Financial Report22 | 23

Contents

		 LEM Group5

Consolidated financial statements

10Notes to the consolidated financial statements

44

Auditor’s report

48

Corporate governance report

60

Compensation report

67

Auditor’s report		

LEM HOLDING SA

70

Financial statements

72

Notes to the financial statements

76

Auditor’s report

78Group subsidiaries

LEM Financial Report 22 | 23

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LEM GroupLEM Financial Report 22 | 23

Page 4

Consolidated statement offinancial position

AssetsNotes

in CHF thousands

31.3.2023

31.3.2022

21’775

17’198Current assets
Cash and cash equivalents
Accounts receivable

586’45880’096Inventories

6

56’83146’140

3’896

3’470

Income tax receivable
Other current assets

7

Total current assets

4’678

6’582

173’638

153’486

Noncurrent assets
Property, plant and equipment

8

73’58060’574Right-of-use assets

925’26628’436

Intangible assets

10

5’987

4’072

Deferred tax assets

21

48’36954’102Other noncurrent assets

11

664

728

Total noncurrent assets

153’866

147’911

Total assets

327’504

301’397

Notes

31.3.2023

31.3.2022

12

36’071

26’67732’29630’423Liabilities and equity
in CHF thousands

Current liabilities
Accounts payable
Accrued expenses
Lease liabilities

9

3’103

1’646

Income tax payable

21

2’199

3’793

Current provisions

13

601

94

38’41440’650Interest-bearing loans and borrowings
Other current liabilities

14

Total current liabilities

2’228

1’267

114’912104’549

28’375

Noncurrent liabilities
Noncurrent lease liabilities

9

26’930Noncurrent provisions

13

1’020

856

Deferred tax liabilities

21

2’934

3’469

Interest-bearing loans and borrowings

5’175

Other noncurrent liabilities

14

2’899

2’952

Total noncurrent liabilities

38’95935’651

Total liabilities

153’871

140’200

EquityShare capital

15

570

570

Treasury shares

15(1’069)(977)

Reserves

15

2’949

9’701

Retained earnings

171’184

151’904

Total equity

173’633

161’197

Total liabilities and equity

327’504

301’397

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Page 5

Consolidated
income statement

April to March

Notes

in CHF thousands

Sales

2022/232021/22406’350

373’395(214’156)(196’116)

Gross profit

192’194

177’279

Sales expenses(29’124)(28’909)

Administration expenses(38’950)(30’778)

Research & development expenses(32’174)(29’392)

Cost of goods sold

Other income
Operating profit

234

158

92’18088’358(650)

Financial expenses

18(1’719)Financial income

19

392

269

Foreign currency exchange effect20(1’928)(2’700)88’92585’277(13’585)(12’910)75’34072’367

66.12

63.48

66.07

63.48

Profit before tax
Income taxes

21

Net profit
Earnings per share, in CHF

Basic earnings per share

22

Diluted earnings per share

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

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Consolidated statement ofcomprehensive income

April to March

Notes

in CHF thousands

Net profit for the period recognized in the income statement

2022/232021/2275’34072’367

Other comprehensive income to be reclassified to profit and loss
in subsequent periods
Currency translation difference
Income tax
Total other comprehensive income to be reclassified to profit and loss
in subsequent periods(6’843)

698

726

(106)

(6’117)

592

4’596

Other comprehensive income not to be reclassified to profit and loss
in subsequent periods
Remeasurement gains /(losses) on defined benefit plans

24

(172)

Income tax

21

32

(605)

(140)

3’991

Other comprehensive income /(loss) for the period, net of tax(6’257)

4’583

Total comprehensive income for the period

69’08376’950Total other comprehensive income not to be reclassified to profit and loss
in subsequent periods

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Consolidated statement ofchanges in equity

Attributable to shareholders
Notes
in CHF thousands

1 April 2021

SharecapitalTreasurysharesCapitalreserve

Translation
reserve

Retainedearnings

Total
equity570(1’156)13’099(3’917)123’304

131’899

72’36772’367

Net profit for the year
Other comprehensive income/(loss)

698

3’885

4’583

Total comprehensive income

698

76’252

76’950(47’858)(47’858)

Dividends paid

15

Movement in treasury shares

15

179

(179)

207

207

31 March 2022

570

(977)

12’920(3’219)151’904

161’197

1 April 2022

570

(977)

12’920(3’219)151’904

161’197

Net profit for the year
Other comprehensive income/(loss)
Total comprehensive income

75’34075’340(6’843)586(6’257)(6’843)75’92669’083

Share-based payments

17

514

514

Dividends paid

15

(56’958)(56’958)

Movement in treasury shares

15

31 March 2023

570

(92)

92

(1’069)13’011(10’062)

(202)

(202)

171’185

173’633

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

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Consolidated cash flow
statement

April to March

Notes

in CHF thousands

2022/232021/22

Cash flow from operating activities
Profit before tax

88’92585’277

Adjustment for noncash items and taxes paid

9’020

(19’976)

Net financial result
Derivative financial instruments revaluation

1’257

327

(18)

(837)

Share-based payment expense

516

Depreciation and amortization

14’592

Impairment loss

15’149442

Gain / Loss on disposal of fixed assets

75

43

Increase (+) / decrease (-) of provisions and allowances

1’596

924

Movement in pension

(244)

447

Interest received

284

242

Interest paid

(536)

(167)

Taxes paid

(8’944)(36’104)

Cash flow before changes in net working capital

97’94565’301

Change in inventories(13’789)(5’750)Change in accounts receivable and other current assets(10’786)(13’782)

Change in payables and other liabilities
Cash flow from changes in net working capital
Cash flow from operating activities

13’624

4’660(10’951)(14’872)

86’99550’429Cash flow from investing activities
Investment in fixed assets

8(26’232)(20’755)

Investment in intangible assets

10

(227)

(344)

Increase (–) in other noncurrent assets

(144)

(422)

Decrease (+) in other noncurrent assets

150

523

(26’453)(20’998)(14’653)

Cash flow from investing activities
Cash flow from financing activities
Treasury shares acquired (–)

15(7’427)

Treasury shares divested (+)

15

7’225

14’860(1’819)(4’388)

Payment of lease liabilities
Lease incentive received
Dividends paid to the shareholders of LEM HOLDING SA

15

892

750

(56’958)(47’858)

Increase (+) in financial liabilities

141’745

172’200

Decrease (–) in financial liabilities(138’590)(155’550)

Cash flow from financing activities(54’932)(34’639)

5’609(5’208)Cash and cash equivalents at the beginning of the period

17’19822’418Exchange effect on cash and cash equivalents(1’032)(13)

Cash and cash equivalents at the end of the period

21’775

17’198Change in cash and cash equivalents

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

1.
General information
LEM Group (the Group) is a leading company in electrical measurement. LEM engineers the best solutions for energy and mobility, ensuring that its customers’ systems are optimized, reliable and safe. The Group has operations in seventeen countries
and employed 1’716 people as at 31 March 2023. The parent company of LEM Group is LEM HOLDING SA (the Company) which
is a limited company incorporated in Switzerland.
LEM HOLDING SA has been domiciled at Route du Nant-d’Avril 152, 1217 Meyrin, since 30 June 2022.
The financial year ends on 31 March 2023. The Company has been listed on the SIX Swiss Exchange since 1986.
The Board of Directors approved the consolidated financial statements on 23 May 2023, to be submitted for approval by the
Annual General Meeting of Shareholders on 29 June 2023.

2.
Significant accounting principles
2.1 Basis of preparation
The consolidated financial statements of LEM Group have been prepared in accordance with the International Financial andReporting Standards (IFRS) and interpretations published by the International Accounting Standards Board (IASB) and comply
with Swiss law.
The consolidated financial statements have been prepared using the historical cost convention except that, as discussed in
the accounting policies below, certain items like derivatives are recorded at fair value.
The financial information is presented in thousands of Swiss francs (CHF). The totals are calculated with the original unit amounts
which could lead to rounding differences. These differences in thousands of units are not changed in order to keep the accuracy of the original data.
2.2 Adoption of new and revised International Financial Reporting Standards and interpretations
New and amended standards and interpretations
The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on orafter 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
Standard or ­interpretation

Title

Effective date

Amendments to IAS 37

Onerous Contracts – Cost of Fulfilling a Contract

1 January 2022

Annual Improvements to IFRS Standards 2018-2020

1 January 2022

Amendments to IAS 16

Property, Plant and Equipment: Proceeds before Intended Use

1 January 2022

Amendments to IFRS 3

Reference to the Conceptual Framework

1 January 2022

These amendments did not have a material impact on the Group’s consolidated financial statements.
Future standards
There are no standards that are not yet effective and that would be expected to have a material impact on the Group in thecurrent or future reporting periods.

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Page 10

Notes to the consolidated
financial statements

2.3 Summary of critical accounting estimates and judgments
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions
that affect the reported amounts of revenues, expenses, assets, liabilities and related disclosures at the date of the financial
statements. These estimates are based on management’s best knowledge of current events and actions that the Group mayundertake in the future. However, actual results could differ from those estimates. The key assumptions concerning the futureand other key sources of estimation uncertainty at the reporting date are discussed below.
LeasesThe Group assessed whether a contract is or contains a lease at inception of the contract. This assessment involves the exercise of judgment about whether it depends on a specific asset, whether the Group obtains substantially all the economic
benefits from the use of that asset, and whether the Group has the right to direct the use of the asset.
Impairment of goodwill, other intangible assets and property, plant and equipment
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. Other intangible assets andproperty, plant and equipment are tested for impairment if there is a triggering event indicating a potential impairment. These
calculations require the use of estimates in particular to the expected growth of sales, discount rates and development of raw
material prices.
Provisions
Provisions are recognized only if the specific criteria under IFRS are met. Provisions represent presumed obligations arisingfrom past events and are recognized only if their amount can be estimated reliably. Nevertheless, provisions are based onassumptions.
Income and other taxes
The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. Some of these positions are
inherently uncertain and include those relating to transfer pricing matters and the interpretation of income tax laws applied tocomplex transactions. The Group periodically reassesses its tax positions. Changes to the financial statement recognition,measurement, and disclosure of tax positions are based on management’s best judgment given any changes in the facts, circumstances, information available and applicable tax laws.
Employee benefits
The standard requires that certain assumptions are made in order to determine the amount to be recorded for defined benefit
obligations and pension plan assets, in particular for defined benefit plans. These are mainly actuarial assumptions such as
expected salary increase, employee turnover and discount rates. Substantial changes in the assumed development of any ofthese variables may significantly change LEM Group’s retirement benefit obligation and pension plan assets.
Valuation of deferred tax assets
The carrying amount of deferred tax assets is reviewed on each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

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Page 11

Notes to the consolidated
financial statements

2.4 Basis of consolidation
The consolidated financial statements are composed of LEM HOLDING SA and of its subsidiaries.
Subsidiaries
Subsidiaries are those entities over which the Group has control. Control is when the Group is exposed, or has rights, to variable
returns from its involvement with subsidiary and has the ability to affect those returns through its power over the subsidiary to
direct the relevant activities.
Business combinations are accounted for using the acquisition method. Companies that are acquired are included when control is obtained and are consolidated until control is transferred to the acquirer. The cost of purchasing a company is determined as the sum of the fair value of the assets that are to be paid to the seller and the obligations that are entered into, or
assumed, on the date of purchase. Identifiable acquired assets, liabilities and contingent liabilities are recognized at their fairvalue as of the date of their acquisition. The Group’s share of the purchase price that exceeds the fair value of the identifiable
net assets is recognized as goodwill. The Group’s share of the fair value of the identifiable net assets that exceeds the purchaseprice is shown as a gain on bargain purchase on the income statement.
Intragroup assets and liabilities as well as income and expenses are set-off against each other.
Unrealized intragroup profits, particularly on inventories and fixed assets, are eliminated.
Associates
Investments in associated undertakings are accounted for using the equity method. These are undertakings over which theGroup exercises significant influence, but which it does not control.
No associated undertakings existed as at 31 March 2023 and 31 March 2022.
2.5 Foreign currencies
Functional and presentation currency
The consolidated financial statements are presented in Swiss francs as the presentation currency. The subsidiaries use local
currencies as their functional currency which is the currency of the primary economic environment in which they operate.
Foreign currency translation
All assets and liabilities in the balance sheets of subsidiaries that are denominated in the respective functional currencies aretranslated into Swiss francs at the year-end exchange rate. Items in the income statement and cash flow statement are translated at the average exchange rate for the year. The resulting translation differences are recognized in other comprehensive
income. When a foreign operation is disposed, the cumulative translation differences recognized in other comprehensive
income are transferred to the income statement.

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Page 12

Notes to the consolidated
financial statements

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

Income statementof 2022/23

Income statementof 2021/22

Balance sheet
31.3.2023

Balance sheet
31.3.2022
Year-end rate in CHF

Average rate in CHF

Average rate in CHF

Year-end rate in CHF

BGN

0.508

0.546

0.509

0.525

CNY

0.139

0.143

0.133

0.146

DKK

0.134

0.144

0.134

0.138

EUR

0.994

1.068

0.995

1.026

GBP

1.150

1.255

1.131

1.213

JPY

0.00710.00820.00690.0076
0.219

MYR

0.215

0.220

0.207

RUB

0.014

0.012

0.012

0.011

USD

0.955

0.919

0.914

0.923

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

nil

Buildings

20 – 40 years

Fixtures and equipment

5 – 15 years

Machinery and equipment

5 – 8 years

Tools and molds

2 – 5 years

Vehicles3 – 5 years

IT equipment

3 – 5 years

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Page 13

Notes to the consolidated
financial statements

Repairs and renewals are charged to the income statement when the expense is incurred. Subsequent expenditure on an itemof property, plant and equipment is capitalized only when it is probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured reliably.
2.9 Leases
The Group recognizes a right-of-use asset and a corresponding lease liability with respect to contracts considered as a leasein which the Group acts as lessee, except for leases with a term of 12 months or less (“short-term leases”) and leases for which
the underlying asset is of a low value (“low-value asset”).
At the commencement date of a lease, a lessee recognizes a liability measured at the present value of future lease payments
using the interest rate stated in the contract or in the absence of such a rate an incremental borrowing rate (i.e., the lease liability) and a corresponding asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use
asset). Extension options are initially only considered if the Group is reasonably certain that such options are exercised. Leaseliabilities are subsequently remeasured in case the lease term is changing or if extension options are reassessed. Right-of-use
assets are adjusted accordingly if lease liabilities are reassessed.
Lease liabilities are thereafter recorded at amortized cost whereas right-of-use assets are depreciated on a straight-line basis
over the lease term.
Real estate leases
The Group leases buildings for use as office and warehouse space. Lease terms are negotiated on an individual basis andcontain a wide range of different terms and conditions. Leases are typically made for a fixed period of 1 to 15 years and may
include extension options.
Vehicles leases
The Group maintains some leased vehicles with an average lease term of 3 years.
2.10 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of theacquired subsidiary at the date of acquisition. Goodwill on acquisitions is reported in the balance sheet under intangible assets
and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Research & development
Research costs are expensed as incurred. An intangible asset arising from development is recognized if, and only if, the Groupcan demonstrate the following:– the technical feasibility of completing the intangible asset;– Group’s intention to complete the intangible asset;– ability to use or sell the intangible asset and the expectation that the intangible asset will generate probable future
economic benefits;– the availability of adequate technical, financial and other resources to complete the development; and– the ability to measure the expenditure attributable to the intangible asset during its development reliably.
Such development costs are capitalized and amortized over the life of the product or process.

