members of the Executive Management based on personal performance review.
Short-term variable compensation related to the Executive's function, responsibility and obtained results
Each Executive's individual target amount for the short-term
incentive plan is communicated to the Executive at the beginning of the financial year together with the objectives andtheir weighting. The target amount and the objectives are
based on the role and impact of the Executive as well as
annual company priorities. Objectives are linked to bottom
line indicators, quantitative or qualitative targets. At the endof the year, the performance on each objective is evaluatedresulting in the total amount for payout.
The number of objectives is large enough to allow each Executive to reach a fair level of short-term variable compensation
rewarding for the results achieved even under changed business conditions. Since the degree of achievement of set
objectives has to be evaluated at the end of the period, aclear understanding of the metrics to be applied is established at the time of target setting and kept constant over theperiod. For each objective, the curve between minimum andmaximum bonus level is defined. Ambitious but achievable
objectives are set as targets, at which 100 % of the respective target amount is attributed.
For Executive Management, the minimum payout of theshort-term incentive is 0 % of the target amount and theweighted maximum payout is 139 %.

28

Annual Report 2017/18 | LEM

Long-term variable compensation related to the sustainable financial performance of LEM GroupThe long-term incentive is defined as an annual target
amount and is based on the performance of LEM evaluated over a period of three consecutive financial years(2015/16 – 2017/18). The performance criterion is the
cumulated Economic Value Added (EVA) over these threefinancial years. The Board of Directors defines the EVA
objective at the beginning of year one and the evaluationof the performance takes place at the end of year three.
Once the forward-looking EVA objective is defined, this
EVA objective remains unchanged over the period of three
years.
For Executive Management, the minimum payout of thelong-term incentive is 0 % of the target amount and the
maximum payout is 200 %.
For the long-term incentive cycle ending 2017/18, themaximum amount approved prospectively by the shareholders at the Annual General Meeting in 2015 is
CHF 1'050'000 for payout in 2018.
2.1.3 Nonwage compensation of Executive Management
For Executive Management, nonwage compensation consists of pension plans (retirement benefits) only.
Executive Management benefits from LEM's Swiss pension
plan, considered a defined contribution plan under Swiss lawthat provides retirement benefits and risk insurance for deathand disability. IFRS, on the contrary, considers this plan as adefined benefit plan. The insured base salary follows Swiss
professional pension regulations without limitation of theamount. The pension fund is funded by contributions fromthe company and the insured Executive.

2.2 	 Remuneration of Executive Management

Base salaryshort-term
incentive 3long-term
incentive

Company's
contribution topension fundTotal­compen­sation

Company's
contribution
to socialsecurity
charges

520
920
–
1'440

416
634
–
1'050

4861
266
49
801

66
95
–
161

1'488
1'915
49
3'452

128
164
4
296

2017/18
In CHF thousands

François Gabella, CEO
Executive Management (excl. CEO)
Former Executive Management 2
Total

1 A lso includes pro-rata payments under the long-term incentives 2016/17 – 2018/19 and 2017/18 – 2019/20.
2 T he long-term incentive 2015/16 – 2017/18 amount of former members of the Executive Management paid out in 2017/18 corresponds to their activity in the Executive
Management (this is the last year this applies).
3 Including an additional one-time payment beyond the regular short-term incentive plan.

2016/17

In CHF thousands

François Gabella, CEO
Executive Management (excl. CEO)
Former Executive Management 1
Total

Base salaryshort-term
incentive

long-term
incentive

Company's
contribution topension fundTotal­compen­sation

Company's
contribution
to socialsecurity
charges

499
920
0
1'419

250
325
0
575

147
182
75
404

64
93
0
157

960
1'520
75
2'555

81
128
7
216

1 T he long-term incentive 2014/15 – 2016/17 amount of former members of the Executive Management paid out in 2016/17 corresponds to their activity in the Executive
Management.

The amounts are shown as follows:– –Base salary: as paid out in the reporting period– –Short-term incentive 2017/18: as proposed to the Annual
General Meeting in June 2018 for payout in July 2018
– –Long-term incentive: as accrued for or paid out during thereporting period– –Pension fund contributions: as accrued for or paid out during the reporting period– –Company's contributions to social-security charges: as
accrued for or paid out during the reporting period
Amounts approved by previous Annual General Meetings
related to the period reported above:– –Maximum amount base salary (valid from 1 October 2017
to 30 September 2018) CHF 1'800'000– –Maximum amount long-term incentive 2015/16 for payment
in 2018: CHF 1' 050'000– –Maximum amount base salary (valid from 1 October 2016
to 30 September 2017) CHF 1'727'000– –Short-term incentive amount for payment 2016/17:
CHF 626'750– –Pension fund contribution and company contribution tosocial security charges as paid out or accrued for in thereporting period are included in the above amounts

2.3 	 Compensation of former members andrelated parties
Apart from the LTI disclosed in 2.2., no compensation has
been paid in this and the prior reporting period to former members or related parties.

3 	 Loans to current and former membersof the Board of Directors and Executive
Management and related parties
Our Articles of Association do not provide the basis to grantloans to current or former members of the Board of Directors,
the Executive Management or to any related party. Therefore,
no loans have been granted in the financial years 2017/18
and 2016/17 or in any previous year.

LEM | Annual Report 2017/18

29

Auditor's Report
Report of the statutory auditor on the Compensation Report
We have audited the remuneration report of LEM Holding SA for the year ended 31 March 2018. The audit
was limited to the information according to articles 14–16 of the Ordinance against Excessive Compensationin Stock Exchange Listed Companies (Ordinance) contained in the note 1.2 on page 27 and on notes 2.2 to
2.3 on page 29 of the remuneration report.
Board of Directors' responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration
report in accordance with Swiss law and the Ordinance. The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor's responsibility
Our responsibility is to express an opinion on the remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the remuneration reportcomplies with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected depend on the auditor's judgment, including the assessment of the risks
of material misstatements in the remuneration report, whether due to fraud or error. This audit also includes
evaluating the reasonableness of the methods applied to value components of remuneration, as well as
assessing the overall presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
OpinionIn our opinion, the remuneration report for the year ended 31 March 2018 of LEM Holding SA complies with
Swiss law and articles 14 – 16 of the Ordinance.

To the General Meeting of LEM Holding SA, Fribourg
Lancy, 15 May 2018

Ernst & Young Ltd

Fredi Widmann
Licensed audit expert(Auditor in charge)

30

Annual Report 2017/18 | LEM

Roland Ruprecht
Licensed audit expert

LEM Group
Consolidated Financial Statements

Consolidated Statement of
Financial Position 33
Consolidated Income
Statement 34
Consolidated Statement of­C omprehensive Income 35
Consolidated Statement of Changes
in Equity 35
Consolidated Cash Flow
Statement 36
Notes to the Consolidated
Financial Statements 37
Auditor's Report 60

LEM | Annual Report 2017/18

31

32

Annual Report 2017/18 | LEM

Consolidated Statement of
Financial Position
AssetsIn CHF thousands

Current assets
Cash and cash equivalents
Accounts receivable
Inventories
Income tax receivable
Other current assets
Total current assets
Noncurrent assets
Deferred tax assets
Property, plant and equipment
Intangible assets
Other noncurrent assets
Total noncurrent assets

Notes

31.3.201831.3.201717'63066'64835'787
131
2'541
122'737

12'80958'47930'628723
1'905
104'543

14'46939'937
6'181
906
61'493

5'028
31'381
7'045
985
44'440184'230

148'983

Notes

31.3.201831.3.2017925'71826'359
6'037
682
5'000
778
64'57424'59822'043
2'824
1'061

1'026
6'392
3'205
10'623

1'127
1'881
4'389
7'397

75'19858'503570(1'091)
12'997
96'556
109'032

570
(906)
9'467
81'35090'480184'230

148'983

4
5
6

17
7
8

Total assets

Liabilities and equity
In CHF thousands

Current liabilities
Accounts payable
Accrued expenses
Income tax payable
Current provisions
Interest-bearing loans and borrowings
Other current liabilities
Total current liabilities
Noncurrent liabilities
Noncurrent provisions
Deferred tax liabilities
Other noncurrent liabilities
Total noncurrent liabilities

10
11

10
17
11

Total liabilities
EquityShare capital
Treasury shares
Reserves
Retained earnings
Total equity
Total liabilities and equity

12
12
12

578
51'106

LEM | Annual Report 2017/18

33

Consolidated Income Statement
April to MarchNotes

2017/18

2016/17

Sales
Cost of goods sold
Gross margin301'243(162'826)
138'416264'519(140'959)
123'560

Sales expense
Administration expense
Research & development expense
Other expense
Other income
Operating profit(30'540)(24'892)(21'679)
0412
61'719(26'700)(25'246)(16'039)(0)182
55'758

(298)
127
1'345

(228)
80
(642)

62'89354'968(9'587)(10'403)53'30644'566Notes

2017/18

2016/17

18

46.78

39.11

In CHF thousands

Financial expense
Financial income
Exchange effect

14
15
16

Profit before taxes
Income taxes

17

Net profit for the year

Earnings per share, in CHF
Basic & diluted earnings per share

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

34

Annual Report 2017/18 | LEM

Consolidated Statement of­Comprehensive Income
April to March
In CHF thousands

2017/18

2016/1753'30644'566

3'346
3'346

(845)
(845)

2'140
30
(485)
1'685

1'881
(390)
(302)
1'189

Other comprehensive income/(loss) for the period, net of tax

5'031

345

Total comprehensive income for the period

58'337

44'910Notes

Net profit for the period recognized in the income statement
Other comprehensive income to be reclassified to profit andloss in subsequent periods
Currency translation difference
Total other comprehensive income to be reclassified to
profit and loss in subsequent periods
Other comprehensive income not to be reclassified to
profit and loss in subsequent periods
Remeasurement gains/(losses) on defined benefit plans, in Switzerland
Remeasurement gains/(losses) on defined benefit plans, in Germany
Income tax
Total other comprehensive income not to be reclassified to
profit and loss in subsequent periods

20
20
17

Consolidated Statement of
Changes in Equity
Attributable to shareholders
In CHF thousands

1 April 2016
Net profit for the year
Other comprehensive income/(loss)
Total comprehensive income
Dividends paid
Movement in treasury shares
31 March 2017 / 1 April 2017
Net profit for the year
Other comprehensive income/(loss)
Total comprehensive income
Dividends paid
Movement in treasury shares
31 March 2018

Notes

Share
­capital

Treasuryshares570(502)

Capital Translation
reserve
reserve

12'445(2'538)
(845)
(845)

12
12
570

(405)
(906)

405
12'849(3'383)
3'346
3'346

12
12
570

(185)
(1'091)185
13'034(37)

Retainedearnings

Total
equity75'919 85'894
44'566 44'566
1'189
345
45'75544'910(39'879) (39'879)
(444)
(444)
81'35090'48053'306 53'306
1'685
5'031
54'99158'337(39'889) (39'889)
104
104
96'556 109'032

The amount available for dividend distribution is based on LEM Holding SA's shareholders' equity determined in accordancewith the legal provisions of the Swiss Code of Obligations.

