schaffner – solutions for efficient and reliable power · of power electronic devices as...

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energy efficiency and reliabilityenergy efficiency and reliability

Schaffner –Solutions for efficient and reliable power

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, 2007 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.

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The Schaffner Group – Corporate Presentation

Solutions for efficient and reliable power

Global leader combining EMC and Power Quality

First half results FY 2007/2008

Summary and outlook

Annex


The Schaffner Group

Solutions for efficient and reliable power

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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


Schaffner´s business: Power Quality

Power PlantPower plant

Power Quality (PQ) solutions from Schaffner enable power electronic systems to operate with high efficiency and reliability in the power grid

Harmonic distortions

4


Schaffner counts most of the large manufacturersof power electronic devices as customers for EMC filters

Motordrive Motor

EMC filter

Electroniccontrol

EMC filter

Line Load


Together, EMC and Power Quality products create total solutions for customers in an addressable market of CHF 1.2 billion for Schaffner

Motordrive Motor

EMC filter

Electroniccontrol

EMC filterTransformer Harmonicsfilter

Line

Output filter

Load

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Core markets (1/2): Power electronics for energy efficient systems

AC motor drives

Variable speed and torque control of motor

Regeneration of energy in braking mode

Optimization of energy consumption


Motor drives reduce energy consumption by 30% to 70%, providing an answer to ever-rising electricity cost

Regulation with conventional throttle Regulation with variable speed control

Supplied power 285% Supplied power 160%

Sou

rce:

ZV

EI

6


Growth of the motor drives market is accelerated by investments in energy efficient systems

Typical applications

Building automation (HVAC, elevators)

Water treatment

Ships

Locomotives, trains

Machine tools and automation equipment

Mining equipment

0,00

2,00

4,00

6,00

8,00

10,00

12,00

2006 2007 2008 2009 2010 2011

USD

bill

CAGR: 9%

sour

ce: I

MS

Nov

.200

7


Schaffner supplies all major motor drive manufacturers with EMC filters and has tremendous cross-selling opportunities for PQ products

Schaffner EMC component customers represent 78% of the motor drives market

Schaffner Power Quality component customers represent 14% of the motor drive market

Motor drive manufacturers, market share in %

3

3

5

6

2216

12.5

7.5

6.57

6.5

ABB 16%Siemens 12.5%Yaskawa-Omron 7.5%Rockwell 6.5%Mitsubishi 7%Danfoss 6%Schneider Toshiba 6.5%Fuji (incl. GE) 5%Emerson 5%Vacon 3%Lenze/AC Tech 3%Others 22%

5

Source: IMS Nov 2007

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Core markets (2/2): Power electronics for renewable energy

Inverters for wind turbinesStabilization of floating voltages and frequencies

Inverters for solar cellsTransferring DC voltages into AC power line grid voltages


Renewable energy - Photovoltaics

Production limits due to silicon shortage beginning to disappear in 2009Core markets (D, E) extend government subsidies, other countries followCapacity buildout and technology lead to cost and price deflation, spur growthAccelerated growth forecasted from 2012, when grid-parity will be reached (E)

Mid-case projection world market for PV

0

1000

2000

3000

4000

5000

6000

7000

2006 2007 2008 2009 2010 2011 2012

Ann

ual i

nsta

llatio

nsM

W EMEAAmericasAsia

Sou

rce:

IMS

May

08

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Schaffner is the leading provider of EMC solutions for photovoltaic inverters, just starting to penetrate with Power Quality products

Schaffner EMC and PQ component customers represent 66.5% of the PV market

Strong new design-in activities in China

PV inverter manufacturers, market share 2007

34.1

10.2

8.24.64.5

3.9

3.9

2.9

2.8

2.42.22.1

2.1

16.1SMA 34.1% Kaco 10.2% Froniua 8.2%Sharp 4.6%Conergy 4.5%Sanyo 3.9%Sputnik 3.9%Ingeteam 2.9%Xantrex 2.8%Mastervolt 2.4%Kyocera 2.2%Outback 2.1%Delta 2.1%Others 16.1%

Source: IMS May08


Schaffner Schaffner Schaffner

Grid 3

FN 3359 AC EMI filtersCustom magneticsCustom DC EMI filters

CHF 3000 - 5000 / 100kVA Inverter depending on grid and manufacturer technology (excluding mains transformers)

