Press release

LEM announces steady financial results for full year 2019/20
Fribourg, Switzerland, 19 May 2020 – LEM (SIX: LEHN), a leading global company in electricalmeasurement for industry and automotive applications, announces full year results for 2019/20(April-March) compared to 2018/19:•

Sales decreased by 4.2% to CHF 307.9 million (CHF 321.6 million); at constant exchange rates,
sales declined by only 1.9%

•The company benefits from a diverse global spread of sales:– China CHF 98.7m (32.0% of total)– Europe CHF 97.9m (31.8% of total)– North America CHF 37.4m (12.1% of total)– Rest of World CHF 74.0m (24.0% of total)•R&D up by 1.7% to CHF 28.0 million (CHF 27.6 million), or 9.1% of sales, underpinning launch often products•

EBIT decreased by 10.0% to CHF 58.3 million (CHF 64.8 million); the EBIT margin declined slightly
to 18.9% (20.1%), impacted by lower sales and one-off reorganization charges•

Record net profit for the period up by 15.9% at CHF 60.7 million (CHF 52.4 million), helped by anon-recurring positive tax impact of CHF 14.0 million•

Free cash flow up 51.8% at CHF 58.9 million (CHF 38.8 million)•Dividend reduced to CHF 40 per share (CHF 42 for 2018/19)

Frank Rehfeld, Chief Executive Officer, said: “We are pleased to report another year of steadyresults which are encouraging given the tough environment we have faced. Both our top-line
revenue, down only 1.9% in constant currencies, and our underlying EBIT margin of 19.6% (excluding
one-off effects), were in line with guidance. LEM’s diversity of applications across multiple sectors of
the global economy provides a steady flow of orders and a prudent spread of risk. We also benefit froma good geographic spread of business.
Mega trends drive demand for electric sensors, give multiple opportunities to leverage LEM
expertise and ensure a sustainable long-term business for all our stakeholders. We are focused onstrengthening our technology leadership, improving our quality systems and operational excellence,developing our talent capabilities and making the organization more agile.
Looking ahead, Covid-19 will undoubtedly impact our customers and our business in the comingyear. Some factors remain out of our control, but the diversity of our global footprint should provide
a solid base for our performance.”
Andrea Borla, Chief Financial Officer, remarked: “Our record net profit of CHF 60.7 million wasboosted by a one-off tax gain. LEM benefits from robust margins and a strong balance sheet, while thesignificant free cash flow of CHF 58.9 million was driven by good operational management. We
continue to invest substantially in R&D, now at 9.1% of sales, leveraging new technologies in electric

LEM Holding SA

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powertrains, smarter sensors, DC metering and charging systems. These investments are producing
results with the launch of ten new products this year.”Industry segment: steady performance in difficult economic environment
Twelve months sales in the Industry segment totalled CHF 240.4 million, down 3.9%. At constantexchange rates, sales decreased by only 1.3%, which was pleasing given the difficult economicenvironment. Our drives business was impacted particularly by delays in customer investment. Sales
increased by 0.1% in China, our largest market, but decreased by 5.6% in Europe, by 8.9% in North
America and by 3.8% in Rest of World. Global orders improved by 3.5% to CHF 254.3 million.
in CHF millions

2019/20

2018/19

Change CommentsBusinesses
Drives

99.5

113.3

Renewable
Energy78.7

77.0

Traction

51.0

48.6

High precision

11.1

11.3

+5.1% • Growth in India• Higher investments Eastern Europe & Russia-2.2% • Demand for EV car test benches Japan &Western Europe• New IN product family well received

Total Industry

240.4250.2-3.9%-12.2% •••+2.2% •

China delay of investments
Japan & Germany weak machine tools
Interest in new products

