Investors’ Day 2015 The Schaffner Group We shape ......“Schaffner provides manufacturers and users of electrical and electronic equipment worldwide with components, systems and

Investors’ Day 2015The Schaffner GroupWe shape electrical power

Agenda

| Introduction to Schaffner

| Strategy 2020 - Group

| Strategy 2020 – Finance

| Division EMC

| Business Unit Power Quality

| Division Power Magnetics

| Division Automotive

| Summary

Alexander Hagemann

Alexander Hagemann

Kurt Ledermann

Guido Schlegelmilch

Stefan Melly

Alexander Hagemann

Alexander Hagemann

Alexander Hagemann

© Schaffner GroupSLIDE 2

Investors’ Day 2015Introduction to Schaffner

4

Schaffner: a Leader in Electromagnetics and Power Electronics

Key figures FY 2013/14

– Net Sales: CHF 214.6 million– EBIT margin: 7.0%– 3,140 employees worldwide– Market cap as of 23.09.2015: CHF 140 million

Balanced sales and global footprintDivisions with leading market positions

Electro Magnetic Compatibility Filters (EMC)– No 1 in EMC filters

Power Magnetics (PM)– No 3 in transformers/inductors

Automotive (AM)– No 2 in keyless entry antennas

FY 2013/14 FX Reported

Net sales growth above GDP

100%

200%

USA 18% Europe 47% Asia 35% Production Sites

“Schaffner provides manufacturers and users of electrical and

electronic equipment worldwide with components, systems and

services that enable efficiency and reliability by applying leading

knowledge in electromagnetics and power electronics.”

We shape electrical power

Schaffner Mission

5

Business Model

6

•Products•Solutions•Services

Global Footprint

CompetenceCenter Unique Position

in Power Electronics

• Innovation Center• Global Talents• Research Network

• USA• Europe• Asia-Pacific

• EMC• Power Quality• Power Magnetics• Automotive

Client and Market

Needs

Broad Market Mix…

© Schaffner Group7

Motor DrivesRenewable Energy

Rail Transportation

Automotive

Health Care

LED

Oil + Gas

Water Treatment

Smart Grids

Marine

Robotics

Solutions from Schaffner Eliminate Distortions of Electrical Power …


…Served by Three Divisions

9

Electro Magnetic Compatibility Power Magnetics Automotive

No. 1 in EMC filters 1

Sales: CHF 110 mn

EBIT: CHF 15.9 mn

Market Size: CHF 330 m

1) No. 2: TDK (Japan/Germany)

24Marketsharein %

No. 3 in Transformers/Inductors 2

Sales: CHF 67.3 mn

EBIT: CHF 4.3 mn

Market Size: CHF 2 bn

2) No. 1: Hammond Power Solutions (Canada)

4Marketsharein %

No. 2 in Keyless Entry Antennas 3

Sales: CHF 37.3 mn

EBIT: CHF 2.5 mn

Market Size: CHF 120 mn

3) No. 1: Sumida Corporation (Japan)

25

Marketsharein %

All financials: ACT FY 2012/14. Market sizes and shares are Schaffner estimates 2015

Investors’ Day 2015Strategy 2020 - Group

Strategic Priorities

| Exploit growth opportunities through organic growth and acquisitions

| Margin improvement through continued efforts for operational excellence

| Strengthen market penetration in North America

11

Strategic Priorities: Organic Growth and Acquisitions

| Focus on markets with long-term growth drivers, e.g. air conditioning and motor drives

| New technologies and product pipeline, setting Schaffner apart from competition

| Build on solid M&A track record and increase external growth

12

Strategic Priorities: Operational Excellence to Expand EBIT Margin

Past improvements driven by:

| Lean manufacturing

| Restructuring of logistic flows

| Factory consolidation in Europe

Focus areas for future improvement:

| Optimized global footprint

| Zero defect manufacturing

| Quick response manufacturing

| Automation in Asian operations

13

Strategic Priorities: Accelerated Expansion in North America

| „Reshoring“ of production, modernization of infrastructure and robust economy drive demand

| Schaffner coming from a base of lower market share compared to Europe and Asia-Pacific

| Critical mass achieved to establish a strong presence: management, marketing, engineering, production