LEM | Annual Report 2017/18

35

Consolidated Cash Flow Statement
April to MarchNotes

2017/18

2016/1762'89354'968

134
223
8'219
550
420
(318)
556
79
(213)
(10'824)
61'719(4'106)(6'419)2'930(7'594)
54'124

112
(76)
6'856
0
349
(790)
436
35
(147)
(9'585)52'159(2'615)(2'645)5'926
667
52'827

7
8(14'788)(434)
109(15'113)(12'552)(622)(27)(13'201)

12
12

104
(39'889)
5'000(34'785)(444)(39'879)(25)(40'349)

Change in cash and cash equivalents

4'226

(723)

Cash and cash equivalents at the beginning of the period
Exchange effect on cash and cash equivalents
Cash and cash equivalents at the end of the period

12'809595
17'63013'629(97)
12'809In CHF thousands

Cash flow from operating activities
Profit before taxes
Adjustment for noncash items and taxes paid
– – Net financial result– – Derivative financial instruments revaluation– – Depreciation and amortization– – Impairment loss
– – Gain/Loss on disposal of fixed assets– – Increase (+) / decrease (–) of provisions and allowances– – Movement in pension
Interest received
Interest paid
Taxes paid
Cash flow before changes in net working capital
Change in inventories
Change in accounts receivable and other current assets
Change in payables and other current liabilities
Cash flow from changes in net working capital
Cash flow from operating activities
Cash flow from investing activities
Investment in fixed assets
Investment in intangible assets
Increase (–) / decrease (+) in other assets
Cash flow from investing activities
Cash flow from financing activities
Treasury shares acquired (–) / divested (+)
Dividends paid to the shareholders of LEM Holding SA
Increase (+) / decrease (–) in financial liabilities
Cash flow from financing activities

36

Annual Report 2017/18 | LEM

Notes to the Consolidated
Financial Statements
1 	 General information
LEM Group (the Group) is a market leader in providing innovative and high-quality solutions for measuring electrical parameters. Its core products – current and voltage transducers – are used in a broad range of applications in drives & welding,renewable energies and power supplies, traction, high-precision, conventional and green cars businesses. The Group has
operations in thirteen countries and employs 1'527 people per 31 March 2018. The parent company of LEM Group is LEM
Holding SA (the Company), which is a limited company incorporated in Switzerland.
The registered office is at Avenue Beauregard 1, CH-1700 Fribourg. The financial year ends on 31 March (the year). The
Company has been listed on the SIX Swiss Exchange since 1986.
The Board of Directors approved the consolidated financial statements on 15 May 2018, to be submitted for approval by
the Annual General Meeting of Shareholders on 28 June 2018.

2 	 Significant accounting principles
2.1 	 Basis of preparation
The consolidated financial statements of LEM Group have been prepared in accordance with the International Financial andReporting Standards (IFRS) and interpretations published by the International Accounting Standards Board (IASB) and comply with Swiss law.
The consolidated financial statements have been prepared using the historical cost convention except that, as discussed
in the accounting policies below, certain items like derivatives are recorded at fair value.
The financial information is presented in thousands of CHF. The totals are calculated with the original unit amounts, which
could lead to rounding differences. These differences in thousands of units are not changed in order to keep the accuracyof the original data.
2.2 	 Adoption of new and revised International Financial Reporting Standards and interpretations
New standards in 2017/18
In 2017/18, LEM Group introduced the following revised standards and interpretations:Standard or i­nterpretation

Title

Effective date

ImpactIAS 7

Disclosure Initiative
Amendments to IAS 7

1 January 2017New
disclosure

IAS 12

Recognition of Deferred Tax Assets for Unrealized Losses
Amendments to IAS 12

1 January 2017

None

Amendments

Annual improvements to IFRS 2014 – 2016

1 January 2018

None

Future standards
LEM Group will adopt the following revised standards and interpretations in the future:
Standard or i­nterpretation Title

Effective date

IFRS 9IFRS 15IFRIC 22
Amendments
IFRS 16IFRIC 23IFRS 9IAS 19

1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2019
1 January 2019
1 January 2019
1 January 2019

Financial Instruments
Revenue from Contracts with Customers and its Amendments
Foreign Currency Transactions and Advance Consideration
Annual improvements to IFRS 2015 – 2017
Leases
Uncertainty over income tax treatments
Prepayment Features with Negative Compensation Amendments to IFRS 9
Plan Amendment, Curtailment or Settlement Amendments to IAS 19

The Group will implement the relevant new standards when they become effective, i.e., for annual periods beginning on orafter the effective date stated above. The impact on the capital, financial position, income or cash flow situation of LEM
resulting from the application of above standards and interpretations has not been evaluated but is expected to have nomaterial effects, with the exception of IFRS 16 for which the impact is currently under evaluation. IFRS 16 requires lessees
to recognize assets and liabilities for all leases. The note 21 Operating lease commitments gives a first indication of thevolume of leases for the Group.
LEM | Annual Report 2017/18

37

IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of revenues and cash flows arising from an entity's contracts
with customers.
According to the new guidance, revenue recognition depicts the transfer of promised goods and services to customers in
an amount that reflects the consideration to which the entity expects to be entitled for these goods and services. Revenue
is recognized when (or as) control of the goods and services is transferred to the customer. The standard replaces existing
revenue recognition guidance including IAS 18 Revenues.
The Group has evaluated the potential impacts of this standard on the timing of recognition of revenue. Representative
contracts with customers have been reviewed and relate primarily to the delivery of manufactured products. They may
contain some additional performance obligations such as freight costs recharges or specific product development which
are highly dependent on the delivery of our transducers and amount to only 0.2 % of revenues at 31 March 2018. To date,the Group is already recognizing revenues at a point in time according to the different delivery terms which is in line withIFRS 15 based on the performance obligations identified.
Based on the above-mentioned analysis, the Group assessed that the adoption of the standard does not significantly
impact its consolidated financial statements, therefore, the retrospective transition method will not require a restatementof the consolidated financial statements.
2.3 	 Summary of critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and related disclosures at the date of thefinancial statements. These estimates are based on management's best knowledge of current events and actions that
the Group may undertake in the future. However, actual results could differ from those estimates. The key assumptions
concerning the future and other key sources of estimation uncertainty at the reporting date are discussed below.
Impairment of goodwill, other intangible assets and property, plant and equipment
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy. The
recoverable amounts of cash-generating units have been determined based on value-in-use calculations. Other intangible
assets and property, plant and equipment are tested for impairment if there is a triggering event indicating a potential
impairment. These calculations require the use of estimates in particular to the expected growth of sales, discount rates
and development of raw material prices.
Provisions
Provisions are recognized only if the specific criteria under IFRS are met. Provisions represent presumed obligations arisingfrom past events and are recognized only if their amount can be estimated reliably. Nevertheless, provisions are based onassumptions.
Income and other taxes
The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. Some of these positions
are inherently uncertain and include those relating to transfer pricing matters and the interpretation of income tax laws
applied to complex transactions. The Group periodically reassesses its tax positions. Changes to the financial statement
recognition, measurement, and disclosure of tax positions are based on management's best judgment given any changes
in the facts, circumstances, information available and applicable tax laws.

38

Annual Report 2017/18 | LEM

Employee benefits
The standard requires that certain assumptions are made in order to determine the amount to be recorded for defined
benefit obligations and pension plan assets, in particular for defined benefit plans. These are mainly actuarial assumptions such as expected salary increase, employee turnover and discount rates. Substantial changes in the assumed
development of any of these variables may significantly change LEM Group's retirement benefit obligation and pension
plan assets.
Valuation of deferred tax assets
The carrying amount of deferred tax assets is reviewed on each balance sheet date and reduced to the extent that it is nolonger probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
2.4 	 Basis of consolidation
The consolidated financial statements are comprised of LEM Holding SA and of its subsidiaries.
Subsidiaries
Subsidiaries are those entities over which the Group has the control. Control is when the Group is exposed, or has rights,
to variable returns from its involvement with subsidiary and has the ability to affect those returns through its power overthe subsidiary to direct the relevant activities.
Business combinations are accounted for using the acquisition method. Companies that are acquired or sold during thefinancial year are included in the Group financial statements up to the date of transfer of control. The costs of purchasing
a company are determined as the sum of the fair value of the assets that are to be paid to the seller and the obligations
that are entered into, or acquired, on the date of purchase. Identifiable acquired assets, liabilities and contingent liabilities
are recognized at their fair value as of the date of their acquisition. The Group's share of the purchase price that exceeds
the fair value of the identifiable net assets is recognized as goodwill. The Group's share of the fair value of the identifiable
net assets that exceeds the purchase price is shown as gain on bargain purchase on the income statement.
Intragroup assets and liabilities as well as income and expenses are set off against each other.
Also, intragroup-unrealized profits on inventories and fixed assets are eliminated.
Associates
Investments in associated undertakings are accounted for using the equity method. These are undertakings over which theGroup exercises significant influence, but which it does not control.
No associated undertakings exist as per 31 March 2018 and 31 March 2017.
2.5 	 Foreign currencies
Functional and presentation currency
The consolidated financial statements are presented in Swiss francs as the presentation currency. The subsidiaries use
local currencies as their functional currency, which is the currency of the primary economic environment in which they
operate.
Foreign currency translation
All assets and liabilities in the balance sheets of subsidiaries that are denominated in the respective functional currencies
are translated into Swiss francs at the year-end exchange rate. Items in the income statement and cash flow statement
are translated at the average exchange rate for the year. The resulting translation differences are recognized in other comprehensive income. When a company is sold, the cumulative translation differences recognized in other comprehensive
income are transferred to the income statement.

