Contents

4

Welcome8

Leading the world10

Financial results

14

50 years of ingenuity

		
16

Financial Report
PDF download→ www.lem.com/en/investors

Key milestones

50 years of inspiration

		Conversation with the Founder, Chairman and CEO

20

Industry segment performance

26

Automotive segment performance

32

Trends, technology, R&D

40

Culture, talent & values

		

Executive Committee		

Board of Directors

48

CO2 strategy

52

Responsibility		

ESG Key Performance Indicators

56

Information for investors

1972
LEM SA Founded
GenevaWelcome

We are delighted to report record
annual results as we celebrate
50 years since LEM was founded in1972. Both our revenues and profitability demonstrated the fundamental demand for our products andthe strengths of the company operationally, despite the challenging
economic environment. Our dedicated employees have worked tirelessly
with our suppliers and customers
to mitigate the supply chain constraints and adapt to the fluctuating
impediments of the pandemic.

Looking beyond this year’s exceptional performance,
LEM’s long-term prospects are driven by megatrends
such as energy efficiency, CO2 neutrality, mobility,
and automation. Recent geopolitical events also
highlight the need to accelerate the world’s efforts
to decarbonize energy supplies, and power electronics is a key enabler of this process.
50 years of ingenuity and inspiration
This year’s Annual Review is an opportunity to reflect
on the company’s progress over the past 50 years.
And to draw inspiration for the future. We are proud
to illustrate our key milestones of technological andproduct achievements, together with our early expansion into different parts of the world. It was aparticular pleasure for us to both learn from thefounder Jean-Pierre Etter about the company’s responses to customer needs and the management
philosophy he used to build the organization. We
encourage you to read our conversation with him –there are many insights that still guide us today!
Ingenuity is a quality that describes much of what
LEM does – clever, original and inventive. Ingenuity
can also be seen as a mindset, accepting a way of
thinking differently and working on practical solutions that are needed. Above all, accepting that anindividual does not have the complete answer, butthat in working together and with the customer, we
will arrive at the right solution.
A new headquarters and organizationfor our talent
It is also appropriate that we mark this anniversary bymoving into our new global headquarters in Geneva.
This building – “The Hive” – reflects the sustainability principles of our businesses and enables ourteams to continue devising ingenious solutions forour customers. It is a symbol of how we are investingin the next generation of technologies and talent todrive LEM’s progress.

Buildings can also foster creativity and innovationand help to change a company culture. We continue
to embed our “LEM Blue Behaviors” across all our
teams as we strive for a high-performance culture.
Key qualities we look for include entrepreneurship,
agility, openness, and a desire to learn. Our people
enjoy intellectual challenges, diverse pathways, andglobal career opportunities. We are relentlessly recruiting and developing the best global talent withboth leadership and technical competencies to deliver the growth potential of the company.
Our industry is changing fast and being shaped byseveral technology breakthroughs and market opportunities. So is LEM: as of April 1, 2022, a new regional and functional matrix organization has been
fully implemented. It is designed to move decision-making closer to the customer in different partsof the world and empower local management. Global functional teams will support regional markets
across all customer applications and the entire LEM
product portfolio, thereby providing synergies of expertise and development.
CO2 strategy and ESG indicators
LEM is very conscious of its responsibility to society,as our products help to optimize and reduce energy
consumption in many sectors of the economy. This
year, we have initiated a wide-ranging review of how
LEM may reduce its own carbon footprint, identifying a range of measures to become CO2 neutral inscope 1 and scope 2 emissions by 2025 and to be
CO2 neutral in all three scopes by 2040. A special
interview with two members of the Executive Committee describes our new strategy. We are also
pleased to report that our broader ESG efforts arebeing enhanced, as shown by the new set of key
performance indicators (KPIs) compliant with theglobally recognized and standardized NASDAQ ESG
Reporting Guide 2.0.

We are investing in next-generation technologies tosupport the growing market penetration of intelligent
sensors for energy measurement. These investments reflect increased needs, such as those forsemiconductors, metering, electromobility, andsmart-grid applications.
We continue to build centers for specific competencies across our sites in Geneva, Lyon, Beijing, andSofia. Our R&D teams provide a diversified skill set,
ingenuity, and a particular cleverness in design todeliver the best product. Developing products forcustomers across multiple sectors allows us to leverage synergies to produce larger systems, modules,
and semiconductors. This gives us the scope tomaster the value chain from the design function at an
integrated-circuit level all the way up to the full sensor and customer application.
Record results
Our record financial results should be seen in thecontext of the global economy rebounding from theworst effects of the pandemic. They also reflect ouragility to respond to customer demands, the economies of scale we are building, and the new technologies we are leveraging. Sales in the financial year
2021/22 increased by 24.1% to CHF 373.4 million.
EBIT increased by 45.1% to CHF 88.4 million, yielding an improved EBIT margin of 23.7%. We posted a
net profit of CHF 72.4 million, up from CHF 55.6 million last year.
Our balance sheet is strong and we continue to generate healthy cash flow. Based on these excellent
results for the year 2021/22 and the long-term fundamentals for the business, the Board of Directors
proposes a special dividend to mark the 50th anniversary of CHF 50 per share, up from CHF 42 pershare.

R&D investments deliver new products
Significant investments in R&D over recent years
continue to bear fruit, and in 2021/22 we launchedseven products.

LEM Annual Review 21 | 22

4

5

LEM Annual Review 21 | 22

Welcome

Strategic focus and outlook
Megatrends drive demand for sensors, providing
multiple opportunities to leverage LEM expertise andensure a sustainable long-term business. Decarbonization and electrification provide underlying structural growth across all our businesses. On top of this,
we are investing in next-generation applications andpartnerships with customers as we move into adjacent fields that are still closely connected to current
measurement, either through technology or by adding functionality. Power electronics is being seen as
a strategic asset, and there is an increasing trend
toward “onshoring” and localization of manufacturing investment, which will further support our business. The investment in our new production plant in
Malaysia will bring us new skill sets and flexibility in
our supply chain. As the world increasingly shifts torenewable energies, we see new markets opening
up and will ensure that we stay close to our customers and are well positioned to meet their demands.

Thank you
On behalf of the Board of Directors and the Executive
Management, we thank shareholders for the confidence they have placed in us. Our talented teams
worldwide have demonstrated yet again their commitment, ingenuity, and resilience in the face of multiple challenges. Our performance is also due to thetrusted relationships we have developed with customers, suppliers, and business partners. We relishthe opportunities to work together and bring to market new innovative products. Ultimately, all of us at
LEM are inspired by a common purpose – helping ourcustomers and society accelerate the transition to asustainable future. We hope you enjoy this Annual
Review, learn something new about how far we havecome since 1972 and are as enthusiastic as we areabout LEM’s prospects for the next 50 years!

However, the world is dealing with a series of shocks,
which will inevitably restrict economic growth. In the
short term, we see continued headwinds from supply chain constraints. Our business in China is alsoheavily impacted by lockdowns, with implications forother markets as well. We will remain agile and adapt
as best we can, but the coming financial year will notcontinue the same growth trajectory we have delivered this year.

Andreas Hürlimann
Chairman of the Board of Directors

life

For the past year, LEM has proven to be especiallyvital. The pandemic and disrupted supply chains
impacted us all, but our teams adapted valiantlywith creativity and new digital forms ofcollaboration. The record annual results reﬂect thisexceptional commitment from everybody, and weare proud to celebrate our 50th year as a company.
At special events throughout 2022, we will taketime out to connect across cultures, locations, anddisciplines, and to celebrate LEM moments
together, using this opportunity to learn from ourhistory and go forward with renewed conviction.

energyEnergy abounds in a company that is 50 years
young. This dynamism enables LEM to continually
recognize trends and opportunities and to design
new and leading products to meet market demands. Our anniversary is the perfect occasion tocelebrate LEM’s ingenuity – our particularly cleverway of thinking and engineering the best solutions
for our customers’ systems.

motionLEM sells literally millions of electrical sensors.
What will the next half century bring? Progress set
into motion by megatrends, such as efﬁcient renewable energy, mobility, and automation. Successdriven by our mindset of continuous learning andimprovement. A future inspired by a common purpose of helping our customers and society accelerate the transition to a sustainable future.

Frank Rehfeld
Chief Executive Officer

1982
LEM-France
First international
officeLEM Annual Review 21 | 22

6

7

LEM Annual Review 21 | 22

Customization

Production

R&D

Sales

Leading the world inelectrical measurement
EuropeGeneva, Switzerland
Frankfurt, Germany
Vienna, Austria
Brussels, Belgium
Randers, Denmark
Paris, France
Padova, Italy
Skelmersdale, UK
Lyon, France
Sofia, Bulgaria
China
BeijingShanghai
Shenzhen
Xian
Hefei
Taipei, Taiwan
North America
Milwaukee, Wisconsin
Columbus, Ohio
Amherst, Massachusetts
Los Angeles, California

LEM headquarters
Geneva, Switzerland

Rest of world
Pune, India
Seoul, South Korea
Tokyo, Japan
Tver, Russia
Agents / distributors

A leading company in electricalmeasurement, LEM engineers the bestsolutions for energy and mobility,
ensuring that our customers’ systems
are optimized, reliable, and safe.

LEM Annual Review 21 | 22

8

Our 1,500 people in over 15 countries
transform technology potential into
powerful answers. We develop and recruit
the best global talent, working at
the forefront of megatrends, such as
renewable energy, mobility, automationand digitization.

With innovative electrical solutions,
we are helping our customers andsociety accelerate the transition toa sustainable future.

9

LEM Annual Review 21 | 22

Financial results

Record financial performance
Sales in the financial year 2021/22 totaled CHF 373.4
million, up by 24.1% from CHF 301.0 million; at constant exchange rates, sales increased by 22.5%.
Both the Industry and Automotive segments delivered record sales, although both were hampered bysupply chain constraints and could have delivered
more products to customers. Operational efficiency
is improving profitability while also enabling us to execute significant R&D programs.
LEM’s diversity of applications across multiple sectors of the global economy provides a steady flow oforders and a prudent spread of risk. We also benefit
from a good geographic spread of business and, in
terms of relative share, the regions remained stable,with China at 38% of sales, Europe at 31%, North
America at 9%, and the rest of the world accountingfor 22%. All our regions delivered strong double-digit growth, with Europe and China leading the way,
mainly due to demand for drives, renewable energy
and electric vehicles.
During the financial year 2021/22, orders were up by
59.2% at a new record of CHF 576.4 million comparedwith CHF 362.0 million. The Industry segment customers continue to commit to orders over longer time
horizons. During the second half of the year, Automotive bookings reverted to normal levels, with customers ordering for delivery one quarter at a time. The
full-year book-to-bill ratio reached 1.54, up from 1.20.

Top-line growth of 24.1% andan EBIT margin of 23.7% are
impressive, but should be seenin the context of post-COVID-19
global economic recovery
and the acceleration toward
decarbonization and electrification.