14

Schaffner Aims to Exceed CHF 400 million in Net Sales in 2020

15

0

50

100

150

200

250

300

350

400

450

CHF 215 m

CHF million

FY 2013/14 FY 2019/2020

EMC

PM

AM

EMCEMC:• Grow in a mature market• Accelerate growth with Power Quality

> CHF 400 m

PM: Achieve market leadership

Automotive: Establish a robust business

PM

AM

Financial Targets Across the Cycle

16

• Leverage ratio target: Net Debt/EBITDA < 3

• Long term equity ratio > 40%

• Dividend policy: pay-out ratio 25-35% of Net Income

Net Sales Growth, organic

EBITA Margin ROCE

EMC > 3% > 12%

PM > 7% > 8%

AM > 5% > 10%

Group > 5% > 8% > WACC

Investors’ Day 2015Strategy 2020 - Finance

Financial Highlights H1 2014/15

| Net sales CHF 102.5 million (CHF 102.6 million)

| Growth -0.1%, in local currencies +1.4%

| Book-to-bill 0.99 (1.06)

| EBIT margin on 3.6% (4.8%)

| Net profit CHF 1.9 million (CHF 3.2 million)

| EPS CHF 3.02 (CHF 5.08)

| Free cash flow CHF -2.8 million (CHF -2.2 million)