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Page 14

Notes to the consolidated
financial statements

Other intangible assets
Other intangible assets with definite useful lives are carried at cost less amortization and any impairment.
Expenditure on computer software, acquired patents, trademarks and licenses is capitalized and amortized using the straightline method over their useful lives, not exceeding five years.
2.11 Impairment of tangible fixed assets, intangible assets and right-of-use assets
Assets that are subject to depreciation and amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which
the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value lesscost to sell and value in use.
For the purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable
cash-flows (cash-generating unit).
The value in use is calculated based on the estimated future cash-flows expected to result from the use of the asset and eventual disposal, discounted using an appropriate noncurrent interest rate.
Goodwill is tested for impairment annually (at 31 March) and when circumstances indicate that the carrying value may be
impaired. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill
relates. Impairment losses relating to goodwill cannot be reversed in future years.
2.12 Financial assets
Financial assets comprise cash, receivables, certain accrued income, marketable securities and derivative financial instruments. Financial assets are recorded on the trade date.
Initial recognition and measurement
At initial recognition, financial assets are designated into two categories, financial assets at fair value through profit and loss
and at amortized cost.
Financial assets are initially recognized at fair value plus, in the case of a financial asset not at fair value through profit and loss,
directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification:– financial assets at fair value through profit and loss (refer to note 2.13);– loans and receivables are measured at amortized cost using the effective interest rate method, less impairment.
Accounts receivable are carried at the original invoice amount less an allowance made for doubtful accounts based on a review
of all outstanding amounts at year-end covering expected lifetime credit losses. Allowances for doubtful accounts are established when there is an objective indication that the Group will not be able to collect the amounts due. Allowances for doubtful
accounts are written off when identified as not recoverable in full. For accounts receivable that are not individually adjusted,
LEM applies the simplified approach for the recognition of the expected lifetime losses using a provision matrix.
Other receivables are measured at amortized cost less allowances for amounts that are deemed not to be recoverable.

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Page 15

Notes to the consolidated
financial statements

2.13 Derivative financial instruments
The Group uses derivative financial instruments to hedge foreign exchange risks of forecasted transactions. Derivative financial
instruments comprise forward exchange contracts.
Derivative financial instruments are initially measured at fair value and subsequently at fair value through profit and loss. Any
gains and losses arising from changes in fair value on derivatives are recorded directly in the income statement which meansthat the Group does not apply hedge accounting.
Derivative financial instruments are shown as part of other current assets and other current liabilities. In case the maturity isafter more than one year, derivative financial instruments are recognized under other noncurrent assets or other noncurrent
liabilities.
2.14 Financial liabilities
Financial liabilities comprise bank loans, payables, certain accrued expenses and derivative financial instruments at the end of
the period. Financial liabilities are initially recorded on the trade date.
All financial liabilities are recognized initially at fair value less, in the case of financial liabilities not at fair value through profit andloss, directly attributable transaction costs.
Financial liabilities that are due within 12 months after the balance sheet date are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability until at least 12 months after the balance sheet date.
Borrowing costs are expensed as incurred except if they are capitalized as part of a qualifying asset.
Subsequent measurement
Subsequently, financial liabilities other than derivatives are measured at amortized cost based on their effective interest rate.
Interest expenses and foreign currency revaluations are recognized in the income statement. On derecognition, gains and losses are recognized in the income statement. Financial liabilities are derecognized when the contractual obligations are fulfilled,
cancelled or expire.
2.15 Employee benefits
The Swiss and German subsidiaries provide a defined benefit plan for employees; the other subsidiaries provide defined contribution plans according to local laws. In both cases the charges are included in the related periods in the personnel expensesof the various functions where the employees are located.
Defined benefit plan
The defined benefit obligation is determined annually by qualified independent actuaries. The obligation and cost of pension
benefits are determined using the projected unit credit method. Service costs are part of personnel expenses and consist of
current service cost, past service cost and gains/losses from plan settlements. Past service costs are recognized at the earlier of the date when the plan amendment occurs, or when restructuring costs are recognized. They include plan amendment
and curtailment. Gains or losses on settlement of pension benefits are recognized when the settlement occurs. Net interestis recorded in the financial result and is determined by applying the discount rate to the net defined benefit liability/asset thatexists at the beginning of the year. Actuarial gains and losses resulting from changes in actuarial assumptions and experience
adjustments are recorded in other comprehensive income as remeasurements of employee benefits. The return on plan assets(excluding interest based on the discount rate) and any change in the effect of an asset ceiling are also recorded in this line.
In accordance with IFRIC 14, any assets resulting from surpluses in defined benefit plans are limited to their economic benefit
such as to the value of the maximum future savings from reduced contributions.

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Page 16

Notes to the consolidated
financial statements

Defined contribution plan
The subsidiaries sponsor defined contribution plans including state plans based on local laws and regulations. Defined contribution plan expenses are recorded in the income statement as incurred.
LEM Incentive System
The LEM Incentive System consists of a short-term incentive component and a long-term incentive component.
The short-term incentive component compensates for the actual annual results and achieved performance. The long-term
incentive plan rewards the members of the Executive Management and Senior Managers for the sustainable financial performance of the Group.
Both elements are cash settled and the bonus payments are made in the first four months of the following fiscal year. The estimated payments are accrued for at year-end.
As of 2022/23, the Board of Directors of LEM HOLDING SA decided to replace the current cash-based long-term incentive planfor LEM’s Executive Management by a share-based Performance Share Unit (“PSU”) plan.
Share-based payment
The purpose of the share-based Performance Share Unit (“PSU”) plan is to offer LEM’s senior management and Executive
Management the possibility to participate in the future long-term business results of LEM Group, provide an increased incentive for participants and foster loyalty as well as align the interests among senior management and Executive Management,
LEM Group as well as its shareholders.
The number of shares obtained per PSU can thereby vary between 0% and 200% of the award, subject to continuous employment and depending on the achievement of pre-agreed performance conditions.
The performance conditions include non-market and market conditions such as economic value added (“EVA”), absolute total
shareholder return (“absolute TSR”), and total shareholder return measured relative to the SPI EXTRA® Total Return Index (“relative TSR”). The grant-date fair value estimate of market conditions are based on a Monte Carlo simulation. The performance
conditions are measured over the period of three consecutive financial years starting with the financial year during which theaward date occurs relevant for measuring the long-term performance.
The Group accounts for the PSU as an equity-settled plan.
The employee services received in exchange for the grant of the PSU are measured at the fair value of the equity instruments
granted and are recognized as expenses, with a corresponding increase in retained earnings over the vesting period.
The dilutive impact of the outstanding performance share plan is reflected in the calculation of diluted earnings per share.
Further details about this share-based payment LTI plan are provided in the compensation report (page 60).
2.16 Provisions and contingent liabilities
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of
the obligation.

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Page 17

Notes to the consolidated
financial statements

Warranty and customer claims
The Group recognizes the estimated liability to replace products still under the contractual warranty at the balance sheet date.
This position is calculated based on past history of the level of repairs and replacements. Additional specific provisions arebooked when required.
Litigations
The Group recognizes the estimated country and entity-specific risks relating to litigations with former personnel or indirect
taxation.
Restructuring
A constructive obligation to restructure arises only when an entity has a detailed formal plan for the restructuring identifying
at least:– the business or part of a business concerned;– the principal locations affected, function and approximate number of employees who will be compensated for terminating
their services;– the expenditures that will be undertaken; and– when the plan will be implemented;
and raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
Contingent liabilities
Contingent liabilities arise from past events where the outcome depends on future events. As the probability either cannot bemeasured reliably or the probability for a subsequent outflow lies below 50%, contingent liabilities are not recognized in thebalance sheet but are described in the notes.
2.17 Share capital
LEM HOLDING SA has only ordinary registered shares. Dividends on ordinary shares are deducted from equity in the period inwhich they are declared.
Treasury shares
Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain orloss is recognized in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Any difference between the carrying amount and the consideration is recognized in retained earnings.
2.18 Revenue recognition
Revenue from the sale of products is recognized at a point in time when LEM satisfies its performance obligation, which is themoment when the customer acquires control over the products. This is generally achieved at delivery of the products. Revenue
is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of
payment and excluding taxes or duty.
Revenue from the sale of products comprises all revenue that is derived from sales of products to third parties after deductionof rebates and value-added taxes.

LEM Financial Report 22 | 23

Page 18

Notes to the consolidated
financial statements

2.19 Income taxes and deferred taxation
Income taxes
Income taxes comprise all current and deferred income taxes, including the withholding tax payable on profit distributions within the Group. Income taxes are recognized in the consolidated income statement except for income taxes on transactions thatare recognized directly in shareholders’ equity or in other comprehensive income.
Deferred taxation
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of
assets and liabilities and their carrying amounts in the financial statements. Deferred taxes are determined using tax rates that
apply, or have been substantially enacted, on the balance sheet date in the countries where the Group is active. Tax losses
carried forward and deductible temporary differences are recognized as deferred tax assets to the extent that it is probablethat tax profit will be available in the future against which the tax losses carried forward can be utilized. Deferred tax assets andliabilities are offset against each other if the corresponding income taxes arise by the same tax authority and a legally enforceable right for offsetting exists.

3.
Segment Information
As of 1 April 2022, LEM Group decided to modify its organizational structure and to manage its business primarily on a geographic basis and therefore dissolved the two operating segments Industry and Automotive.
For management purposes, LEM Group is now organized into two reportable segments as follows:– Region of Asia which includes China, Japan, South Korea, India, South-East Asia;– Region of Europe/Americas which includes Europe, Middle East, Africa, NAFTA and Latin America.
Although the reportable segments provide similar electronics components called transducers for applications in different customer sectors, each region is managed separately to better align with the location of the Group’s customers and distribution
partners and the unique market dynamics of each geographic region.
The Group evaluates the performance of its reportable segments based on net sales and operating profit. Net sales for geographic segments are based on the location of customers. Operating profit for each segment includes net sales to third parties,
related cost of sales and operating expenses directly attributable to the segment.
Centralized headquarter support functions as well as certain research and development costs managed outside of the reportable segments are allocated to each segment based on sales.
The Group does not include intercompany transfers between segments for management reporting purposes. The reporting
segments are presented in a manner consistent with the internal reporting.
LEM Group has restated the sales and corresponding items of segment information for earlier periods.
It was not possible to disclose the current period based on the old basis of segmentation as the necessary information is notavailable.

LEM Financial Report 22 | 23

Page 19

Notes to the consolidated
financial statements

Business segment information
Asia

Europe/Americas

LEM Group2022/232021/222022/232021/22Sales

228’900

211’248

177’450

162’147406’350

373’395

EBITDA

60’591

59’97446’557

43’535107’148

103’507

10’233

In CHF thousands

2022/232021/22

Income statement

Depreciation and amortization
3’705

3’415

7’765

6’818

11’470Intangible assets

Property, plant and equipment

217

218

167

195

383

413

Right-of-use assets

1’021

1’084

2’094

3’419

3’115

4’503

Total

4’943

4’717

10’026

10’432

14’96815’149Operating profit

55’64855’25736’53133’10392’18088’358Interest expenses(1’719)(650)Interest revenue

392

268

Foreign currency exchange effect(1’928)(2’700)Taxes(13’585)(12’910)75’34072’36620’755

Net profit for the year
Capital expenditures
Property, plant and equipment

11’480

5’394

14’752

15’361

26’232

71

101

156

243

227

344

Total capital expenditures

11’772

5’495

14’90815’60426’68021’099Goodwill

2’907

3’022

2’907

3’022

Intangible assets

Assets by reportable segments include trade receivables, inventories, property, plant and equipment, right-of-use assets.
Liabilities by reportable segments include trade payables, accrued expenses and lease liabilities.

4.

Revenue information

Regional information
2022/232021/22

China

157’897

143’825

Rest of Asia

71’00367’423

Total region Asia

228’900

211’248

EMEA

127’668

124’674

Americas49’78237’473

Total region Europe/Americas

177’450

162’147

LEM Group406’350

373’395

In CHF thousands

Sales

LEM Financial Report 22 | 23

Page 20

Notes to the consolidated
financial statements

Geographical information
China

USA

GermanyJapan

2022/232021/222022/232021/222022/232021/222022/232021/22

In CHF thousands

Sales

157’897

143’825

44’56032’607

43’53337’862

29’14928’845

Noncurrent assets1

15’99013’789

98

60

132

148

3’425

3’661

Right-of-use assets

1’339

1’712

394

50

8

48

247

529

South Korea

Italy

Other countries

2022/232021/222022/232021/222022/23

24’65019’91513’82713’087

0

21

23

37

52

23’241LEM Group2021/222022/232021/2292’73497’254406’350

373’395

59’902

46’96479’56764’64526’04525’26628’436

In CHF thousands

Sales
Noncurrent assets1
Right-of-use assets

1 Other than financial instruments, deferred tax assets and post-employment benefit assets

Sales are reported as per place of transaction destination.

5.

Accounts receivable
31.3.2023

31.3.2022

in CHF thousands

Accounts receivable – trade82’52574’918

Allowance for doubtful accounts / expected credit losses(1’379)(1’147)

Total accounts receivable – trade

81’146

73’771Other receivables

5’313

6’325

Total

86’45880’096

Movements of allowance for doubtful accounts/expected credit losses
Total
in CHF thousands

Balance as per 1 April 2021

710

Addition

500

Utilized during the year

(21)

Foreign exchange effect(42)

Balance as per 31 March 2022

1’147

Balance as per 1 April 2022

1’147

Addition

467

Utilized during the year

(188)

Foreign exchange effect(47)

Balance as per 31 March 2023

LEM Financial Report 22 | 23

1’379

Page 21

Notes to the consolidated
financial statements

Aging analysis of accounts receivableNot due< 30 days

31– 90 days

91– 180 days

> 180 days

Total

61’858

8’985

3’129

229

717

74’918

(90)

(157)

(273)

(42)

(585)

(1’147)

1

6’325

186

133

80’096

In CHF thousands

31 March 2022
Accounts receivable – trade
Allowances for doubtful accounts /expected credit losses
Other receivables

6’324

Total

68’092

8’829

2’856

70’633

8’116

2’343

363

1’070

82’525

0

(157)

(117)

(90)

(1’015)(1’379)

2’226

273

31 March 2023
Accounts receivable – trade
Allowances for doubtful accounts /expected credit losses
Other receivables

4’517

510

Total

75’150

8’469

6.

286

5’313

341

86’458Inventories
31.3.2023

31.3.2022

Raw material

30’756

24’514Work in progress

3’323

2’526

Finished goods and goods for resale

22’752

19’100Total

56’83146’140in CHF thousands

The inventories include allowances of CHF 6’090 thousand (at 31 March 2022: CHF 6’092 thousand).

7.

Other current assets
31.3.2023

31.3.2022

Advances to suppliers

2’682

4’665

Prepayments and accrued income

1’952

1’795

Derivative financial instruments

42

32

Other current assets

2

90

4’678

6’582

in CHF thousands

Total

LEM Financial Report 22 | 23

Page 22

Notes to the consolidated
financial statements

8.