Gross profit was up significantly by 26.1% at CHF
177.3 million (CHF 140.6 million), while the gross margin improved again to 47.5%. This is 80 basis points
better than in the prior year, with increased supply
chain costs offset by improved efficiencies from
economies of scale.
We remain vigilant with overheads, so while SG&A
costs were up by 13.4% to CHF 59.7 million (CHF
52.6 million) to support the extra market demandcompared with last year, they declined to 16.0% ofsales (17.5%). The absolute increase reflects our investments in talent to strengthen the organization,higher compensation rates, and external consulting
support for several key initiatives.
We continue with our long-term investment in futureapplications, with R&D up in absolute terms by 4.0%
to CHF 29.4 million (CHF 28.2 million), although thisdecreased to 7.9% of sales (9.4%). We are significantly increasing the resources in the integrated
current sensor (ICS) team both in Geneva and Lyon.
We have doubled the size of the ICS and R&D teams
with experts from the semiconductor industry. This
will enable us to reduce outsourcing of R&D andgrow in-house competency in design, test development, and applications support.

Key figures 2017/18 to 2021/22
in CHF millions

2017/18 1

2018/192019/20

2020/212021/22

Orders received

319.7

320.5

322.4

362.0

576.4

Book-to-bill ratio

1.06

1.00

1.05

1.20

1.54

Sales

301.2

321.6

307.9

301.0

373.4

Gross margin

138.9

146.5

142.7

140.6

177.3

46.1%

45.6%

46.4%

46.7%

47.5%

in % of sales
EBIT
in % of sales

10

64.8

58.3

60.9

88.4

20.1%

18.9%

20.2%

23.7%

Net profit for the year

54.4

52.4

60.7

55.6

72.4

EPS basic (CHF)

47.76

45.97

53.27

48.79

63.48

Dividend per share (CHF)

40.00

42.00

40.00

42.00

50.00 2

Operating cash flow

54.1

53.5

73.6

50.9

50.4

Investing cash flow

–15.1

–14.8

–14.7

–13.5

–21.0

31.3.2018 1

31.3.2019

31.3.2020

31.3.2021

31.3.2022

In CHF millions, %Net financial cash/(debt)

12.6

4.5

10.2

–1.6

–23.5

Shareholders’ equity

111.6

113.1

117.4

131.9

161.2

Equity ratio (in % of assets)

60.0%

60.5%

51.0%

49.9%

53.5%

Market capitalization

1’812.6

1’459.2

1’210.7

2’082

2’554

Employees (in FTEs)

1’527

1’477

1’497

1’448

1’572

1 Restated financial statements.
2 Proposal of the Board of Directors to the Annual General Meeting of Shareholders on June 30, 2022.

Our R&D investment continues to bear fruit with another seven new products launched successfully
this year. Due to a change in accounting policy, there
was also a tax credit of CHF 1.2 million reflected in
R&D expenses, which would previously have beenrecorded in the income tax line of the P&L.
EBIT for the year 2021/22 rose notably by 45.1% to
CHF 88.4 million from CHF 60.9 million, mainly due
to the leverage effect of the improved revenues
across our established cost base. Our reported EBIT
margin was up at 23.7% compared with 20.2%,
above guidance.
Net financial income was CHF –3.1 million, mainly due
to foreign currency losses following the euro depreciation over the last 12 months. The Group tax expenses of CHF 12.9 million represent a tax rate of
15.1%, reflecting a favorable geographic profit mix.

Sales per segment

Regional sales breakdown

in CHF millions

in CHF millions

300

140

250

120

250

100

200

80

150

60

100

40

50

20

0

17/18

18/19

Automotive segment

LEM Annual Review 21 | 22

63.1
21.0%

19/20

20/21

Industry segment

21/22

0

17/18

China

18/19

Europe

19/20

20/21

North America

11

21/22

Rest of world

LEM Annual Review 21 | 22

Financial results

We posted a record net profit for the year of CHF
72.4 million, up from CHF 55.6 million last year. This
year’s net profit margin thereby increased to 19.4%
compared with 18.5%.
Strong cash flow and balance sheet
Cash flow from operating activities was CHF 50.4
million. Excluding nonrecurring tax payments related
to the sale of intellectual property, it would havebeen CHF 77.0 million compared with CHF 50.9 million last year. Free cash flow was CHF 29.4 million(CHF 37.4 million). This decrease is mainly due tohigher investments related to the new global headquarters in Geneva.
Our balance sheet remains strong, with limited net
debt of CHF 23.5 million. As of March 31, 2022, total
assets increased to CHF 301.4 million. Shareholders’equity reached CHF 161.2 million, representing anequity ratio of 53.5% (49.9% as of March 31, 2022).

24.1 %
23.7 %
Sales growth72.4 mEBIT margin % of sales

Record net profit

LEM Annual Review 21 | 22

12

Special 50th anniversary dividend
Based on the excellent results for 2021/22, the longterm fundamentals for the business and to mark the50th anniversary of the founding of the company in1972, the Board of Directors proposes a special dividend of CHF 50 per share (CHF 42 for 2020/21),
payable on July 7, 2022. 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 78.8%, downfrom 86.1% last year.
Changes in financial reporting 2022/23
With effect from April 1, 2022, the company is now
organized on a regional and functional matrix. Geographically, we will now report sales according to thefollowing regions:– China– Rest of Asia (Japan, South Korea, India,
Southeast Asia)– Europe, Middle East, and Africa (EMEA)– Americas (NAFTA and Latin America)
It also means the previous two segments of Industry
and Automotive are no longer applicable. Rather, we
will now report sales along the following five businesses:– Automation– Automotive– Renewable Energy– Track– Energy Distribution and High Precision
The company will report a single company-wide P&L
every quarter and cash flow and balance sheets
twice a year. Further details of these changes in financial reporting are available from the slides on our
website, which were presented at the annual results
conference in Zurich on May 24, 2022.

Prudent outlook
In its latest biannual World Economic Outlook in April
2022, the IMF reduced its estimates and now forecasts global growth to slow from an estimated 6.1 %in 2021 to 3.6 % in 2022 and 2023. War-induced
commodity price increases and broadening pricepressures have led to 2022 inflation projections of
5.7 % in advanced economies and 8.7 % in emerging-market and developing economies. The IMF
highlights the essential need for multilateral efforts
to respond to the humanitarian crisis, prevent further
economic fragmentation, maintain global liquidity,
manage debt distress, tackle climate change, andend the pandemic.
Against this backdrop, it is clear that many factors
impacting economic demand over the coming year
remain out of LEM’s control. Despite last year’s record performance, we remain cautious about ourprospects for the first six months of 2022/23. This isdue to ongoing headwinds from supply chain constraints, particularly for semiconductors, while thepandemic lockdowns in China will impact supply
chain, production, and sales. The current geopolitical tensions may also undermine investment confidence in certain sectors. Therefore, we expect oursales in the first six months of 2022/23 to be lower
than those we achieved in the first six months of2021/22.
LEM’s business does benefit from geographic andsector diversity. There is an increasing trend toward“onshoring” and localization of manufacturing investment, which will further support our business.
Our fundamental long-term prospects remain strong,
driven by megatrends, such as renewable energy,
mobility, and automation. We see this particularly inthe demand for our new products in solar power,
electric vehicles and e-mobility. The strong demandfor EV solutions continues, but the sector’s ongoingsupply chain challenges may take several more quarters to be resolved.
We are maintaining our key project of investing in a
new production plant in Malaysia and plan to start
production by early 2024. We continue to invest in
R&D at between 8% – 10% of sales, ensuring LEM
has the right new technologies and applications forcustomers as their businesses grow.

This 50th anniversary year provides
us with a great opportunity to learn
from our history and to also move
forward with renewed energy andconviction.
The new organizational matrix of regions and functions will move decision-making closer to the customer in different parts of the world, empower local
management and increase speed of execution.
Global functional teams will support regional markets
across all customer applications and the entire LEM
product portfolio, thereby providing synergies of expertise and development.
We have been positively surprised this year by thedemand for our products and are impressed by how
the organization has responded so well to multiple
challenges. This 50th anniversary year provides us
with a great opportunity to learn from our history andto also move forward with renewed energy and conviction. The sectors in which we serve our customers are being transformed by decarbonization andelectrification, so while certain elements remain out
of our own hands, we can look forward with optimism
to continued long-term growth.

1989
Production plant
Beijing

13

LEM Annual Review 21 | 22

2016First fully integrated
digital sensors
on the market

2004

50 yearsof ingenuity

1999

Revolutionary
product withintegrated chipdrives ﬁrst fully
automated
production lines

Key milestones

First accuratecompact digital
voltage sensor.
Still market
leader withthis product
today

First salesof sensors
for hybrid
electric cars

1997

Liaisons électroniques-mécaniques (LEM)
founded in
Geneva2008

2003

CHF 100
million in
total sales

1 9 751972

Strategic decision to
focus on components
and divest instruments
business

First current sensors
delivered for the
new metro inSantiago de Chile
1986

2022

LEM Holding
introduced on
the Geneva
Stock Exchange.
120 employees
worldwide. First
sensors fortrains in China

LEM moves to
new HQ in Geneva.
1,500 employees
worldwide
2019

2015

Novel electric
DC meter forelectric vehicle
fast-charging
stations

37 million sensors
produced per year
2012

1999

First ASIC
current sensor.
Programmable bycustomers

2 million
sensors
produced per
year. 700
employees
worldwide

1973

Swiss trams in
Geneva moving
smoother withﬁrst current
sensors

First miniature
integrated circuit
sensor opens
up market for
low currents

Strategic decision
to enter the
automotive market

1994

First sensors
for windturbines inGermany

1 million
sensors
produced
per year
1992

First salesof sensors
for solar
photovoltaic
applications

66 million
sensors
produced
per year

Sales reach arecord of overCHF 300 million.
R&D investment at
9.4 % of sales

2007

1998

1979

2018

2021

1996

Strategic division
into two distinct
business units:
test systems
and high-current
systems

International expansion
With expert sense of the markets and customer demand,
LEM grew rapidly around the world.
1972

1982

1987

1989

1990

2000

2013

2017

LEM SA
foundedin Geneva

FranceUS
Germany
SwedenChina

RussiaJapan

Bulgaria

R&D
France50 years of inspiration

Conversation with the Founder,
Chairman, and CEO

Jean-Pierre Etter LEM’s Founder and CEO of
LEM, 1972 – 1989, Board Member until 1998
Andreas Hürlimann Chairman of the Board of
Directors, 2013 – present, Board Member since 2011
Frank Rehfeld CEO, 2018 – present,
Senior Vice President Industry, 2016 – 2018

AH Project “Regain” in 2004 was key. Our focus on
sensors required continuously lowering production
costs, building a position in the automotive sector
and later in renewable energy, but also divesting instrumentation and other loss-making businesses.
FR If we limited our activities to our standard heritage sensors, it would mean the end of our growth
opportunities because prices fall substantially fasterthan you can increase volume. Therefore, we decided to move into adjacent fields that are still closely
connected to current measurement either throughtechnology or by adding functionality. Examples are
the ICS business, the DC meter, and smart-grid activities.
How would you describe your relationship withmajor customers?
JPE Right from the start, we were working very
closely with customers, such as SNCF and Siemens.
Working on an equal basis was key. There was mutual respect, technical exchange and learning, as wellas cocreation with an open mindset and trust in therelationship. This reduced both technology risk andmarket risk.

