Results
First Half Year of 2012/13
1 April 2012 to 30 September 2012

13 November 2012

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook2

1. About LEM■ LEM is the global market leader in providing innovative and high quality
solutions for measuring electrical parameters.
■ The current and voltage transducers are used in a broad range of industrial
and automotive markets.
■ LEM is a high growth global company with approximately 1’200 employees.
Production plants are in Beijing (China), Geneva (Switzerland) and Machida(Japan). With regional sales offices close to the clients’ locations, LEM
provides a seamless service.
■ LEM (SIX: LEHN) has been listed on the SIX Swiss Exchange since 1986
and has a market cap of CHF 540 million per 30.09.2012.

3

1. LEM Applications: Robot To control the arm, power inverters drive amotor from one position to the next andstop precisely in position Accurate measurement of the current withtransducers needed to control the arm

A CASR
1 Control Unit
2 Inverter
3 Motor4

1. LEM Applications: Mobile Phone Base Station
 Transducers ensure stable power supply
and control in case of a failure Transducers used to control the charge
and discharge of power batteries forbackup

A HASS
B LTS
1 Antenna
2 Battery
3 Controller
4 Power supply

5

1. LEM Applications: Electric Plug-in Car
 Battery management
 Electric motor management
 Charger management

1 High-voltage battery
2 Vehicle control unit
3 Charger
A HAH1B DHABC HC5F
D CAB

4 Motor controller
5 Electric motor and transaxle
6 DC/DC converter
7 Electric power steering

61. LEM Applications: Plasma Cutting
 To maintain the arc continuously, current
transducer measures the current throughthe arc
 Accuracy of measurement is important toguarantee accuracy and shape of cut

A LAH
1 Electronic
2 Motor
3 Torch
3 XY-table7

1. LEM Production & Logistics World-Wide

Production Centers (PDCs)
Adaptation Centers
Sales Offices
Agents / Distributors
8

1. LEM at a Glance - Businesses
Industry segment
Drives & welding

Automotive segment
Conventional cars

■Motor drives■ Welding■ Miscellaneous■

Renewable energies &power supplies

Green cars (HEV, EV)

Solar■ Wind■ UPS■ Battery monitoring, processcontrol, energy metering■

Lead battery management■ Start/stop application

Battery pack management■ Electric motor control■Traction
On-board applications■ Trackside■ Energy monitoring■High precision
Medical scanner■ Test & measurement■

92. Highlights and Business Review

102. Highlights H1 2012/13
In CHF millions, %H1 2012/13

H1 2012/13 vs.
H1 2011/12

Q2 vs. Q1 2012/13

Orders

120.5

49.8%

-1.6%

Sales

124.2

-1.0%

-3.2%

Operational EBIT

23.8

24.1%

9.8%

Net earnings

20.5

36.6%

-8.5%

■

Low visibility with customers requiring increased flexibility in terms of timing
and delivery volumes■

Improved margins due to increased efficiency and ramp-up of recently
launched products■

Careful short-term outlook■

Launch of 3 new products
11

2. Product Launches H1 2012/13
HO New ASIC with twice improved accuracy New functionalities: over-current detection, stand-by mode
 First programmable transducer

DVL New technology to create a digital isolation
 Improved sensitivity to external magnetic fields
 Robust design for harsh environments in traction applications

HFWS
confidential Customer specific transducer
 Communication with microcontroller and serial interface Very small size for the current measured
122. Net Sales
In CHF millions

In CHF millions, %Sales

275

Industry

106.0

-6.4%

-11.7%

250

Automotive

18.2

48.5%

33.0% -10.1%

225

Total sales

124.2

-1.0%

-7.3%

300

H1 vs. H1Q2 vs.
Q1
as reported at constantcurrencies
-2.0%
-3.2%

200

■

175
150125■10075■

50

Industry businesses affected by European
economic slowdown but growing in China
and North America
Continued strong sales growth in theAutomotive businesses
Positive currency impact on sales

25008/09

09/1010/1111/12

HY 12/13

13

2. Quarterly View
In CHF millions

Book-to-bill ratio
1.6

100
90

1.4

80
70



75.0

77.0

77.4
1.2

67.7

66.8

63.1
57.9

60

55.0

61.1

55.7

1.0



Orders slowing in Q2 of
2012/13 for the first time in fourquarters
Increasing volatility of themarket characterized by shortterm orders from customers