Property, plant and equipmentin CHF thousands

Net book value 1 April 2021
Investment

Land and buildings

Machinery andequipment

Total

42

50’34550’387

1’025

19’73120’755(27)(27)

Disposal
Impairment
Other movements
Depreciation(8)

Foreign exchange effect41

41(10’227)(10’233)

(4)

(345)

(349)

Net book value 31 March 2022

1’055

59’51860’574

At cost of acquisition

1’153

147’493

148’646(98)(87’975)(88’072)

Net book value 31 March 2022

1’055

59’51860’574

Net book value 1 April 2022

1’055

59’51860’574717

25’73626’453

Accumulated depreciation

Investment
Disposal

(140)

(140)

Impairment

(442)

(442)

Other movements
Depreciation
Foreign exchange effect

(17)

(17)

(13)

(11’016)(11’028)(57)(1’762)(1’819)Net book value 31 March 2023

1’703

71’87873’580At cost of acquisition

1’804

161’131

162’934

Accumulated depreciation(101)(89’253)(89’354)

Net book value 31 March 2023

1’703

71’87873’580LEM Financial Report 22 | 23

Page 23

Notes to the consolidated
financial statements

9.
9.1

LeasesRight-of-use assets
Real estate

VehiclesTotal

Net book value 1 April 2021

7’008

245

7’253

Addition

25’87458

25’932(134)(4’503)in CHF thousands

Remeasurement(25)

Depreciation(4’369)Foreign exchange effect
Net book value 31 March 2022

(25)

(216)

(5)

(221)

28’272164

28’436

At cost of acquisition

37’117523

37’640

Accumulated depreciation(8’845)(359)(9’204)

Net book value 31 March 2022

28’272164

28’436

Net book value 1 April 2022

28’272164

28’436

880

231

1’111

(2’984)(130)(3’114)

(271)

(14)

(285)

25’015251

25’266

Addition
Remeasurement(882)

Depreciation
Foreign exchange effect
Net book value 31 March 2023

(882)

At cost of acquisition

33’114583

33’697

Accumulated depreciation(8’099)(332)(8’431)

Net book value 31 March 2023

25’015251

25’266

On 14 January 2022, LEM International SA entered into a lease agreement for its new headquarters for 15 years.

LEM Financial Report 22 | 23

Page 24

Notes to the consolidated
financial statements

9.2 Lease liabilities
The Group presents the lease liabilities in the table below:
Current leaseliabilities

Noncurrent
lease liabilities

3’458

3’905

Total

in CHF thousands

Balance as per 1 April 2021
Payment of lease liabilities including interest(4’388)

7’363(4’388)Non-cash items

0

Addition

487

Interest

26’382402

Transfer from noncurrent to current
Exchange differences
Balance as per 31 March 2022

Balance as per 1 April 2022
Payment of lease liabilities including interest
Lease incentive

26’869402

1’732(1’732)

0

(46)

(180)

(226)

1’646

28’37530’021

1’646

28’37530’021(1’819)(1’819)892

892

Non-cash items

0

Addition

224

887

1’111

Interest

1’006

Remeasurements

(873)

1’006

Transfer from noncurrent to current

2’149(2’149)0Foreign exchange effect

(121)

(183)

(304)

Balance as per 31 March 2023

3’103

26’93030’034(873)

The weighted average incremental borrowing rate is 3.35% (31 March 2022: 1.34%).
The following table presents the contract undiscounted cash flows for lease obligations as at 31 March 2023:
Undiscounted cash flows
31.3.2023

31.3.2022

In CHF thousands

Within 1 year

4’261

1’853

Within 1 year to 5 years

12’118

12’562

Above 5 years

20’862

23’564

9.3 Other lease disclosures
The following expenses related to the Group’s leasing activities are recognized in the income statement:
Expenses related to the Group’s leasing activities
31.3.2023

31.3.2022

In CHF thousands

Expenses relating to short-term leases / low value assets(1’001)(492)

Depreciation of right-of-use assets(3’114)(4’503)

Interest expenses on lease liabilities(1’006)

(402)

Total

(5’121)(5’397)LEM Financial Report 22 | 23

Page 25

Notes to the consolidated
financial statements

10.

Intangible assets
Goodwill

Patents

Other
intangible assets

Total

3’171

130

1’025

4’326

in CHF thousands

Net book value 1 April 2021
Investment

344

344

Other movements

(35)

(35)

(413)

(413)

Amortization
Foreign exchange effect

(148)

0

(2)

(150)

Net book value 31 March 2022

3’022

130

920

4’072

At cost of acquisition

3’022

Accumulated amortization

465

9’285

12’773(335)(8’365)(8’700)

920

4’072

Net book value 31 March 2022

3’022

130

Net book value 1 April 2022

3’022

130

920

4’072

51

2’368

2’418

Investment
Other movements
Amortization

16

16

(383)

(383)

Foreign exchange effect

(115)

0

(21)

(136)

Net book value 31 March 2023

2’907

181

2’899

5’987

At cost of acquisition

2’907

Accumulated amortization
Net book value 31 March 2023

2’907

516

11’50514’928(335)(8’606)(8’941)

181

2’899

5’987

The entire goodwill of LEM Group results from the acquisition of NANA in 2000/01 and is allocated to the cash-generating unit
LEM Japan KK. The goodwill relates to the Asia business segment. The recoverable amount has been determined based onvalue-in-use calculations. These calculations use cash flow projections of five years based on financial business plans andbudgets approved by management. The projections include assumptions concerning revenue growth and expected operating
costs over the next five years plus a continuous period. Average revenue growth is projected at 8.5% and operating costs were
estimated based on the experience of management. The pretax discount rate used within these cash flow calculations is 13.7%(2021/22 12.8%) and is based on the weighted average cost of capital of a peer group. The carrying value of the cash-generating unit including goodwill was compared to the value in use and no impairment was found to be present for the year ended
31 March 2023.
This year, the Group entered into a transformation program to support LEM’s future growth. This transformation program contains cloud computing arrangements on which an assessment has been made to ensure it complies with IAS 38 Intangible assets. In relation to cloud computing arrangements, an entity needs to assess whether an intangible asset(s) is/are present, i.e.
does the contract provide the customer with a resource that it can control. Costs of implementation such as testing softwareand configuration are capitalized if directly attributable, and programming of interfaces are capitalized if they met the definitionof IAS 38. All other costs are expensed.

LEM Financial Report 22 | 23

Page 26

Notes to the consolidated
financial statements

11.

Other noncurrent assets
31.3.2023

31.3.2022

Loan to personnel

140

190

Deposits & guarantees

524

538

Total

664

728

31.3.2023

31.3.2022

Total accounts payable – trade

33’00423’320

Other payables

3’067

3’357

Total

36’071

26’677in CHF thousands

12.

Accounts payablein CHF thousands

13.

Provisions
Warranty andcustomer claims

Litigations

Other

Total

1’594

359

322

2’275

In CHF thousands

Balance as per 1 April 2021
Additional provisions

218

281

(213)

(1’011)

(112)

(594)

Unused amounts reversed(649)

Utilized during the year(482)

Foreign exchange effect

0

0

(2)

(2)

681

210

58

950

Balance as per 31 March 2022

(149)

63

Of which current

94

Of which noncurrent

856

Balance as per 1 April 2022

681

Additional provisions

334

210

950
1’061

Unused amounts reversed

(177)

(4)

(216)

Utilized during the year

(71)

(12)

(83)

Foreign exchange effect

(26)

(64)

(91)

Balance as per 31 March 2023

741

705

1’621

Of which current

175

601

Of which noncurrent

LEM Financial Report 22 | 23

(35)

58
727

1’020

Page 27

Notes to the consolidated
financial statements

Warranty and customer claims
Provisions for warranty and customer claims have been estimated based on past experience and the risk assessment of management. The warranty provision is expected to be used over the next five years.
Litigations and taxes
Despite the care that LEM applies in the separation process with personnel, such separation may result in legal conflicts. The
Group reviews all legal claims and takes appropriate actions to support its position and management estimates the reasonablerisk to be provided for.
The Company operates in multiple jurisdictions with complex legal and tax regulatory environments. In the frame of the continuous improvement of its processes and systems, LEM has reviewed the consumption taxes in several countries. It has appearedthat some LEM’s subsidiaries may not have been fully compliant with their local consumption tax regulations. As a consequence, LEM has estimated consumption tax provisions according to management’s best judgment. Some of these positions
are inherently uncertain and include the interpretation of local regulations applied to complex transactions.
Other
A restructuration provision of CHF 380 thousand is recorded in 2022/23 due to termination of operations in LEM Russia.

14.

Other liabilities
31.3.2023

31.3.2022

513

531

Other liabilities

4’613

3’680

Total

In CHF thousands

Post-employment benefit plans
Derivative financial instruments

8
5’127

4’219

Of which current

2’228

1’267

Of which noncurrent

2’899

2’952

15. Equity
Share capital
The nominal share capital of CHF 570’000 comprises 1’140’000 registered shares, each with a nominal value of CHF 0.50.
There is neither authorized nor conditional share capital outstanding.
Investments in shares of LEM HOLDING SA held by the Group are classified as treasury shares and are accounted for at historicalcost. Treasury shares are not entitled to dividends.

LEM Financial Report 22 | 23

Page 28

Notes to the consolidated
financial statements

Movement of treasury shares
NumberHigh

Price per share in CHF
AverageLow

Value
in CHF thousands

In number of shares, in CHF

Value 1 April 2021

608

Purchases at cost

6’936

2’670.00

2’112.59

1’634.18

14’653(7’095)2’670.00

2’090.42

1’657.40(14’832)

3’986

2’401.82

1’863.23

1’392.29

7’427(3’880)2’438.18

1’890.66

1’439.90(7’336)

Sales at cost
Value 31 March 2022

1’156

449

Purchases at cost
Sales at cost
Value 31 March 2023

977

555

1’069

In CHF

Ordinary dividend per share 2021/22		

50.00

Ordinary dividend per share 2022/23

52.00

A dividend of CHF 52 per share will be proposed by the Board of Directors to the Annual General Meeting of Shareholders of
the Group on 29 June 2023. The expected payout for dividends amounts to CHF 59.3 million.

16.

Staff costs
Notes

2022/232021/22

Production(28’520)(25’792)

Sales(19’544)(19’387)

Administration(16’192)(15’335)

Research & development(23’833)(20’046)

Total(88’089)(80’559)

Salaries and wages(83’039)(74’406)

Temporary employee costs(3’596)(3’624)(1’274)(2’335)

In CHF thousands

Cost of defined benefit plans

24.1

Cost of defined contribution plans
Total
Number of employees at the end of the financial year

(180)

(194)

(88’089)(80’559)

31.3.2023

31.3.2022

Permanent employees

1’488

1’350

Temporary employees

216

198

Apprentices

13

24

1’716

1’572

Total

LEM Financial Report 22 | 23

Page 29

Notes to the consolidated
financial statements

17. Share-based payments
The grant-date fair value is calculated based on the closing share price as reported by SIX Swiss Exchange at the date of the
grant.
As the EVA condition is a non-market condition, the future EVA performance realization is not reflected in the grant-date fairvalue. Since plan participants are not entitled to dividends during the vesting period, the value of the EVA-driven part of a PSU
is reduced by the present value of the expected dividend stream during the period from the grant date to the vesting date.
The three-year TSR is calculated as the relation between the average daily closing share prices / index performance during
the month of March of the year of grant and the average daily closing share prices / index performance during the month ofMarch of the year of vesting assuming dividend payments over the performance period are reinvested in shares at the time ofthe distribution and expressed in percentage based on the compound annual growth rate (CAGR) over the performance period.
Relative TSR is calculated as a simple difference between the three-year LEM’s TSR CAGR and the three-year TSR CAGR of the
SPI EXTRA® Index.
As of 31 March 2023, the Group has the following plans ongoing:

Plan namePlan Cycle 2022/23 to 2024/25

Grant date

Vesting date

Number of
beneficiaries

20.7.2022

20.7.2025

32

Plan Cycle 2022/23 to 2024/25

Number of
PSU
allocated

Revision of
sharenumberrelated toservice andperformance
conditions

995

–87

Number ofsharesdefinitely
allocated in
March 2023

Number ofsharesexpected to
be deliveredat vesting
date

0

908

Fair value at
grant date(in CHF)

Absolute TSR fairvalue at grant date(in CHF)

Relative TSR fairvalue at grant date(in CHF)

EVA fair value at
grant date(in CHF)

1’765.00

1’187.22

1’627.70

1’592.00

Plan Cycle 2022/23 to 2024/25
An expense of CHF 514 thousand is recorded in 2022/23 in respect of this plan, the fair value of which totaled CHF 514 thousand. The following input were used to calculate the fair value of the plan:
LEM

SPI Index

Risk-free interest

1.09%

1.09%

Dividend yield

3.07%

–

36.66%

18.42%

2022/232021/22(1’542)(573)

Expected volatility

18.

Financial expenses

In CHF thousands

Interest expenses
Other financial expenses

(177)

(77)

(1’719)(650)2022/232021/22

Interest income on cash

392

269

Total

392

269

Total

19.

Financial income

In CHF thousands

LEM Financial Report 22 | 23

Page 30

Notes to the consolidated
financial statements

20. Exchange effect2022/232021/22(2’191)(3’481)

In CHF thousands

Exchange gains /losses
Fair value revaluation on derivatives

18

837

Gains and losses on derivatives 1

246

(57)

(1’928)(2’700)Total
1 Position includes cost of derivative hedging

In 2022/23, the exchange effect is mainly driven by the foreign exchange loss linked to EUR and USD devaluation.

21. Income taxes, deferred tax assets and liabilities
The Group operates in multiple jurisdictions with complex legal and tax regulatory environments. In certain of these jurisdictions, the Group has taken income tax positions that management believes are supportable and are intended to withstandchallenges by tax authorities. Some of these positions are inherently uncertain and include those relating to transfer pricing
matters and the interpretation of income tax laws applied to complex transactions. The Company periodically reassesses its tax
positions. Changes to the financial statement recognition, measurement, and disclosure of tax positions are based on management’s best judgment given any changes in the facts, circumstances, information available and applicable tax laws. Considering
all available information and the history of resolving income tax uncertainties, the Group believes that the ultimate resolution ofsuch matters will not have a material effect on its financial statements.
Differences between the final tax outcome and the amounts that were initially recorded impact the income and deferred taxes
in the period in which such determinations are made. The Group calculates its expected average tax rate as a weighted averageof the tax rates in the tax jurisdictions in which the Group operates.
LEM has made the decision to repatriate all available dividends from its subsidiaries in the foreseeable future. Unrecoverable
withholding taxes are considered part of the expected tax rate. Deferred income tax liabilities have been established for unrecoverable withholding taxes that would be payable on the unremitted earnings of foreign subsidiaries.
The tax expense relating to components of other comprehensive income amounts to CHF 758 thousand for the year 2022/23(tax income of CHF 711 thousand in 2021/22).
Income tax
2022/232021/22

Current income taxes(9’608)(8’228)Deferred taxes relating to the origination and reversal of temporary differences(4’462)(5’155)

In CHF thousands

Deferred tax income/(expense) resulting from reduction in tax rates
Adjustment recognized in the period for current tax of prior year
Total

LEM Financial Report 22 | 23

Page 31

0

2

485

471

(13’585)(12’910)

Notes to the consolidated
financial statements

The Group’s effective tax rate differs from the Group’s average expected tax rate as follows:
2022/232021/22

15.6

15.2

In %

Group’s average expected income tax rate
Group’s average expected withholding tax rate

0.8

1.3

16.4

16.5

Permanent differences

(0.4)

(0.7)

Adjustment in respect of previous periods’ income tax

(0.6)

(0.6)

0.0

(0.2)

Group’s average expected tax rate
Tax effect ofRecognition of previously unrecorded tax losses
Other differences

(0.2)

0.1

Group’s effective tax rate

15.3

15.1

Deferred tax assets and liabilities
Deferred taxes have been calculated on the following balance sheet positions:31.3.2023

31.3.2022

Asset

Liability

Asset

Liability

48’524(5’116)54’351(4’982)

108

(113)

101

(131)

1’425

(591)

1’795

(470)

Property, plant and equipment

1’348(3’891)859(4’018)Intangible assets

45’635(24)

51’16399

In CHF thousands

Assets
Accounts receivable
Inventories

Tax losses carried forward
Other assets

426

0

8

(497)

7

(462)

Liabilities

4’825(2’798)

4’492(3’228)Provisions

218

0

53

0

4’607

0

4’439

0

(2’798)0(3’228)(8’210)

OthersWithholding tax on dividends
Gross deferred taxes

53’349(7’914)58’843

Offsetting(4’980)

4’980(4’741)

4’741

Net deferred taxes

48’369(2’934)54’102(3’469)LEM Financial Report 22 | 23

Page 32

Notes to the consolidated
financial statements

The balance sheet contains the following:
31.3.2023

31.3.2022

Deferred tax assets

48’36954’102

Deferred tax liabilities(2’934)(3’469)Net assets

45’43550’633

LEM Group has no more deferred tax assets on tax losses (CHF 426 thousand in 2021/22). In 2022/23, the deferred tax
assets of CHF 48.4 million is mainly linked to the deferred tax asset of the technical intellectual property sale in 2019/20 andusufruct sale in 2020/21.