Jean-Pierre Etter

What would you like to tell us about the sparkthat inspired the creation of LEM?
JPE The dream of the entire industry was to develop
power electronics with variable current. My brotherand I started an engineering research company, andwe succeeded in developing reliable sensors. While
my brother remained focused on research, in 1972, I
decided to start a company to bring a few sensors to
the market, as I saw growing demand across industries.
How did you come up with the company name?
JPE Big industrial players had separate divisions forelectronics and mechanics, which worked in silos. I
envisioned linking the two and offering a combined
solution, which is reflected in the name Liaisonsélectroniques-mécaniques or LEM.

LEM Annual Review 21 | 22

16

What does the name signify today?
FR The bridge is still the same between electronics
and mechanics. To give LEM even more momentum
to grow, we need to get our message beyond the
population that focuses on power electronics.
Therefore, we attributed to the name LEM a second
dimension with our slogan Life Energy Motion, which
points to our purpose: helping customers and society accelerate the transition to a sustainable future.
Was there a key strategic choice that you
made to ensure LEM’s growth?
JPE Some members of the management and Board
wanted to focus on the testing and control market.
However, I made the decision to stay in current measurement for major applications because we recognized a market need and the potential to become
number one. We moved rapidly into automation andhigh-volume sales to meet customer demand.

FR Your approach from that time is still valid today.
We continue to profit from the closeness of customer relationships. The special thing about LEM is that
we are focused on current sensing and providing thewidest application range in this area. Although we are
not a huge company, we have application know-how
to provide customers with volumes they cannot bundle themselves.
AH Our technically highly competent sales force
provides expert application know-how and advice
during the customer’s design phase. Also, they havethe flexibility to adapt components to specific customer requirements or develop new ones throughcustomer-driven R&D or cocreation.

How did you grow the product portfolio?
JPE Customers wanted customized products, so wedeveloped products together with them. Afterwards,
they viewed these sensors as their own. There wasalways significant investment in R&D, but to growand to produce high volumes at lower prices, we had
to invest even more in production. We needed automated production, which required machine engineering and production engineers as well.
FR I could not agree more. We decided to grow theinvestment in R&D even further to 8% to 10% ofsales to move into the adjacent areas mentioned before. We managed to show results from our R&D investment in a relatively short time frame of three tofour years. LEM has built up a software team anddeveloped one of the most complex products everdeveloped in the components business – the DC
meter for EV charging stations. I am also convincedthat the ICS is becoming a great success story.
And how have shareholders reacted to yourinvestment in R&D?
AH The mindset has evolved over the years. Shareholders who were hesitant about the high level of
R&D investment now see how this translates into
profitable growth, and they accept that the longterm benefits are worth the investment.

Right from the start, we were
working very closely withcustomers, such as SNCF and
Siemens. Working on an equal basis
was key. There was mutual respect,
technical exchange and learning
as well as cocreation and trust in
the relationship.

17

LEM Annual Review 21 | 22

50 years of inspiration

Ingenuity is a good word to describe
LEM. It is a response that comesfrom a demand. Ingenuity is amindset, accepting a way of
thinking differently, listening to one’s
instincts and working on practicalsolutions that are needed.
Could you tell us about LEM’s earlyoverseas expansion?
JPE We proved it was best to work together withcompetent local experts who knew their customers.
Finding the right people in each location was key. I
also visited our competitors because I knew that we
could learn from each other and even work together
in various ways. In the 1980s, China wanted to develop semiconductors, and we received a request to
deliver testers to a university. I was approachedabout setting up a plant to manufacture testers andwas open to the idea but told the authorities that I
required a responsible director. This was the start ofour joint venture in China. They were responsible formanagement, administration, customers, and soforth, and we were responsible for technical competence, the know-how.
And what is the approach today?
FR Very similar. You certainly need a team that you
can rely on. People who have the right skill set, theright mindset, the right competencies. As we grow,we need to establish the right structures and governance to make it scalable. The fearlessness andforesight of JP Etter was amazing! We need to recapture some of that spirit today. The market focus forsustainable energy has been on Asia, thus our 50%
in turnover there. But the world is waking up; sustainability will only fly when costs go down and volumes
go up. We are positioning ourselves to achieve ourambition of quadrupling volume and doubling sales
in the next five years. We need to get even closer toour customers, so we have reorganized ourselves
into a regional and functional matrix from April 2022.

LEM Annual Review 21 | 22

18

What is your approach to talent management
and building a company culture?
JPE In the beginning, it was a start-up culture thatworked well. Once we grew to more than 15 people,
we needed a new kind of management. Our philosophy remained, with a focus on people who love
their work, who have a sense of purpose. I foundpeople I trusted who were experts in finance, marketing, and production, and gave them the freedom
to operate.
FR Your approach still resonates today. Qualities weneed are entrepreneurship, ambition, and openness.
We want to attract and develop people who have fun
shaping an organization and who see the agility wehave due to our size. You can do things faster here
than at large global companies.
AH Managers at LEM have the opportunity to speak
directly to a Board with the majority shareholders
present, like in a start-up. This access to entrepreneurial decision-making and our speed of execution
are real assets. There is a healthy appetite for taking
risks to move ahead. If things go wrong, we take corrective measures and move on.
The word “ingenuity” captures a lotof LEM’s essence over these 50 years.
How do you relate to this?
JPE Ingenuity is a good word to describe LEM. It isa response that comes from a demand. Ingenuity isa mindset, accepting a way of thinking differently,
listening to one’s instincts, and working on practicalsolutions that are needed. Above all, accepting thatan individual does not have the complete answer,
but that in working together and with the customer,
we will arrive at the right solution.
FR We still apply principles discovered 150 years ago
by the Danish physicist Hans Christian Ørsted andask: How do we consider customer demands to further develop something, to make it cheaper and faster? If we view ingenuity as freedom of individual
thought, we have the examples of ICS and the DC
meter, which were perfect moments to understandmarket opportunities and build competence. This
closes the circle back to our culture. Driven by our
success and a stable 20% EBIT margin, perhaps wedeveloped an attitude that we already know it all.

However, future developments require us to be curious and fast, have the courage to make mistakes,
and take responsibility for our actions.
AH Ingenuity is the quality of being clever, original,
and inventive. Many engineers call current sensors“LEMs” – quite a way to call out the original. We arestill putting things together in new ways, just as you,
Mr. Etter, did at the start by connecting électriquesand méchaniques. We have plenty of ingenuity inthe production environment as well, such as byworking with cobots, being more effective, more robust, higher quality, lower cost.
“Innovation” is a much-used buzzword.
How do you regard this at LEM in 2022?
AH Innovation has multiple dimensions, including
the classical understanding leading to new products,
but also new applications for existing products, newtechnologies to solve existing problems more efficiently and effectively, and producing new processes, tools, and machinery. There is also innovation at
LEM in supply chain management, logistics, andsales.
FR I would probably phrase it this way that I see ingenuity more as the mindset and innovation as theresult.

What inspires you when you think about
LEM’s future and the next 50 years?
AH We are at the core of the major technical efforts
to decarbonize the world. We are a key enabler inthis. This drives our structural growth and provides
plenty of emerging opportunities. I am inspired as ashareholder, as a Board member, and as a humanbeing. We can make a major contribution to the challenges that are ahead.
FR Our purpose says it all: we are helping customers
and society accelerate the transition to a sustainable
future.
Can you sum up LEM in a few words?
JPE First, to be useful and of service. Second, toserve a common purpose. Third, to need one another and work together. Finally, to share, give, and receive in equal measure.
AH LEM employees and customers are key enablers
of a carbon-free energy system for the future.
FR LEM is one of the places in the world where you
can do what you want to do, show what you are capable of and, at the same time, contribute so that theworld becomes a better place.

What do you see as LEM’s biggest challenges
to maintaining its success as market leader?
AH Increasing size drives transformation toward local and regional empowerment and talent development. Yet we want to remain one company with acoherent strategy and well-coordinated decision-making. Competition is more forceful, and technologies are shifting quickly. A higher level of alertness and hunger to achieve are required.
FR Our limit is not the market. Our limit is the speedwith which LEM can transform itself and grow in thismarket. Organizations, structures, processes, butalso a passion to achieve – all this must come together in an already successful environment. Ultimately, it comes down to people. Rejuvenatingteams and attracting the right people. This is why wework on our employer branding.

19

LEM Annual Review 21 | 22

Industrysegment
performance«For 50 years, our customers’applications have inspired us todevelop new sensors and toconstantly improve ourselves,
making us experts in electricalmeasurement.»

LF1010s
A compact, closed-loop current sensor family
based on the latest LEM ASIC technology.
LF1010s serves high-performance industrial
applications. A magnetic core with partial air
gap for 5x better immunity against external
fields and LEM Hall effect ASIC for the lowest
temperature drift.

Industry segment
performance

Global industry market – challenging environment
Global manufacturing remained strong in June 2021,
while in September supply chain disruptions and material shortages subdued the upturn. By the end of2021, output, new orders, and employment all accelerated, but lost a little traction at the end of the firstquarter 2022, with March seeing rates of expansionin output and new orders ease and new export business contract (source: IHS Market).
The global economy enters 2022 in a weaker position than previously expected. As the new omicron
COVID-19 variant spreads, countries have reimposed
mobility restrictions. With rising energy prices andsupply chain disruptions, inflation was higher than
anticipated (source: IMF World Economic Outlook,
January 2022).
Against this challenging global economic backdrop,
the Industry segment performance produced strong
growth, thanks to our broad portfolio of applications
and new launches. We thus continue to maintain significant market share in our business segments. Although COVID-19 interrupted global supply chains,
we were proud to have increased our output significantly.
The well-reported shortages of semiconductors andother components affected all our businesses, butwith geopolitical tension leading to divestments fromoil and gas, we remain encouraged by the fundamental transition towards green energy solutions. Longterm demand for our products is supported by increasing decarbonization and electrification acrossthe world.
We are adapting to important and acceleratingchanges across markets, such as higher power densities, the electrification of mobility, digital disruption, smart grids, and distributed energy resources.
We won new designs and accelerated the production of new sensors, such as the DC meter and ICS
models.
LEM delivers strong performance
Full-year sales in the Industry segment totaled CHF
287.6 million, up 27.7%. At constant exchange rates,
sales improved by 26.4%. All our businesses andregions continue to benefit from the return of invest-

LEM Annual Review 21 | 22

22

Solar inverter
Every house with a photovoltaic systemneeds an inverter to convert the solar
DC electricity into AC electricity.
LDSR measures AC and DC leakage
currents in transformerless photovoltaic
systems to ensure the safety of people
and installations. Primarily used on the DCside of the inverter, HMSR SMS measures
AC and DC currents with high accuracy
and high immunity to external interference.
On the AC side, newly launched LWSR
supports a lower levelized cost of energy(LCOE).

ment confidence and customer demand. Our sales
were held back principally by supply chain constraints. However, there is an increasing trend toward“onshoring” and localization of manufacturing investment, which will further support our business.
Europe (+30.4%), China (+22.8%), and and the restof the world (+34.6%) benefited from the demandacross Drives, Renewables, and High Precision. Europe continues to be our largest market. North America (+22.1%) benefited from the demand for Drives,
but less so for Renewables. Global orders increasedby 56.2% for the full year, averaging around CHF 100
million per quarter, as customers continue to commit
to orders over longer time horizons.