| Sound balance sheet with 40% (30.09.14: 43%) equity ratio


Profit & Loss Statement

SLIDE 19

2012/13 2013/14 H1 2014/15Net Sales 194.9 214.6 102.5

– Cost of sales 142.3 151.9 74.3

Gross profit 27.0% 52.5 29.2% 62.7 27.5% 28.2

– R&D, Application engineering 7.8% 15.1 6.9% 14.8 7.6% 7.8

– Others 26.9 31.4 15.6

EBITA 5.4% 10.5 7.7% 16.5 4.5% 4.8

– Amortization 1.3 1.5 1.1

EBIT 4.7% 9.2 7.0% 15.0 3.6% 3.7

– Financial result 2.1 1.2 1.4

– Tax 1.0 1.2 0.4

Net Profit 3.1% 6.1 5.9% 12.6 1.9

© Schaffner Group

Balance Sheet

SLIDE 20

2012/13 2013/14 H1 2014/15

Intangible assets, Goodwill 19.6 24.1 23.2

Property, plant and equipment 20.9 24.8 24.4

Others 10.7 8.5 6.9

Total non-current assets 37% 51.2 37% 57.4 37% 54.5

Inventories 28.1 31.3 29.2

Trade Receivables 34.0 38.5 36.9

Cash & Equivalents 17.0 18.6 20.1

Others 8.5 8.6 7.9

Total current assets 63% 87.6 63% 97.0 63% 94.1

Equity 42% 58.1 43% 66.6 40% 59.2

Non-current liabilities 27% 37.1 28% 42.4 34% 51.0

Current liabilities 31% 43.5 29% 45.4 26% 38.3

© Schaffner Group

Cashflow Statement

SLIDE 21

2012/13 2013/14 H1 2014/15

Net profit 6.1 12.6 1.9

Depreciation and amortization 7.0 7.1 3.9

Change in net working capital 10.3 -2.2 -5.4

Change in provision -1.6 -1.0 -1.4

Others -1.0 -1.2 1.2

Cashflow from operating activities

20.8 15.3 0.2

Cashflow from investing activities

-6.2 -15.8 -1.6

Cashflow from financing activities

-7.7 1.8 2.9

CAPEX -4.9 -6.4 -3.0

Free cashflow 16.0 8.9 -2.8

© Schaffner Group

Innovation and Portfolio Diversification Lead to Sustainable Growth

SLIDE 22

Capital employed by division Gross margin

Net sales

© Schaffner Group

FY 2013/14 FX Reported

Net sales growth above GDP

100%

200%

0

20

40

60

80

2009/10 2010/11 2011/12 2012/13 2013/14

AMPMEMC

0

50

100

150

200

250

2009/10 2010/11 2011/12 2012/13 2013/14

AMPMEMC

0%10%20%30%40%50%

2009/10 2010/11 2011/12 2012/13 2013/14

TotalEMCPMAM

Strong Operational Leverage

SLIDE 23

Break-even point and operating leverage

Every CHF 1.–in additional sales will result in CHF 0.30 additional EBIT

© Schaffner Group

Currency Exposure – Cash Flow (in CHFm)

SLIDE 24

Highest currency exposure in Thai Baht, natural hedge in all other regions

0

20

40

60

80

100

120

140

160

180

200

CHF CNY USD EUR THB Rest

Inflow (Sales) Outflow (operating expenses)

© Schaffner Group

Overview Distribution to Shareholders

SLIDE 25 © Schaffner Group

Financial Key Performance Indicators


| Sales growth > 5 %

| Operational EBITA margin > 8 %

| Equity ratio > 40 %

| Economic Value Added, ROCE > WACC

| Pay-out to shareholders 25-35 % of net income

Measuring Performance of Divisions


Operational EBITA

Operational earnings before interest, taxes and acquisition-related amortization represents

Income from operations excluding acquisition-related amortization, restructuring and

restructuring related expenses, gains and losses from sale of businesses and acquisition

related expenses.

Schaffner Earnings Sustainably Exceed Capital Costs


-15.0%

-5.0%

5.0%

15.0%

25.0%

Target: ROCE > WACC

WACC ROCE

5.6% WACC5.6% WACC

10.6% ROCE10.6% ROCE

Investors’ Day 2015Schaffner DivisionsWe shape electrical power

The Schaffner Group

Markets of the Schaffner Group

30

Division EMCInvestors’ Day 2015


EMC Division


129106 109 110

050

100150200250

Net sales (in CHFm)

Operating profit (in CHFm)

20

12 14 16

05

10152025

Global Footprint

Production SitesSales markets

Markets

Main Products and Solutions


Chokes

Inlet FilterDC FilterAC Filter

MF FilterOutput Filter

Growing Market Share in a Challenging Environment with EMC Filters

| Market size CHF 330m with future CAGR of 2%

| Market decline for traditional EMC filters since 2011 due to CHF

appreciation, volume and price reduction in Photovoltaics

| Already 25 % of division sales in high growth areas: Output filters,

Middle Frequency filters, Power Quality filters

| High market shares in several regional and vertical markets

| Only very few truly global competitors,

| Local competition addressed by strengthening local presence

(e.g. sample center and business development team USA)


EMC Division Update

Schaffner EMC is pursuing profitable growth by:

| Gaining market share in existing markets like motor drives and machine tool & robotics

| Participating in the growth of new markets like quick charger and 3D printing

| Exploiting an innovative and growing product portfolio

| Building up new customers with strong FAE presence

| Continuously improving cost structures and organization processes


Application Example: Home Automation

| Sales of home automation have been growing substantially since 2009 and this trend is expected to gain momentum through 2020

| The simplicity of management of home automation systems suggests they will be available for the masses in the near term.

| Targeted companies who have invested in product development: Crestron, Lutron, Savant, Sonos, Control 4, Marantz, Integra, Bower & Wilkins, JBL, Leon.

| Schaffner won first key customers with chokes, 1phase and inlet filters


Application Example: 3D Printing

| The global 3D printing market is expected to reach $20.2 billion in 2019

| The three major manufacturers of 3D printers include 3D Systems, Stratasys, and ExOne

| Schaffner won projects at leading customers with 1phase and inlet filters


38

| Siemens Solution Partner Automation Drives

| Fulfilment of globally standardized tests and audits

| Market- and application specific products and tools

complementing Siemens system solutions

| Benefiting from global Siemens sales channels

| Regular technical trainings on latest product

developments of entire Schaffner portfolio

Cooperation With Key Leaders in the Market

Strategic Priorities Will Create Growth in Classical EMC Filter Business…

… while supporting new filter businesses.