22. Earnings per share
Net earnings per share is calculated by dividing the net profit for the financial period by the average number of shares in issue
over the period net of treasury shares held.
Only treasury shares held by LEM Group and allocated at the closing to share performance plan guarantee a dilutive effect on
the calculation of diluted earnings per share.
The following table reflects the income and share data used in the basic and diluted EPS calculations:
2022/232021/22

Basic earnings per share
75’34072’367

Ordinary number of shares at the beginning of the year

Net profit for the year attributable to LEM shareholders – in CHF thousands

1’140’000

1’140’000

Weighted average number of ordinary shares

1’140’000

1’140’000

Weighted average number of treasury shares

544

420

1’139’456

1’139’580

66.12

63.50

75’34072’367

1’139’456

1’139’580

Weighted average number of shares outstanding
Earnings per share – basic in CHF
Diluted earnings per share
Net profit for the year attributable to LEM shareholders – in CHF thousands
Weighted average number of shares outstanding
Share-based payment plans
Adjusted weighted average number of shares outstanding
Earnings per share – diluted in CHF

LEM Financial Report 22 | 23

Page 33908

01’140’364

1’139’580

66.07

63.48

Notes to the consolidated
financial statements

23. Related parties
Related parties are the Board of Directors and the Executive Managers as defined in the Corporate Governance guidelines.
The compensation to the Board of Directors is paid as a fixed fee in cash. The compensation for the Executive Management includes base salary, a performance-related bonus (LEM Incentive System), bonus and post-employment benefits.
In 2022/23 and 2021/22, no termination benefits have been paid. The base salary is the employee’s compensation before
deduction of the employee’s social security contributions. Bonus payments are made in cash.
Compensation of the Board of Directors
2022/232021/22

In CHF thousands

Annual fees

(870)

(870)

Total

(870)

(870)

2022/232021/22

Base salary(2’002)(1’802)Bonus(2’143)(1’745)Compensation of the Executive Management
In CHF thousands

Other benefits

(26)

–

Company’s contribution to pension fund

(203)

(180)

(4’374)(3’727)

Total

Share-based payments of the Executive Management

Plan namePlan Cycle 2022/23 to 2024/25

Grant date

Vesting date

Number of
beneficiaries

20.7.2022

20.7.2025

5

Numberof shares
allocated
604

Revision ofshare number
related toservice andperformance
conditions

Number ofsharesdefinitely
allocated in
March 2023

Number ofsharesexpected to
be deliveredat vesting
date

0

604

In 2022/23 and 2021/22, no member of the Board of Directors has any significant business connection with LEM Group.
For details on the compensation of the Board of Directors and of the Executive Management, please refer to the compensation
report. Also, see Significant Accounting Principles 2.15 Employee benefits.

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

24. Retirement benefit obligations
The Group operates a defined benefit plan for all its employees in Switzerland with a collective foundation.
This foundation is a separate legal entity which is not part of the Group. It is managed by a board of trustees having equal representation of employees and employers of the affiliated companies. It is supervised by the supervisory authority and complies
with the requirements of Swiss pension law. The Company pays contributions that are based on a percentage of the insured
salary under the Swiss law. The pension plan qualifies as a defined benefit plan under IAS 19 due to the various benefits guaranteed according to the law.
The plan is funded by contributions from both employer and employees. The plan participants are insured against the financial
consequences of old age, disability and death. The retirement benefit is based on a notional individual savings account converted at retirement into a fixed pension benefit.
The assets of the foundation are invested in a diversified portfolio. Death in service and disability benefits are insured with aninsurance company. The pension plan does not expose the affiliated companies to any additional unusual risks not foreseen by
the law. No curtailments or settlements occurred in 2022/23.
Over the period, the funded status moved from a surplus of CHF 3.8 million to CHF 4.3 million. Therefore, the amount of surplus
has been restricted to nil as the economic benefit in the form of a reduction in future contributions cannot be realized.
The following main assumptions have been updated:– discount rate from 1.25% to 2.1%;– interests credited on savings account from 1% to 1.5%;– salary increase rate remains stable at 1%.
Applying the rules of IAS 19, this adjustment was accounted for in other comprehensive income and did not impact the net
profit for the year.
The subsidiaries abroad sponsor either defined contribution plans or defined benefit plans based on local laws and regulations.
A former employee in Germany benefits from a defined benefit obligation amounting to CHF 249 thousand at 31.3.2023 (CHF
307 thousand at 31.3.2022). Other subsidiaries’ defined benefit obligations in Japan, Bulgaria and Italy amount to CHF 264
thousand at 31.3.2023 (CHF 224 thousand at 31.3.2022).
31.3.2023

31.3.2022

In CHF thousands

Fair value of plan assets at year-end

48’76848’672

Defined benefit obligations at year-end

44’43544’884

Surplus

4’333

3’788

(4’333)(3’788)00Effect of asset ceiling
Funded status (Net assets in the balance sheet)

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

24.1 Cost of defined benefit plans
2022/232021/22

Current service cost

1’682

2’329

Past service cost(386)

In CHF thousands

Net interest (income)
Total pension expenses recorded in the consolidated income statement

(22)

6

1’274

2’335

Costs related to the pension plan were charged to the different functional departments based on salary costs.
Past service costs result from a change in the conversion rate.
24.2 Remeasurements of employee benefits
2022/232021/22(3’601)(5’678)In CHF thousands

Experience adjustments on defined benefit obligation
Change in the effect of asset ceiling
Return on plan assets excluding interests
Total remeasurements recorded in other comprehensive income

498

3’788

3’347

(2’662)244(4’552)2022/232021/2224.3 Reconcilitation of the effect of asset ceiling
In CHF thousands

Effect of asset ceiling per beginning of year

(3’788)Change in the effect of asset ceiling(498)

Net interest (income)(48)

Effect of asset ceiling per end of year

(3’788)(4’334)(3’788)31.3.2023

31.3.2022

Fair value of plan assets as per beginning of year

48’67244’323Return on plan assets excluding interest income(3’347)2’662

24.4 Change in fair value of plan assets
In CHF thousands

Interest income on plan assets

618

136

Employer’s contributions

1’518

1’888

Employees’ contributions

1’403

1’735

(95)

(2’072)48’76848’672

Benefits paid
Fair value of plan assets as per end of year

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

24.5 Change in present value of defined benefit obligation
31.3.2023

31.3.2022

Defined benefit obligation per beginning of year

44’88448’427

Current service cost

1’682

2’329

Past service cost

(386)

Employees’ contributions

1’403

In CHF thousands

Interest cost
Actuarial (gains)due to changes in assumptions
due to demographic and experience changes
Benefits paid
Defined benefit obligation per end of year

1’735

549

143

(3’601)(5’678)(4’359)(7’735)

758

2’057

(95)

(2’072)44’43544’884

The weighted average duration of the Defined Benefit Obligation (DBO) at the end of the current fiscal year is 15 years.
Past service costs result from a change in the conversion rate.
24.6 Asset allocation of investments
Major categories of plan assets as a percentage of the fair value of total plan assets
Long-term target

2022/232021/22In %Equity securities

36.0%

33.1%

35.8 %

Debt securities

34.0%

31.2%

29.6 %

Real estate

25.0%

28.4%

27.6 %Cash and other investments

5.0%

7.3%

7.0 %

100.0%

100.0%

100.0 %

Strategic pension plan allocations are determined by the objective to achieve a return on investment which, together with thecontribution paid, is sufficient to maintain reasonable control over the various funding risks of the plans. Estimated returns on
assets are determined based on the asset allocation and are reviewed periodically. A temporary deviation from policy targets
is allowed.
Cash as well as most equity and debt securities have a quoted market price in an active market (Level 1 of fair value hierarchy).
Other assets including real estate and other investments do not have a quoted market price (Level 3 of fair value hierarchy).
24.7 Actuarial assumptions
The main actuarial assumptions used in the actuarial calculations include:2022/232021/22In %Discount rate

2.10%

1.25 %

Salary increases

1.00%

1.00 %

Interest credit rates

1.50%

1.00 %The present value of the defined benefit obligation is determined annually by independent actuaries using the projected unit
credit method. Actuarial assumptions are required for this purpose.

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

Sensitivities of significant actuarial assumptions
The sensitivity analysis is based on reasonable possible changes as of the end of the year 2022/23. Each change in a significant assumption was analyzed separately as part of the test.
The sensitivity of the DBO to changes in the main actuarial assumptions is as follows:
2022/232021/22

Increase by 0.25 %(1’520)(1’731)

Decrease by 0.25 %

1’616

1’848

DBO increase / DBO (decrease) – In CHF thousands

Discount rate

Salary increase rate
Increase by 0.25 %

448

400

Decrease by 0.25 %

(458)

(403)

24.8 Maturity structure of pension obligation
The following main cash outflows are expected in future periods:
In CHF thousandsin 1 year

1’909

in 2 years

2’099

in 3 years

2’198

in 4 years

2’228

in 5 years

2’914

in 6 to 10 years

14’61624.9 Contingent liabilities
The Group is from time to time impacted by changing political, legislative, fiscal and regulatory environments, including thoserelating to environmental protection. The frequency and effects on future operations and earnings are unpredictable and are
only partly covered by insurance policies. For the years 2021/22 and 2022/23, there is no material contingent liability from a
consolidated point of view.

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

25. Financial risk management objectives and policies
The Group classifies its financial assets and liabilities in the following categories as per IFRS 7:
Financial assets
31.3.2023
Book value

31.3.2022
Book value

Amortized
cost

Cash and cash equivalents

21’775

17’198X

Accounts receivable

86’45880’096X

Derivative financial instruments – current

42

32

Other current financial assets

2

90

X

664

728

X

108’941

98’144

In CHF thousands

Other noncurrent financial assets
Total

At fair value
through
profit andloss

X

Financial liabilities
31.3.2023
Book value

31.3.2022
Book value

Accounts payable

36’071

26’677X

Accrued expenses

32’29630’423X

In CHF thousands

Derivative financial instruments – current
Other current financial liabilities
Other noncurrent financial liabilities
Total

Other financial liabilities

08

38’41440’650

X

5’175

0

X

111’956

97’758X

Book values approximate fair values except for derivative financial instruments which are disclosed at fair value.
Fair value of the lease is amounting to CHF 37’241 thousand in 2022/23 (CHF 37’979 thousand in 2021/22)

LEM Financial Report 22 | 23

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At fair value
through
profit andloss

Notes to the consolidated
financial statements

Changes in liabilities arising from financing activities
Cash impact

1.4.2021

Cash flows
Inflow

Non-cash
impactCash flows(Outflow)

Fair valuechanges andOthers

31.3.2022

In CHF thousands

Interest-bearing loans and borrowings

24’000172’200(155’550)-

40’650Total

24’000172’200(155’550)-

40’650Fair valuechanges andOthers

31.3.2023

Cash impact

1.4.2022

Cash flows
Inflow

Cash flows(Outflow)

Non-cash
impactIn CHF thousands

Interest-bearing loans and borrowings

40’650141’745(138’590)(216)

43’589Total

40’650141’745(138’590)(216)

43’589Management assessed that fair value levels of all financial assets and liabilities approximate their book value.
The Group enters into derivative transactions such as forward contracts to hedge USD and EUR risks.
The purpose of these currency hedges is to manage the currency risks arising from the Group’s operations.
It is the Group’s policy that no derivatives for speculative purposes shall be entered into. The main risks arising from the Group’s
financial instruments are foreign currency risks and credit risks whereas the others are of minor or no impact. The Board of
Directors reviews and agrees policies for managing each of those risks.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation method:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices).
Level 3: methods which use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.
The Group’s net financial assets at fair value amount to CHF 42 thousand per 31 March 2023 (net financial assets of CHF 24
thousand per 31 March 2022), all classified under level 2.
During the two last reporting periods, there were no transfers between Level 1 and Level 2 fair value measurements, and notransfers into and out of Level 3 fair value measurements.

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

Foreign currency risk
The Group operates globally and is exposed to various foreign exchange risks primarily to the USD, EUR, JPY, CNY and GBP.
The Group generally seeks to reduce these risks by optimizing its natural hedging strategy (cash inflows and outflows in a specific currency should be balanced as far as possible).
The Group’s policy states that 100% of LEM’s net exposure for the main currencies EUR, USD and JPY is to be hedged on arolling 12-month basis.
Currency risks also arise from translation differences that are not hedged by the Group when preparing the consolidated financial statements in CHF. The foreign exchange translation is excluded from the calculation of the sensitivity analysis for currency
risk below.
Sensitivity analysis for currency risk
The sensitivity analysis is performed per 31 March 2023 with a 5% change in the USD, EUR, JPY, CNY and GBP, with all othervariables held constant of the Group’s profit before tax (due to the changes in the fair value of the monetary assets and liabilities) and the Group’s equity.
The sensitivity analysis performed for the financial year shows an impact of CHF ±979 thousand for a ±5% EUR rate change(CHF ±837 thousand per 31 March 2022), of CHF ±575 thousand for a ±5% USD rate change (CHF ±510 thousand per 31 March
2022), of CHF ±1’608 thousand for a ±5% CNY rate change (CHF ±1’515 thousand per 31 March 2022) and of CHF ±249 thousand for a ±5% JPY rate change (CHF ±164 thousand per 31 March 2022). For other currencies, there is no significant impact.
There is no significant impact on the Group’s equity.
Credit risk
Credit risk is the risk that a financial loss occurs if a counterparty is unable or unwilling to fulfill its contractual payment obligation. The Group trades with recognized and creditworthy parties. Accounts receivable are monitored on a monthly basis.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.
In case of a deterioration of the credit history, advance payments are required.
The Group’s exposure to bad debts is not significant. The maximum exposure is the carrying amount as disclosed in note 5.
There are no significant concentrations of credit risk within the Group.
With respect to credit risk arising from the other financial assets in the Group which comprises cash and cash equivalents,
other current assets and certain derivative instruments, the Group’s exposure to credit risks arises from a potential default of
the counterparty, with a maximum exposure equal to the carrying amount of these positions.