In 2008, our addressable market in photovoltaics reaches CHF 100 million

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Renewable energy – wind turbines

Global market growth by 31% in 2007(Global Wind Energy Council)

20 GW of new installations

Fastest growing markets: US, PR China, Spain

Schaffner PQ component customers represent 45% of the wind turbine market

Strong new design-in activitiesin China

Annual installed capacity by region 2003 - 2007

0

5

10

15

20

25

30

35

40

2003 2004 2005 2006 2007

GW

Europe North America Asia

FC annual installed capacity 2008 – 2012 (world)

0

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012

GW

Sou

rce:

GW

EC M

ay 0

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In 2008, our addressable market in wind power reaches CHF 100 million

Variable wind → variable frequency → inverter → fix frequency

Rotor choke Control transformer

EMC filter Interphase reactor

4k to 7k CHF PQand EMC materialper MW

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The Schaffner Group

Global leader combining EMC and Power Quality



Schaffner´s mission

To be the world´s leading provider of engineered components and modules enabling the efficient and reliable operation of electronic systems

To provide OEM customers with best service throughout the productlife cycle, close to their operations

To operate in the most competitive cost structure, generating financialreturns above peers

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Schaffner is clear leader in the EMC filter market

1

2

3

45678

910

11

World market sharefor EMC filters

SchaffnerSchaffner is number 1 or 2 in every major market except Japan

Schaffner is only competitor with strong position in Europe, North America, and Asia

Schaffner is only competitor with strong engineering capabilities in Europe and Asia, supporting outsourcing and relocation strategy of major customers

Calculation after assumed acquisition of Epcos by TDK

Other

s


In a fragmented Power Quality market, Schaffner has developed a sustainable position for growth

10th position in European/US market in 2007

Cross-selling to existing EMC customers

Customer wins in China (wind, solar, rail & traction)

Expansion of operating margins

Aim at number 3 position with internal and external growth

1

2

3

4

5

67

8910

Schaffner

Share of top 45 competitors 2007 –

Europe and North America

only

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Schaffner´s strategy

1. Leadership in markets of renewable energy and energy efficient motor drives

2. Expansion in China and Southeast Asia

3. New products for growing markets

4. Lean processes and optimized cost structure

5. M&A

Achieve 10% operating margin in FY 2009/2010


1. Focus on the growth markets of efficient motor drives and renewable energy already results in 33% contribution to sales

H1 FY 2007/2008 2,0 4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0 20,0

Other

Public transport

Automotive electronics

Renewable energy

Telecom equipment

Electronic devices &power supplies

Machine tools & robotics

Motor drives

CHFm

19,2%

20,0%

19,5%

13,5%

13,0%

7,7%

6,0%

1,0%

% of sales

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2. Although Europe will remain the largest market, growth in Asia leadsto increasing share of sales even with a strengthening Euro

Europe: - Leadership in EMC - Growth in solar, wind

Asia: - above 30% growth in China, South East Asia (in local currency)

- PQ rampup in Shanghai- 6 Sales offices in China

Americas: - Stable position in astagnant marketenvironment

Asia 18 %

Europe 75 %

Americas 7 %H1 FY 2007/2008


3. Capture growing markets with unique products

Harmonics filters increase reliability and reduce cost of motor driveinstallations

With ECOsine, Schaffner is launching a superior product in thismarket, targeting a market share above 5% until 2013

Market CAGR of 12%

Note: All figures are rounded; the base year is 2006. Source: Frost & Sullivan

800

700

600

500

400

300

200

100

0

16

14

12

10

8

6

4

2

0

18

USD

m

Gro

wth

rate

(%)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

800

700

600

500

400

300

200

100

0

16

14

12

10

8

6

4

2

0

18

USD

m

Gro

wth

rate

(%)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Revenues in USDm

Growth rate (%)

Low voltage harmonic filter market: Revenue forecasts (World), 2003 - 2013

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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


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

Cash balance plus operating cash flow provide sufficient funds for acquisitions

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The Schaffner Group

First half results FY 2007/2008



Income Statement First Half Year 07/08 in Comparison with Previous Year

Nonrecurring itemsafter Jacke acquisition: Negatives in Cost of Goods, positives in Other Income