LDSR
0.3-NP

Drives and Welding
Sales in the Drives and Welding businesses increased considerably by 32.8% to CHF 130.2 million.
The Drives business is largely supported by the manufacturing investment cycle and benefited from demand for small- and medium-power applications,
including tooling machines and heating, ventilation
and air-conditioning (HVAC) as well as end-consumer products, such as heat pumps, principally due tothe strong recovery from China, Japan, and Korea.
Automation and energy-saving applications are themain growth drivers for our sales. We continue toreceive very positive feedback on the introductionof our new product family of ICSs for small drives androbotics.
Renewables
Sales in the Renewables business grew by 28.7% to
CHF 105.0 million due to government policies andcommercial investment, with increasing concerns
about dependency on fossil fuels and customers
from the Chinese and European solar industry producing for the world market. We continue to growstrongly in China due to the country’s heavy investment in solar applications. Sales in Europe and the
US remained steady, mainly due to our products forgrid monitoring and the certified DC meters for theGerman market. The infrastructure investment fore-mobility is driving the successful rollout of our new
DC meter, and we are encouraged by growing customer interest.

Solar inverter

HMSR
30-SMS

LWSR

Industry segment
performance

DC fast-charging stationfor electric vehicles
DC fast chargers provide power to the carbattery directly and quickly, which isessential for convenient long distancedriving and for fleets.

Traction
Sales increased by 12.8% to CHF 42.8 million. Our
Traction business, with its project-based long investment horizons, has returned to growth mainly in Europe and India after COVID-19 reduced the global
demand for rail traffic.
High Precision
In the project-driven High-Precision business, sales
grew by 24.6% to CHF 9.5 million. Demand in thetest and measurement sector for batteries and EVs
as well as medical equipment increased sales of ourhigh-precision sensors. Our most recent productline, the IN family, continues to be well received bycustomers thanks to its superior performance.

Industry sales
2021/22

Moving into new markets
As we are moving towards a fully integrated energy
market, we are accelerating our efforts for ICSs by
preparing the launch of a large portfolio of smaller
current sensors in addition to the existing HMSR, aminiature current sensor manufactured on semiconductor processes, and GO series of chip-based sensors. The new family of ICSs stands out with a highagility of application, such as robots in logistics, EV
chargers and heat pumps, and allows us to penetrate new low-power, high-volume applications, suchas air conditioners, drones, ande-bikes.

CHF 287.6
millionDrives and Welding
Renewables
TractionHigh Precision

LEM Annual Review 21 | 22130.2 m105.0 m42.8 m
9.5 m

24

Our DC meter for charging green
cars was launched in 2020/21 andcontinued to perform strongly inthis financial year. The DCBM offersa high level of integrated functions,with a reliable and certified solution
for billing electricity for fast charger
users. With the official DC meter
qualification and certification granted by the German Physical TechnicalFederal Institution PTB, LEM is oneof the first to introduce integratedfunctions and a certified software
solution for billing electricity for fast
charger users. We will continue toinvest in DC metering with the aim ofoffering our solutions in other European markets.

In the Drives business, we are moving from current
sensors with analogue output to digital outputs. For
our smart-grid projects, bookings and sales for thevarious Rogowski products continue to increase.
Both products have seen large orders and are leading our growth in the low-voltage market. We continue to develop other sensors based on the Rogowski
technology to enter the highly promising medium-voltage switchgear business. We offer a broad
variety of secondary cables and connectors.
LEM – 50 years of leadership
LEM brings 50 years of global leadership in electricalmeasurement – underpinned by our qualities of ingenuity and inspiration. The drive to constantly improve ourselves is an inherent characteristic of LEM.
It’s with a heritage of close resourceful collaboration
and a knowledge of partnership that we work. Our
customers’ applications inspire us to develop new
sensors, and we understand their products very well.
While our customers provide the market pull, we offer the technical push. By projecting ourselves into
the situations of our customers, our design teams
produce solutions with creativity and ingenuity. Our
teams then know how to translate an application-specific project into cost-efficient production tomeet our customers’ requirements for volume, price,and quality.
Outlook
The latest IMF World Economic Outlook (January2022) predicts the global growth of 5.9% in 2021 tomoderate to 4.4% in 2022. The Industry segment
continues to be impacted by the pandemic in thefirst quarter of 2022. As markets continue to pick up,
supply chain resilience remains the biggest challenge. In the short term, we are anticipating that new
lockdown measures in China will impact our suppliers, production at our factories and, ultimately, sales
in the first half of the coming financial year. In themedium- to long-term view, however, LEM will benefit from our portfolio, which is well balanced geographically and across applications. We expect ourorder book on heritage and new products to stay invery good shape as we continue to expand into new
applications. We expect new opportunities in gridmonitoring and EV charging systems in the US,
thanks to the new US government administration’s
support for green energy solutions.

The AC/DC power module enables theconversion from alternating current toa direct current. Sensors ensure the control
loop function, which regulates the stability
and power of power modules.

DC meterLESR 25-NP

CDSR 0.07-TP

HC16
A unique open-loop, Hall-based sensor
with measurement up to 1,600 amp,
HC16 suits all architectures up to 1,000 V.
Compatible with surface-mounted
and through-hole assembly processes
and a highly versatile solution for motor
control applications.

«When LEM decided to address the automotive market about 20 years ago, wewere already anticipating the technicalchallenges linked to the electrification of
the sector. Our ingenious approach has
led LEM to be a partner of choice for key
EV market players.»

Automotive
segment
performance

Automotive segment
performance

Hybrid electric vehicles/
electric vehicles
Battery management
Highly accurate and ASIL-ready sensors
provide all the required information
to improve the efficiency and safetyof the charging and discharging processof the battery management system.

Market dynamics strongly influenced
by supply chain constraints and accelerationof electrification
After a difficult year in 2020 due to the pandemic,
the global production output for passenger carsslightly increased in 2021 by 1.2% to 75.5 million
units. The expected rebound driven by demand forelectric vehicles (EVs) has been curtailed by the unavailability of components, particularly driven by theshortage of automotive-grade semiconductors. The
situation highlighted the structural vulnerability of
the automotive supply chain, which has been built
on a lean inventory and just-in-time delivery. The unprecedented shortages forced major automotive
original equipment manufacturers (OEMs) to cut production and revise their volume ambitions downward. Conversely, Chinese OEMs and “newcomers”
seemed to be less affected by this situation thanks
to the greater flexibility of their supply chain setup.

New car production –propulsion share
6

19 %

13

15
26

40 %
25

59 %
33

80
60
40

2021

2024

2027

Electric vehicles
Hybrid vehicles
Internal combustion engines

In parallel, the adoption of EVs by consumers continued to thrive, driven by a combination of factors:
government subsidies to support post-pandemic
industry recovery, CO2 emissions reduction targets,and rising oil prices. Consequently, carmakers didprioritize the production of premium electrified models, leading to a global share of EVs 1 increasing to
8% of the total vehicle production in 2021. Since EVs
require a lot of semiconductors, the increasing demand for EVs will lead in the short term to extended
tensions in the supply chain. However, the ramp-up
of EV production will accelerate the transition towards electrification in the medium term.
Strong recovery driven by EV demand
Full-year sales in the Automotive segment totaled
CHF 85.8 million, an increase of 13.3%. At constantexchange rates, sales improved by 10.8% comparedto full-year last year. Q4 performance reflects thehigher baseline of last year when global production
had recovered from previous shutdowns.

Motor control
The accelerator gives the signal to the motor
control to take power from the batteries.
Reliable sensors are integrated in or to theinverter modules to provide current signals
at very high speeds to assure smooth andjerk-free acceleration.

DCDT

Electric traction motor
Electronics + inverter
DC/DC converter
Onboard charger

Internal combustion engine

With the acceleration of the deployment of EV platforms by carmakers, our products have been designed for several vehicles that entered production
in 2020. Our largest market, China, grew by 31.7%,
driven by consumer appetite for EVs, the launch of
several new vehicles, and the ability of new sector
players to better manage supply chain challenges.
We benefit from a leading market position, and LEM
is well positioned to capture growth opportunities
unleashed by the government’s ambition to achieve
25% electrified cars by 2025.

HBCT

High-voltage battery

Electric vehicles (EVs), defined as plug-in hybrids and battery electric vehicles but excluding traditional hybrids.

28

HC16

CAB SF 1500
DC charger

1

HMSR

Lead acid battery

Our output is still constrained by supply chain issues
for semiconductors and other components. These
continue to impact the entire sector, and some manufacturers are still revising production plans downward. Bookings in the first half were exceptionally
boosted by customers committing firm orders in advance for several quarters. While second half bookings remain strong, they have now reverted to normal levels, with customers ordering for delivery one
quarter at a time. The strong fundamental demand for
EV solutions continues, but the industry’s ongoingchallenges may take several more quarters to be resolved.

Source: IHS Markit 2022

LEM Annual Review 21 | 22

HAH3DR

Automotive segment
performance

Sensor integration levels
The traditional OEMs are not adapting as quickly tothese supply chain challenges, and this is reflectedin our sales in other regions, such as Europe (+4.8%)
and North America (–4.8%). Moreover, the rest of
the world decreased by 2.7%, reflecting a higher
sales base, as these markets had been less impacted by the pandemic last year.
Well positioned to capture growth on green cars
The green car sector now represents more than
80% of the Automotive revenues, reflecting LEM’s
strategic focus on electric and hybrid powertrains.
Analyzing our sales performance by the different
businesses underlines this dramatic shift.
Battery management
We offer intelligent battery sensors for start/stoparchitectures combining a unique know-how oncurrent sensing technologies together with our expertise acquired on lead acid battery technologies.
For the full-year 2021/22, sales grew by 6.7% to
CHF 48.7 million, reflecting the US reduction in traditional combustion engine sales and the semiconductor shortages, offset by the increase in demandfor high-voltage products.

Charging system
This new product range offers dedicated technologies to support transfer energy subsystems from AC
to DC and DC to DC with high- and low-voltage applications. For the full-year 2021/22, sales decreased by 11.9% to CHF 3.0 million due to productallocation impacted by semiconductor shortages.
Continuously progressing in all aspects ofthe business in a constrained market
Technical innovation and strong product development road maps have always been key pillars of
LEM’s strategy, making us a preferred partner forcustomers adapting to the technological disruptionof automotive electrification.
But over the last couple of years, due to the global
constraints that the automotive market experienced,
we have also witnessed a shift of our customer priorities from long-term productivity improvements tosafeguarding short-term production continuity. LEM
has risen to these new challenges by quickly adapting our processes in terms of supply chain management agility and making extra efforts to optimize
production outputs.