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

Liquidity risk
The Group operates a cash-pooling agreement in which cash targets are set for all the subsidiaries. Cash surplus / shortages
are balanced in intercompany loans on a monthly basis.
Group capital requirements are managed centrally by corporate finance. In case liquidity is required, bank loans are either
taken-up centrally and passed on as an intercompany loan, or provided directly by the bank to the subsidiary with a reductionof the Group’s total credit line. The total leverage of the Group is low, the financial liabilities mature in less than one year basedon the carrying value of borrowings reflected in the financial statements.
31.3.2023
Book valueLess than
one yearOver oneyear

31.3.2022
Book valueLess than
one yearOver oneyear

In CHF thousands

Accounts payable

36’07136’071

26’677

26’677

Accrued expenses

32’29632’29630’42330’423

Derivative financial instruments – current
Lease liabilities 1

0
3’103

4’261

8

8

1’646

1’853

Non current lease liabilities 1

26’93032’98028’3750

Other current financial liabilities

43’58938’4145’175

40’65040’650Total

141’989

111’042

38’155

127’779

99’61136’12636’126

1 Whereas net book values as of 31.3.2023 are net present values, future liabilities are disclosed as undiscounted

The Group’s exposure to the risk of changes in market interest rates with the current financial leverage is low. Per 31 March
2023, the bank credit line amounts to CHF 38.4 million.
Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a healthy and stable equity ratio in order to secure the confidence of shareholders and investors, creditors and other market players and to strengthen the future
development of the Group’s business activities. The Group manages its capital structure and makes adjustments if required byeconomic conditions. LEM targets a payout ratio significantly above 50% of the consolidated net profit for the year. However,it may diverge from this policy due to economic prospects or on the grounds of planned future investment activities.

LEM Financial Report 22 | 23

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Notes to the consolidated
financial statements

26. Scope of consolidation
Full consolidation

Country

Currency

Share capital

Ownership

EuropeLEM Europe GmbHGermany

EUR

75’000100 %LEM HOLDING SA

Switzerland

CHF

570’000

100 %LEM International SA

Switzerland

CHF

100’000

100 %LEM Management Services SARL

Switzerland

CHF

20’000100 %LEM Advisory Services SA (in liquidation)

Switzerland

CHF

100’000

100 %LEM Tech France SAS

FranceEUR

50’000100 %LEM Bulgaria EOOD

Bulgaria

BGN

1’971’000

100 %LEM Russia Ltd

RussiaRUB

16’400’000

100 %

USA

USD

150’000

100 %LEM Electronics (China) Co. Ltd

China

CNY

204’495’594

100 %LEM Japan KK

Japan

JPY

16’000’000

100 %Malaysia

MYR

6’200’000

100 %North America
LEM USA Inc.
Asia

LEM Malaysia SDN, BHD

27. Changes in scope of consolidation
On April 1st 2022, the shareholders of LEM Advisory Services SA decided to start the company liquidation process.
In March 2023, the Group has assessed that LEM Russia Ltd’s ability to continue as a going concern is not anymore satisfied
and will terminate its operation in Russia.

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

LEM Financial Report 22 | 23

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Auditor’s report

Report on the audit of the consolidated financial statements
OpinionWe have audited the consolidated financial statements of LEM HOLDING SA and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at 31 March 2023, the consolidated statement of income,the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including
a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of
the Group as at 31 March 2023 and of its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISA) and Swiss Standards
on Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the “Auditor's
responsibilities for the audit of the consolidated financial statements” section of our report. We are independent of theGroup in accordance with the provisions of Swiss law, together with the requirements of the Swiss audit profession, as
well as those of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethicalresponsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of theconsolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided inthat context.
We have fulfilled the responsibilities described in the “Auditor's responsibilities for the audit of the consolidated financial statements” section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated
financial statements. The results of our audit procedures, including the procedures performed to address the mattersbelow, provide the basis for our audit opinion on the consolidated financial statements.

LEM Financial Report 22 | 23

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Auditor’s report

Recoverability of deferred tax assets
Risk
At 31 March 2023, the Group disclosed CHF 48 million of deferred tax assets in Note 21 to the consolidated financial
statements (CHF 54 million at 31 March 2022).
The deferred tax assets were recognized and relate mainly to timing difference of the technical IP sale from LIP to LIN
and usufruct sale from LHO to LIN. The analysis of the recoverability of the deferred tax assets was significant to our audit because the amounts are material, the assessment process is complex and judgmental and is based on assumptions
that are affected by expected future market or economic conditions.
Our audit response
Our procedures included, amongst others:– We have audited the tax provision and the related business tax risks.
– We also involved our internal tax experts to assess the recoverability of the asset as well as inputs into the modelsuch as tax rate.
– We analyzed the offsetting and presentation of deferred tax positions.
– We audited the current year tax provision, the Company’s reconciliation of book to taxable income, as well as
the deferred tax balances and evaluated whether the assumptions applied by management on the recoverabilityof deferred tax assets are consistent with its budget and forecasts.
Our audit procedures did not lead to any material reservations regarding the recoverability of the deferred tax assets.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements, the compensation report and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

LEM Financial Report 22 | 23

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Auditor’s report

Board of Directors’ responsibilities for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements, which give a true andfair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law, ISA and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located on EXPERTsuisse’s website at: https://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report.

LEM Financial Report 22 | 23

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Auditor’s report

Report on other legal and regulatory requirements
In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists, which
has been designed for the preparation of the consolidated financial statements according to the instructions of theBoard of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
Ernst & Young Ltd.
		

Daniel Zaugg
Licensed audit expert(Auditor in charge)

Jean-Charles Bonifacj

LEM Financial Report 22 | 23

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Corporate governancereport

The following information complies with the Directive on Information relating to Corporate Governance of the SIX Swiss
Exchange (SIX) and the disclosure rules of the Swiss Code of Obligations. In order to enhance the clarity of this chapter,
reference is made to other parts of this Financial Report and our website (www.lem.com). Key elements are contained in
the Articles of Incorporation.
1.
Group structure and shareholders
Group structure
LEM HOLDING SA is domiciled at Route du Nant-d’Avril 152, CH–1217 Meyrin. LEM’s registered shares are listed on the main
segment of the SIX Swiss Exchange (LEHN, security no. 2 242 762; ISIN 0022427626). On 31 March 2023, the market capitalization was CHF 2’241 million. LEM Group is structured into Asia and Europe & Americas regions. Appropriate segment reporting
pursuant to IFRS is contained in note 3 of the consolidated financial statements. All companies in LEM Group are listed under“Scope of consolidation” in note 26 of the consolidated financial statements, with their respective company names, registeredoffices, share capital and the relevant percentages of shares held. There are no other listed companies in the scope of consolidation.
Significant shareholders
The following shareholders held 3 % or more of the share capital and voting rights:

31.3.2023

31.3.2022

SharesIn %SharesIn %Werner O. Weber and Ueli Wampfler, in Zollikon/Wollerau,
Switzerland, through WEMACO Invest AG and Voltano AG
in Cham, Switzerland592’500

52.0 %

584’700

51.3 %

Ruth Wertheimer, in Kfar Shmaryahu, Israel, through7-Industries Holding B.V., in Amsterdam, Netherlands

In number of shares, percent of shareholding

34’381

3.0 %34’381

3.0 %Capital Group Companies Ltd., Los Angeles, U.S.A.

n.a.

3 %–5 %1

n.a.

3 %–5 %1

J. Safra Sarasin Investmentfonds AG, Basel, Switzerland

n.a.

<3 %

36’5503.2 %1 Capital Group disclosed a 3.02 % stake as of 31 August 2020, but did not report the exact number of LEM shares per 31 March 2022 and 31 March 2023

Shareholdings of
non-executive Directors

Andreas Hürlimann

31.3.2023
Number ofshares held

31.3.2022
Number ofshares held

1’001

1’001

Shareholdings of
Executive Management

31.3.2023
Number ofshares held

31.3.2022
Number ofshares held

Frank Rehfeld, CEO

20

0Andrea Borla, CFO

00François Gabella

600

600

Rodolphe Boschet, CHRO

00

Ilan Cohen

300

300

Verena Vescoli, CTO

0075’50072’700350

300

Ueli Wampfler
Ulrich Jakob Looser

0

0

Total

Werner C. Weber

77’75174’901LEM Financial Report 22 | 23

Page 48

John McLuskie, SVP Asia

00

Bastien Musy, SVP Europe & Americas

00

Uwe Gerber, SVP Operations

0

0

Total

20

0

Corporate governancereport

The notifications which have been sent to the Company and the disclosure office of SIX Swiss Exchange AG during the financial
year pursuant to Article 120 et seqq. of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities
and Derivatives Trading may be viewed via the search function on www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.
The trading of LEM shares by both Board of Directors and Executive Management has to respect LEM’s disclosure and insider
trading policy as well as all applicable rules and legislation.
Cross-shareholdings
LEM has no cross-shareholdings with other joint-stock companies.

2.
Capital structure and shares
The nominal value of the share capital of LEM HOLDING SA is CHF 570’000, which is divided into 1’140’000 fully paid-up registered shares with a par value of CHF 0.50 each. No changes in the capital have occurred during the last three financial years.
There are no shares with preferred voting rights. All shareholders are entitled to the same dividends. There are no restrictions
on the transfer of shares. In order to be registered in the share register, each shareholder shall declare that they hold the sharesfor their own account.
On 31 March 2023, LEM HOLDING SA held 555 treasury shares.
Authorized and conditional capital
There is no authorized or conditional capital, nor are there any profit-sharing certificates or participation in certificates or any
convertible bonds or options outstanding.

3.
The Board of Directors’ election, terms of office and cross-involvement
The Board of Directors is composed of at least three members who are individually elected at the Annual General Meeting for amandate of one year, which is renewable up to an age limit of 70. It is possible to derogate from this rule in justified cases. The
Board of Directors constitutes itself, except for the Chairman of the Board of Directors and the members of the Compensation
Committee who are elected by the Annual General Meeting of Shareholders.
At the Annual General Meeting on 30 June 2022, Andreas Hürlimann, François Gabella, Ilan Cohen, Ueli Wampfler, Ulrich J.
Looser and Werner C. Weber were re-elected as members of the Board of Directors. Andreas Hürlimann was re-elected as
Chairman of the Board of Directors. In addition, shareholders elected Andreas Hürlimann and Ulrich J. Looser to the Nomination& Compensation Committee (NCC). Ulrich J. Looser chairs the Committee.
All members of the Board of Directors are non-executive. Only François Gabella had been part of the Executive Management of
LEM before his election as member of the Board of Directors. No member of the Board of Directors has any significant businessconnection with LEM Group.

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The Board of Directors was composed of the following members as of 31 March 2023:
Position
Chairman of the Board of Directors,
Chairman of the Strategy Committee,
Member of the Nomination andCompensation Committee
Entry
2011
– Since 2011, Entrepreneur

Nationality Swiss
Born in 1964

– HMT Microelectronic AG, Biel/Bienne, Chairman of the Board of
Directors– Condis SA, Rossens, Member of the Board of Directors– Glatz AG, Frauenfeld, Member of the Board of Directors– themissinglink ag, Cham, Member of the Board of Directors

Professional background

Andreas Hürlimann

Other notable activities– 2005 – 2010, Managing Director,
Spencer Stuart, Zurich– 1999 – 2005, Global Director of Industry
Practices and Member of the Executive
Board, Arthur D. Little Inc., Zurich,
Lisbon, London and Paris– Sustainable Real Estate Investments SICAV, Zurich, Chairman of theBoard of Directors
Education– M. Sc. Electrical Engineering, ETH Zurich, Switzerland– DAS Finance, University of Zurich, Switzerland– 1990 – 1999, international business development, sales and management roles
with Siemens Schweiz AG, ABB Power
Generation AG and Oerlikon Aerospace
Inc., Zurich, Baden, Montréal

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

Other notable activities

Entry
2018

– Sensirion AG, Stäfa, Member of the Board of Directors

Professional background

Nationality Swiss
Born in 1958

– Sonceboz SA, Sonceboz, Member of the Board of Directors– Optotune AG, Dietikon, Member of the Board of Directors– Nextlens AG, Dietikon, Member of the Board of Directors– 2010 – 2018, CEO, LEM Group– Vice President of Swissmem, Zurich– 2006 – 2010, CEO, Tesa SA– Switzerland Global Enterprise, Zurich,
Vice President of the Advisory Board– 2002 – 2006, SVP, Areva

François Gabella– Natron Energy, U.S.A., Chairman of the Board– 1996 – 2002, Business Area Manager,
ABB Power Transformers– Economie Suisse, Member of the Board, Zurich– City Counsel of Buchillon, Switzerland, Member– Fondation des Maladies Hépatiques, Lausanne, Member
Education– M. Sc. Microtechnics EPFL, Lausanne, Switzerland– MBA IMD, Lausanne, Switzerland

Position
Member of the Board of Directors

Other notable activities

Entry
2010

– MOTX LTD, Israel, Member of the Board of Directors

Professional background– Since 2019, Chairman and CEO of Caja
Robotics– 2009 – 2019, President, Servotronix
Motion System Ltd.

Ilan Cohen
Nationality Israeli
Born in 1956

– 2008 – 2009, General Manager, Kollmorgen Industrial & Commercial Engineered
Solutions Ltd. (Danaher Group)– 1997 – 2008, President and CEO,Kollmorgen Servotronix Ltd.
– 1987, Founder, Servotronix Ltd.
– 1983 – 1990, Associate Professor,
University of Tel Aviv, Israel

LEM Financial Report 22 | 23

Page 50– Caja Robotics, Israel, Chairman of the Board of Directors– New Era Partner Capital, Israel and U.S.,
Member of the Advisory Board– Negba Houses for Children at Risk in Israel, Honorary President
Education– Ph.D. Control System, Ecole Polytechnique de Bruxelles, Belgium– MSEE, CALTECH Pasadena, USA– M.Sc. and BSEE Electro-mechanical engineer,
Ecole Polytechnique de Bruxelles, BelgiumPosition
Member of the Board of Directors,
Chairman of the Nomination andCompensation Committee,
Member of the Audit and Risk Committee– Since 2009, Berg Looser Rauber &Partner (BLR&Partners)– 2001 – 2009, Accenture, various
positions including Managing Director
Austria/Switzerland/Germany Management Consulting and Chairman Accenture
AG (Switzerland)– 1987 – 2001, McKinsey & Company,
industry, energy, pharma and public
sector practices, partner election 1993

Nationality Swiss
Born in 1950

– Economiesuisse, Member of the Board– University Hospital Balgrist, Member of the Board– Swiss-American Chamber of Commerce– Swiss National Science Foundation, Member of the Executive
Committee of the Foundation Council (until 31 December 2020),
Member of the Foundation Council (ongoing)
Education– M.Sc. Physics, ETH Zürich, Switzerland– M.A. HSG, University of St. Gallen, Switzerland

Entry
2007

– Rebew AG, Zurich, Member of the Board of Directors

Professional background– Swisa Holding AG, Baar, Owner and Delegate of theBoard of Directors– Caspar Finanz AG (Traco Power Group), Baar,
Member of the Board of Directors– Voltano AG, Baar, Owner and Chairman of the Board of Directors– 1998 – 2004, Director, STG Schweizerische Treuhandgesellschaft, Zurich– 1974 – 1998, STG Coopers & Lybrand,
Zurich (Partner since 1991)

Entry
2017

Education– Lic. oec., University of Zurich, Switzerland– Certified auditor

Other notable activities– WEMACO Invest AG, Zug, Member of the Board of Directors– weber schaub & partner ag, Zurich,Member of the Board of Directors– Arosa Bergbahnen AG, Arosa, Member of the Board of Directors

Professional background– Since 1998, weber schaub & partner ag,
PartnerNationality Swiss
Born in 1960

– Fachhochschule Kanton Zurich, Member of the Fachhochschul
Council

Other notable activities

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

Werner C. Weber– Bachofen Holding AG, Chairman of the Board of Directors

Position
Member of the Board of Directors,
Chairman of the Audit and Risk Committee– Since 2004, Founder and Senior Partner,
Wampfler & Partner AG, Zurich