Strong growth in China• Stable Europe & US• Driven by solar and new products

Automotive segment: continued transformation to green cars
Twelve months sales in the Automotive segment totalled CHF 67.6 million, a decrease of 5.3%. At
constant exchange rates, sales declined by 3.9%. Our green car business now accounts for 74.3% of
the Automotive segment, up from 68.1% a year ago. China sales dropped by 23.4% due to changes
in government policies and the first impact of Covid-19, but the world’s largest market for green cars
will clearly grow in the long-term. Europe was up 29.6% supported by significant investments to launch
new electric or hybrid-electric car platforms. Demand from European manufacturers is driving sales ofmotor control and battery management in Korea and Japan, with Rest of World up 31.1%. North
America fell 22.6% owing to lower volumes in the traditional market, as the transition to newtechnologies becomes more evident.
in CHF millions

2019/20

2018/19

Businesses
Green50.248.6

Conventional

17.4

22.8

Change Comments+3.4% • China influenced by policies and Covid-19• Momentum in Europe, Korea, Japan• New motor control, battery management andcharging system products developed-23.8% • Continued switch to new technologies• US major OEMs are starting to electrify SUVs
and pick-ups

Total Automotive

LEM Holding SA

67.6

71.4

-5.3%

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Profitability on track
Gross profit was down by 2.6% at CHF 142.7 million, while the gross margin improved again to46.4%. This is 80 basis points better than in the prior year, thanks to various efficiency programs.
We remain vigilant with overheads, although on a reported basis total SG&A costs have risen by
3.9% to CHF 56.5 million, or 18.3% of sales compared with 16.9% last year. This increase reflects
positive non-recurring items in 2018/19 (e.g. pension adjustments) and negative non-recurring items
this year (e.g. restructuring in Geneva announced in January 2020). Without these items, SG&A
costs would have been slightly lower.
We continued to increase investment in research and development (R&D), up by 1.7% to CHF 28.0
million, or 9.1% of sales, up from 8.6%. Our investment continues to bear fruit with another ten products
launched this year.
EBIT for the year 2019/20 decreased to CHF 58.3 million from CHF 64.8 million, mirroring the decline
in revenues and increased costs discussed above. Our reported EBIT margin was down at 18.9%,
compared with 20.1%. On an underlying basis, excluding the one-off reorganization costs in Geneva,
the EBIT margin was 19.6% in line with our guidance.
The Group tax expenses was a positive CHF 5.1 million, mainly due to a non-recurring positive tax
impact of CHF 14.0 million from the sale of technical IP from LEM Intellectual Property SA based inFribourg to LEM International SA based in Geneva and to LEM China.
We posted a record net profit for the year of CHF 60.7 million, up from CHF 52.4 million last year.
The net profit margin thereby increased to 19.7% compared with 16.3%. Excluding the positive tax
impact, net profit would have decreased to CHF 46.7 million, while the net profit margin would havedeclined to 15.2%.
Improved cash flow and strong balance sheet
Cash flow from operating activities was CHF 73.6 million (+37.5%) and free cash flow was CHF 58.9
million (+51.8%). This increase is a consequence of better net working capital management andlower taxes paid.
Our balance sheet remains strong and essentially debt-free. As of 31 March 2020, total assets
increased to CHF 230.3 million. Shareholders’ equity reached CHF 117.4 million, representing anequity ratio of 51.0% (60.5% as of 31 March 2019).
Adjusted dividend
Based on the results for 2019/20 and the uncertain outlook, the Board of Directors proposes a slightly
reduced dividend of CHF 40 per share (CHF 42 for 2018/19), payable on 18 June 2020. The proposal
follows LEM’s dividend policy of distributing significantly more than 50% of its consolidated net profit
to shareholders and corresponds to a payout ratio of 75.1%, down from 91.4% last year.
Uncertain outlook
The dramatic impact of Covid-19 on the world economy has been well reported. The IMF publishedits bi-annual World Economic Outlook in April 2020; this forecast a baseline decline of -3% for global
GDP in 2020, with only China and India showing any positive growth, and the aftershocks to be felt
even into 2022. This baseline is predicated on most major economies moving out of lockdown by
the end of Q2 2020, so actual GDP could be even worse if the Covid-19 pandemic persists.