Automotive sales
2021/22

The recognition by our customers of our efforts
demonstrates that we are the right partners for themto prepare their future. This allows LEM to maintain astrong link with our customers’ R&D teams, so that
we can continue to ensure long-term success founded on our technical expertise.

CHF 85.8
millionBattery management
Motor control
Charging systems

Motor control
Our sensors for power inverter applications provide
flexibility to Tier 1 and OEMs in their design, with solutions that can be implemented on various subsystems, such as gate driver boards, power modules,
integrated busbar, and standard busbar mounting.
For the full-year 2021/22, sales grew by 27.7% to
CHF 34.1 million, with strong demand spurred by EVs.

48.7 m34.1 m
3.0 m

LEM ingenuity and inspiration
When LEM decided to address the automotive market about 20 years ago, we focused on current measurement devices for 12-V battery management inconventional combustion engine vehicles. But themarket potential of automotive electrification had
already been perceived as a strong opportunity. Over

LEM’s strategic thrusts
Functional
integration
C

Leveraging our ASIC
know-how in developing
complex modules

Strengthening our
ASIC and ICs offer

Additional
functionality(e.g. voltage,
SoX)
Smart sensor(e.g. measurement evaluation)
Simple sensor(e.g. direct
output)A
Technology

B
Sensing
element(e.g. IC)

Semi-integrated
sensor(e.g. ASIC andshielding)Standard
sensor(e.g. stand-alone
sensor)Complex/customized
sensor(e.g. integrated
busbar, multiphase)

Physicalintegration

Source: Strategy Engineers; AVL

the years, our persistence in addressing and solving
the technical challenges of our customers helped
them to fully engage on this path of electrification.
This ingenious approach led LEM to be a partner ofchoice for all key automotive trendsetters, be it either newcomers disrupting the established OEM
brands or traditional carmakers transitioning fromconventional combustion engines to electrified powertrains, leveraging their high-volume production
capabilities.
Our successful early move into the EV market provides us with inspiration to build on this experienceand tackle even larger opportunities, such as thosein energy metering.

Outlook
The pandemic, together with structural changes
linked to electrification, continues to disrupt the
global supply chain. Although these challenges expose us to matters out of our control, we remain flexible and agile as an organization. In the short term,
we expect our business to be impacted by factoryclosures in China and continued supply bottlenecks,
particularly due to the global shortage of semiconductors affecting the whole automotive industry.
However, in the medium and long term, we are confident the green energy transition will continue todrive LEM’s future. In 2022/23, our growth will besupported by new product launches in motor control(HC16 and HAH6) and battery management (HSBBV).

Production of EVs per year are forecast to double from2025 to 2030 as products move beyond the performanceand luxury segments. The next five years are critical,
particularly in building a robust supply chain and support
infrastructure, and in convincing consumers that EVs are
real. Because for the industry, they are.
IHS Markit “Making the BEV commitment,” June 2021

LEM Annual Review 21 | 2230

31

LEM Annual Review 21 | 22

Trends,
technology,
R&D«We continued to invest in newtechnologies and in the ingenuityof our highly skilled R&D teams.
This resulted in the launchof seven new products in thepast year.»

LWSR
Completing LEM’s offer for solar
string inverters, LWSR is a closed-loop,
Hall-based sensor designed to fit
inverters rated between 250 and 500 kW.
This sensor supports solar inverter
manufacturers with a lower LCOE forphotovoltaic power plants.

Trends,
technology,
R&D

Megatrends drive long-term growth
Our growth is driven by megatrends, such as renewable energy, energy efficiency, reliable energy, distributed energy, mobility, automation, and digitization. They drive demand for sensors, give multiple
opportunities to leverage LEM expertise, and ensurea sustainable long-term business for all our stakeholders.
Based on IHS data and our analysis, the current sensor market is expected to grow from about CHF 2.8
billion in 2021 to CHF 4.1 billion in 2026. Our strong
heritage is industry applications, where we are market leader and have significant growth potential,
while our fastest growing sector in the long term is
automotive applications. Far from being a mature
market, current sensing products are undergoingsignificant mutations, driven by new applications andtechnologies. These fast-changing markets will leadto pricing pressure, shorter product lifetimes, quicker return on investments and will require companies
to be more agile.

Our R&D team provides a diversified
skill set and ingenuity as well as
a particular cleverness in design todeliver the best product. We masterthe value chain, from the design
function at an IC level all the way up
to the full sensor and customer
application.

LEM has opportunities thanks to the switch to electric powertrains, the miniaturization of components,
and the adoption of integrated current sensors.
Across both industry and automotive applications,
we see demand for additional functionalities towards
current transmission and digital information.
Technology trends
Ever-higher power densities drive new current
sensing technologies
The power density is the amount of power generated
per unit volume of the motor and the power electronics. The more powerful the motor in a smaller envelope, the higher the power density. Increasing power density is therefore a critical factor to increase
performance, as space constraints are present in
virtually all industry and automotive applications.
Two technologies are enabling a step change in levels of power density: silicon carbide (SiC) and gallium nitride (GaN). These allow higher switching frequencies and thus are very well suited for automotive
applications where performance is key. We are
spending significant time and energy on evaluating,gaining access to and mastering future sensor technologies.
The increased demand for small sensors capable ofhandling high levels of power density led to theemergence of integrated current sensors over thelast decade. ICSs measure the primary current line
directly through surface-mounted integrated circuits(ICs) and have become a technology of choice forindustrial and automotive applications thanks to theirability to sense relatively high currents while using avery compact footprint.

Digital is disrupting energy and mobility usages
Smart grid and autonomous driving are two major
disruptions led by digital revolutions to bring about
smarter, greener, and more efficient ecosystems.
This is creating a lot of data, communication, and theneed for artificial intelligence. At LEM, we are developing smarter sensors with data processing, functional safety, including self-diagnostics, and added
value with embedded software to achieve real-time
computation, which accelerates information transmission and decision-making in the system.
The electrification of vehicles opens new
applications to current sensors
By 2028, 50% of annual car production will be using
hybrid and electric powertrains. In addition, electricand hybrid vehicles require a higher number of current sensors than combustion powertrains, spurring
exponential growth for the demand of sensors. From
about 125 m of current phases measured in 2020,
LEM estimates that the market will grow more thanfour times, to reach about 450 m in 2028.
LEM believes onboard chargers (OBCs), DC meters,
and DC/DC converters will play a key role in energy
distribution and management of hybrid and electric
powertrains. OBCs provide the means to recharge
the battery using an AC socket at home or from acharging station. DC/DC converters translate highvoltage coming from the battery to a lower voltage,
which is then used for various onboard applications(A/C, electric power steering, etc.).
DC metering is becoming mandatory in EU and US
markets, as regulators want customers to pay only
for the power load of the battery of the vehicle, netof power line losses. Electrical safety is also becoming increasingly important, as the detection of current leakage brings protection for customers in caseof malfunction of the charging station. Ever-higher
voltage levels (up to 800 V) place the battery systemat the heart of the hybrid and electric powertrains.
Accurate battery management systems that canmeasure the state of charge (SoC) and state ofhealth (SoH) have become increasingly important toensure the driver has access to reliable informationon the remaining driving range and that the battery
cells are well maintained to protect the battery life.

More stringent safety standards pave the way
for autonomous driving
Automated driving functions are realized with interconnected systems using automated driving assistance systems (ADAS). Those systems are replacing
part of a driver’s usual decisions keeping them andothers safe from hazards. To maintain this level ofsafety, ADAS are implementing functional safety defined by the ISO 26262 standard. We are introducing
this standard to offer the strongest safety functions
to our customers using LEM sensors in electrical vehicle powertrain systems, such as battery, motor, andpower converters.
Smart grid, a new market for current
sensing solutions
Our energy system is undergoing a radical transformation as millions of EVs hit the road and terawattsof renewable energy capacity are installed. Thesechanges are essential to decarbonize our energy
system but are creating significant challenges. First,
wind and solar energy’s intermittent nature forces
grid operators to provide flexibility to the system.
Second, the rapid growth of distributed energy resources (DER) is decentralizing the distribution network, increasing the complexity of its operation. A
smarter grid is thus needed to reliably integrate intermittent renewable energies and DERs.
LEM provides sensors that measure electrical parameters along the network, allowing grid operators
to monitor, control, and automate grid operation.
LEM offers best-in-class solutions for the ever-increasing demands of utilities and equipment manufacturers.

2000
Production plantTokyo

LEM Annual Review 21 | 2234

35

LEM Annual Review 21 | 22

Trends,
technology,
R&D

Ongoing R&D investments
We continue to invest to assure long-term growth,with R&D investments in 2021/22 of CHF 29.4 million, up from CHF 28.2 million last year. We are on
track in executing our mid-term and long-term plans.
Four main trends prevail in driving our investments:
increasing global demand for electromobility; measurement of energy flows in smart grids; requests
from automotive customers for functional safety
through third-party assessments; and demand for
tailored solutions in high-volume applications.
Our investments are split into near-, mid-, and longterm projects, such as developing building blocks
for the next decade. At our R&D sites in Geneva andLyon, our engineers and specialists are conducting
long-term research and thinking about new applications in clever ways. In Sofia and Beijing as well, newproducts are being developed in cooperation withour customers for specific applications.
This is leading us from a traditional, electromagnetic
sensors company into a broadened business of various integration levels. Examples are the HMSR andthe DC meter for charging stations. The HMSR is an
ICS that includes a high-performance ASIC, a micro
ferrite, and the benefits from a specific over-molding
method ensuring high isolation in a very small package. The DC meter has an intelligent Ethernet interface and a high level of integration in the customer
product. Both products, launched in 2020, haveseen a fast ramp-up and are a success story of ourcollaborative work approach.
Our R&D team provides a diversified skill set and ingenuity as well as a particular cleverness in design
to deliver the best product. Developing products forcustomers in the industry and automotive segmentsallows us to leverage synergies to produce larger
systems, modules, and semiconductors. This gives
us the agility to master the value chain from the design function at an IC level all the way up to the fullsensor and customer application.

LEM Annual Review 21 | 2236

An example is the development of the DC meter,where we involved alpha customers early on andquickly provided prototypes for customer feedback.
The shift from hybrids to full EVs is the future, and weare positioned exactly right for this transformation.
The demand for DC metering in EV charging infrastructure is increasing and even stronger than we
expected. Our broad skill set also led us to producefunctionally safe sensors to protect customer products and users from higher system and vehicle malfunction. The demand for residual current detection
associated with charging solutions is also taking off.

New technologies drive miniaturization
Precision DC and AC current sensors
are getting smaller and smarter.

Development across sites, teams, and segments
The Geneva team is becoming our leading hub for
innovation and advanced engineering for products
going into drives, residual current detection, highprecision, and semiconductors. In Lyon, we develop
products for traction, DC metering for EV fastcharging stations, and automotive battery management systems.
R&D teams in both Geneva and Lyon focus on new
and advanced technologies, such as embedded
software development and validation, predevelopment of technologies and innovative applications ofour products, including algorithms for intelligent battery management. Dedicated innovation teams at
both sites work with universities and technical institutions.
We are significantly increasing the resources in the
ICS team both in Geneva and Lyon. We have doubled
the size of the ICS R&D team with experts from thesemiconductor industry. This will enable us to reduce
outsourcing R&D and grow in-house competency indesign, test development and applications support.

