Results
First Half Year of 2013/14
1 April 2013 to 30 September 201313 November 2013

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook

2

Global Market Leader in Current and Voltage Transducers
Market Position

Performance

Perspectives

 Global market shareof 50%
 Benchmark in service
and product quality
 4 production sites inEurope and Asia
 Sales of CHF 235
million in 2012/13

 Continued sales
growth and margin
improvements
 27.2% average total
shareholder returnp.a. (10/2008 to10/2013)
 Dividend yield >5% ineach year since 2009

 Reinforced investment in innovation
 Solid growth perspectives due to underlying trends
 Strong foothold inChina
 EBIT margin target of
15 to 20%3

1. LEM Applications: Elevator
22
3
BA LTSB LA 150-P

1

A

The controller moves the motor in the right
direction and lets it stop exactly at the rightposition to the floor ground, independent of
the weight in the elevator car. The current
transducers take care that the motor is
powered with the correct current.
Elevator doors are controlled by a control unitthat integrates the motors of the sliding
doors. The current transducer measures thecurrent in the motors to run the panels
smoothly and to discover if something (e.g., afinger, a leg) obstructs the doors.

1 Door control unit
2 Motor3 Controller

41. LEM Applications: Start-Stop System for Cars

A CAB

C

D HAH3

HC5

A

B

B
1B HABThe current sensors (HAB, CAB) allow thebattery management system to decide if
enough energy is available in the battery tooperate the accessories (such as airconditioning, headlights, and radio) while theengine is off, and still have ample charge left
to restart the engine.

5 C

23
41 Battery

D

The “power-control unit” will instruct the“starter generator” to restart the engine orrecharge the battery, as needed, and current
sensors (HC5, HAH3) used in the converters
and inverter modules allow it to operatesmoothly, improving the driver experience
while helping the environment.

2 Power control unit
3 Internal combustion engine
4 Starter generator
5 Rectifier

51. LEM Applications: Container Gantry Crane
A crane can be moved on rails over the groundsurface normally driven by four motors. Thetrolley runs along rails that are located on top
or sides of the boom and girder. The movement
is done with two motors located on the trolley.
Once the spreader locks onto a container, thecontainer is lifted and moved. The lift of thecontainer is done normally by one axis by avery sophisticated rope system and driven byone motor.

A LF 1005
A

43
2

5
1
1

Current transducers are used in all motor
inverters to satisfy all requirements for safe andaccurate movements.

1 Ground surface move motors
2 Hoist motor

11

3 Trolley motor
4 Inverter and control cabinet
5 Spreader

61. LEM Applications: Locomotive

A LTC 100

B DVL

1A5A
31

B

Additional inverters are used for heating, airconditioning and ventilation. Transducers areused to measure the motor currents in orderto optimize their efficiency.

424

Inverters are used to transform the energy
into the right voltage and current to drive themotors. Voltage and current transducers areused to measure the current and the voltage
on the secondary side of the transformer andon the DC-side. Special differential
transducers are implemented at thesecondary side of the transformer to detect
any leakage current flowing in the train.

1 Pantograph
2 Transformer

43 Inverters
4 Motors
5 Auxiliary inverter71. Diverse Target Markets – Diversified Businesses
Businesses
Green Cars
Conventional Cars

Share of sales
H1 2013/14
13%High precision
Traction
Renewable energies& power supplies

Cyclicality

Macro drivers

Consumer durables

Technology adoption
Fuel savings

Late cycle

Infrastructure investments

Mid cycle

Energy prices, subsidies

Early cycle

Industrial investment

87%

Drives & welding

Automotive segment
Industry segment8Agenda
1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook

92. Highlights H1 2013/14
In CHF million, %H1 2013/14

H1 2013/14 vs.
H1 2012/13*

Q2 vs. Q1 2013/14

Orders

124.3

+3.2%

-8.9%

Sales

126.9+2.2%

+5.3%

EBIT

30.2

+27.4%+27.9%Net profit

24.5+20.2%+51.2%■

Increased efficiency resulted in improved operating margins to record levels■

Industry businesses with strong growth in China■

Slow recovery in green cars business■Economic uncertainty remained key challenge

10* Restatement following IAS 19R application (pensions)2. Product Launches H1 2013/14
ITL 1200-T

RT 500TOP 90-S
confidential

 Extended current range from 900 to 1200 A
 High accurate Fluxgate closed loop technology
 Accuracy is expressed in ppm
 Designed for latest versions of MRI

Industry Rogowski coil measurement technology
 Split-core current sensor for easy installation
 High accuracy regardless the position of the primaryconductor by eliminating coil-clasp discontinuity
 High immunity against surrounding perturbations

