LEM : Annual Review 2021/22

Financial Report

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→ www.lem.com/en/investors

Contents

4 Welcome

1. Leading the world

1. Financial results

1. 50 years of ingenuity

Key milestones

16 50 years of inspiration

Conversation with the Founder, Chairman and CEO

20 Industry segment performance

1. Automotive segment performance

1. Trends, technology, R&D

1. Culture, talent & values

Executive Committee

Board of Directors

1. CO2 strategy

1. Responsibility

ESG Key Performance Indicators

56 Information for investors

1972

LEM SA Founded

Geneva

Welcome

We are delighted to report record annual results as we celebrate

50 years since LEM was founded in

1972. Both our revenues and profitability demonstrated the fundamental demand for our products and the strengths of the company opera- tionally, despite the challenging economic environment. Our dedicated employees have worked tirelessly with our suppliers and customers to mitigate the supply chain constraints and adapt to the fluctuating impediments of the pandemic.

Looking beyond this year's exceptional performance, LEM's long-term prospects are driven by megatrends such as energy efficiency, CO2 neutrality, mobility, and automation. Recent geopolitical events also highlight the need to accelerate the world's efforts to decarbonize energy supplies, and power electronics is a key enabler of this process.

50 years of ingenuity and inspiration

This year's Annual Review is an opportunity to reflect on the company's progress over the past 50 years. And to draw inspiration for the future. We are proud to illustrate our key milestones of technological and product achievements, together with our early expansion into different parts of the world. It was a particular pleasure for us to both learn from the founder Jean-Pierre Etter about the company's responses to customer needs and the management philosophy he used to build the organization. We encourage you to read our conversation with him - there are many insights that still guide us today!

Ingenuity is a quality that describes much of what LEM does - clever, original and inventive. Ingenuity can also be seen as a mindset, accepting a way of thinking differently and working on practical solutions that are needed. Above all, accepting that an individual does not have the complete answer, but that in working together and with the customer, we will arrive at the right solution.

A new headquarters and organization for our talent

It is also appropriate that we mark this anniversary by moving into our new global headquarters in Geneva. This building - "The Hive" - reflects the sustainability principles of our businesses and enables our teams to continue devising ingenious solutions for our customers. It is a symbol of how we are investing in the next generation of technologies and talent to drive LEM's progress.

Buildings can also foster creativity and innovation and help to change a company culture. We continue to embed our "LEM Blue Behaviors" across all our teams as we strive for a high-performance culture. Key qualities we look for include entrepreneurship, agility, openness, and a desire to learn. Our people enjoy intellectual challenges, diverse pathways, and global career opportunities. We are relentlessly recruiting and developing the best global talent with both leadership and technical competencies to deliver the growth potential of the company.

Our industry is changing fast and being shaped by several technology breakthroughs and market op- portunities. So is LEM: as of April 1, 2022, a new regional and functional matrix organization has been fully implemented. It is designed to move decision -making closer to the customer in different parts of the world and empower local management. Global functional teams will support regional markets across all customer applications and the entire LEM product portfolio, thereby providing synergies of expertise and development.

CO2 strategy and ESG indicators

LEM is very conscious of its responsibility to society, as our products help to optimize and reduce energy consumption in many sectors of the economy. This year, we have initiated a wide-ranging review of how LEM may reduce its own carbon footprint, identifying a range of measures to become CO2 neutral in scope 1 and scope 2 emissions by 2025 and to be CO2 neutral in all three scopes by 2040. A special interview with two members of the Executive Committee describes our new strategy. We are also pleased to report that our broader ESG efforts are being enhanced, as shown by the new set of key performance indicators (KPIs) compliant with the globally recognized and standardized NASDAQ ESG Reporting Guide 2.0.

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

We are investing in next-generation technologies to support the growing market penetration of intelligent sensors for energy measurement. These investments reflect increased needs, such as those for semiconductors, metering, electromobility, and smart-grid applications.

We continue to build centers for specific competencies across our sites in Geneva, Lyon, Beijing, and Sofia. Our R&D teams provide a diversified skill set, ingenuity, and a particular cleverness in design to deliver the best product. Developing products for customers across multiple sectors allows us to leverage synergies to produce larger systems, modules, and semiconductors. This gives us the scope to master the value chain from the design function at an integrated-circuit level all the way up to the full sensor and customer application.

Record results

Our record financial results should be seen in the context of the global economy rebounding from the worst effects of the pandemic. They also reflect our agility to respond to customer demands, the economies of scale we are building, and the new technologies we are leveraging. Sales in the financial year 2021/22 increased by 24.1% to CHF 373.4 million. EBIT increased by 45.1% to CHF 88.4 million, yielding an improved EBIT margin of 23.7%. We posted a net profit of CHF 72.4 million, up from CHF 55.6 million last year.

Our balance sheet is strong and we continue to generate healthy cash flow. Based on these excellent results for the year 2021/22 and the long-term fundamentals for the business, the Board of Directors proposes a special dividend to mark the 50th anniversary of CHF 50 per share, up from CHF 42 per share.

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Welcome

Strategic focus and outlook

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

Thank you

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

life

energy

For the past year, LEM has proven to be especially vital. The pandemic and disrupted supply chains impacted us all, but our teams adapted valiantly with creativity and new digital forms of collaboration. The record annual results reflect this exceptional commitment from everybody, and we are proud to celebrate our 50th year as a company. At special events throughout 2022, we will take time out to connect across cultures, locations, and disciplines, and to celebrate LEM moments together, using this opportunity to learn from our history and go forward with renewed conviction.

Energy abounds in a company that is 50 years young. This dynamism enables LEM to continually recognize trends and opportunities and to design

However, the world is dealing with a series of shocks,	Andreas Hürlimann
which will inevitably restrict economic growth. In the	Chairman of the Board of Directors
short term, we see continued headwinds from sup-
ply chain constraints. Our business in China is also
heavily impacted by lockdowns, with implications for
other markets as well. We will remain agile and adapt	Frank Rehfeld
as best we can, but the coming fi nancial year will not	Chief Executive Offi cer
continue the same growth trajectory we have deliv-
ered this year.

1982

LEM-France

First international office

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motion

new and leading products to meet market de- mands. Our anniversary is the perfect occasion to celebrate LEM's ingenuity - our particularly clever way of thinking and engineering the best solutions for our customers' systems.

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

Leading the world in electrical measurement

LEM headquarters

Geneva, Switzerland

Sales

R&D

Production

Customization

Europe

Geneva, Switzerland

Frankfurt, Germany

Vienna, Austria

Brussels, Belgium

Randers, Denmark

Paris, France

Padova, Italy

Skelmersdale, UK

Lyon, France

Sofia, Bulgaria

China

Beijing

Shanghai

Shenzhen

Xian

Hefei

Taipei, Taiwan

North America

Milwaukee, Wisconsin

Columbus, Ohio

Amherst, Massachusetts

Los Angeles, California

Rest of world

Pune, India

Seoul, South Korea

Tokyo, Japan

Tver, Russia

Agents /distributors

A leading company in electrical measurement, LEM engineers the best solutions for energy and mobility, 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 megatrends, such as renewable energy, mobility, automation and digitization.

With innovative electrical solutions, we are helping our customers and society accelerate the transition to a sustainable future.

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