1975
Transfo
Shunt

1980
LA-S

1983
LT

1987
LA-P

1996
HY

Due to continued stress in the supply chain, thewhole semiconductor industry is very constrained bymaterial availability. We have been successfully establishing very important strategic partnerships –with foundries, outsourced assembly and testing – inorder to get the materials we require. These partnerships will guarantee and secure component delivery
for our key customers.

1998
LTS

2007
HMS

2012
HLSR

2020
HMSR

In Bulgaria, we are executing major projects, such as
development of Rogowski coils in Sofia. China is developing custom projects, such as open-loop sensors in Beijing and launched a trackside sensor last
year.

37

LEM Annual Review 21 | 22

Trends,
technology,
R&D

Protecting our customers from cyberthreats
Cybersecurity is a concern for our customers. We
have been working on hardware/software product-related cybersecurity specifically for Automotive. With increasing digitalization, more and moreproducts could be exposed to external communication. One example is an automotive sensor. Whenever a firmware download is done, there exists thethreat of potential hacking, so cybersecurity needs
to be considered. Another example is the DC meter.
The interface at the charging station could potentially be exposed. We are working on ways cybersecurity can protect these products. We understand thecomplexity of the situation and are actively planning
to increase our competency in this area. We are expanding our know-how and investing in system engineers who can translate customer needs into product requirements and architecture.
Technical focus and product launches
We are running product projects in the areas of automotive battery management, integrated current
sensors for renewable energy applications, drives,
and traction. New market needs are emerging to protect people’s safety. Residual current detection is
becoming more and more apparent as a trend, driven
by regulations as well. For example, detection andmonitoring of current overload, where we see verystrong demand in DC charging but also in photovoltaic and data centers.
We completed a process assessment and certification last year with the DC meter 600 amp, MID
module D. This allows LEM to deliver DC meters at
fast-charging EV stations directly to our German customers and forego an additional and expensive interim certification step. Our teams continue to work on
the lower-cost, high-volume 100 amp DC meter.

LEM Annual Review 21 | 22

38

Rogowski sensors are in very strong demand insmart grid. In our traction business, we updated existing products via testing and validation to be compatible with new standards, and in China, we engineered new sensors for trackside monitoring.
Our efforts were recognized by the granting of nine
patents. Significant investments in R&D over recent
years continue to bear fruit. In 2021/22, we launchedseven products.
OutlookIn 2022/23, our investment in R&D will increase, withgrowth in three main areas across our main R&D
sites. For ICS, additional resources will allow us towiden our portfolio. More system engineering capacity is needed to support new product requirements, including functional safety and cybersecurity.
Embedded software is increasingly integrated into
LEM products, including DC metering, battery monitoring and residual current detection, and this will
require growth in both development and testingteams.
We will also increase efficiency by developing new
product architectures shared across multiple applications. The innovation team in Geneva has been
extended and continues to work on long-term technology projects and innovative new applications.

Product launches 2021/22
Product

Segment

Application

EM4T II+/TEMA4G

Industry

Onboard traction, metering

ARH

Industry

Smart grid

HOB-P

Industry

Drives, power conversion

LWSR

Industry

Renewables

IN 200Industry

High precision

HTRS

Industry

Trackside

HSBBV

Automotive

Battery management

EM4T II+/TEMA4G
TEMA4G, an energy measurement solution (EMS),
contains the new EM4T II+ and a 4G/LTE modem.
The EM4T II+ is a highly versatile multinetwork
energy meter able to measure both AC and DC currents and can therefore be used for cross-border
traffic. The EM4T II+ is fully compliant with metering standards for onboard use and is available for
new designs and maintenance projects.

HOB-P
A high-bandwidth (1 MHz), open-loop sensor developed specifically for fast-switching silicon carbide(SiC) MOSFETs in high-voltage, pulsed-power
circuits. Thanks to a pick-up coil on LEM’s application-specific integrated circuit (ASIC), the sensor
provides best-in-class response time and frequency
bandwidth. The HOB-P is well suited for handheld
plasma cutters, welders, and DC-DC converters.

LWSR
Completing LEM’s offer for solar string inverters,
LWSR is a closed-loop, Hall-based sensor designed
to fit inverters rated between 250 and 500 kW.
This sensor is aimed at providing solar inverter
manufacturers with sensing measurement solutions
to support a lower LCOE for photovoltaic power
plants.

IN 200To enable test benches to achieve the increasingly high levels of accuracy that the EV market isdemanding, LEM has developed the world’s firstcurrent measurement sensor capable of achieving
record-high levels of accuracy (0.0018%) andperformance. Effectively three products capableof matching nominal currents of 100A, 200A,
and 400A, the IN 200 sensor offers significant
performance improvements over previous devices,
especially in terms of linearity, electrical offset,
and noise immunity.

39

LEM Annual Review 21 | 22

Culture, talent& values«LEM’s founder Jean-Pierre Etter emphasized the quality of ingenuity as a mindset, a
way of thinking differently, questioning theusual way of doing things. This same quality
remains today with our Blue Behavior ofa learner mindset.»

IN 200For high-precision applications, such as MRI, and toenable test benches to achieve ever higher levels of
accuracy for the EV market, LEM has developed theIN 200. This is the world’s first current measurement
sensor to achieve record-high levels of accuracy(0.0018%). It significantly improves performanceover previous devices, especially in terms of linearity,electrical offset, and noise immunity.

Culture and talent
for growth

Organization adapted to customer needs
and growth opportunities
Our industry is changing fast and being shaped byseveral technology breakthroughs and market opportunities. And so is LEM. As of April 1, 2022, a new
regional and functional matrix organization has been
fully implemented. This new structure aims at accelerating the speed of decisions closer to our current
and future customers while building our growth onsolid foundations. Our new headquarters in Geneva
is the symbol of our ambition and our way of working:agility, transparency, and collaboration. We believe
this location, known as “The Hive,” will inspire current
and future LEM employees to fulfill their potential.

The way we work together with all
our stakeholders is what makes
us different from the competition
and will enable us to achieve ourambitious business objectives anddeliver on our purpose.

Human resources function drives
talent development
At LEM, Human Resources is a strategic business
partner, committed to maximizing sustainable global
growth by building organizational capability and awork environment where diverse talent can thrive.
Last year, we continued to shape the HR function byadding two centers of excellence: Total Rewards andTalent Management, which will ensure that we continue to attract, engage, develop, and retain the talent LEM needs today and tomorrow.
During 2021/22, we conducted a fundamental review of LEM’s long-term incentive plan with the goalof further strengthening:– the link between pay and performance by 		adding an external perspective to the current
internally focused view on company
value creation;– the loyalty of key employees to LEM by giving
them the opportunity to directly participate in
LEM’s sustainable success via an equity-based
plan;– the alignment of interests with shareholders.
As of 2022/23, the current cash-based long-term
incentive plan of LEM’s Executive and Senior Management will be replaced by a share-based Performance Share Unit (PSU) plan.
Employer of choice
We are a high-quality global employer, human-sizedwith a collaborative culture. As market leader in several applications of electrical measurement, our employees enjoy intellectual challenges, diverse pathways, and global career opportunities. We arerelentlessly recruiting and developing the best global talent with both leadership and technical competencies to deliver on the growth potential of thecompany. Working for LEM enables us all to contribute to its purpose: “With innovative electrical solutions, we are helping our customers and society
accelerate the transition to a sustainable future.”

LEM Annual Review 21 | 2242

Keeping connected: ingenuity and inspiration
Over the last couple of years, all of us have had toadjust to the extraordinary consequences of the
COVID-19 pandemic. Everyone has gone the extra
mile to compensate for the lack of in-person communication due to travel restrictions. In the meantime, we have continued to build communication andcollaboration tools, such as our new intranet called
My LEM. This new global platform aims at sharing
information and, more importantly, creates and maintains a social link between the global LEM community. The quality of ingenuity remains a constant factor
in how LEM employees develop solutions for ourcustomers and also the best practices we develop
across functions. By keeping connected and sharing
such successes, we are inspired to learn from eachother and seek continuous improvements.
Our way of working is what makes the difference
The LEM team is made of human expertise, talent,
and leadership and works relentlessly to bring customers the best solutions. We are conscious that theway we work together with all our stakeholders iswhat makes us different from the competition andwill enable us to achieve our ambitious business objectives and deliver on our purpose.
LEM employees have been involved in the identification and definition of LEM Blue Behaviors, which aregrouped in four categories:– Innovation and continuous improvement
mindset– Customer orientation and growth mindset– Team player mindset– Player/learner mindset
Within these groups, specific behaviors have been
identified and are already integrated into individual
development plans, performance assessment systems, and talent acquisition processes. All employees should aspire to embrace and enact LEM Blue
Behaviors, whatever their function or seniority. It isalready clear that a constructive culture will help current employees achieve their full potential and enjoy
their experiences, as well as attract the right caliberof new talent to ensure LEM achieves its strategic
goals.

Diversity and inclusion
As LEM adapts its organizational structure to meetthe demands of its customers and seize the growth
opportunities of the various megatrends, there is aneed to diversify its talent base across different regions, product applications, technologies, and support functions. The company is committed to ensuring that its talent acquisition and development
strategies are as broad-based as possible, recognizing that diversity and inclusion brings many benefits.
LEM provides equal opportunity to all qualified individuals. The share of female employees is 53% in
the overall workforce. However, given the historically high share of engineering positions in productdevelopment, sales and marketing, and management, the share of female employees in the nonproduction-related activities is 31%, which is a 2% increase compared to the previous year. We actively
seek female candidates in order to increase theirshare in the higher-qualification positions, and there
has been significant progress in markets suchas China, where many engineering graduates are
women. Several global responsibilities, such as purchasing, supply chain, finance and reporting, groupcontrolling, global talent management, and communications, are headed by female employees. LEM
has several key female managers in China (Finance,
Purchasing, Quality, and Supply Chain) and in Bulgaria (General Manager, Purchasing, Human Resources,
and R&D). During 2021/22, the proportion of management positions held by women increased by 4%.

Employee analysis
31.3.2022

31.3.2021

Permanent employees

1’350

1’297

Temporary employees

198

135

Trainees

24

16

1’572

1’448

FTE

Total

43

LEM Annual Review 21 | 22

Culture and talent
for growth

Executive Committee

Workforce by activity

Average length of service

1’572 total employees

1’350 permanent employees

12

14 %

10.9

10

7.7

8

14 %

6.8

6

6.3

4

9%

2

63 %

0
Years

Operations
Admin and logistics

R&D
Sales and marketing

Ready-now talent
A committed, qualified, and engaged team is essential for LEM’s lasting success. To this end, we support our employees to attend leadership andjob-specific training and develop their personal
skills. Our aim is to continue to invest in reskilling or
upskilling, with an increased focus on web-based/
remote delivery to adapt to the new normal. Accessto LinkedIn Learning for all LEM employees is an illustration of our commitment to their development.
In the last year, more than 40% of our open positions
were filled by internal talent.

