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Von Roll Holding AG

Company Performance in 2011 &

Corporate Strategy

20 March 2012

2 | 20 March 2012 | Von Roll: Company Performance 2011 & Strategy

Von Roll Group / Overview

Performance shaped by uncertain market environment

In CHF million 2011 2010 2009

Order intake 560 540 475

Sales 543 554 549

Gross profit 96 111 108

Operating EBIT 7 10 1

Net income 0 -7 -11

CFOA -20 14 29

CAPEX 18 14 21

Equity ratio 60% 66% 71%

Employees 2,858 2,937 2,953

» Orders increased to CHF 560 million, up 4% or 16% when adjusted for currency conversion effects

» Sales kept almost constant at CHF 543 million, or up 10% when adjusted for currency conversion effects

» Gross profit margin severely impacted by the Transformers segment

» Operating EBIT down on 2010, CHF 12 million due to the Transformers segment and CHF 3 million due to depreciation on the Solar project

» Net income burdened slightly by foreign exchange and tax effects

» Negative cash flow from operating activities due to projects in the Transformers segment being capitalised

» Equity ratio very solid at 60%, comfortably above the industry average

» Headcount down 3%


Von Roll Group / Income statement

EBIT influenced by one-off factors

» Growth in sales in traditional core

business of 1%, or 13% when adjusted

for currency conversion effects

» Gross margin affected by the fall in

gross sales in the Transformers segment

» Research and development activities

constant at CHF 9 million, focused on

product modifications

» Administration costs cut by 24%

through efficiency savings

» Other operating profit includes the

valuation allowance of CHF 3 million for

the Solar project

» Net financial result improved by CHF 6

million overall due to foreign exchange

effects

» Income taxes influenced by local profit

distribution


Net sales 543 554 549

Manufacturing costs for sold

products -447 -443 -441

Gross profit 96 111 108

Research and development

expense -9 -9 -12

Sales and distribution expense -35 -37 -36

Administrative expense -43 -57 -59

Other operating profit -2 3 -10

EBIT 7 11 -9

Net financial result -2 -8 -3

Profit before tax 5 3 -12

Income taxes -5 -10 1

Net income 0 -7 -11


Von Roll Group / Balance sheet

No change to assets

» Cash and cash equivalents reduced by

CHF 17 million to finance working capital

» Trade accounts receivable down by

CHF 5 million

» Increase in inventories of 38%, mainly

due to capitalised projects and

replenishing necessary stocks in the

Transformers segment

» Property, plant and equipment remain

constant once currency effects are

accounted for

» Goodwill down by CHF 2 million due to

changes in the purchase price for Von

Roll BHU Umwelttechnik GmbH and the

Shenzhen Mica Group as well as the

impact of currency trends

» Fall in other non-current assets due to

a CHF 9 million reduction in pension plan

assets.


Cash and cash equivalents 44 61 62

Trade accounts receivable 88 93 90

Inventories 132 95 99

Other current assets 21 18 32

Current assets 285 267 283

Property, plant and equipment 92 95 103

Goodwill 39 44 44

Other intangible assets 42 44 47

Deferred tax assets 15 15 21

Other non-current assets 17 26 26

Non-current assets 205 224 241

Total assets 490 491 524


Von Roll Group / Balance sheet

No change to liabilities

» Current financial liabilities of CHF 58

million taken up primarily to finance

working capital

» Provisions and post-employment

benefit obligations up by

CHF 5 million, mainly due to an increase

in post-employment benefit obligations

» Deferred tax liabilities reduced by CHF

6 million, due in part to the decrease in

pension plan assets and the new tax rate

in Israel

» Equity down by CHF 29 million, mainly

due to currency effects (CHF -13 million)

and actuarial losses including

corresponding tax effects (CHF -16

million)


Trade accounts payable 42 40 40

Current financial liabilities 58 33 1

Current provisions 3 5 4

Other current liabilities 45 43 58

Current liabilities 148 121 103

Non-current financial liabilities 1 1 0

Post-employment benefit

obligations 30 22 23

Deferred tax liabilities 5 11 13

Non-current provisions 12 13 12

Non-current liabilities 48 47 48

Equity 294 323 373

Total liabilities 490 491 524


Von Roll Group / Cash flow statement

Cash flow severely impacted by Von Roll Transformers

» Working capital increased by CHF 35

million, mainly in connection with

capitalised orders and an increase in

necessary stocks in the Transformers

segment

» Other outflows of cash from operating

activitities mainly relate to tax payments

of CHF 4 million

» CAPEX up by CHF 4 million due to the

launch of a new Group-wide ERP

solution and the construction of the new

wire plant in Bhopal, India

» Acquisitions comprise final payments

under takeover agreements previously

subject to conditions precedent

» Utilisation of credit lines amounting to

CHF 25 million to finance working capital


EBITDA 25 29 11

Change in non-current provisions -4 3 1

Changes in working capital -35 -15 32

Other -6 -3 -15

Cash flow from operating activities -20 14 29

CAPEX -18 -14 -21

Acquisitions -1 -10 1

Other 1 0 -1

Cash flow from investing activities -18 -24 -21

Change in financial liabilities 24 33 -2

Dividends 0 -18 -36

Other -2 -3 -8

Cash flow from financing activities 22 12 -46

Change in cash and cash

equivalents -16 2 -38


Von Roll Group / Reconciliation statement for sales

Foreign exchange effects impact significantly on sales

543

+10%

2011

(adjusted)