0.8

50
40

0.6

30
0.4
20
0.2

1000.0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
10/11 10/11 10/11 10/11 11/12 11/12 11/12 11/12 12/13 12/13
Orders received

SalesBook-to-Bill ratio

14

2. Industry Segment: Regional Markets
EuropeIn CHF millions, %North America

Sales

H1 vs. H1Q2 vs. Q1

Asia

Europe50.3-14.1%-10.6%

Rest of the World

N. America

14.9

11.5%

-1.8%

Asia

38.6

0.0%

12.3%

ROW

2.1

-21.5%-32.1%

Total

106.0

-6.4%

-2.0%

2%

36%
48%




14%

Continued weakness in Europe
Strong performance of renewableenergies business in Asia and North
America with slowing trend at theend of Q2 of 2012/13
Ramp-up of production of recently
launched products
15

2. Industry Segment: Business DevelopmentBusinesses and Applications
In CHF millions

Op. EBIT in % of sales
25280240

20200
151601201080
5Drives & welding (-18%)
 Weakness in Europe, particularly Germanyand Italy
 New projects in the robot and elevator
markets
Renewable energies & power supplies (+13%)
 Most volatile business Growth in North America, Asia, mainly China,and Japan Higher requirement for environmental
compatibility and accuracy
Traction (-6%)
 Weak European demand Prolonged delays in China

4000
08/09

09/10

10/11

11/12

HY 12/13

High precision (-3%)
 Weakened demand for test & measurementin Asia16

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

H1 vs. H1Q2 vs. Q1

Europe1.4

27.7%-42.5%

N. America

9.1

40.9%

-1.6%

Asia andROW

7.7

63.8%

-12.6%

Total

18.2

48.5%

-10.1%

EuropeNorth America
Asia and Restof World
8%

42%




Sales growth despite weak global car
industry in H1 of 2012/13
Slowing growth in Q2 of 2012/13
Success due to strategic focus on
US and Asian car manufacturers

50%
17

2. Automotive Segment: Business Development
In CHF millions

Op. EBIT in % of sales

303025252020151510105

500
08/09

09/10

10/11

11/12

Businesses and Applications
Conventional cars (+52%)
 Strong performance with battery
management applications forconventional cars
 Won market shares and extended
number of platforms
Green cars (HEV, EV) (+34%)
 Delays/suspensions of new projects
 Consumers hesitant to invest inenvironmental cars in times of crisis

HY 12/13-5-5-10-10-15-1518

2. Business Development China
ProductionSales■■60

Market share of over 50%
Sales impacted by slowing activity
especially in solar, wind and traction

LEM China expands its #1 position aslargest manufacturing site of the Group(over 51% of total production)“Made by LEM” quality■■

In CHF millions
12050In CHF millions

1004080

3060

2040

10

20

00
08/09

09/10

10/11

11/12

HY 12/13

08/09

09/10

10/11

11/12

HY 12/13

19

3. Financial Review

3. Financial Highlights
Strong balance sheet
 Dividend payment of CHF 28.4 million to shareholders in July 2012 Equity at CHF 74.3 million, equity ratio 55% (48% per 30.09.2011)

Improved profitability Gross margin of 42.9% (40.5%)
 SG&A down by 2.1 million representing 23.7% of sales
 Operating EBIT-margin of 19.2% (15.3%)
 Net profit CHF 20.5 million (CHF 15.0 million)

Strong cash generation
 Free cash flow CHF 15.6 million (CHF 9.1 million)

Legacy SOP programs expired per 31.03.201221

3. Consolidated Balance Sheet
30.09.2012

31.03.2012

Cash and cash equivalents

12'421

21'121

Accounts receivable

46'62942'140Inventories

30'81426'605

Income tax receivable

833

2'009

Other current assets

1'610

2'956

Total non-current assets

42'30237'683

Total assets

134'608

132'514

Accounts payable

23'082

17'863

Other current liabilities

33'83029'774

Total non-current liabilities

3'441

5'316

Equity74'25579'561

Total liability and equity

134'608

132'514

11.3%

12.3%

4.6

5.3

55.2%

60.0%

7.4

18.1

In CHF thousands

 Avg. net working capital in % sales
 Inventory turns
 Equity ratio Net cash (CHF millions)22