Ueli Wampfler– u-blox AG, Member of the Board of Directors– University of Zurich, Member of the University Council

Professional background

Nationality Swiss
Born in 1957

– Kardex AG, Member of the Board of Directors– Fostag AG, Member of the Board of Directors

Entry
2015

Ulrich J. Looser

Other notable activities– Prior thereto in particular Freddy Burger
Management Group in Zurich as LegalCounsel and General Secretary, andPricewaterhouseCoopers AG in Zurich as
Legal and Tax Counsel– Schilthornbahn AG, Lauterbrunnen,
Member of the Board of Directors– City Parkhaus Aktiengesellschaft, Zurich,Member of the Board of Directors– MedioSearch AG, Bern / SkySmile AG, Zurich,Member of the Board of Directors
Education– Dr. iur. University of Zurich, Switzerland– Admitted as an attorney-at-law in Zurich, Switzerland– Mediator SBA, Zurich, Switzerland

LEM Financial Report 22 | 23

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Corporate governancereportExternal mandates
Pursuant to Article 31 of the Articles of Incorporation, members of the Board of Directors may not hold more than ten additional
mandates of which no more than four may be in listed companies. The following mandates are not subject to the above limitations: (a) mandates in companies which are controlled by LEM or which control LEM; (b) up to five mandates held at the requestof LEM or companies controlled by it; and (c) up to six mandates in associations, charitable organizations, foundations, trusts
and employee welfare foundations. Mandates shall mean mandates in the supreme governing body of a legal entity, which is
required to be registered in the commercial register or a corresponding foreign register. Up to 20 mandates in different legal
entities which are under joint control or same beneficial ownership are deemed one mandate.
Internal organizational structure
The Board of Directors meets as often as necessary, but six annual meetings are planned in advance. In the completed financial year, six full-day meetings were held. The meetings usually take place at the Company’s registered office in Meyrin. The
Chairman, after consulting with the CEO and the Chairmen of the committees, determines the agenda for the Board meetings.
The members of the Board of Directors can ask for additional items to be included on the agenda. They receive supporting
documents beforehand, allowing for a comprehensive preparation of the meeting. The CEO and CFO attend the meetings ofthe Board of Directors as non-voting guests. Depending on the topics, other members of Executive Management participate in
the meetings in order to respond to specific questions. Decisions can be taken by the Board of Directors if at least half of the
Directors are present, and a simple majority of them is sufficient. In the event of tie, the Chairman has the casting vote. Minutesof the meetings including decisions taken are prepared by the CFO and distributed to the members of the Board of Directors,
the CEO and the CFO.
The Board of Directors reviews its working procedures, the efficiency and effectiveness of its teamwork as well as its interaction with the management of the Company on a regular basis. Regular feedback sessions at the end of a meeting provide
valuable input for the continuous improvement of the Board’s coherence and leadership.
Definition of areas of responsibility
The Board of Directors delegates the management of the Company to the CEO to the extent permitted by the Swiss Code ofObligations. The Board of Directors reviews and assesses at least on an annual basis and makes decisions in the following
areas:– review and approval of the strategy, business plan, annual business objectives and budget for the LEM Group;– approval of creation/closing of any subsidiary and purchase/sale of any interest in any company or entry into any merger or
joint venture agreement;– appointment/dismissal of the Executive Management;– monitoring the ethical and legal behavior of LEM;
– review of human resources management, including employee satisfaction and management development and legal, intellectual property, social and environmental aspects.

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Corporate governancereportInformation and control systems of the Board of Directors vis-à-vis Executive Management
The Board of Directors ensures that it receives sufficient information from the management to perform its supervisory duty andto make the necessary decisions.
The Board of Directors obtains the information required to perform its duties through several means:– the Board of Directors receives monthly and quarterly reports on the current development of the business;– informal meetings and teleconferences are held as required between the Chairman and the CEO as well as between the
Chairman and individual members of the Board of Directors;– the Committees meet at regular intervals and exchange detailed information with the Executive Management;– the Board of Directors receives detailed information to each agenda item one week before the Board meeting;– each Executive Manager joins at least one but usually multiple Board sessions in any given year.
Business risk management
In compliance with Swiss law, LEM is using a standardized procedure to analyze its business risks. LEM’s risk management
covers all types of risk: financial, operational and strategic – including the external business environment, compliance andreputational aspects.
The Executive Management conducts an annual risk analysis. The results and consecutive action plans are thereafter presented to and formally approved by the Board of Directors.
The risk management approach follows five steps: in a first step, potential hazards are evaluated and a consolidated list with
5 to 10 main hazards is set up. In a second step, each hazard is assessed by a product of probability and quantified impact.
Step two results in a risk map, which visualizes LEM’s potential risk environment. In step three, an action plan is put in place tomitigate the risks. The hazards thereafter are revalued a second time, taking into consideration the mitigation measures. In step
four, the action plan is validated and thereafter monitored on a bi-annual basis (step five).
Internal control system
In compliance with Swiss law, LEM has put in place an internal control system.
Starting from the material positions in the annual financial results, the important underlying processes and process owners
have been identified. For each process, key risks that could lead to errors in the financial reporting have been identified. For
each key risk, key controls have been defined and responsibilities assigned to assure effective compliance and documentationof the key controls. The process has been presented to and approved by the Audit & Risk Committee.
Looking forward, the process owners will perform an annual process review whereby identified weaknesses shall be continuously improved and key risks and controls shall be updated. Based on the input of the process owners, the CFO prepares anannual report on the internal control system, which is presented to and discussed with the Audit & Risk Committee.

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

LEM Financial Report 22 | 23

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Corporate governancereport4.
Executive Management
The Executive Management was composed of the following members as of 31 March 2023:

Frank Rehfeld
Nationality German
Born in 1968
Function CEO
With LEM since 2016

Previous companies and positions
2016 – 2018, SVP Industry, LEM Group2009 – 2015, VP Drives, Brose China Co., Ltd.
2006 – 2009, Managing Director, Hella Shanghai Electronics Co., Ltd.
2004 – 2006, Siemens VDO China, Director Body/Chassis Electronics
1996 – 2004, Siemens VDO Germany, Director R&D Body/Chassis Electronics
Education
Dipl. Eng. Electrical Engineering, Erlangen-Nuremberg, Germany

Andrea Borla
Nationality Swiss
Born in 1967
Function CFOWith LEM since 2015

Previous companies and positions
2008 – 2015, CFO, Schindler France
2003 – 2007, Field Operations Manager, Schindler China
1999 – 2003, Area Controller, Schindler Asia Pacific1996 – 1999, Head of Group Consolidation, SAirGroup
Education
Ph.D., M.A. HSG, Finance and Accounting, St. Gallen, Switzerland

Rodolphe Boschet
Nationality French
Born in 1967
Function CHRO
With LEM since 2020

Previous companies and positions
2019 – 2020, VP HR integration, Danaher
2016 – 2019, Senior Vice President HR & Communications, Beckman Coulter2013 – 2016, Global Vice President HR & Communications, Radiometer2006 – 2013, Head of HR France, Europe, Chemistry Business Unit, Beckman Coulter
2002 – 2006, HR Manager Europe, Datascope Corp
1997 – 2002, International HR Manager, Cartier
Education
Masters of Political Science, Paris Sorbonne, France
Masters in International Human Resources Management, ENS Cachan, France

Verena Vescoli
Nationality Italian
Born in 1970
Function CTO
With LEM since 2022

Previous companies and positions
2016 – 2022, Senior Vice President R&D, ams OSRAM AG, Austria
2015 – 2016, Senior Manager Device & Systems R&D, ams AG, Austria
2012 – 2015, Department Manager R&D Particle and Soot Management Systems, AVL List GmbH, Austria
2009 – 2012, Product Manager Particle and Soot Management Systems, AVL List GmbH, Austria
2000 – 2009, Senior Engineer TCAD and Device Development, ams AG, Austria
Education
Ph.D. in Solid State Physics, ETH Zurich
Master of Science in Physics, Université de Franche-Comté of Besançon/France
Bachelor of Science in Physics, Karl Franzens University and Technical University of Graz/Austria

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Corporate governancereportJohn McLuskie

Previous companies and positions

Nationality British
Born in 1970
Function Senior Vice
President Asia
With LEM since 2023

2018 – 2022, President, GKN Automotive China
2014 – 2018, Deputy General Manager Shanghai GKN HUAYU Automotive Systems
2007 – 2013, Business Development Director, GKN Driveline Torque Technology
2005 – 2007, Commercial Director Japan and Korea, GKN Driveline Torque Technology
2003 – 2004, Global Commercial Director, Propshaft Product Group, GKN Driveline
2001 – 2003, Global Account Manager, GKN Driveline
1999 – 2000, Manager – Japanese Development Projects, GKN Driveline
1996 – 1998, Business Development Manager, GKN Invel Transmissions Ltd
Education
BEng in Electrical and Electronic Engineering, University of Leeds, UK

Bastien Musy

Previous companies and positions

Nationality French
Born in 1978
Function Senior Vice
President Europe &AmericasWith LEM since 20182019 – 2022, VP Global Product Management, LEM Group2018 – 2019, Special Projects Manager, LEM Group
2016 – 2018, Global Pricing & Commercial Analytics Lead, Syngenta
2015 – 2016, Investor Relations Manager, Syngenta
2012 – 2015, Head Finance Production & Supply Asia Pacific, Syngenta
2009 – 2012, Controller Seeds Division, Syngenta
2005 – 2009, Risk and Financial Planning Manager, Ciba Specialty Chemicals
2001 – 2005, Internal Auditor, Credit Mutuel - CIC
Education
MSc in Management, University Lyon III, France

Uwe GerberPrevious companies and positions

Nationality German
Born in 1965
Function Senior Vice
President Operations
With LEM since 2023

2020 – 2022, Managing Director & COO, Bode - Die Tür2018 – 2020, Managing Director & COO, Thermamax
2016 – 2018, VP Global Operations (Industry), Behr (MAHLE)
2012 – 2016, VP Operations North America, Behr (MAHLE)
2008 – 2011, Plant Manager, Behr2004 – 2008, Head of Prototype Shop, Behr1999 – 2004, Programm Manager, Behr
Education
Industrial Engineering, University – FH Esslingen, Germany

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

5.
Compensation
Please refer to the compensation report on page 60.

6.
Shareholders’ participation rights
The rules on shareholders’ participation rights are outlined in the Articles of Incorporation. The rules for the convening ofGeneral Meetings, the participation rights and the majority rules for decisions all follow Swiss law. The complete Articles ofIncorporation can be downloaded from the Investor Relations pages on the website www.lem.com/en/file/11549/download.
Voting rights and representation restrictions and entry in the share register
There are no limitations on voting rights for shareholders who are entered into the shareholders’ register with voting rights.
Anyone purchasing registered shares is registered by the Board of Directors in the share register on request as a shareholder
with voting rights, provided they expressly declare that the shares are held for their own account. Each shareholder may be
represented by the independent representative or by a third party who need not be a shareholder of LEM HOLDING SA.
Statutory quorums
The Articles of Incorporation contain no deviation from the applicable law. In case a second vote is necessary for elections, arelative instead of the absolute majority of the votes represented is required.
Convocation of the General Meeting of the Shareholders and inclusion of items on the agenda
Registered shareholders are convened to General Meetings by ordinary mail and by publication in the Swiss Official Gazette ofCommerce at least 20 calendar days prior to the day of the meeting.

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Corporate governancereportAccording to Article 12 of the Articles of Incorporation, one or several shareholders who collectively hold 10 % of the sharecapital can call for a shareholders’ meeting; shareholders representing shares with a total nominal value of CHF 1 m or 1 % of theshare capital may request that an item be placed on the agenda.
Entries in the share register
Voting rights may be exercised by shareholders who are registered in the share register on the record date indicated in theinvitation to shareholders' meeting.
Dividend policy
LEM targets a payout ratio significantly above 50 % of the consolidated net profit for the year, to be proposed by the Board of
Directors to the Annual General Meeting.

7.
Change of control and defensive measures
Opting-out clause
Any shareholder is released from the obligation to submit a public takeover offer to all shareholders if their participation in LEM
exceeds 33 1/3 % of the voting rights.
Clauses on changes of control
There is no particular clause in the Articles of Incorporation for changes of control. No member of the Executive Management
will receive additional severance payments if dismissed in the case of a change of control of the Company.

8.
Auditors
The duration of the auditors’ mandate is one year. Ernst & Young has been auditing LEM since the financial year 2005/06, with
Daniel Zaugg bearing the responsibility for the audit since 2021/2022. As required by law, the auditor-in-charge is changed every
seven years. Ernst & Young audits the Group’s consolidated financial statements as well as all of LEM’s Group companies in Switzerland and abroad that are subject to a statutory audit requirement. The audit fees and fees for additional services are as follows:
Type of service
In CHF thousands

Audit fees

2022/232021/22

595

386

595

386

Additional audit-related fees
Total

The Audit Committee evaluates and controls the performance (focus on areas that involve significant risk to LEM, ability toprovide effective and practical recommendations, open and effective communication and coordination), fees, and independence of the auditors each year. It discusses and reviews the scope of the audits, and the resulting feedback. Based on thisinformation, it determines which changes and improvements are necessary. The auditor’s report on the results of their audits
both orally and in writing. Financial statements as well as management letters are discussed in the ARC in the presence of theexternal auditors. During 2022/23 Ernst & Young attended all three regular ARC meetings.

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Corporate governancereport9.
Information policy
LEM informs its shareholders about the business status and its results on a quarterly basis in the form of press releases. These,
together with the Annual Review and Financial Report, are made publicly available on its website (http://www.lem.com/en/
investors) and may be obtained in printed form from the Company’s headquarters. Once a year, LEM holds a presentation forthe media, investors and financial analysts. Internal processes assure that price-sensitive facts are published without delay inaccordance with the ad hoc publicity rules of the SIX Swiss Exchange. At www.lem.com, detailed information is available, e.g.,
the Articles of Incorporation, interim and annual reports, investor presentations, press releases as well as the financial calendar.

10. Trading restriction periods
LEM HOLDING SA has adopted a DISCLOSURE AND INSIDER TRADING POLICY with the objective to prevent insider trading by
LEM HOLDING SA, its affiliates, their directors, officers and employees. LEM applies trading restriction periods (Blackout Periods) from the internal disclosure of the quarterly, semi-annual and annual financial results to the Board of Directors (at 7amon the 15th of the month following the closing of the relevant financial period) until 24 hours after the public release of suchfinancial results.
LEM HOLDING SA, its affiliates and all persons who have regular access to potentially price-sensitive information, including all
members of the Board of Directors and the Executive Management, as well as their staff and LEM employees worldwide (Insiders) are bound by the Blackout Periods. Any Insider is prohibited from engaging in any transactions in LEM securities during
the Blackout Periods. The Blackout Periods are without prejudice to the obligation of the Insiders to refrain from dealing in LEM
securities at any other times when in possession of price sensitive facts relating to LEM.
Contact for investors and media: Andrea Borla, CFO, Route du Nant-d’Avril 152, CH–1217 Meyrin, or send an e-mail toinvestor@lem.com (phone: +41 22 706 12 50).