LEM | Annual Report 2017/18

39

The following table summarizes the principal exchange rates that have been used in the translation process:Currency

BGN
CNY
DKK
EUR
GBP
JPY
RUB
USD

Income statement of
2017/18

Income statement of
2016/17

Balance sheet
31.3.2018

Balance sheet
31.3.2017

Average rate in CHF

Average rate in CHF

Year-end rate in CHF

Year-end rate in CHF

0.579
0.146
0.152
1.133
1.285
0.0088
0.017
0.971

0.553
0.147
0.146
1.083
1.285
0.0091
0.016
0.989

0.600
0.152
0.157
1.174
1.336
0.0090
0.017
0.953

0.545
0.145
0.144
1.069
1.250
0.00900.018
1.001

Foreign currency transactions
Foreign currency transactions are translated at the market rate prevailing at that time. The monetary assets and liabilities
are translated at the year-end rates while nonmonetary assets are translated at historical rates. Gains and losses arisingfrom the transactions as well as from the translation of monetary assets and liabilities in foreign currencies are recorded asincome or expenses in the income statement (except from translation differences arising from a monetary item that forms
part of the Group's net investment in a foreign operation, which are included in shareholders' equity).
2.6 	 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash at bank and cash at postal accounts and bank deposits with an
original maturity of three months or less from the date of acquisition, that are readily convertible to known amounts of cash.
2.7 	 Inventories
Inventories are stated at the lower of cost or net realizable value. The first-in, first-out (FIFO) method is applied. The cost offinished goods and work in process comprise raw materials, direct labor costs and other costs that can be directly allocated,such as production overhead expenditures. Allowances are established when:– –there is an objective indication that the Group will not be able to sell the goods in due time;– –the goods are damaged, in excess or obsolete;– –the net realizable value is below cost.
2.8 	 Property, plant and equipment
Property, plant and equipment is stated at cost of acquisition or construction, less depreciation and any impairment. Depreciation is calculated on a linear basis on the following estimated useful life:Land
Buildings
Machinery and equipment
Tools and molds
VehiclesIT equipmentnil
20 – 40 years
5 – 8 years
2 – 5 years
3 – 5 years
3 – 5 years

Repairs and renewals are charged to the income statement when the expense is incurred. Subsequent expenditure on
an item of property, plant and equipment is capitalized only when it is probable that future economic benefits associatedwith the item will flow to the Group and the cost of the item can be measured reliably.

40

Annual Report 2017/18 | LEM

2.9 	 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net assets of theacquired subsidiary at the date of acquisition. Goodwill on acquisitions is reported in the balance sheet as an intangible
asset and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include thecarrying amount of goodwill relating to the entity sold.
Research & development
Research costs are written off as incurred. An intangible asset arising from development is recognized if, and only if theGroup can demonstrate the following:– –the technical feasibility of completing the intangible asset;– –Group intention to complete the intangible asset;– –ability to use or sell the intangible asset, the intangible asset will generate probable future economic benefits;– –the availability of adequate technical, financial and other resources to complete the development; and– –ability to measure the expenditure attributable to the intangible asset during its development reliably.
Such development costs are capitalized and amortized over the life of the product or process.
Other intangible assets
Other intangible assets with definite useful lives are carried at cost less amortization and any impairment.
Expenditure on computer software, acquired patents, trademarks and licenses is capitalized and amortized using thestraight-line method over their useful lives, not exceeding five years.
2.10 	Impairment of tangible fixed assets and intangible assets
Assets that are subject to depreciation and amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount bywhich the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fairvalue less cost to sell and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows (cash-generating unit).
The value in use is calculated based on the estimated future cash flows expected to result from the use of the asset andeventual disposal, discounted using an appropriate noncurrent interest rate.
Goodwill is tested for impairment annually (at 31 March) and when circumstances indicate that the carrying value may be
impaired. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill
relates. Impairment losses relating to goodwill cannot be reversed in future years.
2.11 	Financial assets
Financial assets comprise cash, receivables, accrued income, marketable securities and derivative financial instruments.
Initial recognition and measurement
At initial recognition, financial assets are designated into two categories, financial assets at fair value through profit and loss
and loans and receivables.
Financial assets are initially recognized at fair value plus, in the case of a financial asset not at fair value through profit andloss, directly attributable transaction costs.
Subsequent measurement– –The subsequent measurement of financial assets depends on their classification:– –financial assets at fair value through profit and loss (refer to note 2.12);– –loans and receivables which are nonderivative financial assets with fixed or determinable payments that are not quoted inan active market. Loans and receivables are subsequently measured at amortized cost using the effective interest rate
method, less impairment.
Accounts receivable are carried at original invoice amount less an allowance made for doubtful accounts based on a review
of all outstanding amounts at the year-end. Allowances for doubtful accounts are established when there is an objective
indication that the Group will not be able to collect the amounts due. Allowances for doubtful accounts are written off whenidentified irrecoverable.
LEM | Annual Report 2017/18

41

Other receivables are measured at amortized cost. The Group assesses at each reporting date whether there is any objective evidence that an asset or group of assets is impaired. Evidence of impairment may include indications that the debtors
or a group of debtors are experiencing significant difficulties, default or delinquency in interest or principal payments. The
amount of the loss is measured as the difference between the assets' carrying amount and the present value of estimatedfuture cash flows.
2.12 	Derivative financial instruments
The Group uses derivative financial instruments to hedge foreign exchange risks of forecasted transactions. Derivative
financial instruments comprise forward exchange contracts.
Derivative financial instruments are initially measured at fair value and subsequently at fair value through profit and loss.
Any gains and losses arising from changes in fair value on derivatives are taken directly to the income statement whichmeans that the Group does not apply hedge accounting.
Derivative financial instruments are shown as part of other current assets and other current liabilities. In case the maturity
is more than one year, derivative financial instruments are recognized under other noncurrent assets or other noncurrent
liabilities.
2.13 	Financial liabilities
Financial liabilities comprise bank loans, payables, accrued expenses and derivative financial instruments at the end of theperiod.
All financial liabilities are recognized initially at fair value and, in the case of loans and payables, net of directly attributabletransaction costs.
Financial liabilities that are due within 12 months after the balance sheet date are classified as current liabilities unless theGroup has an unconditional right to defer settlement of the liability until more than 12 months after the balance sheet date.
2.14 	Leases
In the years under review LEM Group does not hold any finance lease.
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the lease term.
2.15 	Employee benefits
The Swiss and German subsidiaries provide a defined benefit plan for employees; the other subsidiaries provide defined
contribution plans. In both cases the charges are included in the related periods in the personnel expenses of the various
functions where the employees are located.
Defined benefit plan
The defined benefit obligation is determined annually by a qualified independent actuary. The obligation and costs of pension benefits are determined using the projected unit credit method. Service costs are part of personnel expenses and consist of current service costs, past service costs and gains/losses from plan settlements. Past service costs are recognizedat the earlier of the date when the plan amendment occurs, or when restructuring costs are recognized. They include planamendment and curtailment. Gains or losses on settlement of pension benefits are recognized when the settlement occurs.
Net interest is recorded in the financial result and is determined by applying the discount rate to the net defined benefit
liability/asset that exists at the beginning of the year. Actuarial gains and losses resulting from changes in actuarial assumptions and experience adjustments are recorded in other comprehensive income as remeasurements of employee benefits.
The return on plan assets (excluding interest based on the discount rate) and any change in the effect of an asset ceiling arealso recorded in this line. In accordance with IFRIC 14, any assets resulting from surpluses in defined benefit plans are limited to the value of the maximum future savings from reduced contributions.

42

Annual Report 2017/18 | LEM

Defined contribution plan
The subsidiaries abroad sponsor defined contribution plans based on local practices and regulations.
LEM incentive scheme
The LEM Incentive System consists of a short-term incentive component and a long-term incentive component.
The short-term incentive component compensates for the actual annual results and achieved performance. The long-term
incentive plan rewards the members of the Executive Management and Senior Managers for the sustainable financial performance of the Group.
Both elements are cash settled and the bonus payments are made in the first four months of the following fiscal year. The estimated payments are accrued for per year-end.
2.16 	Provisions and contingent liabilities
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate can be made of the amountof the obligation.
Warranty and customer claims
The Group recognizes the estimated liability to replace products still under warranty at the balance sheet date. This positionis calculated based on past history of the level of repairs and replacements. Additional specific provisions are booked whenrequired.
Litigations and consumption taxes
The Group recognizes the estimated country and entity-specific risks relating to litigations with former personnel or indirect
taxation.
Restructuring
A constructive obligation to restructure arises only when an entity has a detailed formal plan for the restructuring identifying at least:– –the business or part of a business concerned;– –the principal locations affected, function and approximate number of employees who will be compensated for terminating
their services;– –the expenditures that will be undertaken; and– –when the plan will be implemented;
and raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or
announcing its main features to those affected by it.
Contingent liabilities
Contingent liabilities arise from past events where the outcome depends on future events. As the probability either cannot
be measured reliably or the probability for a subsequent outflow lies below 50 %, contingent liabilities are not recognized in
the balance sheet but are described in the notes.
2.17 	Share capital
LEM Holding SA has only ordinary registered shares. Dividends on ordinary shares are recognized in equity in the period inwhich they are declared.
Treasury shares
Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. Neither gain
nor loss is recognized in the income statement on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration is recognized in retained earnings.
2.18 	Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue
can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of theconsideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duty.
LEM | Annual Report 2017/18

43

Revenue from the sale of products comprises all revenues that are derived from sales of products to third parties after
deduction of price rebates and value-added tax. Revenues from the sale of products are recognized when the significant
risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the products.
2.19 	Income taxes and deferred taxation
Income taxes
Income taxes comprise all current and deferred income taxes, including the withholding tax payable on profit distributions
within the Group. Income taxes are recognized in the consolidated income statement except for income taxes on transactions that are recognized directly in shareholders' equity or in other comprehensive income.
Deferred taxation
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of
assets and liabilities and their carrying amounts in the financial statements. Deferred taxes are determined using tax rates
that apply, or have been substantially enacted, on the balance sheet date in the countries where the Group is active. Tax
losses carried forward and deductible temporary differences are recognized as deferred tax assets to the extent that it isprobable that tax profit will be available in the future against which the tax losses carried forward can be utilized. Deferred
tax assets and liabilities are offset against each other if the corresponding income taxes arise by the same tax authority anda legally enforceable right for offsetting exists.