Industry

 Split-core current sensor for easy mounting Cost effective solution for AC non-contact isolated
current measurement
 Ideal tool for use with power meters, energy
sub-metering in industrial applications

Industry11

2. Net Sales
In CHF millions

In CHF millions, %Sales

300

H1 vs. H1
asreported275

Q2 vs.
Q1
at constantcurrencies

250

Industry

109.8

+3.6%

+5.2%+5.3%

225

Automotive

17.1

-6.1%

-3.3%

+5.5%

200

Total sales

126.9

+2.2%

+4.0%

+5.3%

175

■

150

■

125

Sales growth in most Industry businesses
Increasing activity in green cars business in
Q2 of 2013/14, but still below previous year

100
7550
250
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

HY 13/1412

2. Quarterly View
In CHF millions

Book‐to‐bill ratio

80
70

1.2
67.7

65.1
61.8
57.9

60

63.1

55.7

61.1

55.0

1.0

55.8

55.0

0.8

50
40

 Book-to-bill ratio
pointing to a slowing
activity Lead times requested
by customers remainvery short

0.6

30
0.4
20
0.2
100.0

0
Q1
11/12

Q2
11/12

Q3
11/12

Q4
11/12

Q112/13

Orders received* Restatement following IAS 19R application (pensions)Q2
12/13*
Sales

Q3
12/13

Q4
12/13*

Q1
13/14

Q2
13/14

Book-to-Bill ratio13

2. Industry Segment: Regional Markets
In CHF million, %Sales

H1 vs. H1Q2 vs. Q1

Europe47.6-5.5%+4.0%

N. America

14.3

-4.5%

-7.9%

Asia andROW

47.9+17.8%+10.9%

Total

109.8+3.6%+5.3%

EuropeNorth America
Asia and ROW

43%

44%

13%

 Double digit growth in Asia
 China remains #1 industry market
 Weak businesses in Europe andNorth America

142. Industry Segment: Business Development
Businesses and Applications
In CHF millions

Op. EBIT in % of sales
30280
25240200

2016015120
10Drives & welding (growth H1 vs. H1: +9%)
 Strong market growth in China
 Won market share in certain applications
Renewable energies & power supplies (+1%)
 Strong performance of solar applications in Asia
 Increasing activity in off-shore wind parks inChina, India and EuropeTraction (-7%)
 New orders for energy meter (EM4TII)
 Restrained investments in rail infrastructure

805400009/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

HY 13/14

High-precision (+14%)
 New medical projects in Europe and NorthAmerica
 New HVDC projects in China
15

2. Automotive Segment: Regional Markets
In CHF million, %Sales

H1 vs. H1Q2 vs. Q1

Europe1.4-2.1%+53.8%

N. America

9.3

+1.6%

-0.4%

Asia andROW

6.4-16.0%

+5.8%

Total

17.1

-6.1%

+5.5%

EuropeNorth America
Asia and Rest of World

8%

38%

Conventional cars business drivingperformance Focus on Asian and North Americanmarkets
 Pick-up of green cars sales in Q2 of2013/14


54%

16

2. Automotive Segment: Business Development
In CHF millions

Op. EBIT in % of sales

40253520302515201015105Businesses and Applications
Conventional cars (growth H1 vs. H1: +3%)
 Growth in battery management application
 Ramp-up of LEM’s new start-stopapplication faster than expectedGreen cars (HEV, EV) (-35%)
 Market burdened by high vehicle prices
 Limited success of electrical cars
 Increasing sales of new CAB (measuresstate of the battery)

500
09/10

10/11

11/12

12/13*

HY 13/14-5-5-10-15* Restatement following IAS 19R application (pensions)-10172. Business Development ChinaProductionSales■■■

Market share of over 50%
Market share increase in somedrives & welding applications
Biggest market with 24% of totalsales

LEM China expands its #1 position aslargest manufacturing site of the Group(56% of total production, compared to51% in financial year 2012/13)“Made by LEM” quality■■

In CHF millions
120In CHF millions
50100
40
80
30

60

20

40

1020
00
09/10

10/11

11/12

12/13

HY 13/14

09/10

10/11

11/12

12/13

HY 13/14
18

2. New Production Site in Sofia (Bulgaria)
 Objectives of the new siteDiversify LEM’s low cost production
Increase production capacity close to Europeancustomers
Increase natural hedge of operations
Absorb major part of LEM’s future growth Continuation of strategy initiated in 2004
Production lines to be relocated from Machida (Japan) and Geneva(Switzerland) to low cost countries
Geneva (Switzerland) site strengthened with investment in R&D andmarketing
Machida (Japan) site to focus on local Japanese market