608

Currency

conversion

effect

65

2011 Currency

conversion

effect

65

Copper

effect

30

Price

effect

3

Volume

effect

21

2010

554

In CHF million


Von Roll Group / Reconciliation statement for EBIT

Transformers and Solar burden EBIT

In CHF million

23.1

6.6

10.8

2010 Transformers

effect

11.5

2011 Currency

conversion

effect

1.9

Solar

depreciation

3.1

Transformers

effect

11.5

Current

result

12.3

2011

(adjusted)

Currency

conversion

effect

1.9

Solar

depreciation

3.1


EMEA Americas Asia

Von Roll Group / Sales by region

Regional development shaped by economic environment

141142150

2011

-1% -5%

2010 2009

281286292

2011

-2%

2010 2009

-2%

122126108

+17%

2010 2009

-3%

2011

» Slight recovery in the North

American market

» Particularly strong sales

growth in the USA (>25% in

US dollars)

» Brazil experiences slight

recovery in sales

» Low-voltage segment far

outperforms its high-voltage

counterpart

» 5% sales growth in euros

» Marked recovery in the

high-voltage segment

» Significant decline in the

transformer business

» Shift in energy policy is

offering promising new

market opportunities

(e.g. wind power)

» Slight sales growth in the

core regions of India and

China (in local currencies)

» MICA product line posts

significantly higher sales

figures (+19%)

» Indian and South-East

Asian markets still have

potential

Long-term

success factors

» Sustained

increase in global

demand for energy

» Shift away from

non-renewable

energy sources

» Urban population

growth in

emerging markets

and development

of infrastructure

In CHF million


Operating segments / Von Roll Insulation

Sound positioning

Von Roll Insulation: highlights

Low-voltage

» Stagnating demand in Europe for low-voltage

products, which are sensitive to the state of the

economy, due to the uncertain market environment

and the euro crisis

» In contrast, demand in Asia and America remains

high

366 373

2010

+2% +23%

2011 2009

298 357 361

2010 2009

355

+1%

2011

+1%

18

2009

9

-1% +103%

2011

18

2010

High-voltage

» Slight upward trend, particularly in the rotation

motors sector

» Greater demand for wind turbine products

» Accepted supplier to several major customers

Order intake Sales Operating EBIT

In CHF million


Operating segments / Von Roll Composites

Focus on new developments

Von Roll Composites: highlights

» Marked improvement in operating EBIT thanks to increased capacity utilisation

» Special plastics for civil defence and the automotive industry developed

» New collaborative projects for ballistic protection systems launched

116

2011

114

2009

+18%

99

2010

-2%

111

2009

+8%

102

2010

+1%

2011

111


1

n.a.

2009

-3

2010

+84%

2011

3

In CHF million


Operating segments / Von Roll Transformers

Further development into a niche provider

Von Roll Transformers: highlights

» Impact of order intake in the crisis years of 2009 and 2010 reflected in sales figures in 2011

» Focus in 2011 on developing new products together with customers

» High capacities in the development phase with low quantities initially

» Introducing a revised product plan and setting aside reserves have a one-off negative effect on

operating EBIT

» Successful development and launch of specialist transformers for wind turbines

53

+18%

-31%

2011

63

2010 2009

78 82

-19% -11%

2011

67

2010 2009

92

7

n.a. -1%

2011

-5

2010 2009

7


In CHF million


» Slight increase in CAPEX due to

investment in a new global ERP

solution

» The start of production at the new

site in Bhopal, India, required the

corresponding machinery to be

purchased and the premises to be

equipped

» With power transformers now

accounting for a larger part of the

product mix in the Transformers

segment, investments had to be

made in the relevant production

capacities

Von Roll Group / Financial position

CAPEX strategically increased once again

Change in property, plant and equipment

120%

Target

range

90%

Additions/

depreciation

CAPEX

1.081.00

1.20

1.92

1.58

1.00

2006 2007 2008 2009 2010 2011


Von Roll Group / Share

Development of share price 2011

2

3

4

5

6

Jan 11 Apr 11 Jul 11 Okt 11 Jan 12

ROL SPI

Price (CHF)

Exchange rate

data (CHF) 2011 2010

High 5.23 7.35

Low 2.50 4.30

Year-end 2.56 4.90

Market cap. (1,000) 473,034 905,417

Performance 2011 Year P/E

Von Roll -47.8%

SPI -8.2% 14.37


Von Roll Holding AG / Dividend

Board of Directors proposes not to pay out a dividend

The Board of Directors will propose to the Annual General Meeting of 20 April 2012 that no

dividend be paid for financial year 2011.