3 	 Segment information
Business segment information
In CHF thousands

Income statement
Sales
EBITDA
Operating profit
Net financial expenses

Industry
2017/18

242'248
57'60151'191

2016/17214'290
49'18043'935

Automotive
2017/18
2016/1758'99512'886
10'52750'22913'434
11'823Taxes
Net profit for the year

LEM Group
2017/18
2016/17301'243
70'48761'7191'175

264'51962'61455'758(790)(9'587)53'306(10'403)
44'566

Depreciation and amortization
Tangible assets
Intangible assets
Impairment loss
Total

5'300
925
184
6'410

4'313
932
0
5'245

1'618
375
366
2'359

1'264
347
0
1'611

6'919
1'300
550
8'768

5'577
1'278
0
6'856

Capital expenditures
Tangible assets
Intangible assets
Total assets

10'271349
10'620

9'365
504
9'870

4'517
85
4'602

3'186
118
3'305

14'788434
15'222

12'552622
13'174For management purposes, LEM Group is organized into two operating segments, Industry and Automotive. The Industry
segment develops, manufactures and sells electronic components called transducers for the measurement of current andvoltage of various industrial applications. The Automotive segment develops, manufactures and sells transducers forapplications in automotive markets.
Transactions between the subsidiaries and/or business segments are conducted at arm's length.

44

Annual Report 2017/18 | LEM

Geographical Information

China

USA

Germany

Japan

Italy

Switzerland

Rest ofthe world

LEM Group

In CHF thousands

2017/18

2016/172017/18

2016/172017/18

2016/172017/18

2016/172017/18

2016/172017/18

2016/172017/18

2016/172017/18

Sales

98'49979'01341'38144'65438'99232'66826'36124'83911'048

9'835

3'095

3'096

81'86670'414301'243 264'519

2016/17

Noncurrent assets

14'705

9'833

31

51

223

253

3'589

3'601

63

65

17'772

18'496

9'733

6'128

46'11838'426

Sales are reported as per place of transaction.

4 	 Accounts receivable
In CHF thousands

31.3.201831.3.2017

Accounts receivable – trade
Allowance for doubtful accounts
Total accounts receivable – trade
Other receivables
Total

59'799(763)
59'035
7'612
66'64852'493(689)
51'804
6'675
58'4792017/18

2016/17

689
129
(75)
19
763

1'187
(439)
(49)
(10)
689

Movements of allowance for doubtful accounts
In CHF thousands

Opening position
Additions charged / (reversals credited) to income statement
Amounts written off
Foreign exchange effect
Total

Aging analysis of accounts receivable
In CHF thousands

Not due<30 days

31 – 90 days

91 – 180 days

>180 days

Total

31 March 2017
Accounts receivable – trade
Allowances for doubtful accounts
Other receivables
Total

44'861
0
6'675
51'536

5'135
0
0
5'135

1'612
(80)
0
1'532

315
(80)
0
235

570
(529)
0
41

52'493(689)
6'675
58'47931 March 2018
Accounts receivable – trade
Allowances for doubtful accounts
Other receivables
Total

47'6360
7'601
55'237

8'411
0
0
8'411

2'826
(144)
0
2'682

371
(97)
0
274

555
(522)
11
44

59'799(763)
7'612
66'648The allowance for doubtful accounts is computed as a percentage of aged balances plus an assessment of individual
recoverability. It corresponds to 1.3 % of trade accounts receivable (1.3 % in 2016/17). In 2017/18, no receivables have been
individually impaired.

LEM | Annual Report 2017/18

45

5 	 Inventories
In CHF thousands

31.3.201831.3.2017

Raw materialWork in progress
Finished goods and goods for resale
Total

13'391
1'724
20'67235'787

11'175
2'105
17'34830'62831.3.201831.3.2017

713
1'613
215
2'541

595
1'292
18
1'905

The inventories include allowances of CHF 2'196 thousand (2016/17 CHF 2'260 thousand).

6 	 Other current assets
In CHF thousands

Advances to suppliers
Prepayments and accrued income
Other current assets
Total

7 	 Property, plant and equipment
Land and buildings

Machinery andequipment

Total

Net book value 1 April 2016
Foreign exchange effectInvestment
Disposal
Depreciation charge for the year
Net book value 31 March 2017

97
5
0
0
(15)
87

25'082(428)
12'552(349)(5'562)31'29425'179(423)
12'552(349)(5'577)31'381

At cost of acquisition
Accumulated depreciation
Net book value 31 March 2017

364
(278)
87

92'862(61'568)
31'29493'226(61'845)
31'381

Net book value 1 April 2017
Foreign exchange effectInvestment
Disposal
Impairment loss
Depreciation charge for the year
Net book value 31 March 2018

87
(0)
0
0
0
(15)
71

31'294
1'658
14'788(420)(550)(6'904)39'86631'381
1'657
14'788(420)(550)(6'919)39'937

At cost of acquisition
Accumulated depreciation
Net book value 31 March 2018

364
(293)
71

108'941(69'075)
39'866109'305(69'368)
39'937

In CHF thousands

46

Annual Report 2017/18 | LEM

8 	 Intangible assets
In CHF thousands

Goodwill

Net book value 1 April 2016
Foreign exchange effectInvestment
DisposalAmortization charge for the year
Net book value 31 March 2017

3'098
67
0
0
0
3'165

Patents Other intangible assets

324
0
0
(2)
(76)
247

4'208
6
622
0
(1'203)
3'633

7'630
72
622
(2)
(1'278)
7'045

Total

At cost of acquisition
Accumulated amortization
Net book value 31 March 2017

3'165
0
3'165

5'329
(5'083)247

10'025(6'392)
3'633

18'519(11'475)
7'045

Net book value 1 April 2017
Foreign exchange effectInvestment
Transfer movement
Amortization charge for the year
Net book value 31 March 2018

3'165
(23)
0
0
(1)
3'141

247
0
0
44
(76)
215

3'633
25
434
(44)
(1'223)
2'825

7'045
2
434
(0)
(1'300)
6'181

At cost of acquisition
Accumulated amortization
Net book value 31 March 2018

3'141
0
3'141

5'374
(5'159)215

10'467(7'642)
2'825

18'982(12'801)
6'181

The entire goodwill of LEM Group is from the acquisition of NANA in 2000/01 and is allocated to the cash-generating unit
LEM Japan KK. The goodwill relates to the Industry segment. The recoverable amount has been determined based on valuein-use calculations. These calculations use cash flow projections of five years based on financial business plans and budgets approved by management. The projections include assumptions concerning revenue growth and expected operating
costs. Average revenue growth is projected at 9 % and operating costs were estimated based on the experience of management. The pretax discount rate used within these cash flow calculations is 7.0 % (2016/17 7.0 %) and is based on theweighted average cost of capital of a peer group. The carrying value of the cash-generating unit including goodwill wascompared to the value in use and no impairment was found for the year ended 31 March 2018.

9 	 Accounts payable
In CHF thousands

31.3.201831.3.2017

Total accounts payable – trade
Other payables
Total

20'634
5'085
25'71821'170
3'428
24'598

LEM | Annual Report 2017/18

47

10 	 Provisions
Warranty andcustomer claims

Litigations andconsumption taxes

Restructuring

Total

Balance as per 1 April 2016
Additional provisions
Unused amounts reversed
Utilized during the year
Foreign exchange effectBalance as per 31 March 2017
Of which current
Of which noncurrent

2'532
932
(877)
(651)
24
1'961

538
21
(304)
(22)
(7)
227

447
87
0
(534)
0
0

3'517
1'041
(1'181)(1'207)
18
2'188
1'061
1'127

Balance as per 1 April 2017
Additional provisions
Unused amounts reversed
Utilized during the year
Foreign exchange effectBalance as per 31 March 2018
Of which current
Of which noncurrent

1'961
474
(735)
(191)
(4)
1'505

227
0
(34)
0
11
204

0
0
0
0
0
0

2'188
474
(769)
(191)
7
1'709
682
1'026

In CHF thousands

Warranty and customer claims
Provisions for warranty and customer claims have been estimated based on past experience and the risk assessment ofmanagement. The warranty provision is expected to be used over the next five years.
Litigations and consumption taxes
Despite the care that LEM applies in the separation process with personnel, such separation may result in legal conflicts. The
Group will defend its case and management estimates the reasonable risk to be provided for.
The Company operates in multiple jurisdictions with complex legal and tax regulatory environments. In the frame of the continuous improvement of its processes and systems, LEM has reviewed the consumption taxes in several countries. It has
appeared that some of LEM's subsidiaries may not have been fully compliant with their local consumption tax regulations.
As a consequence, LEM has estimated consumption tax provisions according to management's best judgment. Some ofthese positions are inherently uncertain and include the interpretation of local regulations applied to complex transactions.
Transfer of activity
On 25 September 2017, LEM announced a restructuring plan. At 31 March 2018, most of the employees affected by theplan have left the Company. The remaining costs are accrued in the balance sheet; as a consequence, no restructuringprovision has been booked in 2017/18.