 Project on plan

Investment of CHF 2 million into new site
Production started early October 2013, first products delivered tocustomers
19Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook

20

3. Financial Highlights
Strong balance sheet
 Dividend payment of CHF 34.2 million to shareholders in July 2013
 Equity at CHF 72.1 million, equity ratio 57% (62% per 31.3.2013)



Improved profitability
 Gross margin of 46.5% (42.9%)
 SG&A down to 22.7% of sales (23.8%)
 EBIT margin of 23.8% (19.1%)
 Net profit CHF 24.5 million (CHF 20.4 million)

Strong cash generation
 Free cash flow CHF 10.9 million (CHF 15.6 million)

First-time application of IAS 19R (pensions) Reduction of equity by CHF 3.3 million
21

3. Consolidated Balance Sheet
30.09.2013

31.03.2013*

Cash and cash equivalents

12.8

27.6

Accounts receivable

47.7

43.1

Inventories

26.4

23.6

Income tax receivable

0.6

1.3

Other current assets

2.7

3.3

Total non-current assets

35.5

36.8

Total assets

125.8

135.6

Accounts payable

16.5

16.8

Other current liabilities

33.4

31.3

Total non-current liabilities

3.8

3.5

Equity72.1

84.0

Total liability and equity

125.8

135.6

 Avg. net working capital in % sales

14.4%

9.9%

5.2

5.8

57.3%

62.0%

3.8

27.6

In CHF millions

 Inventory turns
 Equity ratio Net cash (CHF millions)* Restatement following IAS 19R application (pensions)22

3. Income Statement
In CHF millions

H1
H1
2012/13* 2013/14

ChangeQ1
2013/14Q2
2013/14

ChangeSales

124.2

126.9

+2.1%

61.8

65.1

+5.3%

Gross margin

42.9%

46.5%3.6pt

45.4%

47.5%

+2.1ptOperating Cost

-29.5

-28.7

-2.7%

-14.8

-13.9

-5.8%

EBIT

23.7

30.2

+27.4%

13.3

17.0+27.9%

Financialexpense (net)

0.7

-0.7

N/A

-1.4

0.6

N/A

Income tax

-4.0

-4.9

+23.2%-2.1-2.8+31.7%Net profit

20.4

24.5

+20.2%

9.8

14.8+51.2%

23* Restatement following IAS 19R application (pensions)3. Results by Quarter
In CHF millions

In % of sales
30%

80
67.7
63.1

70

57.9

55.0

61.8

61.1

55.8

60

55.0

65.1

55.825%20%

5015%
4010%
305%20 Positive volumeleverage effect onmargins in H1 of
2013/14
 Positive FX impact on
EBIT in H1 of 2013/14
 Q4 of 2012/13 includes
a restructuring charge ofCHF 1.9 million

0%

10-5%

0
Q1
11/12

Q2
11/12

Q3
11/12

Orders received

Q4
11/12

Q1
12/13

Sales

* Restatement following IAS 19R application (pensions)Q2
12/13*

Q3
12/13

Op. ROSQ4
12/13*

Q1
13/14

Q2
13/14

Net Profit in % of sales

24

3. Gross Margin
In CHF millions

In % of sales

14048%

Gross margin

H1
2012/13*

H1
2013/14Q1
2013/14Q2
2013/14

53.3

58.9

28.1

30.9

42.9%

46.5%

45.4%

47.5%

in CHF million
12046%

Gross margin
in % of sales

10044%

8060

42%

40

 Positive impacts on gross margin
 Continued operating savings in COGS
 Continued relocation to low cost
manufacturing sites

40%
2038%

009/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

HY 13/14

253. Operating Expense
In CHF millions

In % of sales
40%

7060

Operatingexpense

H1
2012/13*

H1
2013/14Q1
2013/14Q2
2013/14

29.5

28.7

14.8

13.9

23.8%

22.7%

23.9%

21.4%

in CHF million
30%

50Operatingexpensein % of sales

4020%
30

2010%

■ Ongoing strict cost control measures■ Operating expense as a percentage ofsales remain on low levels compared tohistorical average

1000%
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

HY 13/1426

3. R&D Expense
In CHF millions

In % of sales
10%

15R&D
expense
8%

126%

64%

32%

H1
2013/14Q1
2013/14Q2
2013/146.9

7.33.9

3.4

5.6%

5.8%

6.3%

5.3%

in CHF million

R&Dexpense
9H1
2012/13*in % of sales

 Maintained high investment in R&D forboth segments
 Ongoing renewal of product range withfocus on optimized cost, higher
accuracy and new functions