LEM Holding SA

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LEM’s business does benefit from geographic and sector diversity. Our operations in China(accounting for 32% of sales and 60% of production) were back up and running nearly at fullcapacity by the end of March 2020. However, a substantial portion of our China production isdestined for export, and therefore is dependent on how quickly demand picks up from othereconomies which have been hit badly by the virus.
Given the inter-connectedness of customer demand and supply chains, and where LEM sits in thiscomplex global web, we will not have any real visibility on the impact to our business until thesecond quarter of our financial year 2020/21.
Despite this difficult environment, it is important to remember the fundamental long -term prospects
for LEM remain strong, driven by mega trends such as renewable energy, mobility and automation.
LEM benefits from the underlying reliability of our business across a global footprint, withrecognized heritage and market leadership, a steady flow of orders, robust margins, a strong
balance sheet and healthy cash flow.
We are maintaining our key projects of investing in a new plant in Malaysia to diversify theproduction footprint, and in a new global headquarters in Geneva. We continue to invest in R&D at
between 8-10% of sales, leveraging new technologies for example in electric powertrains, smartersensors, DC metering and charging systems. We continue to improve the efficiency of production,
while also empowering our global sites with full capabilities in R&D, operations, sales and quality
management. This will make our organization more agile, increase our speed of execution andreduce the time to market.
In summary, we will focus on those matters under our own control, ensuring the business is run as
efficiently as possible. While confident in LEM’s core qualities of engineering expertise and reliability,with a proven track record of nearly 50 years, we recognize the Covid-19 impact on the global
economy and societies will leave certain drivers for our short-term prospects out of our hands.
Conference call and webcast
Due to the ongoing pandemic and social distancing requirements, LEM will not host a p hysicalmeeting as it normally does on this occasion. Rather, Andreas Hürlimann, Chairman of the Boardof Directors, Frank Rehfeld, CEO, and Andrea Borla, CFO, will host a conference call and webcast
for investors, analysts and media, to present the results for the financial year 2019/20 and theoutlook for the financial year 2020/21 today at 10:00 CEST, followed by a Q&A session.
Listen to the conference call and live webcast
https://87399.choruscall.eu/links/lem200519.html
The press release, Annual Review, Financial Report, investor presentation, and the link to thewebcast will be available from today, 19 May 2020, on http://www.lem.com/en/investors.
Dial-In Numbers+41 (0) 58 310 50 00
Switzerland & Europe+44 (0) 207 107 06 13
UK+1 (1) 631 570 56 13USA
Other countries: https://media.choruscall.ch/documents/Attended_DI_numbers.pdf

LEM Holding SAPage 4/7

Annual General Meeting
Given the exceptional circumstances due to the Covid-19 pandemic, the Annual General Meeting ofShareholders on 09 June cannot take place in the usual format. This means that shareholders are notpermitted to attend in person, and therefore they may only exercise their voting rights by instructing
the Independent Representative. The formal invitation with proposed resolutions is published today on
the company’s website.
Financial calendar
The financial year runs from 1 April to 31 March
9 June 2020
Annual General Meeting of Shareholders for the financial year 2019/20
16 June 2020
Dividend ex-date
18 June 2020
Dividend payment date
29 July 2020
First-quarter results 2020/21
3 November 2020
Half-year results 2020/21
4 February 2021
Third-quarter results 2020/21
19 May 2021
Year-end results 2020/21
24 June 2021
Annual General Meeting of Shareholders for the financial year 2020/21
1 July 2021
Dividend ex-date
6 July 2021
Dividend payment date
LEM – Life Energy Motion
A leading company in electrical measurement, LEM engineers the best solutions for energy andmobility, ensuring that our customers’ systems are optimized, reliable and safe.
Our 1,500 people in over 15 countries transform technology potential into powerful answers. We
develop and recruit the best global talent, working at the forefront of mega trends such as renewableenergy, mobility, automation and digitization.
With innovative electrical solutions, we are helping our customers and society accelerate the transition
to a sustainable future.
Listed on the SIX Swiss Exchange since 1986, the company’s ticker symbol is LEHN.
www.lem.com
Contact: Investment community
Andrea Borla, Chief Financial Officer
Phone: +41 22 706 1250
Email: investor@lem.comContact: MediaCabinet Privé de Conseils s.a. (CPC)
Nick Miles, miles@cpc-pr.com, mobile +41 79 678 76 26
Michael Füglister, fuglister@cpc-pr.com, mobile +41 78 839 07 62

