LEM : Annual Review 2022/23

Financial Report PDF download: www.lem.com/en/investors

Contents

4 Welcome

1. Leading the world

1. Financial results

14 Our five businesses

Automation

Automotive

Renewable Energy

Energy Distribution and High Precision

Track

26 New headquarters

32 Trends, technology, R&D

Product launches 2022/23

38 Culture, talent & values

Executive Committee

Board of Directors

46 Responsibility

ESG Key Performance Indicators

52 Information for investors

Welcome

We are pleased to report record annual results for the year. Our revenues and profitability show high demand for our products and the strengths of the organization to excel despite challenges throughout the year. LEM is preparing for the future, and our people are embracing change with determination and flexibility, working on innovative solutions in rapidly accelerating business environments. Our new headquarters

in Meyrin, Geneva, is a major milestone for LEM, and the positive impact it has on our company and culture is featured in this Annual Review.

LEM's long-term prospects are driven by megatrends such as electrification, decarbonization, renewable energy, automation, and mobility. We are investing in customer closeness and speed to market, and attracting new talent to capture opportunities emerging from these trends and to maintain our position as global market leader in electrical measurement. Our purpose is clear: We are helping customers and society to accelerate the transition to a sustainable future.

A successful, challenging year

We are delighted to report record annual results. Our revenues demonstrated the fundamental demand for our products and the strengths of the company op- erationally. The megatrends that drive our business are accelerating and offering many opportunities to capture substantial growth. We thank our teams around the world, who showed great flexibility and determination to find innovative solutions, so we can benefit from those advantageous circumstances.

We are further rolling out our new regional organiza- tion, moving decision-making closer to the customer and empowering local management in the regions. While the process is demanding, we are making good progress. The management team has achieved our aspired strength, competence, and experience to bring LEM to the next level. All leaders at LEM are invited to role model Blue Behaviors: with innovation and continuous improvement, customer orientation and growth, team player mindset and learner atti- tude.

Challenges due to the pandemic started with lock- downs in China in April and May and then again in November, followed by the sudden lifting of restrictions in December. This stalled production in China, intensified component shortages, and challenged our supply chains. We were unable to deliver on all orders in China and around the world. Teams were highly solution oriented in establishing second sources. They also stepped up communication with longstanding and new customers and suppliers, working together openly and diligently on the best possible solutions as well as fair allocations across customers. Trust and strong relationships were key here, especially as competition increased. Remark- ably, we emerged from these challenges stronger than ever. This was a major achievement for the LEM team.

New headquarters - change made visible

We moved to our new headquarters in Meyrin, Gene- va, in April 2022 and celebrated this together with our 50th anniversary during the Inauguration Day in November. For LEM Geneva, located since 1988 in offices at the CTN industrial park in Plan-les-Ouates, our new headquarters is a major milestone in LEM's corporate transition.

Our new headquarters has a global coordination function, empowers regional teams to executive ef- ficiently, and makes us flexible to capture growth. It brings together more than 250 employees with a rich variety of expertise in a modern and sustainable working environment - ideal for innovation, which is core to our DNA. In the light, clean, open spaces of the building, our culture and our ambition are visible.

Our geographic footprint

We aim at a sufficiently diversified geographic footprint to enable full supply assurance in each region as well as a natural currency hedge. In the US, our reinforced leadership team pursues new opportunities in EVs and the EV charging infrastructure. Malay- sia will be the seventeenth country in which we operate and will further balance our global footprint. Construction at the Penang site is on time, and we expect to be ready for production early 2024.

This new 12'000-square-meter facility will allow us to meet growing customer demand globally and give us new skillsets and flexibility in our supply chain. Penang will be the main testing base for our integrated current sensor (ICS) products, which are in great demand from customers in our Automation, Automo- tive, and Renewable Energy businesses. Hiring is progressing well, and we will benefit from excellent local talent and experience, especially in the semiconductor area. We will start with 50 employees and expect to grow to 500 in a few years.

R&D and future technologies

More than half of our R&D investment goes into developing our core current sensor products and the rest into developing new products for new and adjacent markets. In addition to developing product lines, our R&D teams have developed three entirely new platforms, in metering, integrated current sensing, and smart grid. This is impressive and substantiates our investment. In 2022/23 we launched 9 products.

