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energy efficiency and reliabilityenergy efficiency and reliability
Schaffner Holding AG / Corporate presentation / Fiscal 2007/2008
energy efficiency and reliability
Caution regarding forward looking statements
This communication contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives, and other statements relating to our future business development and economic performance.
While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations.
These factors include, but are not limited to, (1) general market, macro-economic, governmental and regulatory trends, (2) movements in currency exchange rates and interest rates, (3) competitive pressures, (4) technological developments, (5) changes in the financial position or credit worthiness of our customers, and counterparties and developments in the markets in which they operate, (6) legislative developments, (7) management changes and changes to our Business structure and (8) other key factors that we have indicated could adversely affect our business and financial performance which are contained in other parts of this document and in our past and future filings and reports, including those filed with the SWX Swiss Exchange.
More detailed information about those factors is set forth elsewhere in this document and in documents furnished by Schaffner Group, including Schaffner Holding's Annual Report for the year ended September 30, 2008 as well as the interim report 2007/2008. Schaffner Group is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.
2
energy efficiency and reliability
The Schaffner Group – Corporate presentation fiscal 2007/2008
Highlights
Solutions for efficient and reliable power
Global leader combining EMC and Power Quality
Comment on fiscal 2007/2008
Summary
energy efficiency and reliability
Strategic highlights
First complete year after divestment of Test Systems Division
Measures taken to improve operating excellence are showing results>> e.g. manufacturing transfers to Hungary as announced in April
2008 are successfully completed as of November 30, 2008
Strong position in growth markets with still favorable prospectsreduce the negative impacts from recession
>> e.g. renewable energy – wind and solar power
Strong position on the Chinese domestic market supports sustainable growth through major infrastructure projects
>> e.g. public transport – rail infrastructure
Innovative products and solutions to adress growth markets>> e.g. harmonic filters
Jacke getting on track after strong turnaround effort
3
energy efficiency and reliability
Financial highlights
Sales and earnings well above previous year
Consolidated net sales increased by 7.1% to CHF 182.4 m
Order intake increased by 8.2% to CHF 188.5 m
Book-to-bill ratio of 1.03
EBIT increased by 33.3% to CHF 13.6 m
EBIT margin expanded to 7.5%
Net profit increased by 63% to CHF 8.8 m / EPS CHF 14.53
Proposed payout CHF 3.50 per share / payout ratio ~ 25%
energy efficiency and reliabilityenergy efficiency and reliability
The Schaffner Group
Solutions for efficient and reliable power
4
energy efficiency and reliability
Schaffner´s business: Electromagnetic Compatibility (EMC)
Powerline interference
Power grid
Components for Electromagnetic Compatibility (EMC) guarantee the safe and reliable operation of electronic devices by filtering unwantedelectromagnetic noise
energy efficiency and reliability
Power Quality (PQ) solutions from Schaffner enable power electronic systems to operate with high efficiency and reliability in the power grid
Schaffner´s business: Power Quality
Power PlantPower plant
Harmonic distortions
5
energy efficiency and reliability
Schaffner Schaffner Schaffner
Grid 3
Schaffner is the leading provider of solutions that enable powerelectronic devices to operate with high reliability and efficiency
Addressed market of CHF 1.2 billion61% of sales in power electronic applications that require both power quality and EMC solutions
energy efficiency and reliability
The Schaffner Group
Global leader combining EMC and Power Quality
energy efficiency and reliability
6
energy efficiency and reliability
By applying a market-driven approach, Schaffner aims to expandleadership in EMC and to achieve number 3 position in Power Quality