LEM Holding SA

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Appendix
Consolidated income statement
April to March
2019/20

In CHF thousands

2018/19

Change-4.2%

Sales

307'942321'591

Cost of goods sold(165'195)(175'098)

Gross margin

142'747

146'493

46.4%

45.6%

Sales expense(28'232)(29'733)

Administration expense(28'270)(24'640)

Research & development expense(28'038)(27'576)

Gross margin (in %)Other expense(0)0

Other income

120252

EBIT

58'32764'796

EBIT margin (in %)

18.9%

20.1%

Financial expense

(505)

(179)

Financial income

191

155

Foreign exchange effect(2'379)(2'519)Profit before taxes

55'63462'252

Income taxes

5'059(9'876)

Net profit for the year

60'69352'376

Net profit margin (in %)

19.7%

16.3%

LEM Holding SA-2.6%-10.0%-10.6%+15.9%

Page 6/7

Key Figures
2019/20

In CHF millions

2018/19

ChangeQ4 - Q4 FY - FY

Orders received

Q1

Q2

Q3

Q4

FYQ1Q2Q3Q4FY

Industry

71.3

54.8

63.8

64.5

254.3

68.0

56.6

57.5

63.6

245.7

+1.4%

+3.5%

Automotive

17.2

17.2

17.5

16.4

68.2

17.9

23.5

15.1

18.2

74.7

-10.3%-8.8%

Total LEM

88.4

72.0

81.2

80.8

322.4

86.0

80.0

72.6

81.8

320.5

-1.2%

+0.6%

Book-to-bill ratio

Q1

Q2

Q3

Q4FY

Q1

Q2

Q3

Q4FY

Q4 - Q4 FY - FY

Industry

1.10

0.92

1.10

1.11

1.06

0.96

0.93

0.99

1.05

0.98

+5.1%

Automotive

0.95

1.00

0.94

1.18

1.01

1.04

1.160.85

1.13

1.05

+3.9%

-3.7%

Total LEM

1.07

0.94

1.06

1.12

1.05

0.98

0.99

0.95

1.07

1.00+4.7%

+5.1%

+7.7%

Sales

Q1

Q2

Q3

Q4

FY

Q1

Q2

Q3

Q4

FY

Industry

64.6

59.3

58.2

58.2

240.4

70.8

60.8

58.3

60.4

250.2

-3.6%

-3.9%

Automotive

18.0

17.1

18.5

13.9

67.6

17.3

20.1

17.8

16.1

71.4

-13.6%-5.3%

Total LEM

82.6

76.4

76.7

72.2

307.9

88.0

80.9

76.1

76.5

321.6

-5.7%

-4.2%

Q4 - Q4 FY - FY

EBITQ1Q2Q3Q4FY

Q1Q2Q3Q4FY

Q4 - Q4 FY - FY

Industry

14.3

13.2

11.5

11.4

50.4

15.8

13.0

12.1

14.0

54.9

-18.7%-8.1%

Automotive

2.4

1.9

3.2

0.5

7.9

2.8

4.0

3.2

-0.0

9.9

N/A

-20.2%

Total LEM

16.7

15.1

14.6

11.9

58.3

18.5

17.0

15.2

14.0

64.8

-15.0%-10.0%Net profit of the year

Q1

Q2

Q3

Q4FY

Q1

Q2

Q3

Q4FY

Q4 - Q4 FY - FY

Total LEM

13.9

11.2

26.9

8.7

60.7

13.5

13.8

11.6

13.452.4-35.2% +15.9%

LEM Holding SA

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