We continue to build specific competence centers across our sites in Geneva, Lyon, Beijing, and Sofia. Our R&D teams provide a diversified skillset and in- genuity, plus the determination to constantly develop new solutions. Investing in integrated current sensors has proven to be the right move, and we are building out this capacity. Our software competency is also increasing across sites. In addition, we are working on the development of AC measurement for smart grid and highly sophisticated magnetic sensing technology.

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Welcome

Robust results

This year's record performance reflects yet again the fundamental global trend towards decarbonization and electrification, but also our corporate culture of innovation and agility to respond to customer de- mands. We achieved our record results despite lock- downs in China, supply chain difficulties, and geopolitical challenges. Sales increased by 8.8 % from CHF 373.4 million last year to CHF 406.4 million this financial year. Without the foreign exchange impact, sales would have increased by 12.6 %. EBIT increased by 4.3 % to CHF 92.2 million, while the EBIT margin decreased to 22.7 % from 23.7 % in 2021/22. We posted a net profit of CHF 75.3 million, up from CHF 72.4 million last year.

Our balance sheet is strong and we continue to generate healthy cash flow. Based on these excellent results for the year 2022/23 and the long-term fundamentals for the business, the Board of Directors proposes a dividend of CHF 52 per share, up from CHF 50 per share.

Strategic focus and outlook

We are investing in next generation applications and partnerships with customers in adjacent markets that are closely connected to current measurement. We are pleased with the steady, organic growth at LEM that yields success and motivation year after year for all stakeholders. In the financial year ahead, our growth will continue, with the opening of LEM Malay- sia and with our metering and integrated circuit sensors businesses reaching the next level. In the fu- ture, we look forward to further applications in automotive, metering, and electrical safety, with new sensors for intelligent EV charging, for renewable energy storage plants and robotics, and for functional safety.

Thank you

On behalf of the Board of Directors and the Executive Management, we thank our shareholders and our employees, customers, suppliers, and partners for the confidence they have placed in us. Our talented teams worldwide have demonstrated yet again their commitment and ingenuity - and the resolve to contribute to the transformation taking place at LEM. Our performance is also due to the trusted relationships we have developed with customers, suppliers, and business partners with whom we work closely to bring new innovative products to market. 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 and learn something new about LEM.

Andreas Hürlimann

Chairman of the Board of Directors

Frank Rehfeld

Chief Executive Officer

life

Our new headquarters in Meyrin, Geneva, and our celebrations of LEM's 50th year as a company there in November 2022 were full of positive energy and inspiration for the future. LEM talent, investors, customers, partners, and key stakeholders can see and feel transformation underway. We are proud to report record performance again this year.

energy

Behind the numbers, the new premises, and stellar events are LEM people. Skilled individuals with a strong sense of resolve keep our company improving and growing. Although at times over the past year, the pandemic and component constraints depleted our energy and disrupted our plans, LEM people persevered by remaining strong, caring, and positive.

motion

The electronic sensor industry is changing fast, being shaped by continuous technological breakthroughs. The rapid rise in the electrification of the world is driving change faster than ever before. We are focused and moving fast to capture growth opportunities in all of our markets, pursuing our purpose: to help our customers and society accelerate the transition to a sustainable future.

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Leading the world in electrical measurement

LEM headquarters

Geneva, Switzerland

PRODUCTION | R&D | SALES

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.

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EMEA

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

Wuhan

AMERICAS

Milwaukee, Wisconsin

Detroit, Michigan

Bridgewater, New Jersey

Columbia, South Carolina

Los Angeles, California

REST OF ASIA

Pune, India

Seoul, South Korea

Tokyo, Japan

Penang, Malaysia *

*  Penang site is still under construction

Our 1,700 people in 17 countries transform	With innovative electrical solutions,
technology potential into powerful answers.	we are helping our customers and society
We develop and recruit the best global talent,	accelerate the transition to a more
working at the forefront of megatrends,	sustainable future.
such as renewable energy, mobility, automation,
and digitization.

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