11 	 Other liabilities
In CHF thousands

Postemployment benefit plans
Derivative financial instruments
Other liabilities
Total
Of which current
Of which noncurrent

31.3.201831.3.2017

2'160
241
1'582
3'983
778
3'205

3'648
18
1'301
4'967
578
4'389

The decrease of the postemployment benefit plan liability is mainly linked to the increase in the fair value of assets, as elaborated in note 20.

48

Annual Report 2017/18 | LEM

12 	 Equity
Share capital
The nominal share capital of CHF 570'000 comprises 1'140'000 registered shares, each with a nominal value of CHF 0.50.
There is neither authorized nor conditional share capital outstanding.
Investments in shares of LEM Holding SA held by the Group are classified as treasury shares and are accounted for at historical cost. Treasury shares are not entitled to dividends.
Movement of treasury shares
Price per share in CHF
In number of shares, in CHF

NumberValue 1 April 2016
Purchase at cost
Sales at cost
Value 31 March 2017
Purchase at cost
Sales at cost
Value 31 March 2018662
11'065(10'780)
947
7'516(7'811)
652

Value

High

AverageLow

1'169.55
1'180.88

938.93945.39809.00814.391'779.78
1'820.00

1'344.65
1'348.03

919.76934.00in CHF thousands

502
10'700(10'296)906
10'208(10'023)
1'091

In CHF

Ordinary dividend per share 2016/17
Ordinary dividend per share 2017/18

35
40

A dividend of CHF 40 per share will be proposed by the Board of Directors to the Annual General Meeting of Shareholdersof the Group on 28 June 2018. The expected payout for dividends amounts to CHF 45.6 million.

13 	 Staff cost2017/18

2016/17

Production
Sales
Administration
Research and development
Total(27'860)(20'132)(12'968)(14'832)(75'792)(25'668)(19'694)(13'560)(11'248)(70'170)

Salaries and wages
Temporary employee costs
Cost of defined benefit plans
Cost of defined benefit contribution
Total(68'967)(3'805)(2'882)(138)(75'792)(63'136)(4'078)(2'821)(135)(70'170)

31.3.201831.3.2017

1'382
139
7
1'527

1'292
148
13
1'453

In CHF thousands

Number of employees at the end of the financial year
Permanent employees
Temporary employees
Apprentices
Total

Notes

20.1

LEM | Annual Report 2017/18

49

14 	 Financial expense
In CHF thousands

2017/18

2016/17

Interest expenses
Other financial expenses
Total

(213)
(85)
(298)

(147)
(80)
(228)

2017/18

2016/17

127
127

80
80

In CHF thousands

2017/18

2016/17

Exchange gains / (losses)
Fair value revaluation on derivatives
Gains / (losses) on derivatives 1
Total

1'608
(223)
(40)
1'345

205
76
(923)
(642)

15 	 Financial income
In CHF thousands

Interest income on cash
Total

16 	 Exchange effect

1 Position includes cost of derivative hedging

The 2017/18 exchange effect is mainly driven by the appreciation of EUR generating foreign exchange gains while the derivatives impact is nearly neutral due to losses on EUR compensated by gains on USD.

17 	 Income taxes, deferred tax assets and liabilities
The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. In certain of these jurisdictions, the Group has taken income tax positions that management believes are supportable and are intended to withstandchallenge by tax authorities. Some of these positions are inherently uncertain and include those relating to transfer pricing
matters and the interpretation of income tax laws applied to complex transactions. The Company periodically reassesses its
tax positions. Changes to the financial statement recognition, measurement, and disclosure of tax positions are based on
management's best judgment given any changes in the facts, circumstances, information available and applicable tax laws.
Considering all available information and the history of resolving income tax uncertainties, the Group believes that the ultimate
resolution of such matters will not have a material effect on its financial statements.
Differences between the final tax outcome and the amounts that were initially recorded impact the income and deferred taxes
in the period in which such determinations are made. The Group calculates its expected average tax rate as a weighted average of the tax rates in the tax jurisdictions in which the Group operates.
LEM has taken the decision to repatriate all available dividends from its subsidiaries in the foreseeable future. Unrecoverable
withholding taxes are considered part of the expected tax rate. Deferred income tax liabilities have been established for unrecoverable withholding taxes that would be payable on the unremitted earnings of foreign subsidiaries.

50

Annual Report 2017/18 | LEM

In CHF thousands

Current income taxes
Deferred taxes relating to the origination and reversal of temporary differences
Adjustment recognized in the period for current tax of prior year
Total

2017/18

2016/17(14'342)
4'965
(210)
(9'587)(10'378)(101)
77(10'403)

The tax expense relating to components of other comprehensive income amounts to CHF 485 thousand for the year 2017/18(CHF 302 thousand in 2016/17).
LEM IP sold to LEM Electronics (China) Co. Ltd the Intellectual Property for all products manufactured and sold in China
during 2017/18. That transaction generated a net deferred tax asset of CHF + 7.9 million.
This impact is compensated by the change of the deferred tax rate in China from 25 % to 15 % resulting in a deferred tax
expense of CHF – 0.9 million. This considered 15 % tax rate is dependent on the HNTE status in China, which is expected
to be applied as of 1 April 2018.
The Group's effective tax rate differs from the Group's average expected tax rate as follows:
2017/18

2016/17

Group's average expected income tax rate
Group's average expected ­w ithholding tax rate
Group's average expected tax rate

11.5
1.2
12.7

16.6
1.2
17.8

Tax effect of– – permanent differences– – effect of changes in tax rates on deferred taxes– – adjustment in respect of previous periods' income tax– – other differences
Group's effective tax rate

0.1
1.9
0.6
0.0
15.2

0.4
0.0
(0.1)
0.9
18.9

In %

The decrease in the expected income tax rate is due to the above-mentioned transaction on Chinese Intellectual Property
sale generating a total income tax and deferred tax impact of CHF+ 4.3 million (positive tax impact).
Deferred tax assets and liabilities
Deferred taxes have been calculated on the following balance sheet positions:31.3.201831.3.2017

Asset

Liability

Asset– – Accounts receivable

80

(91)

74

(38)

– – Inventories

979

(292)

1'393

(240)

In CHF thousands

Liability– – Property, plant and equipment

1'716

(868)

1'322

(114)

– – Intangible assets

13'578(2'128)

149

(484)

– – Other financial assets

437

0

767

0

– – Tax losses carried forward

491

0

933

0

– – Other assets

0

(616)

0

(138)

– – Provisions

149

0

312

0

– – Others

620(3'549)767(27)– – Withholding tax on dividends
Gross deferred taxes

0(2'429)0(1'532)18'050(9'973)

5'719(2'572)

LEM | Annual Report 2017/18

51

The balance sheet contains the following:– – Deferred tax assets– – Deferred tax liabilities
Net assets

31.3.201831.3.201714'469(6'392)
8'077

5'028
(1'881)
3'147

LEM Group has CHF 491 thousand (CHF 933 thousand in 2016/17) of deferred tax assets on tax losses. The Group expects
that the concerned subsidiaries will be able to only partially use the tax losses against future taxable profit. On this basis,a part of the tax losses have not been recognized as deferred tax assets.
At 31 March 2018, the unrecognized losses carried forward are the following:– – In the next 7 years– – Without date of expiration
Total

31.3.201831.3.2017

1'572
0
1'572

1'572
0
1'572

2017/18

2016/1753'306
1'140'000
1'140'000
418
1'139'582
46.78

44'566
1'140'000
1'140'000
602
1'139'398
39.11

18 	 Earnings per share
Basic and diluted earnings per share
Net profit for the year attributable to LEM shareholders – in CHF thousands
Ordinary number of shares at the beginning of the year
Weighted average number of ordinary shares
Weighted average number of treasury shares
Weighted average number of shares outstanding
Earnings per share – basic and diluted in CHF

19 	 Related parties
Related parties are the Board of Directors and the Executive Managers as defined in the Corporate Governance guidelines. The compensation to the Board of Directors is paid as a fixed fee in cash. The compensation for the Executive Management includes base salary, a performance-related bonus (LEM Incentive System), bonus and postemployment benefits. In 2017/18 and 2016/17, no termination benefits have been paid. The base salary is the employee's compensation
before deduction of the employee's social security contributions. Bonus payments are effected in cash.
Compensation of the Board of Directors
In CHF thousands

2017/18

2016/17

Annual fees
Total

(870)
(870)

(750)
(750)

Compensation of the Executive Management
In CHF thousands

2017/18

2016/17

Base salary
Bonus
Company's contribution to pension fundTotal

(1'440)(1'851)(161)(3'452)(1'419)(979)(157)(2'555)Servotronix Motion Control Ltd, a company presided by Ilan Cohen, has bought transducers for CHF 1'155 thousand in
2017/18 (CHF 751 thousand in 2016/17), including purchases done by its subsidiaries and subcontractors, from LEM Groupat market price. No other member of the Board of Directors has any significant business connection with LEM Group.
For details on the compensation of the Board of Directors and of the Executive Management, please refer to note 10 in thenotes to the financial statements of LEM Holding SA. Also, see Significant Accounting Principles 2.15 Employee benefits
and 2.16 Provisions and contingent liabilities.