Operations
Admin and logistics

R&D
Sales and marketing

New talent
We are continually looking for new talent who wish
to make a difference and have genuine interest incontributing to LEM’s purpose. We offer a multicultural, human-focused working environment allowing
self-fulfillment in a growing and challenging context.
We are focused on hiring core competencies in newmarkets, such as smart grid, semiconductors, andembedded software, as well as in the fastest growing
area of e-mobility. In addition to technical competences, new recruits should embrace LEM Blue Behaviors. We are committed to investing time and resources to facilitate their onboarding and integration
into our organization so they can maximize their impact.

From left to right: Frank Rehfeld Chief Executive Officer, Andrea Borla Chief Financial Officer,
Rebecca Cullinan Senior Vice President, Industry, Rainer Bos Senior Vice President, Automotive,
Rodolphe Boschet Chief Human Resources Officer
LEM Annual Review 21 | 22

44

45

LEM Annual Review 21 | 22

Our values andbehaviors

Board of Directors

Our values
Our core values are the beliefs we share – and the spirit and intent of everything we do:

We are customer-driven
All our activities are driven
by the desire to provide bestquality service.

We commit
We set our goals high andtake responsibility for all
our actions.

We operate with integrity
Our relationships with coworkers,
customers, suppliers, partners,
and the investor community arebased on openness and fairness.

We strive for excellence
No matter how good our
products, services, processes,
and results, we are dedicatedto making them better.

We value teamwork
Teamwork is more than justworking together, it is bringing out
the best of everyone’s strengths.

We lead innovation
By thinking outside thebox, we adapt to tomorrow’s
requirements.

LEM Blue Behaviors
The LEM team is made of expertise, talent, and leadership and works relentlessly to bringcustomers the best solutions. We have identified four groups of LEM Blue Behaviors, which
all employees should aspire to embrace and enact, whatever their function or seniority:

1 Innovation and continuous
improvement mindset
2 Customer orientationand growth mindset

3 Team player
mindset4 Player/learnermindsetLeft to right Ueli Wampfler, Werner C. Weber, Andreas Hürlimann, François Gabella, Ulrich J. Looser, Ilan Cohen

Ueli Wampfler

François Gabella

Member of the Board of Directors
Chairman of the Audit and Risk Committee

Member of the Board of Directors
Member of the Strategy Committee

Werner C. Weber

Ulrich J. Looser

Member of the Board of Directors
Member of the Strategy Committee

Member of the Board of Directors
Chairman of the Nomination andCompensation Committee
Member of the Audit and Risk Committee

Andreas Hürlimann
Chairman of the Board of Directors
Chairman of the Strategy Committee
Member of the Nomination andCompensation Committee

LEM Annual Review 21 | 22

46

Ilan Cohen
Member of the Board of Directors

47

LEM Annual Review 21 | 22«Climate change is one of the greatest challenges facing
society. LEM’s products help our customers reduceenergy consumption and CO2
CO emissions in many
sectors of the economy. We are now implementing astrategy to reduce our own emissions and those
across our supply chain to become net-zero by 2040.»

CO 2
strategy

Towards a sustainable
futureRainer Bos, Senior Vice President, Automotive,
and Andrea Borla, Chief Financial Officer, share theirperspectives on LEM’s new CO2 strategy.
What was the catalyst behind LEM’s CO2 strategy?
Rainer Bos (RB)
There are two key aspects behind our strategy.
Above all, it is our responsibility as a company tocontribute to the mitigation of climate change. Secondly, our customers are expecting their suppliers tofulfill their CO2 requirements. It is also important that
our employees feel that they work in a company thatis doing the right thing for the future of our society.
Andrea Borla (AB)Absolutely. With this strategy, we want to underline
LEM’s willingness to contribute to reducing global
warming and its effects by launching concrete initiatives. The other catalyst is our various stakeholders,
including customers and employees, but also ourinvestors, who in the last few years have made increasing inquiries about our responsibility aroundsustainability.
Can you describe the way in which you aregoing about this project?
AB In 2021, we set up a global team, with individuals
from our various locations and sites. It was essential
for us that this was not just a head office exercise
with our Swiss-based team, but that our global teams
also participate, especially at the other main sites in
China and Bulgaria.

It is fundamental to keep in mind
that the way our products areused is also part of our overall
contribution to tackle climatechange. Nearly all our products are
helping to optimize and reduceenergy consumption in many
sectors of the economy.

LEM Annual Review 21 | 2250

After exploratory discussions, we decided to seek
guidance from an external consulting firm specialized in crafting CO2-reduction plans for companies.
The first phase was the assessment, during which
we evaluated the sources of our CO2 emissions. The
second phase was to develop a company-wide
CO2-reduction strategy, which consisted in defining
the long-term vision, the mid- and short-term targets, and several specific initiatives on how to tackle our emissions.
What are your findings so far?
RB Scope 1 and 2 account for only 2.5% of our total
CO2 emissions. Scope 1 emissions are direct emissions from LEM's own sources that result from the
combustion of fossil fuels. Scope 2 emissions referto indirect emissions generated by our purchases ofelectricity. These are areas that we can impact
strongly and can make relatively quick reductions.
However, scope 3 emissions are a bigger challenge,
since they include a company’s upstream and downstream activities. We were all aware of the fact supply chains are often a crucial element in the CO2 activities of a company like ours, but the magnitude ofits effect was surprising. 97.5% of our total CO2 emissions are classed as scope 3; these include purchased components (90.2%), downstream transportation (4.3%), and production materials (1.5%).
This is a clear indicator that we must collaborate
more closely with our suppliers to share and develop
similar ambitions and plans. To me, we even need to
go beyond that, as it is not just the suppliers, but thecomponents that we are buying from them that playa central role.
Given these findings, what are you short-termtargets, and how do you aim to achieve them?
RB Our priority is to be CO2 neutral in scope 1 andscope 2 by 2025. We are convinced that we can dothat by purchasing green energy from the market orby installing solar panels at our sites for our own
electricity consumption. Moreover, we will start to
reduce our scope 3 emissions in parallel, for example
by finding reasonable, more environmentally friendly
transportation means for our goods – inbound andoutbound. There are several other measures that canbe taken to diminish our scope 3 emissions, such as
reducing single-use products, increasing the usageof recycled materials, and reducing waste in general.

What is your long-term vision and target?
AB Like many of our customers, we have the ambition to be faster in becoming CO2 neutral than the
Paris commitments, that is, to be CO2 neutral in all 3
scopes by 2040, instead of 2050. The major challenge is the way by which we can ensure that all ourpurchased components are also produced in waysthat emit drastically less CO2.
What are the main challenges facing LEM in
reducing its scope 3 CO2 footprint across its
supply chain with suppliers?
RB A key challenge is that we should be working on
the designs of the future to come up with more
“CO2-compliant” product designs. In our industry,
we have lots of so-called “design-for” activities,
such as “designs for quality,” “designs for cost” or“designs for manufacturing.” I am convinced that in
the future we need to introduce a “design for environment.” A second challenge is to fully involve our
suppliers in developing their own action plans interms of ambitions for CO2 reduction and neutrality.
We need to develop a strategy together in the scopeof the general partnership agreements and contracts
that we have with them, especially when it comes toelectronic components. A third challenge is to ensure that we carefully select the right locations when
we make capacity increases. To optimize our CO2
footprint, we need to look at where our customers
and our suppliers are when making choices about
expansion. Finally, we must closely monitor country-specific policy developments. For example, in
the Western part of the world, we have the freedom
to select electricity suppliers based on carbon neutrality. In other regions, this selection proves to be
more challenging.

not fully in our hands, as there are certain restrictions. I am expecting that this will progressively
change, but it is a process that might take slightly
more time.
What is your attitude towards offsetting?
AB In the short term, we would support resorting tooffsetting, which may help achieve immediate results in respect of net CO2 emissions reduction. In
the long term, our ambition is to become CO2 neutral
for all three scopes without having to offset.
How do LEM products contribute to society’s
overall challenges with climate change?
AB LEM’s products help our customers become
more energy-efficient by measuring electric current.
Our products also get incorporated into electric carsor solar and wind farms for example, applications
which play an important role in reducing the CO2
emission levels of our society. It is fundamental tokeep in mind that the way our products are used isalso part of our overall contribution to tackle climatechange.
RB Exactly. Looking at smart grids, this is a field
where many governments will reshape their electrical distribution infrastructure in a more intelligent
way, where our smart-grid sensors could be a valuable contribution. It is also, for instance, about making railways more efficient, where LEM solutions
could play a major role. Nearly all our products are
helping to optimize and reduce energy consumption
in many sectors of the economy.

LEM has significant operations and sales in China.
How do you view the potential to reduce yourCO2 footprint in that country?
RB Our major short-term focus is moving transportation to train and boat. This is something that we havealready achieved in the last years, but due to thecurrent conflict between Russia and Ukraine, logistical constraints have been forcing us to get partiallyback to air freight. Most of our suppliers are in China,
so we will be having various negotiations to havethem develop their own action plans. In China, selecting the source of the electrical energy we use is51

LEM Annual Review 21 | 22

Responsibility

We believe that sustainable and ethical practices
create long-term value for all key stakeholders in society, assure longevity of businesses, lead to smart
solutions, and inspire us and others to do better. Our
success stems from operating and evolving within aclear value system and following best-practice principles and standards, together with the close monitoring of environmental, social, and governance(ESG) KPIs.
LEM Code of Conduct
The LEM Code of Conduct (CoC) is the cornerstone
document for matters related to our company’s responsibility to society. It reflects the United Nations
Global Compact (UNGC) principles, global environmental standards and our core corporate values. It isa binding document for employees and business
partners, such as suppliers and consultants, whose
compliance we regularly audit. Every LEM employee
receives e-learning training on the CoC, including
instructions and case studies, and signs it.

We believe that sustainable
and ethical practices create
long-term value for all key
stakeholders in society, assure
longevity of businesses, leadto smart solutions, and inspire us
and others to do better.

United Nations Global Compact
Since 2006, we adhere to the Ten Principles of the
UNGC, which are driving global action to achieve theSustainable Development Goals by 2030. These
principles, which relate to human rights, labor, environment, and anticorruption, are embedded in every
aspect of LEM, from our strategy to our actions. As
we do every year, we provided an update on our
progress to the United Nations, which is available on
LEM’s and the UNGC’s website. In addition, we follow
the best-practice policies of the Universal Declaration of Human Rights, UK Bribery Act, EU Conflict
Minerals Regulation, and Responsible Minerals Initiative.
Environmental standards
The trends toward sustainable energy sources andelectromobility are two of LEM’s key growth drivers.
Our accurate sensing solutions give our customers acompetitive edge in energy management solutions.
For example, LEM sensors’ high accuracy directly
impacts the battery pack size of an electric or hybrid-electric car and hence improves car weight andenergy consumption. Our products are also found inother green energy applications, such as solar panels and wind turbines.
All our main production sites are ISO 14001:2015 certified, an environmental certification which we renew
regularly. Our production activities are compliant with
the European Regulation for Registration, Evaluation,
Authroization, and Restriction of Chemicals (REACH)
and the Restriction of Hazardous Substances(RoHS). We regularly publish updates to its standards and reporting on our website. All LEM manufacturing sites apply waste sorting and treatment
solutions. For each new product, we develop an
environmental profile before launch, which includes
the recyclability rate and material saving compared
to previous or equivalent models.