| Smaller businesses for output filters, middle frequency filters and PQ filters will grow >15% p.a.

| Major business for EMC filters shows slower growth with leading market position| Use robust and well performing organization to support engineering, sales,

manufacturing and logistics worldwide| Create EMC filter growth by strategic priorities:

focus on organic market share growthincrease existing trading and distribution businessacquire and consolidate smaller competitors


Strategic Priority: Focus on Organic Market Share Growth

| Organic market share growth for market leader

requires focused approach in several areas

| New product introduction

| Adequate pricing strategy

| Shorten time to market and introduce quick

response manufacturing

| Selected vertical markets are Drive OEM,

elevator, machinery & robotics


Strategic Priority: Increase Existing Trading and Distribution Business…

… with new products and partners.


| Provide access for third party suppliers to different markets

| Leverage our existing organization| Strong growth opportunities| Today already single digit MCHF trading

business with attractive margins| Extension of existing product portfolio

| Several new opportunities under discussion

Growth after new product introduction

Business Unit Power QualityInvestors’ Day 2015

Power Quality


Net sales (in %)

Global Footprint

Production SitesSales markets

Markets

100%

405%

>30% CAGR

Products and Solutions


Active filters Solutions Passive filters

Competitive Environment


Harmonic filter market data

Addressable market 2015 300 … 350 m CHF

Schaffner market share 2015 3%

CAGR 2015 … 2020 7%

Schaffner YoY growth +14% (YTD August 2015)

Competitors 3 major global players> 30 smaller regional players

Power Quality Business Unit Update

| Dedicated business unit organization since April 2014 which supports growth ambitions

| Strong application engineering and customer service for differentiation and customer intimacy

| Pre- and after-sales service for supporting customers over the entire product life cycle

| Global sales partner network with representation in > 25 countries

| Full product pipeline and technology roadmap


Project Example: Lee Kong Chian Natural History Museum (Singapore)

| Compliance with IEEE-519 Power Quality standard for the building’s HVAC system. | 164 ECOsine® passive harmonic filters installed.


Project Example: Amusement Park Plohn (Germany)

| Increased reliability of roller coaster «Miniwah» power electronics. | 2x 100A ECOsine® active harmonic filters installed.


Project Example: Offshore Oil & Gas Outdoor Application (USA)

| 3x 100A ECOsine® active harmonic filters integrated in outdoor-grade NEMA enclosure.| Electrical installation incl. fuses and mains breaker according to North American standards.


Strategic Priorities


1. Sales network 2. Vertical markets 3. Product innovation 4. After-sales service

“Accelerate growth”

Strategic Priority 1: Strengthen Global Sales Partner Network


Added 2015+1 in India

>70 PQ sales partners >25 countries +5 added in 2015

Added 2015+1 in USA

Added 2015+1 in Ireland

Added 2015+1 in Norway

Added 2015+1 in Germany

Strategic Priority 2: Focus on Selected Vertical Markets


FactoryAutomation

WaterTreatment

Oil & GasHVAC

Building Technology

Strategic Priority 3: Drive Product Innovation

| Innovation network involving partners from industry and universities

| Development of second product generations

| Design to cost, quality and service-ability

| Implementation of Power Quality technology roadmap


Strategic Priority 4: Establish Profitable After-Sales Service

| Roll-out of global service partner network

| Services offered:Installation, commissioning and training Scheduled maintenance and repairsSpare and wear part management Extended warranty


SchaffnerMaintenance

PartnerLevel 1

SchaffnerPremiumInstallerLevel 2

SchaffnerServicePartnerLevel 3

Division Power MagneticsInvestors’ Day 2015


Power Magnetics Division Key Facts

56

Net sales (in CHFm)