52

Annual Report 2017/18 | LEM

20 	 Retirement benefit obligations
The Group operates a defined benefit plan for all its employees in Switzerland with a collective foundation.
This foundation is a separate legal entity which is not part of the Group. It is managed by a board having equal representation of employees and employers of the affiliated companies. It is supervised by the supervisory authority and complies withthe requirements of Swiss pension law. According to Swiss law, the pension plan is considered as a defined contribution
plan whereas it is considered as a defined benefit plan under IAS 19 due to the various benefit guarantees included in thelaws.
The plan is funded by contributions from both employer and employees.
The plan participants are insured against the financial consequences of old age, disability and death. The retirement benefit is based on a notional individual savings account converted at retirement into a pension.
The assets of the foundation are invested into a diversified portfolio. Death in service and disability benefits are insured withan insurance company. The pension plan does not expose the affiliated companies to any additional unusual risks. No curtailments or settlements occurred in 2017/18.
The funded status increase of CHF + 1.6 million can mainly be explained by the return on plan assets of CHF + 2.0 million
and by the assumptions and population changes generating a decrease of the DBO of CHF + 0.2 million. The following main
assumptions have been updated:– –discount rate from 0.7 % to 1 %;– –interests credited on savings account from 0.7 % to 1 %;– –salary increase rate from 0.5 % to 1 %.
The before-mentioned updates generated a net DBO decrease of CHF + 1.5 million.
In application of IAS 19, this adjustment was accounted for in other comprehensive income and did not impact the net profit
for the year.
The subsidiaries abroad sponsor either defined contribution plans or defined benefit plans based on local practices andregulations. A former employee in Germany benefits from a defined benefit obligation amounting to CHF 426 thousand at
31.3.2018. Other subsidiaries' defined benefit obligations in Japan, Bulgaria and Italy amount to CHF 402 thousand at
31.3.2018.
In CHF thousands

31.3.201831.3.2017

Fair value of plan assets at year-end
Defined benefit obligations at year-end
Funded status (net liabilities in the balance sheet)

42'71644'048(1'332)

46'87349'786(2'913)

In CHF thousands

2017/18

2016/17

Current service cost
Net interest (income) / cost
Total pension expenses recorded in consolidated income statement

2'882
20
2'902

2'821
22
2'842

LEM expects to contribute CHF 2'410 thousand to its defined benefit plan in 2018/19.
20.1 	Cost of defined benefit plans

Costs related to the pension plan were charged to the different functional departments based on salary costs.

LEM | Annual Report 2017/18

53

20.2 	Remeasurements of employee benefits
In CHF thousands

2017/18

2016/17

Experience adjustments on defined benefit obligation
Return on plan assets excluding interests
Total remeasurements recorded in other comprehensive income(188)(1'952)(2'140)(866)(1'016)(1'881)

In CHF thousands

31.3.201831.3.2017

Fair value of plan assets per beginning of year
Return on plan assets excluding interest income
Interest income on plan assets
Employer's contributions
Employees' contributions
Benefits paid
Fair value of plan assets per end of year

46'873
1'952
328
2'346
1'983
(10'766)
42'71646'298
1'016
231
2'406
2'077
(5'156)46'873

In CHF thousands

31.3.201831.3.2017

Defined benefit obligation per beginning of year
Current service cost
Employees' contributions
Interest costExperience adjustments on obligation
due to assumption changes
due to population changes
Benefits paid
Defined benefit obligation per end of year

49'786
2'882
1'983
349
(188)
(1'544)
1'356(10'766)
44'04850'657
2'821
2'077
253
(866)
(1'489)623(5'156)49'78620.3 	Change in fair value of plan assets

20.4 	Change in present value of defined benefit obligation

The weighted average duration of the Defined Benefit Obligation (DBO) at the end of the current fiscal year is 26 years.
20.5 	Asset allocation of investments
Major categories of plan assets as a percentage of the fair value of total plan assets
In %Equity securities
Debt securities
Real estate
Cash and other investments

Long-term target

2017/18

2016/1730.0 %
29.0 %
25.0 %
16.0 %
100.0 %

30.4 %
25.0 %
27.7 %
16.9 %
100.0 %

34.3 %
24.3 %
27.7 %
13.8 %
100.0 %

Strategic pension plan allocations are determined by the objective to achieve a return on investment, which, together withthe contribution paid, is sufficient to maintain reasonable control over the various funding risks of the plans. Estimated returns
on assets are determined based on the asset allocation and are reviewed periodically. A temporary deviation from policy
targets is allowed.
Cash as well as most equity and debt securities have a quoted market price in an active market. Other assets including realestate and other investments do not have a quoted market price.

54

Annual Report 2017/18 | LEM

20.6 	Actuarial assumptions
The main actuarial assumptions used in the actuarial calculations include:In %2017/18

2016/17

Discount rate
Salary increases

1.00 %
1.00 %

0.70 %
0.50 %The present value of the defined benefit obligation is determined annually by independent actuaries using the projected unit
credit method. Actuarial assumptions are required for this purpose.
Sensitivities of significant actuarial assumptions
The sensitivity analysis is based on reasonable possible changes as of the end of the year 2017/18. Each change in a significant assumption was analyzed separately as part of the test.
The sensitivity of the DBO to changes in the main actuarial assumptions is as follows:
DBO increase / DBO (decrease) – In CHF thousands

Discount rate
Increase by 0.25 %Decrease by 0.25 %Salary increase rate
Increase by 0.25 %Decrease by 0.25 %2017/18

2016/17(2'480)
2'678(2'673)
2'880

221
(313)

242
(332)

20.7 	Maturity structure of pension obligation
The following main cash outflows are expected in future periods:
In CHF thousandsin 1 yearin 2 years
in 3 years
in 4 years
in 5 years
in 6 to 10 years

1'060
1'063
1'055
1'123
1'133
6'899

21 	 Operating lease commitments
Minimal lease payments are payable as follows:
In CHF thousands

Within 1 year
Between 1 and 5 years
Beyond 5 years
Total

31.3.201831.3.2017

4'868
2'551
143
7'563

4'966
9'368
403
14'737

In 2017/18 lease expenses amounted to CHF 5'263 thousand (2016/17 CHF 5'192 thousand). Lease agreements exist forthe business facilities used by the Group companies. The agreements are classified as operating leases. The leases havevarying terms and renewal rights between one and fifteen years.

LEM | Annual Report 2017/18

55

22 	 Contingent liabilities
The Group Financial Statements as of 31 March 2017 mentioned a dispute between LEM International SA and the Frenchcustoms authorities which were questioning the validity of the applied VAT exemption (so-called régime 42) for goods soldfrom Switzerland to EU customers transiting through France. The value-added tax requested amounted to EUR 15.4 million.
On 12 June 2017, the French customs authorities announced to LEM International SA that they decided to drop the charges
and to cancel the related value-added tax payment request of EUR 15.4 million.

23 	 Financial risk management objectives and policies
The group classifies its financial assets and liabilities in the following categories as per IFRS 7:
Financial assets

At fair value
through
profit and loss

In CHF thousands

31.3.2018
Fair value

31.3.2017
Fair value

Loans andreceivables

Cash and cash equivalents
Accounts receivable
Other current financial assets
Other noncurrent financial assets
Total

17'63066'648215
906
85'39912'80958'47918985
72'291X
X
X
X

In CHF thousands

31.3.2018
Fair value

31.3.2017
Fair value

Loans andreceivables

Accounts payable
Accrued expenses
Derivative financial instruments – current
Other current financial liabilities
Other noncurrent financial liabilities
Total

25'71826'359241
5'000
90
57'40824'59822'04318
0
246'661X
X

1.4.2017

Cash impact:
cash inflow/(outflow)

Noncash impact:
fair value changes
and others

31.3.2018

0

5'000
5'000

0

5'000
5'000

Financial liabilities

Changes in liabilities arising from financing activities
In CHF thousands

Interest-bearing loans and borrowings
Total

At fair value
through
profit and loss

X
X
X

The management assessed that fair value level of cash and cash equivalents, accounts receivables, other current and noncurrent assets, accounts payables, accrued expenses and other current and noncurrent liabilities approximates their bookvalue.
The Group enters into derivative transactions such as currency risk reversal and forward contracts to hedge the USD and
EUR risks.
The purpose of these currency hedges is to manage the currency risks arising from the Group's operations.
It is the Group's policy that no derivatives for speculative purposes shall be entered into.
The main risks arising from the Group's financial instruments are foreign currency risks and credit risks, whereas the others
are of minor or no impact.
The Board of Directors reviews and agrees policies for managing each of those risks.

56

Annual Report 2017/18 | LEM

Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly(i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
The Group's financial liabilities at fair value amount to CHF 241 thousand per 31 March 2018 (financial liabilities of CHF 18
thousand per 31 March 2017), all classified under level 2.
During the two last reporting periods, there were no transfers between level 1 and level 2 fair value measurements, and notransfers into and out of level 3 fair value measurements.
Foreign currency risk
The Group operates globally and is exposed to various foreign exchange risks primarily to the USD, EUR, JPY, CNY and GBP.
The Group seeks to reduce those risks by optimizing its natural hedging (cash inflows and outflows in a specific currency should
be in balance as far as possible).
The Group's policy states that 100 % of LEM's net exposure for the main currencies EUR, USD and JPY is to be hedged on a rolling 12-month basis.
Currency risks also arise from translation differences that are not hedged by the Group when preparing the consolidated financial
statements in CHF. The foreign exchange translation is excluded from the calculation of the sensitivity analysis for currency risk
below.
Sensitivity analysis for currency risk
The sensitivity analysis is performed per 31 March 2018 with a 5 % change in the USD, EUR, JPY, CNY and GBP with allother variables held constant of the Group's profit before tax (due to the changes in the fair value of the monetary assets
and liabilities) and the Group's equity.
The sensitivity analysis performed for the financial year shows an impact of CHF ±762 thousand for a ±5 % EUR rate change(CHF ±799 thousand per 31 March 2017), of CHF ±568 thousand for a ±5 % USD rate change (CHF ±616 thousand per 31
March 2017), of CHF ±1'181 thousand for a ±5 % CNY rate change (CHF ±727 thousand per 31 March 2017) and of CHF ±157
thousand for a ±5 % JPY rate change (CHF ±178 thousand per 31 March 2017). For other currencies, there is no significant
impact. There is no significant impact on the Group's equity.
Credit risk
Credit risk is the risk that a financial loss occurs if a counterparty is unable or unwilling to fulfill its contractual payment obligation.
The Group trades with recognized and creditworthy parties. The accounts receivable are monitored on a monthly basis.
It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures.
In case of a deterioration of the credit history, advance payments are required.
The Group's exposure to bad debts is not significant. The maximum exposure is the carrying amount as disclosed innote 4.
There are no significant concentrations of risk within the Group.
With respect to credit risk arising from the other financial assets in the Group, which comprises cash and cash equivalents,
other current assets and certain derivative instruments, the Group's exposure to credit risks arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these positions.