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Compensation report

The future of LEM depends on our ability to attract, develop and retain talented people. Among the many measures we
use to achieve this goal are competitive compensation policies. Our compensation policies are designed to align the interests of the Executive Management and the Board of Directors with the interests of shareholders.
In brief
Core principles
LEM’s compensation policies are designed to reward results and performance as well as to create long-term value for shareholders. The compensation policies are reviewed on an annual basis.
LEM’s Articles of Incorporation (www.lem.com/en/Investors > Corporate Governance) contain provisions regarding the approvalof compensation of the Board of Directors (BoD) and the Executive Management (Article 27), the supplementary amount for
new members of the Executive Management (Article 28), the general compensation principles (Article 29) as well as provisions
regarding the agreements with members of the Board of Directors and the Executive Management (Article 30).
This compensation report is based on section 5 of the annex to the Corporate Governance Directive issued by SIX Exchange
Regulation AG and Articles 13 to 17 of the Ordinance Against Excessive Compensation in Listed Stock Companies (OaEC).
Compensation of the Board of Directors
The compensation of the Board of Directors consists exclusively of a fixed fee paid in cash. There is no variable compensation.
The compensation of the Chairman and the members of the Board of Directors depends on the responsibility of each member
and the related work, such as serving on committees of the Board of Directors.
Compensation of the Executive Management
To encourage and reward results that contribute to the sustainable success of LEM, the total compensation of the Executive
Management consists of three elements: base salary, variable compensation and non-wage compensation. The target-setting
process for the variable compensation is carried out on an annual basis and includes quantitative and qualitative performance
criteria, including LEM’s financial results.
Members of the Executive Management are entitled to attend the meetings of the Board of Directors relevant to their function
but are excluded from any deliberation and decision on their compensation.
The compensation authorities are summarized in the following table:
Beneficiary

Compensation element

ProposalApproval

Board of Directors (BoD) and
Executive Management

Compensation principles

Nomination and Compensation
Committee (NCC)

BoD within limits of Articles
of Incorporation

BoD

Aggregate maximum amount
fixed compensation

BoD based on NCC proposal

Annual General Meeting(prospective approval)

BoD

Individual compensation

NCC

BoD

Executive Management

Aggregate maximum amount
fixed annual base salary

BoD based on NCC
proposalAnnual General Meeting(prospective approval)

Executive Management

Aggregate amount short-term
incentive

BoD based on NCC
proposalAnnual General Meeting(retrospective approval)

Executive Management

Aggregate maximum amountlong-term incentive

BoD based on NCC
proposalAnnual General Meeting(prospective approval)

Executive Management

Individual compensation

NCC based on proposal from CEO

BoD

CEO

Individual compensation

Chairman of the BoD

BoD

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Compensation report1.
Board of Directors
1.1
General principles of compensation for members of the Board of Directors
The aggregate maximum compensation of the Board of Directors is approved by the Annual General Meeting upon proposal by
the Board of Directors based upon recommendation from the Nomination & Compensation Committee. The remuneration of theBoard of Directors consists of a fixed cash payment and is reviewed on an annual basis. The remuneration compensates for the
personal responsibility and exposure as member of the Board of Directors and the work related to the Board of Directors’ membership. There is neither a variable compensation nor any participation in an equity-based compensation plan.
1.2 Compensation for members of the Board of Directors
The Board of Directors adopted a remuneration scheme with a fixed membership fee payable in cash of gross CHF 250’000 for
the Chairman and gross CHF 80’000 for each member of the Board of Directors. Activities in committees of the Board of Directors
is compensated by membership fees of gross CHF 40’000 for the Committee’s Chairman and gross CHF 20’000 for each member.
The tables below show the compensation per member of the Board of Directors in the financial years 2021/22 and 2022/23 fortheir respective term of office. At the Annual General Meeting held on 30 June 2022, the shareholders approved a maximum
compensation amount for the term of office from the Annual General Meeting 2022 until the Annual General Meeting 2023 of CHF
1’100’000. The actual costs for the Company are CHF 940’000.

2022/23
In CHF thousands

Annual fees (A)Taxes, social security
charges and similar
contributions (B)Total (A) + (B)Andreas Hürlimann 1, 5, 6

310

26

336

Ueli Wampfler 2

120

10

130

Ulrich Jakob Looser 3, 4

140

10

150

Ilan Cohen a

100

7

107

Werner C. Weber 7

100

9

109

François Gabella 7

100

8

108

Total

870

70

940

Annual fees (A)Taxes, social security
charges and similar
contributions (B)Total (A) + (B)2021/22
In CHF thousands

310

27

337

Ueli Wampfler 2

120

11

131

Ulrich Jakob Looser 3, 4

140

13

153

Ilan Cohen a

100

7

107

Werner C. Weber 7

100

9

109

François Gabella 7

100

9

109

Total

870

76

946

Andreas Hürlimann

1, 5, 6a including the amount of CHF 20’000 for R&D contribution

4 Chairman of the Nomination & Compensation Committee

1 Chairman of the Board of Directors

5 Member of the Nomination & Compensation Committee

2 Chairman of the Audit & Risk Committee

6 Chairman of the Strategy Committee

3 Member of the Audit & Risk Committee

7 Member of the Strategy Committee

LEM Financial Report 22 | 23

Page 61Compensation report

2.
Executive Management
2.1 General principles of compensation for members of Executive Management
The aggregate maximum compensation of the Executive Management is approved by the shareholders at the Annual General
Meeting upon proposal by the Board of Directors. The proposals of the Board of Directors are based on NCC recommendation.
The compensation of the Executive Management is reviewed by the Board of Directors on an annual basis.
The total compensation of the Executive Management is composed of the following elements:
Compensation element

Instrument

PurposeDrivers

Range and cap

Shareholder approvalBase salaryMonthly cash
payments

Pay for the function

Scope and
responsibilities, profileand competencies

N/A

Prospective maximum
amount (October –September)

Short-term incentive

Annual cash
payment

Pay for annual
performance

Business and individual
performance throughout the financial year

0 % – 139 % oftarget amount

Retrospective

Former long-term
incentive

Annual cash
payment

Participation insustainable company
success, alignment
with shareholderinterests

Achieved value creation
over three consecutive
financial years

0 % – 200 % oftarget amount

Prospective maximum
amount for payout
three years later

New long-term
incentive

SharesParticipation insustainable company
success, alignment
with shareholderinterests

Achieved value creationand total shareholder
return over threeconsecutive financial
years

0 % – 200 % oftarget amountMaximum compensation
assuming all performancetargets will be reachedat maximum possiblelevel, not considering
future share pricedevelopment

Non-wagecompensation

Pensioncontributions

Protect against risks
plus retirement anddependents’ coverage

Local legislation andmarket practice

N/A

The total compensation is in line with the market for comparable industrial companies considering the various remunerationlevels for different functions and locations. Furthermore, the compensation mix between base salary, variable compensationand non-wage compensation reflects sectorial and functional market practice. The full Board of Directors periodically reviews,
sets, and approves the compensation system, based on the recommendation of the NCC. The latest external benchmark was
performed early 2022 with the support of Mercer. The Mercer IPE (International Position Evaluation) has been used to define
the peer group, which allows comparability between companies based on revenues, number of employees and business value
chain.

LEM Financial Report 22 | 23

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Compensation report

2.1.1 Base salary of Executive Management
Base salaries are paid monthly as fixed cash amounts.
2.1.2 Variable compensation of Executive Management
The target-setting process for the Leadership-for-Results (L4R) plan is part of the LEM performance management and is
carried out on an annual basis by the NCC. Variable compensation is partly paid in cash (the short-term incentive) and partly
delivered in LEM shares (the long-term incentive) and after approval by the shareholders. The Chairman of the Board of Directors (for the CEO) and the NCC (for the other members of the Executive Management) prepare objectives and performance
evaluations based on personal performance review.
Short-term incentive (STI) related to the Executive’s function, responsibility and obtained results.
Each Executive’s individual target amount for the short-term incentive plan is communicated to the Executive at the beginningof the financial year together with the objectives and their weighting. The target amount and the objectives are based on therole and impact of the Executive as well as annual Company priorities. Objectives are linked to audited financial indicators suchas EBIT and net profit, other quantitative indicators as well as qualitative targets based on strategic initiatives. At the end of thefinancial year, the performance on each objective is evaluated resulting in the total amount to be paid.
The number of objectives is large enough to allow each Executive to reach a fair level of short-term variable compensation rewarding for the results achieved even under changed business conditions. Since the degree of achievement of set objectives
has to be evaluated at the end of the period, a clear understanding of the metrics to be applied is established at the time oftarget setting and kept constant over the period. For each objective, the curve between minimum and maximum bonus level isdefined. Ambitious but achievable objectives are set as targets, at which 100% of the respective target amount is attributed.
For the Executive Management, the minimum payout of the short-term incentive is 0% of the target amount and the weighted
maximum payout is 139%. The target amount of the short-term incentive represents between 18% and 25% of the total target
compensation.
The short-term incentive payout is presented for retrospective approval to the shareholders along with the Annual Report andthe financial statements of the same financial year at the Annual General Meeting 2023 prior to being paid out.
Long-term incentive (LTI) related to the sustainable financial performance of LEM Group
During the past financial year, the long-term incentive was replaced by a share-based Performance Share Unit (PSU) plan. The
goal is to further focus participants on various dimensions of LEM’s financial performance, especially long-term growth andvalue creation, thereby tightening the alignment of interest with our shareholders.
Starting with financial year 2022/23, participants are granted an individual LTI amount in CHF at the beginning of each threeyear plan cycle, which corresponds to the grant date. This amount is converted into PSUs based on a reference price (10-day
average share price prior to grant date). At the end of the plan cycle, PSUs vest in LEM shares, whereas the number of sharesobtained can vary between 0 and 2, depending on the achievement of pre-defined performance and service conditions.

LEM Financial Report 22 | 23

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Compensation report

The performance conditions are:
– Economic Value Added (EVA): to account for an internal view on value creation (weighted 60%)
– Absolute TSR: to link the overall compensation directly to the absolute value created by LEM for its shareholders(weighted 20%)
– Relative TSR (LEM’s TSR compared to the TSR of the SPI EXTRA): to strengthen the appreciation of a participant’s
contribution to the Company’s success based on LEM’s performance compared to the market (weighted 20%)
Under these conditions performance is measured over three consecutive financial years starting with the year during which
the grant date occurs and therefore the plan cycle starts. The BoD defines the targets for all three performance criteria, including minimum, expected and maximum levels, at the beginning of year one of the plan cycle following a stringent target setting
process. In financial year 2022/23 the target for the grant are as follows:

Minimum level(leading to a vesting of 0%)

Expected level(leading to a vesting of 100%)

Maximum level(leading to a vesting of 200%)

EVA

68% of expected performance

100% of expected performance132% of expected performance

Absolute TSR

0.0%

7.0%

14.0%

Relative TSR–10 pp.

0 pp.

10 pp.

Because absolute target amounts for the EVA performance condition are considered strategic and sensitive business information, targets are provided on a relative basis. To set those targets, investors’ return expectations on market value, performanceprojections and current profitability levels were considered to establish an appropriate link between LTI payouts, and the value
created for investors. Once the targets are defined, they remain unchanged over the three-year period. The evaluation of theperformance takes place at the end of year three. The LEM shares for the purposes of this PSU plan will be acquired in themarket. It will not dilute existing shareholders’ interests in the Company.
Overall, the minimum number of shares delivered under the long-term incentive corresponds to 0% of the granted PSUs andthe maximum is 200% of granted PSUs. The target amount, the individual LTI amount, of the long-term incentive represents
35% of the total target compensation of the CEO and between 17% and 25% of the total target compensation for other members of the Executive Management.
Forfeiture rules apply in case a participant is no longer an employee of LEM at the moment where PSUs vest.
The PSU related to this 2022-2025 LTI plan were allocated as follows:
Numbers of PSUs

Value at reference price
In CHF thousands

Frank Rehfeld, CEO

265

450

Executive Management (excl. CEO)

361

613

Total

626

1’063

Former compensation plans: Long-term incentive related to the sustainable financial performance of LEM Group
Until (and including) financial year 2021/22, the former long-term incentive plan was defined as an annual cash target amountand was based on the performance of LEM evaluated over a period of three consecutive financial years. The performance
criterion was the cumulated Economic Value Added (EVA) over these three financial years.
For the Executive Management, the minimum payout of the long-term incentive was 0% of the target amount and the maximum
payout was 200%.
LEM Financial Report 22 | 23

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Compensation report

For the long-term incentive cycle 2020/21 to 2022/23, the maximum amount approved prospectively by the shareholders at
the Annual General Meeting in 2020 was CHF 1’200’000 for payout in 2023.
No further awards will be made under this plan.
Shareholding requirements
Starting with financial year 2022/23, each member of the Executive Management is required to build up an investment in LEM
shares worth the equivalent of 150% of the annual base salary for the CEO, 140% for the CFO, and 80% for other members of
the Executive Management.
Members of the Executive Management will have a five-year period to achieve the above shareholding targets. In case ofnon-compliance, restrictions on the sale of owned shares and post-vesting holding requirements for shares vesting in the near
future under the new share based PSU plan will apply. All vested shares directly or indirectly owned by a member of the Executive Management and related parties, as well as granted but yet unvested PSUs under the LEM’s long-term incentive, will betaken into account when assessing whether or not the shareholding requirements are met.
2.1.3 Non-wage compensation of the Executive Management
For the Executive Management, non-wage compensation consists of pension plans (retirement benefits) only.
The Executive Management benefits from LEM’s Swiss pension plan, considered a defined contribution plan under Swiss lawthat provides retirement benefits and risk insurance for death and disability. IFRS, on the contrary, considers this plan as a defined benefits plan. The insured base salary follows Swiss professional pension regulations without limitation of the amount.
The pension fund is funded by contributions from the Company and the respective insured Executive.
2.2 Remuneration of Executive Management

2022/23

In CHF thousands

Frank Rehfeld, CEO

Base salary

Short-term
incentive

Long-term
incentive

Company’scontribution
to pension
fund

Other
benefits2

Total
compensation

Company’scontribution tosocial security
charges

1’349

135

512

363

420

54

Executive Management (excl. CEO)1

1’490

705

655

149

26

3’025

303

Total

2’002

1’068

1’075

203

26

4’374

438

Long-term
incentive

Company’scontribution
to pension
fund

Total
compensation

Company’scontribution tosocial security
charges

2021/22

In CHF thousands

Frank Rehfeld, CEO

Base salary

Short-term
incentive

Other
benefits2

500

328

295

51

1’174

117

Executive Management (excl. CEO)

1’302

589

533

129

2’553

255

Total

1’802

917

828

180

3’727

372

1 Including joiners CTO (pro-rated 5 months), SVP Asia (pro-rated 3 months), New SVP Operations (pro-rated 2 months),

new SVP Europe/Americas (pro-rated 3 months), and leaver former SVP Operations (pro-rated 6 months)
2 other benefits: international benefits (e.g. company car, housing)LEM Financial Report 22 | 23

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Compensation report

The amounts are shown as follows:– Base salary: CHF 2’002’000 as paid out in the reporting period– Short-term incentive 2022/23: CHF 1’068’414 as proposed to the Annual General Meeting on 29 June 2023
for payout in July 2023
– Long-term incentive: CHF 1’075’000 as accrued for long-term incentive 2020/23 for payout in July 2023
– Pension fund contributions: CHF 203’000 as accrued for or paid during the reporting period– Company’s contributions to social security charges: CHF 438’000 as accrued for or paid during the reporting period
Amounts approved by previous Annual General Meetings related to the period reported above:– Maximum amount base salary (for the period from 1 October 2021 to 30 September 2022): CHF 2’600’000– Maximum amount base salary (for the period from 1 October 2022 to 30 September 2023): CHF 3’348’000– Short-term incentive amount for 2021/22 for payment in 2022: CHF 1’077’774– Maximum amount long-term incentive 2020/21 to 2022/23 for payment in 2023: CHF 1’200’000– Pension fund contribution and Company contribution to social security charges as paid out or accrued forin the reporting period are included in the above amounts
The overall variable remuneration paid out for 2022/23 to the Executive Management ranged from 0% (for recent new joiners)
to 61% of the total compensation.