Reduction of G&A spending

No currency gains in Financial Results

No more negative results fromdiscontinuedoperations

in CHF 1,000 01.10.2007 to 31.03.2008

01.10.2006 to 31.03.2007

Continuing operations

Net sales 86.245 79.170

Cost of goods sold -61.076 -53.078Other income 1.803 0Marketing and sales -8.672 -8.495Reserach, development and application -5.297 -5.011General and administration -7.833 -8.939

EBIT 4.820 3.360EBIT margin % 5,6 4,2

Financial result -1.761 -643EBT 3.059 2.717

Income taxes -856 -804Profit for the period from continuing operations 2.203 1.913

Discontinued operationsProfit for period from discontinued operations 0 -912

Net profit 2.203 1.001

in CHF 1,000 01.10.2007 to 31.03.2008

01.10.2006 to 31.03.2007

Continuing operations

Net sales 86.245 79.170

Cost of goods sold -61.076 -53.078Other income 1.803 0Marketing and sales -8.672 -8.495Reserach, development and application -5.297 -5.011General and administration -7.833 -8.939

EBIT 4.820 3.360EBIT margin % 5,6 4,2

Financial result -1.761 -643EBT 3.059 2.717

Income taxes -856 -804Profit for the period from continuing operations 2.203 1.913

Discontinued operationsProfit for period from discontinued operations 0 -912

Net profit 2.203 1.001

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H2 is typically stronger than H1. No profit dilution from Test Systems business from H1 07/08 onwards

-1,5

1,1 0,8

2,8

1,1

4,3

2,2

1,3

33,8

2,72

5,6

2,22,6

4,55 5,1

3,5

6,7

4,858,5

64,3 66,871,0

79,2

91,186,2

-2

-1

0

1

2

3

4

5

6

7

8

9

10

S1 04/05 S2 04/05 S1 05/06 S2 05/06 S1 06/07 S2 06/07 S1 07/08

CHFm

0

10

20

30

40

50

60

70

80

90

100

CHFm

Net Profit Group Net Profit Continuing EBIT Sales


Solid balance sheet after divestments provide funds for M&A

Gearing : 1.05 0.89 0.83 0.77 0.52 0.40 0.52

* Repayment of nominal value of CHF 6.8 million** Repayment of nominal value of CHF 1.8 million

* **

43.846.2 46.1

51.048.7

51.7

41.946.2

41.138.2 39.1

25.4

20.623.2

34.7 35.2 34.436.0

32.635.1

33.8

0

10

20

30

40

50

60

70

30.09.2003 30.09.2004 30.09.2005 30.09.2006 31.03.2007 30.09.2007 31.03.20080

5

10

15

20

25

30

35

40

45

Equity Financial net debt Equity ratio in %CHFm In %

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Operational Excellence (1/3): Restructuring of production in Europe

0

5

10

15

20

25

30

35

Germany Switzerland Hungary

in E

UR/

h

Source: WIFO, Institut der deutschen Wirtschaft, EUROSTAT 2006

Labor cost per man-hour

0

5

10

15

20

25

30

35

Germany Switzerland Hungary

in E

UR/

h

Source: WIFO, Institut der deutschen Wirtschaft, EUROSTAT 2006

Labor cost per man-hour


Operational Excellence (2/3): Streamlining of the product portfolio

Removed products correspond to less than 1% of net sales

4000

3200

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Sep 07 Sep 08

4000

3200

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Sep 07 Sep 08

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Operational Excellence (3/3): Working capital management

40.0

42.0

44.0

46.0

48.0

50.0

Mar 07 Sep 07 Mar 08

in C

HFm

50

70

90

110

130

inda

ys

NWC A\R Inventory A\P


The Schaffner Group

Summary and outlook


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Summary – Schaffner Investment Case

Schaffner is in excellent position to participate in the growing markets of photovoltaic energy, wind energy, and energy efficiency

Schaffner grows rapidly in Asian markets due to strong local presence

Underlying growth drivers and strong market positioning lead to net salesgrowth of 8.9% (10.3% in local currencies) in H1 FY2007/2008