LEM | Annual Report 2017/18

57

Liquidity risk
The Group operates a cash-pooling agreement in which cash targets are set for all the subsidiaries. Cash surplus / shortages are balanced in intercompany loans on a monthly basis.
Group capital requirements are managed centrally by corporate finance. In case liquidity is required a bank loan is either
done centrally and passed on as an intercompany loan, or given directly by the bank to the subsidiary with a reductionof the Group's total credit line.
The total leverage of the Group is low, the financial liabilities mature in less than one year based on the carrying value ofborrowings reflected in the financial statements.
Financial liabilities
In CHF thousands

31.3.2018
Fair valueLess than
one yearAccounts payable
Accrued expenses
Derivative financial instruments – current
Other current financial liabilities
Other noncurrent financial liabilities
Total

25'71826'359241
5'000
90
57'40825'71826'359241
5'000
057'318Over oneyear

31.3.2017
Fair valueLess than
one yearOver one
year

90
90

24'59822'04318
0
246'661

24'59822'04318
0046'6592
2

Interest rate risk
The Group's exposure to the risk of changes in market interest rates with the current financial leverage is very low. Per 31
March 2018, the bank credit line amounts to CHF 5 million.
Capital management
The primary objective of the Group's capital management is to ensure that it maintains a healthy and stable equity ratio inorder to secure the confidence of shareholders and investors, creditors and other market players and to strengthen the
future development of the Group's business activities.
The Group manages its capital structure and makes adjustments to it, in light of changes in the economic conditions.
LEM targets a payout ratio significantly above 50 % of the consolidated net profit for the year.
However, it may diverge from this policy due to economic prospects or on the grounds of planned future investment
activities.

58

Annual Report 2017/18 | LEM

24 	 Scope of consolidation
Full consolidation

EuropeLEM Europe GmbHLEM Holding SA
LEM International SA
LEM Intellectual Property SA
LEM Switzerland SA
LEM Tech France SAS
LEM Bulgaria EOOD
LEM Russia Ltd
LEM Management Services SARL
North America
LEM USA Inc.
Asia
LEM Electronics (China) Co. Ltd
LEM Japan KKCountry

Currency

Share capital

Ownership

Germany
Switzerland
Switzerland
Switzerland
Switzerland
FranceBulgaria
RussiaSwitzerland

EUR
CHF
CHF
CHF
CHF
EUR
BGN
RUB
CHF

75'000570'000
100'000
300'000
1'000'000
50'0001'971'000
16'400'000
20'000

100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %

USA

USD

150'000

100 %

China
Japan

CNY
JPY

116'420'194
16'000'000

100 %
100 %

25 	 Changes in scope of consolidation
In 2017/18, there have been no changes in the scope of consolidation.

26 	 Events after the balance sheet date
There were no events subsequent to the balance sheet date that require adjustment to or disclosure in the financial statements.

LEM | Annual Report 2017/18

59

Auditor's Report
Statutory auditor's report on the audit of the consolidated financial statements
OpinionWe have audited the consolidated financial statements of LEM Holding SA and its subsidiaries (the Group),
which comprise the consolidated statement of financial position as at 31 March 2018 and the consolidated
statement of income, consolidated statement of comprehensive income, consolidated statement of changes
in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated
financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements (pages 33 to 59) give a true and fair view of the consolidated financial position of the Group as at 31 March 2018, and its consolidated financial performance andits consolidated cash flows for the year then ended in accordance with International Financial ReportingStandards (IFRS) and comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor's
Responsibilities for the Audit of the Consolidated Financial Statements section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss
audit profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our otherethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our auditof the consolidated financial statements of the current period. These matters were addressed in the context
of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated
financial statements section of our report, including in relation to these matters. Accordingly, our audit included
the performance of procedures designed to respond to our assessment of the risks of material misstatementof the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the consolidated financial
statements.

60

Annual Report 2017/18 | LEM

Income taxes, indirect taxes and transfer pricing
Area of focus
The Group operates in multiple jurisdictions with complex legal and tax regulatory environment thatare constantly changing and require more compliance efforts. The country-specific tax risks could
result in potential material amounts payable.
Management monitors these tax risks primarily at corporate level, including the significant level of
estimations and judgments made with respect to the likelihood and magnitude of these risks. In certain of these jurisdictions, the Group has taken tax position on income tax, indirect tax and transfer
pricing that management believes are supportable. Due to the significance of the deferred tax balances and other tax positions and the judgment involved in determining these, this matter was considered significant to our audit. Refer to notes 17 and 22 to the consolidated financial statements forfurther information.
Our audit response
Our procedures included, amongst others, assessing the tax rules in the various jurisdictions in which
the Company operates and assessing the management's assumptions and estimates in relation to
uncertain tax positions, current income tax and deferred taxes.
We involved our tax specialists to assist in assessing the Company's tax methodologies and analyzing the underlying key assumptions, including the advice received by management from external parties to support their position. We audited the current year tax provision, the Company's reconciliationof book to taxable income, as well as the deferred tax balances and evaluated whether the assumptions applied by management on the recoverability of deferred tax assets is consistent with its budget
and forecasts.
Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other information
comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements and our auditor's reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report
and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the otherinformation in the annual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in thisregard.
 esponsibility of the Board of Directors for the consolidated financial statements
R
The Board of Directors is responsible for the preparation of the consolidated financial statements that give atrue and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as
the Board of Directors determines is necessary to enable the preparation of consolidated financial statementsthat are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing theGroup's ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Board of Directors either intends to liquidate theGroup or to cease operations, or has no realistic alternative but to do so.

LEM | Annual Report 2017/18

61

Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's reportthat includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at
the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies. This
description forms part of our auditor's report.
Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that aninternal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.

To the General Meeting of LEM Holding SA, Fribourg
Lancy, 15 May 2018
Ernst & Young Ltd

Fredi Widmann
Licensed audit expert(Auditor in charge)

62

Annual Report 2017/18 | LEM

Roland Ruprecht
Licensed audit expert

LEM Holding SA
Financial Statements

Balance Sheet 65
Income Statement 66
Notes to the Financial
Statements 66
Proposed Appropriation of
Available Earnings 69
Auditor's Report 70

LEM | Annual Report 2017/18

63

64

Annual Report 2017/18 | LEM

Balance Sheet(before distribution of earnings)
Assets
Notes

In CHF thousands

Current assets
Cash and cash equivalents
Loans to affiliated companies
Current assets from affiliated companies
Other current assets
Other current assets from affiliated companies
Total current assets
Noncurrent assets
Investments in affiliated companies
Total noncurrent assets

31.3.201831.3.2017

2'074
31'666575
61
34'377

4'878
34'901
970
146
1'627
42'52154'51254'51245'18345'18388'88987'70431.3.201831.3.2017

5'000
28'06531
1'896
34'99223'87333
1'725
25'631570
285
22'23431'898(1'091)53'896570
285
19'02443'100(906)
62'072

88'88987'704

4

1

Total assets

Liabilities and equity
Notes

In CHF thousands

Current liabilities
Current financial liabilities
Loans from affiliated companies
Current liabilities from affiliated companies
Other current liabilities
Total current liabilities
EquityShare capital
Legal reserves
Free reserves

2– balance carried forward– profit for the year

Treasury shares
Total equity
Total liabilities and equity

3

LEM | Annual Report 2017/18

65

Income Statement
IncomeIn CHF thousands

Notes

2017/18

2016/174

28'014
751
2'309
362
5'993
37'42941'115
831
2'092
22
5'217
49'275

Dividend from affiliated companies
Interest income from affiliated companies
Foreign exchange gain
Other financial income
Other income from affiliated companies
Total income

5

ExpenseIn CHF thousands

Notes

2017/18

2016/176(2'886)(264)(1'884)(5'034)(3'423)(278)(2'046)(5'747)32'394(496)
31'89843'529(429)
43'100

Office, administration and personnel expense
Financial expense
Foreign exchange loss
Total expense

5

Profit before taxes
Income taxes
Net profit for the year

7

Notes to the Financial Statements
Principles for the establishment of the financial statements
The accompanying financial statements have been prepared in accordance with the requirements of the Swiss Code ofObligations. Regarding the inclusion of LEM Holding SA in the consolidated financial statements, the accounting and reporting principles described in the notes to the consolidated financial statements apply.
LEM Holding SA does and did not have any employees.

1 	 Investments in affiliated companies
In CHF thousands

31.3.201831.3.2017

Historical cost
Total

54'51254'51245'18345'183The increase in investments in affiliated companies is linked to the additional investment in LEM Electronics (China) Co. Ltd
for USD 10 million (CHF 9.3m).
Refer to note 24 Scope of consolidation of the Consolidated financial statements.
The percentage of ownership corresponds to the percentage of voting rights.

2 	 Share capital
Number of shares

Opening capital 1.4.2017
Change of capital
Closing capital 31.3.2018

66

Annual Report 2017/18 | LEM

1'140'00001'140'000

Par value pershare in CHF

Capital in CHF
thousands

0.50

570
0
570

0.50

3 	 Treasury shares
NumberValue 1.4.2016
Purchase at cost
Sales at cost
Value 31.3.2017
Purchase at cost
Sales at cost
Value 31.3.2018662
11'065(10'780)
947
7'516(7'811)
652

Price per share in CHF
High
AverageLow

1'169.55
1'180.88

938.93945.39809.00814.391'779.78
1'820.00

1'344.65
1'348.03

919.76934.00

Value in CHF
thousands

502
10'700(10'296)906
10'208(10'023)
1'091

Subsidiaries of LEM Holding SA did not own any shares of LEM Holding SA.
Treasury shares are valued at lower of cost or market value.

4 	 Dividend from affiliated companies
LEM Electronics (China) Co. Ltd did not pay any dividend in 2017/18 which explains the decrease of dividend revenue.
In 2016/17 the "Other current assets from affiliated companies" amounted of CHF 1'627 thousand and were related to thedividend from LEM Europe GmbH.