3. Income Statement
In CHF thousands

H1
2011/12H1
2012/13

ChangeQ1
2012/13

Q2
2012/13

ChangeSales

125'511 124'195-1.0%

63'11861'076-3.2%

Gross margin

40.5%

42.9%

2.5pt

42.1%

43.7%

1.6pt

Operating Cost

-31'582-29'474-6.7%-15'224-14'250-6.4%

Operational
EBIT

19'19423'82924.1%

11'35912'4709.8%

Additional SOP
income / costs

619

0N/A

00

N/A

EBIT

19'81323'82920.3%

11'35912'470

9.8%

Net financial
expense (net)-1'162716-161.6%1'501-786

N/A

Income tax-3'624-4'01510.8%-2'140-1'875-12.4%Net profit

15'02820'52936.6%

10'7209'809-8.5%
23

3. Change in the Classifications on Income Statement
 Review of definitions linked to systems & process improvements, in order to provide
more relevant financial information about LEM’s operations
 Neutral on overall EBIT Impact on gross margin -2.0%-points
 Comparable number provided for 2011/12
 Reclassifications in the consolidated income statement
 Management compensation: into the line to which the managers contribute Facility cost (rent, energy, …): according to the resources used by each activity
 Operation support teams: in costs of goods sold
 Impacts on H1 2011/12 income statement:
In CHF thousands

Cost of goods soldManagementcompensation-1’174

Facility costs-825

Operation
support costs

Total impact-550-2’549Gross margin-2’549

Sales expense-3-2260-229

Administration
expense

1’552

1’246

550

3’348

R&D expense

-375

-195

0-570

0000

Operational EBIT

24

3. Results by Quarter
In CHF millions

In % of sales
30%

10090
80
70

75.0

77.0

25%

77.4

66.8

67.7

63.1
57.9

60

55.0

55.8

61.1

20%

15%50

■ Improved operating EBIT margin,
slightly over target range of 15 to20%■ High net profit in % of sales,
resulting from decreased taxcharge

4010%

30
205%

100%

0Q1
Q2Q3Q4
Q1
Q2
Q3
Q4
Q1
Q2
10/11 10/11 10/11 10/11 11/12 11/12 11/12 11/12 12/13 12/13

Orders received

Sales

Op. ROSNet Profit in % of sales25

3. Gross Margin
In CHF millions

H1
2011/12H1
2012/13

Q1
2012/13

Q2
2012/13

50.8

53.3

26.6

26.7

40.5%

42.9%

42.1%

43.7%

In % of sales
46%

Gross margin
in CHF millions

13545%
12044%

10590

43%

7542%

6041%

4540%3039%

15038%
08/09

09/10

10/11

11/12 HY 12/13

Gross margin
in % of sales

 Strong positive impacts on gross margin vs.
H1 of 2011/12
 Improved production efficiency
 Ramp-up of production of new products
 Negative impacts
 Foreign exchange impacts (CNY) Price pressure

2011/12 and 2012/13 include reclassifications of expense items (see slide 24);
2008/09 to 2010/11 not restated26

3. Operating Expenses
In CHF millions

In % of sales
40%

90

Operatingexpenses

80

H1
2011/12H1
2012/13

Q1
2012/13

Q2
2012/13

31.6

29.5

15.2

14.225.2%

23.7%

24.1%

23.3%

in CHF millions

7030%

60

Operatingexpenses
in % of sales

5020%
40
3010%

20

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

100%

0
08/09

09/10

10/11

11/12

HY 12/13

2011/12 and 2012/13 include reclassifications of expense items (see slide 24);
2008/09 to 2010/11 not restated27

3. R&D Expenses
In CHF millions

In % of sales

H1
2011/12H1
2012/13

Q1
2012/13

Q2
2012/13

7.5

6.9

3.5

3.4

6.0%5.6%

5.5%

5.6%

10%

15R&D
expenses
8%

12in CHF millions

R&Dexpenses
6%

964%

32%

in % of sales

 Continued investment in R&D for bothsegments
 R&D expense around the long-term
average of 5.5%0%008/09

09/10

10/11

11/12

HY 12/13

2011/12 and 2012/13 include reclassifications of expense items (see slide 24);
2008/09 to 2010/11 not restated28

3. Operational EBIT
In CHF millions

In % of sales

70

22%

OperationalEBIT

60

20%

18%
4016%
30
14%
2012%

10

010%
08/09

09/10

10/11

11/12HY 12/13

H1
2012/13

Q1
2012/13

Q2
2012/13

19.2

23.8

11.4

12.5

15.3%

19.2%

18.0%

20.4%

in CHF millions

OperationalEBIT50

H1
2011/12in % of sales

 Q2 of 2012/13 operational EBIT
increased vs. Q1
 H1 of 2012/13 operational EBIT
increased vs. H1 of 2011/12
 Q2 profitability slightly exceeded target
range of 15 to 20%
29