Growth is likely to continue, book-to-bill rate of 1.10 in H1 FY2007/2008

Continued programs for operational excellence: 5.6% EBIT margin in H1 FY2007/2008 after 4.2% in previous year

Guidance for FY2007/2008 are sales growth at the upper end of 6% - 8% range and EBIT margin of around 7% after restructuring charges

Restructuring of European manufacturing will lead to further cost reduction

Company target of 10% EBIT margin in FY2009/2010

Solid balance sheet and available cash support M&A strategy

Schaffner maintains general guideline to pay out 25% of net profits to shareholders


Investor Relations Contact

Alexander HagemannChief Executive [email protected] +41 32 681 66 06

Kurt LedermannChief Financial [email protected] +41 32 681 66 08

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Schaffner –Solutions for efficient and reliable power



The Schaffner GroupAnnex


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Schaffner Group – At a Glance

Established 1962

Publicly listed since 1998 (SWX Swiss Exchange)

Fiscal: October 1 to September 30

Headquarters: Luterbach (Switzerland)

Sales subsidiaries and application centers in 11 countries worldwide

Production facilities and technology centers in 3 low cost countries worldwide


History (1)

1962 Company founded by Hans Schaffner, a pioneer in electromagnetic compatibility.

1970 Launching of first EMC power line filter

1975 – 1981 Establishing sales subsidiaries in France, Germany, and USA

1981 Acquired by Electrowatt AG, Zurich

1984 – 1995 Establishing sales subsidiaries in UK, Italy, Sweden, Japan, China, logistic center in Illzach France, production plant in Thailand

1996 Management buy-out

1998 Schaffner goes public: IPO at SWX Swiss Exchange

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History (2)

1998 Establishment of a sales company in Singapore

2002 Opening of an engineering and production center in Shanghai, China

2004 Opening of representative office in Taipei, Taiwan

2005 Decision to divest Test Systems business

2006 Acquisition of the German firm JACKE Transformatoren GmbH (Power Quality)

2007 Completion of Test Systems Divestment

2007 Capacity expansion in Shanghai, doubling manufacturingfloor space

2008 Opening of new factory in Hungary


Governance

Shareholders

Total

~1500 registered shareholders

Above 5%

Alpine Select

SaraSelect

BURU Holding AG

Schaffner Holding (Treasury Shares)

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Capital Structure

Ordinary share capital

Divided into 635,940 registered shares with a par value of CHF 36 each.

The share capital is fully paid up.

Each share grants the owner one vote at the Annual General Meeting of Shareholders.

All shares not held by the Company or one of its subsidiaries are dividend-bearing.

Conditional share capital CHF 768,240 (for employee share option plan)


Shareholders' pre-emptive rights are excluded.

CHF 6,840,000 (for 2.25% convertible bonds)


Shareholders' pre-emptive rights are excluded.

A pre-emptive subscription right was granted to shareholders.

CHF 22,893,840


Management Structureas of June 1, 2008

Board of DirectorsLeo Steiner (1), ChairmanHans Hess (2)

Robert F. Spoerry (1)

Peter Rüd (2)

Dr. Markus Zenhäusern (2)

(1) Member of Compensation Committee

(2) Member of Audit Committee

Group Management

Alexander Hagemann, Chief Executive Officer

Kurt Ledermann, Chief Financial Officer

Fabian Beck, VP Research and Development

Jean-Michel Calleri, VP Sales Europe

Ah Bee Goh, VP Manufacturing

Eduard Hadorn, VP Business Development Asia

Martin Köppel, VP Supply Chain Management

Christian Stampfer, VP Marketing

Auditors

Ernst & Young AG, Berne

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Technical Background

In the field of electrical engineering, Electromagnetic compatibility(EMC) refers to the ability of an electrical device to work satisfactorilyin its electromagnetic environment without adversely eitherinfluencing the surrounding devices, or being influenced by them. EMC filters as provided by Schaffner reduce electromagnetic emissionor imission to an acceptable level, often government mandated bytechnical standards.

In power electronics, devices generate unwanted harmonics. They arepower at a multiple of the grid frequency, and they may lead to reduced lifetime of devices, shut-down of other devices in the samegrid, or transformer failure. Power Quality (PQ) components suppressharmonics down to an acceptable level.

schaffner – solutions for efficient and reliable power · of power electronic devices as...

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