5 	 Exchange effect
In CHF thousands

2017/18

2016/17

Exchange gains/(losses)
Fair value revaluation on derivatives 1
Gains/(losses) on derivative 1
Exchange effect

687
(223)
(40)
425

893
76
(923)
46

1 Position includes cost of derivative hedging.

6 	 Office, administration and personnel expense
LEM Electronics (China) Co. Ltd did not pay any dividend in 2017/18, therefore no withholding taxes were paid which explains
the decrease in Office, administration and personnel expense.

7 	 Income taxes
In CHF thousands

2017/18

2016/17

Current taxes
Adjustments of tax provisions of previous periods
Total

(457)
(39)
(496)

(355)
(73)
(429)

LEM | Annual Report 2017/18

67

8 	 Significant shareholders according to article 663c of the Swiss Code of Obligations
On 31 March 2018, the following shareholders held 3 % or more of the share capital and voting rights:
31.3.2018
SharesIn number of shares, percent of shareholding

31.3.2017
SharesIn %In %Werner O. Weber and Ueli Wampfler, in Zollikon/Wollerau,
Switzerland, through WEMACO Invest AG and Swisa Holding AG, in Zug/
Cham, Switzerland

570'14850.0 %

548'78648.1 %

Ruth Wertheimer, in Kfar Shmaryahu, Israel,through 7-Industries Holding B.V., in Amsterdam, Netherlands

141'58112.4 %

141'58112.4 %

J. Safra Sarasin Investmentfonds AG, in Basel, Switzerland
Total shareholders < 3 %Total

36'000392'271
1'140'000

3.2 %34.4 %
100.0 %

36'000413'633
1'140'000

3.2 %36.3 %
100.0 %

9 	 Guarantees in favor of third parties on behalf of subsidiaries
In CHF thousands

Amount of guarantees issued

31.3.201831.3.2017

1'928

1'932

31.3. 2018
Number of shares held

31.3.2017
Number of shares held

1'001
300
0
68'0100069'3111'001
300
072'5000073'801

31.3. 2018
Number of shares held

31.3.2017
Number of shares held

600
0
0
0
600

600
0
0
0
600

10 	 Shareholdings
Shareholdings of nonexecutive Directors

Andreas Hürlimann
Ilan Cohen
Norbert Hess
Ueli Wampfler
Ulrich Jakob Looser
Werner C. Weber
Total

Shareholdings of Executive Management

François Gabella, CEO
Andrea Borla, CFO
Frank Rehfeld, SVP Industry
Rainer Bos, SVP Automotive
Total

68

Annual Report 2017/18 | LEM

Proposed Appropriation of
Available Earnings
Appropriation of available earnings
In CHF thousands

31.3.201831.3.2017

Balance brought forward from previous year
Variation of treasury shares
Net profit for the year
Total available earnings

21'328(185)
31'89853'041

18'522(405)
43'10061'217

Proposal of the Board of Directors:
Ordinary dividend
Balance to be carried forward(45'562)
7'479(39'889)
21'328The Board of Directors proposes the distribution of an ordinary dividend of CHF 40 per share. Net of 35 % withholding tax,
this is an ordinary cash dividend of CHF 26 per share.
The proposed appropriation of available earnings is made in compliance with article 671 of the Code of Obligations.
Shares held by LEM Holding SA or any of its subsidiaries are not entitled to dividends.

LEM | Annual Report 2017/18

69

Auditor's Report
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements of LEM Holding SA, which comprise the balance sheet, income statement and notes (pages 65 to 69), for the year ended 31 March 2018.
 oard of Directors' responsibility
B
The Board of Directors is responsible for the preparation of the financial statements in accordance with therequirements of Swiss law and the company's articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further
responsible for selecting and applying appropriate accounting policies and making accounting estimates thatare reasonable in the circumstances.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we planand perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers the internal control system relevant to the entity's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control system.
An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
OpinionIn our opinion, the financial statements for the year ended 31 March 2018 comply with Swiss law and thecompany's articles of incorporation.
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority
Key audit matters are those matters that, in our professional judgment, were of most significance in our auditof the financial statements of the current period. We have determined that there are no key audit matters tocommunicate in our report.

70

Annual Report 2017/18 | LEM

 eport on other legal requirements
R
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA)
and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with
our independence.
In accordance with article 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we confirm that aninternal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and thecompany's articles of incorporation. We recommend that the financial statements submitted to you be
approved.

To the General Meeting of LEM Holding SA, Fribourg
Lancy, 15 May 2018
Ernst & Young Ltd

Fredi Widmann
Licensed audit expert(Auditor in charge)

Roland Ruprecht
Licensed audit expert

LEM | Annual Report 2017/18

71

Information for Investors
Number of registered shareholders
1 – 499
500 – 4'999
5'000 – 49'999
50'000 and more
Total

31.3.201831.3.2017

933
52
7
4
996

917
66
7
4
994

31.3.201831.3.2017

Institutional shareholders
Private individuals
LEM employees,
managers and board

49.4
26.3

49.9
26.7

6.4

7.0

Treasury shares
Nonregistered shares
Total

0.1
17.8
100.0

Shareholders by categoryIn %LEM share
2017/18

2016/17

Number of sharesYear high 1
Year low 1
Year-end 1
Average daily trading ­v olume(shares) 1

1'140'000
1'828
915
1'590
828

1'140'000
1'199
808
934
499

Earnings per share
Ordinary dividend per share
Market capitalization as per
31 March 1 (in CHF millions)46.78
40.00 2
1'813

39.11
35.00
1'065

In number of shares, CHF

1
2

Share information
SymbolListingNominal value
ISIN
Swiss Security Number (Valor)

0.1
16.3
100.0

LEHN
SIX Swiss Exchange
CHF 0.50
CH0022427626
2 242 762

ContactAndrea Borla (CFO)
Phone: +41 22 706 12 50
E-mail: investor@lem.com

Source: SIX
Proposal of the Board of Directors to the Annual General Meeting of Shareholders

Financial calendar of the financial year
1 April 2018 to 31 March 201928 June 2018

Annual General Meeting of
Shareholders for the financial year
2017/18 Université de Fribourg, bvd.
de Pérolles

3 July 2018
5 July 2018
31 July 2018
6 November 2018
1 February 201922 May 201927 June 2019

Dividend ex-date
Dividend payment date
First-quarter results 2018/19
Half-year results 2018/19
Third-quarter results 2018/19
Year-end results 2018/19
Annual General Meeting of
Shareholders for the financial year
2018/19

2 July 2019
4 July 2019

Dividend ex-date
Dividend payment date

Share price development LEM Holding SA (LEHN) compared to SMI
2000

CHF

1800
1600
1400
1200
1000
800
600
400

LEHN

200

SMI

0
4.5.132.11.132.5.142.11.14

Source: Bloomberg

72

Annual Report 2017/18 | LEM

2.5.152.11.15

2.5.162.11.16

2.5.172.11.172.5.18Group Subsidiaries
LEM is a global player with production plants and development centers in Beijing (China), Geneva (Switzerland), Tokyo(Japan) and Sofia (Bulgaria). The Company has a dedicated R&D Center in Lyon (France) and sales offices at all its customers' locations and offers seamless service around the globe. For a complete list of subsidiaries and offices, refer towww.lem.com > Contact > Sales Locator
EuropeLEM Holding SA
Avenue Beauregard 1
CH-1700 Fribourg
LEM International SA
Chemin des Aulx 8
P.O. Box 35
CH-1228 Plan-les-Ouates
LEM Switzerland SA
Chemin des Aulx 8
P.O. Box 35
CH-1228 Plan-les-Ouates
LEM Intellectual Property SA
Avenue Beauregard 1
CH-1700 Fribourg
LEM Management Services Sàrl
Chemin des Aulx 8
P.O. Box 35
CH-1228 Plan-les-Ouates
LEM Tech France SAS
Les Allées du Parc
Allée des Parcs 575/655
F-69800 Saint-Priest
LEM Europe GmbH
Frankfurter Straße 74
D-64521 Groß-Gerau
LEM Europe GmbH, Branch Austria
Concorde Business Park 2/F/6
A-2320 Schwechat

Asia
LEM Europe GmbH,
Succursale France
Avenue Galois 15
F-92340 Bourg-la-Reine
LEM Europe GmbH,
Succursale Italia
Via V. Bellini 7
I-35030 Selvazzano Dentro, PD
LEM Europe GmbH,
Branch UK
West Lancs Investment Centre
UK-Skelmersdale WN8 9TG
LEM Bulgaria EOOD
Iliensko Shosse 8
BG-1220 Sofia
LEM Russia, LLC
Staritskoe Shosse 15
RU-170040 Tver

LEM Electronics (China) Co. Ltd
Linhe Street 28, Shunyi District
CN-101300 Beijing
LEM Japan KK
2-1-2 Nakamachi
JP-Machida, 194-0021 Tokyo
LEM Management Services Sàrl,
Branch India
Level 2, Connaught Place
Bund Garden Road
IN-411 001 Pune
LEM Management Services Sàrl,
Branch Korea
Seocho-Dong
Wonil Bldg.1-3F (311) 10
Nambushuhwan-Ro 333-Gil
Seocho-Gu
KR-Seoul
LEM Management Services Sàrl,
Branch Taiwan
7F., No. 342, Wenlin Road
Shilindistrict
TWN-11163 Taipei

North America
LEM U.S.A., Inc.
11665 West Bradley Road
USA-Milwaukee, WI 53224

LEM Europe GmbH, Branch Belgium
Egelantierlaan 2
B-1851 Humbeek
LEM Europe GmbH Denmark,Filial af LEM Europe GmbH
Haraldsvej 60
DK-8960 Randers

LEM | Annual Report 2017/18

73

Imprint© LEM Holding SA, Fribourg
Concept and text
LEM
Gregor Communications, Zürich
DesignTGG Hafen Senn Stieger, St. Gallen
Images, illustrations
LEM
Pedro Neto
Jasmin Viertl
Printing
Cavelti, Gossau

74

Annual Report 2017/18 | LEM

LEM | Annual Report 2017/18

75

LEM HOLDING SA
Avenue Beauregard 1
1700 Freiburg/Fribourg
Switzerland
Phone: +41 26 460 10 30
Fax: +41 26 460 10 39
www.lem.com
76

Annual Report 2017/18 | LEM