1
2
3
45678
910
11
World market sharefor EMC filters
Schaffner
Calculation after assumed acquisition of Epcos by TDK
1
2
3
4
5
678910
Schaffner
Share of top 45 PQ competitors 2007 –
Europe and North America
only
Schaffner is clear market leader for EMC filters, being the only global player
Schaffner has strong potential to move from 10th position amongst Power Quality peers to 3rd position, due to excellent capabilities and global footprint, leading to an increasing number of customers who choose Schaffneras preferred supplier
energy efficiency and reliability
Cornerstones of Schaffner´s strategy
1. Focus on growth markets
2. Expansion in China and Southeast Asia
3. New products to address growing markets
4. Lean processes and optimized cost structure
5. External growth
7
energy efficiency and reliability
FY 2007/2008 0 5 10 15 20 25 30 35 40
Electronic devices &power supplies
Motor drives
Machine tools & robotics
Renewable energy
Telecom equipment
Automotive electronics
Public transport
Other
CHFm
20,5%
19,2%
7,1%
14,0%
13,8%
5,6%
18,8%
1,0%
% of sales
1. Focus on the growth markets of energy efficient motor drives and renewable energy already results in 34.5% contribution to sales -public transport becomes an additional growth driver
energy efficiency and reliability
2. Although Europe will remain the largest market, growth in Asia leadsto increasing share of sales
Europe: - Leadership in EMC - Growth in solar, wind
Asia: - 40% growth in China,South East Asia(in local currency)
- PQ ramp up in Shanghai- 6 Sales offices in China
Americas: - Stable position in astagnant marketenvironment
Asia 18 %
Europe 75 %
Americas 7 %FY 2007/2008
8
energy efficiency and reliability
3. Capture growing markets with unique products (1/2)
Harmonics filters increase reliability and reduce cost of power electronic installations
With ECOsine, Schaffner has launched a superior product offering
Schaffner will add new technologies and products to the portfolio
Target to achieve CHF 40 million of additional sales until 2013
energy efficiency and reliability
3. Capture growing markets with unique products (2/2)
DestructionOver sizingOverheating Malfunctions
Harmonics are becoming a serious problem
9
energy efficiency and reliability
4. 90% of manufacturing in low cost countries, restructuring of European manufacturing. Presence worldwide close to customers
Sales and application center
Manufacturing plantDevelopment center
Büren, Germany110 employees• PQ R&D• PQ Manufacturing
Luterbach, SwitzerlandHQ, 115 employees• Group Innovation Center• Sample Manufacturing
Lamphun, Thailand950 employees• Product Development• EMC, Automotive Manufacturing
Kecskemét, HungaryNew factory completed in 05/08, 200 employees• EMC, PQ Manufacturing
Shanghai, China650 employees• Product Development• EMC, PQ Manufacturing
energy efficiency and reliability
5. Acquisitions to accelerate growth
Schaffner will stay focused: acquisitions must support our coreproduct lines and markets
Fragmented structure of the Power Quality market (largestcompetitor has 7% world market share) offers investmentopportunities
Through global sales network and low cost manufacturing, substantial synergies are created when integrating acquiredcompanies
Short term focus on small acquisitions with significant strategicimpact
10
energy efficiency and reliability
The Schaffner Group
Fiscal 2007/2008Kurt Ledermann, Chief Financial Officer
energy efficiency and reliability
energy efficiency and reliability
Financial highlights
Sales and earnings well above the prior-year figures
Measures to improve profitability are well on track
Balance sheet strengthened
Proposal to pay out CHF 3.50 per share (reduction in nominal capital)
11
energy efficiency and reliability
Income statement 2007/2008 in comparison with previous year
in CHF 1,000 1.10.2007to 30.09.2008
Continuing operationsNet sales 170'281
Cost of goods sold -115'913
Marketing and sales -16'025Research, development and application -10'094General and administration -17'434Amortisation of customer relations -646
EBIT 10'169EBIT margin % 6.0
Financial result -568EBT 9'601
Income taxes -2'038Profit for the period from continuing operations 7'563
Discontinued operationsProfit for the period from discontinued operations -2'160