3. Legacy SOP Programs Expired per 31.03.212■■■

With the closing of fiscal year 2011/12, all legacy stock option plans are closed
LEM will not record any additional stock option plan cost/income going forward
LEM has no further option based compensation programs# outstanding
options

31.03.2008

31.03.2009

31.03.2010

31.03.2011

30.09.2011

31.03.2012

70’45766’20740’794

4’952

3’876

0Closure ofSOP 5SOP 630

3. Financial Expense
H1
2011/12
Exchange effect*
Other financial expense + incomeTotal

H1
2012/13-1'035722-127-7-1'162716

 H1 of 2012/13 exchange effect mainly driven by USD & CNY appreciation
vs. EUR & CHF
 Foreign exchange hedging policy In general: 50% of net exposure on a rolling 3-9 month basis Euro: 100% of net exposure 18 months forward*

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.

31

3. Income Taxes
In CHF thousands

H1 2011/12

H1 2012/13

EBT

18’651

24’544

Income taxes-3’624-4’015

Effective tax rate

19.4%

16.4%

In %

H1 2011/12

H1 2012/13

Expected income tax rate

19.8%

12.7%

Expected withholding tax rate

2.6%

2.6%

Expected tax rate

22.4%

15.3%

Adjustments in respect of previous periods’ income tax

-3.0%

0.0%

Other differences

0.0%

1.1%

Effective tax rate
19.4%
16.4%
 Reduction/increase of the expected tax rate with increasing/decreasing volumes in low tax
entities Other impacts on tax rate Swiss/Japanese double taxation agreement32
 High and New Technology Status in China

3. Net Profit
In CHF millions% of sales
20%

45Net profit
in CHF millions

4018%

Net profit
in % of sales

35

H1
2011/12H1
2012/13

Q1
2012/13

Q2
2012/13

15.0

20.5

10.7

9.8

12.0%

16.5%

17.0%

16.1%

16%
0.6-1.230

H1 2011/12
-3.6

14%
19.2

25

15.012%
2010%

Operational
EBIT

15

SOP inc. / cost

FinancialexpenseIncome tax

00.7

-4.0

Net profit
H1 2012/138%

10

23.8

20.56%

504%
08/09

09/10

10/11

11/12

HY 12/13

Operational
EBIT

SOP inc. / cost

FinancialexpenseIncome tax

Net profit

33

3. Cash Flow Statement
H1 2011/12

H1 2012/13

18’651

24’54490125

Cash flow from changes in net working capital-4’112-1’630Cash flow from operating activities
Cash flow from investing activities

14’629-5’49823’039-7’445

Free cash flow

9’131

15’594

Cash flow from financing activities-25’126-25’098

Change in cash and cash equivalents-15’995-9’504

Cash and cash equivalents at the end of the period

10’606

12’388In CHF thousands

Profit before taxes
Non-cash items

34

4. Strategy and Outlook

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 acrossgeographies and markets

36

4. Strategic Priorities to Extend Leadership Position
Strategic priorities
Increase technology leadership■ Reinforce multidisciplinary innovation team■ Increase number of product launches■ Constantly improve performance of products■ Establish dedicated team of experts to manage LEM’s IP
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 inH1 of 2012/13■■

Launched 3 newproducts
Established LEM
IP in Fribourg■

Grouped highprecisionbusiness inGeneva■

Improved S&OP37

4. Outlook■

Uncertainty due to the economic slowdown – global political andeconomic implications of crisis remain unclear and make long-termplanning difficult■

Expectations for H2 of 2012/13■ decrease of sales in the Industry segment■ strengthen market share thanks to introduction of new products■ sales in the Automotive segment above 2011/12 levels■

Main challenge for H2 of 2012/13■ adapt production to the short-term planning of LEM’s customers■

Full year 2012/13 sales forecasted to reach CHF 230 to 240 million
38

Financial Calendar and Contact Details
Financial calendar
14 February 2013
5 June 201327 June 2013
2 July 2013
5 July 2013

Third quarter results of 2012/13
Year-end results and media and analyst conference
Annual shareholders’ meeting for the year 2012/13 (Fribourg)
Dividend ex-date
Dividend payment date

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

39