Out of the 17 Sustainable Development Goals (SDGs)
from the United Nations Environment program(UNEP) that promotes environmental sustainability
as a key enabling factor in ensuring the health of ourplanet, we contribute more specifically to five SDGs
that are pertinent to our activity: Water and Sanitation (Goal 6); Affordable and Clean Energy (Goal 7);
Industry, Innovation and Infrastructure (Goal 9); Responsible Consumption and Production (Goal 12);and Climate Action (Goal 13).
Assessments by third-party organizations
We attach great importance to external assessmentsof our Corporate Social Responsibility (CSR) performance, which is why for the financial year 2021/22,
we chose to be evaluated by EcoVadis and the NQC
SupplierAssurance. These assessments allow us togrow and evolve, as they not only highlight strengths,
but also areas for improvement.
EcoVadis
EcoVadis assesses how well a company has integrated the principles of sustainability and CSR into its
business and management system. EcoVadis gave
us an overall score on our sustainability achievements based on an extensive questionnaire that wascompleted by our teams in the fields of Quality &Environment, Corporate Risk, Control & Audit, Legal,
Purchasing, Supply Chain, and Human Resources.
Our employees had to provide factual evidence
when answering the EcoVadis questionnaire, which
was afterwards reviewed by their teams to give an
objective assessment of our sustainability performance. We have been awarded a silver medal for theyear 2021–2022, underlining our efforts in the fields
of environment, labor and human rights, and ethics.

NQC SupplierAssurance
In October 2021, we completed the SAQ 4.0 questionnaire from NQC SupplierAssurance, which covers
themes such as company management, working
conditions, human rights, health and safety, business ethics, environment, supplier management,
and responsible sourcing of raw materials. We also
provided evidence to support our responses, whichwere reviewed by the NQC SupplierAssurance team.
We achieved a final score of 74%, which compares
favorably to the industry average of 67% across 832
locations in the field of ectronic components andsupplies.
ESG metrics
We recognize the importance of keeping score of
our ESG performance. Our ambition is to continuallydevelop our internal capabilities and sustainability
initiatives and to report transparently on our progress. In 2021, alongside our new CO2 strategy, we
took the strategic decision to align our ESG reportingto the globally recognized and standardized NASDAQESG Reporting Guide 2.0, which offers us the possibility to report more systematically on various ESG
KPIs.

2013
Production plant
Sofia

LEM Annual Review 21 | 22

52

53

LEM Annual Review 21 | 22

In 2021, alongside our new CO2
strategy, we took the strategic
decision to align our ESG reportingto the globally recognized andstandardized NASDAQ ESG
Reporting Guide 2.0.
Environmental
We measure our environmental footprint with several
KPIs: the emissions of greenhouse gas (GhG) in CO2
equivalents across all three scopes (1, 2, and 3), thetotal GhG emissions per output scaling factor, thetotal direct energy usage per output scaling factor,
continuous compliance with ISO 14001, and the direct involvement of our Senior Management Team inclimate-related matters.
As part of our new CO2 strategy (see pages 50 and51), we conducted a company-wide assessment of
our CO2 emissions, which allowed us to accurately
evaluate our company emissions profile. In 2021, we
emitted 245 tons of CO2 in scope 1, 4’042 tons in
scope 2, and 163’610 tons in scope 3. A clear planwith measures such as transitioning to fully green
energy for our own electricity consumption is already in place. This will allow us to be CO2 neutral inscope 1 and 2 by 2025. Scope 3 represents by far
the biggest source of our emissions, with around
97.5% of the total. We are confident that by closelycooperating with all partners along our supply chains,
we can become net-zero by 2040.
In 2021, the total GhG emissions per output scaling
factor in CO2 equivalents reached 0.25%. With regards to the total direct energy usage per output
scaling factor, we have seen a significant improvement since last year, going from 15% in 2020 to 11%
in 2021, which underlines efficiency gains that canbe explained by increased sales volumes and decreased energy consumption due to COVID-19.

LEM Annual Review 21 | 22

54

Our four main production sites adhere to the ISO
14001 standard. Every year, we audit our suppliers tomake sure that they fully comply with this standard,
and we ensure that they are aware of our Suppliers
General Requirements Manual. Moreover, as shownby our new CO2 strategy, our Senior Management
Team, and especially our Senior Vice President, Automotive, and our Chief Financial Officer, directly
oversee climate-related risks and take an active
stance in managing this key topic, alongside a newly created team in 2021, which is in charge of CSR-related topics.
Social
It is our goal to make sure that all our activities respect human rights. Additionally, we strive to fostera culture that encourages professional development,
equal and fair treatment, and that nourishes and empowers every individual. We want to be a company
where our employees can feel safe to be creative,
innovative, and thrive with their personal talents.
We make sure that our employees are not subject todiscrimination based on characteristics other thaninherent factors required for the job. The total enterprise headcount shows that there are more womenthan men working for LEM globally. Our CoC – which
also covers suppliers and vendors – stipulates strict
policies protecting human rights as well as against
sexual harassment, discrimination, and child andforced labor.
Governance
We place ethics at the heart of our corporate practices. As such, we want our employees to act basedon our CoC to make sure that our values are wellunderstood across all sites, cultures, and positions.
We ensure all employees sign the CoC upon arrivaland require them to take an online training. In 2021,
98% of our employees worldwide have signed the
CoC.

ESG Key Performance Indicators *Environmental (E)

2017

2018

2019

2020

2021

E1.1

GhG emissions

Total amount (in tons) in CO2 equivalents
for Scope 1

N/A

N/A

N/A

N/A

245

E1.2

GhG emissions

Total amount (in tons) in CO2 equivalents
for Scope 2

N/A

N/A

N/A

N/A

4’042

E1.3

GhG emissions

Total amount (in tons) in CO2 equivalents
for Scope 3

N/A

N/A

N/A

N/A

163’610

E2.1

Emissions intensity

Total GhG emissions per output scaling factor

N/A

N/A

N/A

N/A

0.25%

E4.1

Energy intensity

Total direct energy usage per output
scaling factor

14%

14%

16%

15%

11%

E7.1

Environmental operations

Does your company follow a formal
Environmental Policy? Yes/No

Yes

Yes

Yes

Yes

Yes

E9.1

Climate oversight/
management

Does your Senior Management Team oversee
and/or manage climate-related risks? Yes/No

N/A

N/A

N/A

N/A

Yes

2017

2018

2019

2020

2021

Social (S)S4.1

Gender diversity

Percentage: total enterprise headcount held
by women

N/A

N/A

N/A

N/A

52.6%

S6.1

Nondiscrimination

Does your company follow a sexual harassment
and/or nondiscrimination policy? Yes/No

Yes

Yes

Yes

Yes

Yes

S9.1

Child and forced labor

Does your company follow a child and/or
forced labor policy? Yes/No

Yes

Yes

Yes

Yes

Yes

S9.2

Child and forced labor

Does your child and/or forced labor policy
also cover suppliers and vendors? Yes/No

Yes

Yes

Yes

Yes

Yes

S10.1

Human rights

Does your company follow a human rights policy?
Yes/No

Yes

Yes

Yes

Yes

Yes

S10.2

Human rights

Does your human rights policy also coversuppliers and vendors? Yes/No

Yes

Yes

Yes

Yes

Yes

2017

2018

2019

2020

2021

Yes

Yes

Yes

Yes

Yes

93%

96%

97%

97%

98%

Corporate governance (G)G6.1

Ethics and anticorruption

Does your company follow an ethics and/or
anticorruption policy? Yes/No

G6.2

Ethics and anticorruption

If yes, what percentage of your workforce has
formally certified its compliance with the policy?

* Aligned with NASDAQ ESG Reporting Guide 2.0.

55

LEM Annual Review 21 | 22

Information for investors

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

Number of registered shareholders
31.3.2022

31.3.2021

1’297

1’195

500 – 4’999

58

49

5’000 – 49’999

66

50’000 and more

3

2

1’364

1’252

1– 499

Total

Share price development LEM HOLDING SA (LEHN)
compared to SPI
LEM share price (+353%)
SPI Index rebased (+172%)

in CHF

3000
2500

Shareholders by category
31.3.2022

31.3.2021

Institutional shareholders

44.6

44.3

Private individuals

25.5

25.2

LEM employees, manager, and board

6.8

6.5

Treasury shares

0.0

0.1

Nonregistered shares

23.1

23.8

Total

100.0

100.0

in %

2000
1500
1000
500

0

31.3.1231.3.1331.3.1431.3.15

31.3.16

31.3.1731.3.18

31.3.19

31.3.20

31.3.2131.3.22

Share information
Source: Bloomberg

Symbol

LEHN

Listing

SIX Swiss Exchange

Nominal value

CHF 0.50

ISIN

CH0022427626

Swiss Security Number (Valor)

2 242 762

Financial calendar
April 1, 2022 to March 31, 2023

LEM share
In number of shares, CHF

Number of shares

2021/222020/21

1’140’000

1’140’000

Year high 1

2’690

1’998

1

1’610

980

Year-end 1

2’240

1’826

Year low

Average daily trading ­volume (shares)1
Earnings per share
Ordinary dividend per share2
Market capitalization as per March 311 (in CHF millions)
1

587

1’343

63.48

48.79

50

42

2’554

2’082

June 30, 2022
July 5, 2022
July 7, 2022
July 28, 2022
November 8, 2022
February 6, 2023
May 25, 2023
June 29, 2023
July 4, 2023
July 6, 20233

Annual General Meeting for the financial year 2021/22
Dividend ex-date
Dividend payment date
First quarter results 2022/23
Half year results 2022/23
9 months results 2022/23
Full year results 2022/23
Annual General Meeting for the financial year 2022/23
Dividend ex-date
Dividend payment date

Source: SIX.

2 Proposal of the Board of Directors to the Annual General Meeting of Shareholders 2022.

2017
Dedicated
R&D center
Lyon

LEM Annual Review 21 | 22

56

57

LEM Annual Review 21 | 22

Leading the world in electricalmeasurement, LEM engineers
the best solutions for energy andmobility, ensuring that ourcustomers’ systems are optimized,
reliable, and safe.

Copyright© LEM HOLDING SA,
GenevaConcept and text
LEM
Cabinet Privéde Conseils SA, Geneva
Process AG, Zurich

DesignProcess AG, Zurich

PhotosMara Truog, Zurich
Xiao Nan, Shanghai incollaboration with Process
Shanghai
Getty Images

Printing
Druckprodukt, Zurich

Annual Review
21 | 22LEM HOLDING SA
Route du Nant-d’Avril 1521217 Meyrin
Geneva, Switzerland
www.lem.com