3.
Loans to current and former members of the Board of Directors and Executive Management and related parties
Our Articles of Incorporation do not provide the basis to grant loans to current or former members of the Board of Directors,
the Executive Management or to any related party. Therefore, no loans have been granted in the financial years 2021/22 and2022/23 or in any previous year.

4.
Equal pay
Following the revision of the Switzerland federal law on equal pay between men and women effective from 1 July 2020, LEM
international SA has completed on 30 June 2021 the required analysis on May 2021 month with Logib tool provided by thegovernment and the result has been audited by our external auditor. LEM International SA is proud to announce that there isno gender effect within the team. Even more considering the qualification and workplace characteristics into consideration,
women earn 2.8% more. The next analysis will be done in May 2025 as defined by the law.

LEM Financial Report 22 | 23

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Auditor’s report

Report on the audit of the compensation report
OpinionWe have audited the compensation report of LEM HOLDING SA (the Company) for the year ended 31 March 2023.
The audit was limited to the information on remuneration, loans and advances pursuant to Art. 14-16 of the Ordinanceagainst Excessive Remuneration in Listed Companies Limited by Shares (Verordnung gegen übermässige Vergütungenbei börsenkotierten Aktiengesellschaften, VegüV) in the tables marked “audited” on pages 60 to 65 of the compensation report.
In our opinion, the information on remuneration, loans and advances in the compensation report complies with Swisslaw and Art. 14-16 VegüV.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the “Auditor’s responsibilities for the audit of the compensation report” section of our report. We are independent of the Company in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordancewith these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the tables marked ”audited” in the compensation report, the consolidated
financial statements, the stand-alone financial statements and our auditor’s reports thereon.
Our opinion on the compensation report does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the compensation report, our responsibility is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the audited financial information in the compensation report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Board of Directors’ responsibilities for the compensation report
The Board of Directors is responsible for the preparation of a compensation report in accordance with the provisions of
Swiss law and the Company's articles of incorporation, and for such internal control as the Board of Directors determines
is necessary to enable the preparation of a compensation report that is free from material misstatement, whether due tofraud or error. The Board of Directors is also responsible for designing the compensation system and defining individual
remuneration packages.

LEM Financial Report 22 | 23

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Auditor’s report

Auditor's responsibilities for the audit of the compensation report
Our objectives are to obtain reasonable assurance about whether the information on remuneration, loans and advances
pursuant to Art. 14-16 VegüV is free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this compensation report.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:– Identify and assess the risks of material misstatement in the compensation report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control.
– Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
Ernst & Young Ltd.

Daniel Zaugg
Licensed audit expert(Auditor in charge)

Jean-Charles Bonifacj

LEM Financial Report 22 | 23

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LEM HOLDING SALEM Financial Report 22 | 23

Page 69Balance sheet(before distribution of earnings)

AssetsNotes

31.3.2023

31.3.2022

704

1’287

4

133’774

398’056

3’027

2’695

In CHF thousands

Current assets
Cash and cash equivalents
Loans to affiliated companies
Current assets from affiliated companies
Other current assets

288

94

Total current assets

137’793402’132

Noncurrent assets
Loans to affiliated companies

4237’0500Investments in affiliated companies

1

38’28637’550Total noncurrent assets

275’336

37’550Total assets

413’130439’682

31.3.2023

31.3.2022

Liabilities and equity
Notes
In CHF thousands

Current liabilities
38’00040’650Loans from affiliated companies

Current financial liabilities

57

443

Current liabilities from affiliated companies

97

78

Other current liabilities

1’788

2’222

Total current liabilities

39’94243’393570

570

EquityShare capital2

Legal reserves
Free reserves– balance carried forward– profit for the year

Treasury shares

285

339’453

78’10533’948318’308(1’069)(977)

Total equity

373’188396’290

Total liabilities and equity

413’130439’683

LEM Financial Report 22 | 233285

Page 70

Income statement

IncomeNotes

2022/232021/225

30’778321’671

7’423

4’447

1’268

1’719

In CHF thousands

Dividend from affiliated companies
Interest income from affiliated companies
Foreign exchange gain

6

Other financial income

149

53

Other income from affiliated companies

2’818

2’288

Total income

42’435330’1782022/232021/22(5’279)(4'924)(444)(4'380)

ExpenseNotes
In CHF thousands

Administration and other expenses
Participations’ impairment

1

Financial expense
Foreign exchange loss

6

Total expense
Profit before tax
Income taxes

7

Net profit for the year

LEM Financial Report 22 | 23

Page 71

(752)

(247)

(1’807)(2’208)(8’283)(11’760)

34’153318’419

(204)

(111)

33’948318’308

Notes to thefinancial statements

Principles for the establishment of the financial statements
The accompanying financial statements have been prepared in accordance with the requirements of the Swiss Code of Obligations. In agreement with the Article 961d of the Code of Obligations, the Company does not present the additional informationin the notes to the annual accounts, the cash flow statement and the management report.
Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amount.
LEM HOLDING SA does and did not have any employees.
Financial income and expenses
Current assets and current liabilities denominated in foreign currencies are converted at year-end exchange rates. Realizedexchange gains and losses, and all unrealized exchange losses arising from these as well as those from business transactions,are recorded net as financial income or financial expenses.
Derivative financial instruments
Derivative financial instruments are used for hedging purposes. These instruments are valued at fair value.
Cash and cash equivalents
Cash and cash equivalents are bank accounts and short-term deposits, highly liquid and readily convertible to known amountsof cash with maturities of three months or less from the date of acquisition.
Financial assets
Financial assets are valued at acquisition cost less adjustments for foreign currency losses and any other impairment of value.
Financial investments
Financial investments are initially recognized at cost. Investments in LEM HOLDING SA subsidiaries are assessed annually andin case of an impairment adjusted to their recoverable amount.
Treasury shares
Treasury shares are recognized at acquisition cost and deducted from equity. Gains and losses on the sale are recognized in
the statement of income.

LEM Financial Report 22 | 23

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Notes to thefinancial statements

1.

Investments in affiliated companies
31.3.2023

31.3.2022

In CHF thousands

Historical cost minus impairment

38’28637’550Total

38’28637’550The increase of the total investment is due to the capital increase in LEM Malaysia for CHF 1’280 thousand. In addition,
Management has assessed that LEM Russia Ltd.’s ability to continue as a going concern is not anymore satisfied and will terminate its operation in Russia. As a result, the investment in LEM Russia was fully impaired, with an impact of CHF 444 thousandat 31 March 2023.
For more details about participations, please refer to note 26 of the consolidated financial statements.

2.

Share capital

Opening capital at 1 April 2022

Number ofsharesPar value pershare in CHF

Capital in CHF
thousands

1’140’000

0.50

570

0.50

570

Price per share in CHF

Change of capital0

Closing capital at 31 March 2023

3.

1’140’000

0Treasury shares
NumberHigh

Average

Low

Value in CHF
thousands

Value at 1 April 2021

608

Purchases at cost

6’936

2’670.00

2’112.59

1’634.18

14’653(7’095)2’670.00

2’090.42

1’657.40(14’832)

3’986

2’401.82

1’863.23

1’392.29

7’427(3’880)2’438.18

1’890.66

1’439.90(7’336)

Sales at cost
Value at 31 March 2022

1’156

449

Purchases at cost
Sales at cost
Value at 31 March 2023

977

555

1’069

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

4.
Loans to affiliated companies
On 31 March 2023, LEM HOLDING SA had a loan of CHF 260 million towards LEM International SA, coming from the IP sold to
LEM International SA in 2019. This loan is refunded every year for an amount of CHF 22 million. It is disclosed as follows in thebalance sheet as of 31 March 2023:– Current loans, for CHF 22 million– Non current loans, for CHF 237 million

LEM Financial Report 22 | 23

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Notes to thefinancial statements

5.

Dividend from affiliated companies

In financial year 2022/2023, the dividend income amounts to CHF 30.8 million coming mostly from LEM China (financial year
2021/2022 dividend income of CHF 321.7 million mainly due to LEM Intellectual Property SA liquidation).

6.

Exchange effect2022/232021/22(803)(1’270)

In CHF thousands

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

18

837

Gains/(losses) on derivatives 1

246

(57)

(539)

(489)

2022/232021/22

Current taxes

(737)

(383)

Adjustments of tax provisions of previous periods

533*

272

Total

(204)

(111)

Exchange effect
1 Position includes cost of derivative hedging

7.

Income taxes

In CHF thousands* From previous years due to liquidation of LEM Intellectual Property SA

8.
Significant shareholders according to Article 663c of the Swiss Code of Obligations
On 31 March 2023, the following shareholders held 3% or more of the share capital and voting rights:
31.3.2023

31.3.2022

SharesIn %SharesIn %Werner O. Weber and Ueli Wampfler, in Zollikon/Wollerau, Switzerland,through WEMACO Invest AG and Voltano AG in Cham, Switzerland592’500

52.0%

584’700

51.3%

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

In number of shares, percent of shareholding

34’381

3.0%

34’381

3.0%

Capital Group Companies Ltd., Los Angeles, USA

n.a.

3%–5%1n.a.

3%–5%1

J. Safra Sarasin Investmentfonds AG, Basel, Switzerland

n.a.

<3%

36’5503.2%

1 Capital Group disclosed a 3.02% stake as of 31 August 2020, but did not report the exact number of LEM shares per 31 March 2022 and 31 March 2023

9.

Guarantees in favor of third parties on behalf of subsidiaries
31.3.2023

31.3.2022

1’627

1’855

In CHF thousands

Amount of guarantees issued

LEM Financial Report 22 | 23

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Notes to thefinancial statements

10.

Shareholdings

Shareholdings of non-executive Directors
31.3.2023
Number ofshares held

31.3.2022
Number ofshares held

Andreas Hürlimann

1’001

1’001

François Gabella

600

600

Ilan Cohen

300

300

75’50072’700Ulrich Jakob Looser

Ueli Wampfler

350

300

Werner C. Weber0077’75174’901

Total

Shareholdings of Executive Management
Starting with financial year 2022/23, participants in the LTI plan are granted an individual LTI amount in CHF at the beginningof each three-year plan cycle, which corresponds to the grant date. This amount is converted into PSUs based on a reference
price (10-day average share price prior to grant date). At the end of the plan cycle, PSUs vest in LEM shares, whereas thenumber of shares obtained can vary between 0 and 2, depending on the achievement of pre-defined performance and service
conditions.
31.3.2023

31.3.2022

Number ofshares held

Number of PSU
allocated

Number ofshares held

Number of PSU
allocated

Frank Rehfeld, CEO

20

265

0

0

Executive management (excl. CEO)

0

290

0

0

Total

20

555

0

0

31.3.2023

31.3.2022

Proposed appropriation of available earnings
In CHF thousands

Balance brought forward from previous year
Treasury shares from previous year
Variation of treasury shares339’41378’105(977)(1'156)(91)

179

Net profit for the year

33'948318’308

Total available earnings

372'293395’436

Ordinary dividend(59'280)(57'000)

Balance to be carried forward

313’013338’436

Proposal of the Board of Directors

The Board of Directors proposes the distribution of an ordinary dividend of CHF 52 per share. Net of 35% withholding tax, thisis an ordinary cash dividend of CHF 33.8 per share.
The proposed appropriation of available earnings is made in compliance with Article 671 of the Code of Obligations.
Shares held by LEM HOLDING SA or any of its subsidiaries are not entitled to dividends.

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Auditor’s report

Report on the audit of the financial statements
OpinionWe have audited the financial statements of LEM HOLDING SA (the Company), which comprise the balance sheet as at
31 March 2023 and the statement of income for the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements comply with Swiss law and the Company’s articles of incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the “Auditor's responsibilities for the audit of the financial
statements” section of our report. We are independent of the Company in accordance with the provisions of Swiss law
and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in accordancewith these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of thefinancial statements of the current period. We have determined that there are no key audit matters to communicate inour report.
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements, the compensation report and our auditor’s reports thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doingso, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

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Auditor’s report

Board of Directors’ responsibilities for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisionsof Swiss law and the Company's articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basisof accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonableassurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law
and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on EXPERTsuisse’s website
at: https://www.expertsuisse.ch/en/audit-report. This description forms an integral part of our report.

Report on other legal and regulatory requirements
In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists, which
has been designed for the preparation of the financial statements according to the instructions of the Board of Directors.
Furthermore, we confirm that the proposed appropriation of available earnings complies with Swiss law and the Company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
Ernst & Young Ltd.

Daniel Zaugg
Licensed audit expert(Auditor in charge)

Jean-Charles Bonifacj

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Group subsidiaries

LEM is a global player with production plants and development centers in Beijing (China), Geneva (Switzerland), Tokyo (Japan)
and Sofia (Bulgaria). The Company has a dedicated R&D Center in Lyon (France) and sales offices at all its customers’
locations and offers seamless service around the globe.
For a complete list of subsidiaries and offices, refer to www.lem.com > Contact > Sales Locator
Asia

EuropeLEM HOLDING SA
Route du Nant-d’Avril 152
CH–1217 Meyrin

LEM Europe GmbH, Branch Belgium
Egelantierlaan 2
B–1851 Humbeek

LEM Electronics (China) Co. Ltd
Linhe Street 28, Shunyi District
CN–101300 Beijing

LEM International SA
Route du Nant-d’Avril 152
CH–1217 Meyrin

LEM Europe Denmark,Filial af LEM Europe GmbH
Haraldsvej 60A,1.
DK–8960 Randers

LEM Japan KK
2–1–2 Nakamachi
JP-Machida, 194–0021 Tokyo

LEM Management Services Sàrl
Route du Nant-d’Avril 152
CH–1217 Meyrin
LEM Tech France SAS
Les Allées du Parc
Allée des Parcs 575/655
F–69800 Saint-Priest

LEM Europe GmbH,
Succursale France
Avenue Galois 15
F–92340 Bourg-la-Reine
LEM Europe GmbH,
Succursale Italia
Via V. Bellini 7
I–35030 Selvazzano Dentro, PD

LEM Europe GmbH
Frankfurter Straße 74
D–64521 Groß-Gerau
LEM Europe GmbH, Branch Austria
Concorde Business Park 2/F/6
A–2320 Schwechat

LEM Europe GmbH,
Branch UK
Suite 10 West Lancs Investment
Centre Mapleview
Whitemoss Business Park
UK-Skelmersdale WN8 9TG
LEM Bulgaria EOOD
Iliensko Shosse 8
BG–1220 Sofia

LEM Management Services Sàrl,
Branch India
Level 2, Connaught Place
Bund Garden Road
IN–411 001 Pune
LEM Management Services Sàrl,
Branch Korea
Seocho-Dong
Wonil Bldg.1–3F (311) 10
Nambushuhwan-Ro 333-Gil
Seocho-Gu
KR-Seoul
LEM Management Services Sàrl,
Taiwan Branch
7F., No. 342, Wenlin Road
Shilindistrict
TWN–11163 Taipei

North America
LEM Russia, LLC
Staritskoe Shosse 15
RU–170040 Tver

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

Copyright© 2023 LEM HOLDING SA,
GenevaConcept and text
LEM HOLDING SA, Geneva
Cabinet Privé de Conseils
SA, Geneva
Process AG, Zurich

DesignProcess AG, Zurich

PhotosMara Truog, Zurich

Printing
Druckprodukt, Zurich

LEM HOLDING SA
Route du Nant d’Avril 1521217 Meyrin
GenevaSwitzerland
www.lem.com

Financial Report 22 | 23