Net profit 5'403
1.10.2006to 30.09.2007
Other income 0
182‘445
-128‘289
-17‘124-10‚639-13‘891
-699
13‘6067.5
-201611‘590
-2‚7828‘808
0
8‘808
1‘803
energy efficiency and reliability
Development of semester results
0
1
2
3
4
5
6
7
8
9
10
-2
-1
CHFm
58.564.3 66.8
71.0
79.2
91.1
-1.5
1.10.8
2.8
1.11.3
3.0
3.8
2.72.0
2.6
4.55.0 5.1
3.5
4.3
6.7
5.6
S1 04/05 S2 04/05 S1 05/06 S2 05/06 S1 06/07 S2 06/07
0
10
20
30
40
50
60
70
80
90
100
CHFmNet Profit Group Net Profit EBIT Sales
S1 07/08 S2 07/08
2.2 2.2
4.8
6.6 6.6
8.886.2
96.2
12
energy efficiency and reliability
Balance sheet 2008 in comparison with previous year (extract)
30.09.200730.09.2008 Delta
Intangible assets 13'29813‘402 104
Tangible fixed assets 14'53115‘068 537
Fixed assets 35'69435‘351 -343
Inventories 29'96330‘077 114
Trade receivables 33'41534‘124 709
Cash and cash equivalents 28'79626‘928 -1‘868
Current assets 111'519105‘451 -6‘068
Total assets 147'213140‘802 -6‘411
Shareholders' equity 51'71052‘617 907
Total liabilities 95'50388‘185 -7318
Total liabilities and shareholders' equity 147'213140‘802 -6‘411
in CHF 1'000
energy efficiency and reliability
Trend net debt and shareholders‘ equity
Gearing : 1.05 0.89 0.83 0.77 0.40 0.43
43.846.2 46.1
51.0 51.7 52.6
46.2
41.138.2 39.1
20.622.6
34.7 35.2 34.436.0 35.1
37.4
0
10
20
30
40
50
60
70
30.09.2003 30.09.2004 30.09.2005 30.09.2006 30.09.2007 30.09.20080
5
10
15
20
25
30
35
40
45Equity Financial net debt Equity ratio in %
CHFm In %
13
energy efficiency and reliability
Cash flow statement 2007/2008 in comparison with previous year
in CHF 1'000 2006/2007 Delta
Cash flow from operating activities 7'393 -647
Cash flow from investing activities 24'002 -26‘097
Cash flow from financing activities -11'755 5‘502
Net investment into tangible and intangible assets 14'956
Free cash flow 22'349 -18‘978
2007/2008
6‘746
-2‘095
-6‘253
-3‘375
3‘371
-18‘331
energy efficiency and reliability
Working capital management
65.1
46.3
49.7
40
45
50
55
60
65
70
Sep 06 Sep 07 Sep 0850
60
70
80
90
100
110
120
NWC A\R Inventory A\P
in C
HFm
in d
ays
14
energy efficiency and reliability
Reduction of overhead/personnel
142
10693
111
102
87
137
135
130
-
100
200
300
400
Sep 06 Sep 07 Sep 08
Full
time
equi
vale
nts
Marketing and sales Research, development and application
General and administration
-12%-10%
(sales adjusted -9%)
energy efficiency and reliability
Managing finances to create value to our investors
Schaffner maintains the general guideline to pay 25% of net profits as dividends to shareholders
Moderate requirements for capital spending due to mostly manual labor in manufacturing
The cash balance und operating cash flows will cover refinancing in the event that the convertible bond is not converted
In case of conversion of our convertible bond, effective measures are anticipated to avoid EPS dilution
15
energy efficiency and reliabilityenergy efficiency and reliability
The Schaffner Group
Summary
energy efficiency and reliability
Perspectives for fiscal 2008/2009
Schaffner is much more robust than in the past to withstand a downturn
Sustained growth in wind energy and traction (railway rolling stock)
Infrastructure investments (i.e. China) are leading to double-digit growth in the region even when western economies are in recession
Photovoltaic market to be slow until spring 2009 before continuing growth
Some end markets are in recession: machine tools, automotive
With new products and competitive advantages, Schaffner can takemarket share
Conclusion: No reliable forecast possible before spring 2009, but Schaffner is expected to perform better than the market in general
16
energy efficiency and reliability
Summary – The Schaffner investment case
Market focus on renewable energy and energy efficiency, as well as strong presence in China and Southeast Asia are driving growth
Schaffner is robust and determined to successfully continue the present strategy
Strategic realignment, market success, and operational excellenceprograms lead to substantial improvements of financial result
energy efficiency and reliability
Investor relations contact
Alexander HagemannChief Executive [email protected] +41 32 681 66 06
Kurt LedermannChief Financial [email protected] +41 32 681 66 08