0%

0
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

HY 13/14

273. EBIT
In CHF millions

In % of sales

H1
2012/13*

H1
2013/14Q1
2013/14Q2
2013/14

23.7

30.2

13.3

17.0

19.1%

23.8%

21.5%

26.1%

25%

60

EBIT
in CHF million
5020%

EBIT
in % of sales

4015%
3010%
20

 Profitability above target range of 15 to20%
 Resulting from strong sales and tightcost control

5%

1000%
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

HY 13/14

28

3. Financial Expense
In CHF millions

H1
2012/13*

H1
2013/14Q1
2013/14Q2
2013/14

Exchange effect**

0.7

-0.7

-1.4

0.7

Other financial expense & income

-0.0

-0.0

0.0

-0.0Total

0.7

-0.7

-1.4

0.6

 H1 2013/14 exchange effect mainly driven by appreciation of CHF vs. EUR,USD and JPY
 Foreign exchange hedging policy
 EUR: 100% of net exposure 18 months forward
 USD: 50-100% of net exposure 6-18 months forward* Restatement following IAS 19R application (pensions)** The line “exchange effect” in the financial result is mainly due to currency volatility during the time between booking andsettling a receivable/payable. Over and above this line, foreign exchange rates impact every P&L line through the rate at
which each transaction is booked and at which it is consolidated into CHF.

293. Income Taxes
H1
2012/13*

H1
2013/14

Expected income tax rate
Expected withholding tax rate
Expected tax rate

13.8%
2.6%
16.4%

14.1%
2.2%
16.3%

Adjustment in respect of previous period's income tax

0.0%

0.4%

Effective tax rate

16.4%

16.7%

30
* Restatement following IAS 19R application (pensions)3. Net Profit
CHF millions% of sales

4520%

Net profit
in CHF million

18%

4016%

35

Net profit
in % of sales

H1
2013/14Q1
2013/14Q2
2013/14

20.4

24.5

9.8

14.8

16.4%

19.3%

15.8%

22.7%
H1 2012/1314%30

H1
2012/13*

0.7

-4.0

12%
23.7

25

20.4

10%
208%
15EBIT6%

10

Financial expenses

Income tax- 0.7- 4.9

Net profit

H1 2013/14

4%
30.2

5

24.5

2%

00%
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)H1 13/14

EBIT

Financial expenses

Income tax

Net profit31

3. Cash Flow Statement
H1 2012/13*

H1 2013/14

Profit before taxes

24.4

29.5

Non-cash items

0.2

-5.4

Cash flow from changes in net working capital-1.6-8.6

Cash flow from operating activities

23.015.5

Cash flow from investing activities

-7.4

-4.6

Free cash flow

15.6

10.9

Cash flow from financing activities

-25.1

-25.3

Change in cash and cash equivalents

-9.5

-14.3

Cash and cash equivalents at the end of the period

12.4

12.8

In CHF millions

32* Restatement following IAS 19R application (pensions)

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook33

4. Market Factors and Strategy■ We firmly believe in our strategic
direction and the 4 drivers for ourbusiness remain unchanged■ We will continue to capitalize on
the drivers of LEM’s markets
through pure play components company
 diversification across geographiesand businesses34

4. Executing Strategy
Strategic priorities
Increase technology leadership■ Reinforce multidisciplinary innovation team■ Increase number of product launches■ Constantly improve performance of products
Increase efficiency■ Improve product cost through low cost sourcing andmanufacturing■ Reduce complexity of organization
Increase production flexibility■ Develop systems to better forecast demand fluctuations■ Improve supply chain management

Achievements in H1of 2013/14■■

Launched 3 newproducts
Worldwidetechnology survey■

Established new low
cost site in Sofia,Bulgaria■

Maintained highlevel of flexibility
and on-time delivery
35

4. Outlook■For H2 of 2013/14 we expect■ Industry segment: easing activity■ Automotive segment: resuming growth■

Key operational challenges for H2 of 2013/14■ Ramp up production in Sofia■ Manage economic uncertainty■

Financial year 2013/14 outlook■ Sales of CHF 240 to 250 million■ EBIT margin above 20%36

Financial Calendar and Contact Details
Financial calendar
18 February 2014 Third quarter results of 2013/14
4 June 2014
Year-end results and media and analyst conference
26 June 2014
Ordinary shareholders’ meeting for the year 2013/14
1 July 2014
Dividend ex-date
4 July 2014
Dividend payment date

For further information
Julius Renk, CFO
Tel: +41 22 706 12 50
Email: investor@lem.com
37