36.046.5

53.967.3

0

20

40

60

80

-0.3 -0.3

3.04.3

-202468

Global Footprint

Markets

Production SiteSales markets

Power Magnetics Product and Solutions Overview

| Water-cooledinductors for motordrives

57

| Filter inductors forheavy-duty freightlocomotives

| Medium voltagetransformers forextendedrequirements

| Transformer/inductorcombinations forphotovoltaicinverters

PM Division Update

| Focus: Dry-type transformers and inductors for motor drives, renewable energy and traction

| Challenging market conditions worldwide

| Footprint optimization by consolidating US production

| Establishment of competence center in Germany while moving more production to Hungary

58

Application Example: Value Selling

| A new development in downtown Manhattan requires transformerswith superior electrical, mechanical and environmental performance

| Schaffner’s Magne-Seal technology offers unique robustness at a compact size

| Avoid commoditized mass markets by focussing on profitable niches

59

Application Example: Unique Value Proposition to Globally Active Customers

| Schaffner supplies a longstanding customer with components foruse in propulsion systems of high-speed trains

| Driven by end customer demand, a split of production betweenEurope and China became necessary

| Customer testimonial: «The best production transfer I haveexperienced in my career»

| Same processes are applied to other customers with local contentrequirements, e.g. supporting Japanese train makers in America


~ 6 Global Players

~ 12 Regional Leaders

> 100 Local Suppliers

Power Magnetics Competitive Environment

| Weakness of Oil & Gas market affects the whole industry

| A highly fragmented field of competitors

| Globalization, technological, quality and cost requirements canonly be met by the strongest players


Market share of competitors by class(approximation)

Power Magnetics Strategic Priorities

| Continue to focus on motor drive, renewable energy and traction markets

| Strengthen technology platform for existing and new applications

| Leverage unique global capabilities and synergies with EMC division

| Drive industry consolidation

| Constantly optimize manufacturing footprint and processes

62

Division AutomotiveInvestors’ Day 2015

Automotive Division Key Facts

64

Net sales (in CHFm)


17.624.7

31.337.3

0

10

20

30

40

-0.4

0.6

-2.0

2.5

-4

-2

0

2

4

Global Footprint

Markets

Production SiteSales markets

Automotive Products and Solutions Overview

65

Low Frequency Antennas (LFA) for keyless entry systems

EMC filters for electric and plug-in hybrid vehicles (EV/PHEV)

Automotive Division Update

| Continued double-digit growth with LFA for keyless entry

| Entry into EMC filter business for EV/PHEV

| Exit from commoditized applications

| Operational excellence at high levels

| Mid-term business secured through long-term supply agreements

| Productivity gains through design to cost, automation

66

Demand for Keyless Entry Systems is Driven by Increased Penetration Rate

67

EV/PHEV Have Reached ~0.5% of Global Vehicle Production – Soon to be 1%


Competitive Environment: Being a Leader in an Automotive Niche Market


30%

25%

Market share LFA

| Schaffner with market share gains through customerdiversification

| Schaffner and Sumida strongest, ~3 x larger than nextcompetitor

| Differentiation through best quality and delivery performance at competitive cost

Schaffner

Sumida

Automotive Strategic Priorities


| Grow with the market for keyless entry systems by leveragingSchaffner’s excellent design and manufacturing capabilities

| Develop complementary products to LFA antennas

| Prepare the EMC filter business for electric and plug-in hybrid vehicles

Investors’ Day 2015Investment Rationale

We shape electrical power – and create value

Leader in technological and application know-how

Most complete solution portfolio

Most global amongst all competitors

Excellent growth opportunities in expanding market

Attractive capital returns

72

Documents

Investors’ Day 2015 The Schaffner Group We shape ......“Schaffner provides manufacturers and users of electrical and electronic equipment worldwide with components, systems and