In CHF million 2011 2010

Profit carried forward 105 125

Loss for the year -21 -20

Available net income

for the year 84 105

Proposal:

Dividend payout

(maximum) 0 0

To be carried forward to

new account 84 105


Von Roll Group / Strategy

Product portfolio

Composites

and parts for all kinds of

industrial applications

Composites Technologies

Transformers Water

Complete solutions for the

fast-growing market of

specialist, distribution and

high-voltage power

transformers

Solutions for process

control in water

and wastewater

treatment

CHF 111 million

1,226

Sales:

Employees:

CHF 4 million

20

Sales:

Employees:

CHF 70 million

249

Sales:

Employees:

Insulation

Global market leader for

insulation products,

systems and services

CHF 361 million

1,390

Sales:

Employees:



Target markets in Billion CHF

Source: Oxford Economic Forecasting (OEF)

2015 2011

6% p.a.

15 %

Market share: Market share:

8 %

Market share:

<1 %

2.4

2.9

2015 2011

5% p.a.

1.4

1.7

2015 2011

6% p.a.

214

274

Water

Transformer

Composites Technologies Insulation



Customers

Selected customers

A global customer base creates synergies across both segments and regions



Growth

Global economic trends

» GDP growth of approx. 3% from 2012 to 2020

» Developing national economies such as China

to have growth rates of approx. 8%

Market trends

» Substantial investment in energy infrastructure in

emerging markets

» Significant need for investment in renovation and

modernisation work in industrialised countries

» Markets relevant to Von Roll are growing at a

rate of around 5%, significantly faster than GDP

Development of Von Roll

» Von Roll is benefiting from these trends thanks

to:

» a global presence

» products for fast-growing sectors

such as renewable energy 1) Average annual growth rate 2012 – 2020;

GDP: gross domestic product Source: Oxford Economic Forecasting (OEF), McKinsey Global Institute

GDP Market

growth

Von Roll

3%1)

Targ

et

ran

ge

5%1)

10%1)



Planned business development 2011-2015

Sales 2011-2015 (CHF million)1) EBIT 2011-2015 (CHF million)1)

40

2015

65

2011

7

2011: 1.2%

EBIT margin

2015: 6-8%

2015

800

700

2011

Target

range* 5-11% p.a.

543

* Depending on macroeconomic conditions and the degree of implementation of

the planned initiatives

1) Constant copper prices and exchange rates

Target

range*



Von Roll's strategy for 2015

Overview of Von Roll's strategy for 2015

Market and product portfolio:

» Focus on growth markets

» Positioning as an innovative

provider of solutions

» Realignment of customer support

» Expansion of the

product portfolio

» Inorganic growth

One

Von Roll

Structures and processes:

» Optimising the global

production network

» Optimising management

structures

» Global integration of all

sites and activities through

a standardised ERP

system

Aim: increase corporate value


Von Roll Group / Strategy - Market and product portfolio

Focus on growth markets

» Von Roll has a presence in growth regions with its own production and sales activities

» Asia currently accounts for some 20% of sales

» Future focus on industries that promise sustained growth such as wind, water and electromobility

Wate

r E

-mo

bil

ity

6%

>10%

» Transformers

» Water treatment

» Wastewater treatment

» Engineering services

» Winding wire

» Insulation systems

» Composites

Products Market growth

9%

Win

d

» Transformers

» Winding wire

» Insulation systems

» Composites



Positioning as an innovative provider of solutions

» Developing specific solutions for the wind

industry in consultation with customers

» Example: compact transformers that can be

integrated directly into wind turbine towers

» Cross-segment product range for the wind

industry

» Early involvement in the development of new

technologies through close relationships with

leading wind turbine manufacturers

» Sales growth 09-11 in the wind segment: 45%

Insulating material,

winding wire,

composites for all

electrical components

in wind turbines

Compact transformers

for integration in wind

turbine towers

Power transformers for

wind farm transformer

stations

Selected ongoing projects:

» Developing electromobility solutions

» Developing "green" insulation systems



Realignment of customer support

» 30% of sales in 2011

generated from key

accounts

» Exploiting cross-segment

sales potential

» Focus on customers'

global requirements

» Incorporating R&D

Key account management

» Bringing in product experts

to strengthen regional

sales

» Fine-tuning the technical

knowledge of all sales staff

» Sales on a par technically

with customers'

development engineers

Technical sales

» Externally: technical

training for customers and

involving them in

development processes at

an early stage

» Internally: Introducing a

programme of continuing

specialist and technical

training

Training programme



Expansion of the product portfolio

» Establishing the company as an outsourcing partner

for customers' non-core processes

» A product range oriented flexibly towards customer

requirements

» Example: development of a highly profitable business

producing insulated components for wind turbines in

India

» The appropriate expansion of the product portfolio also

allows the processing of electrical insulation materials

Selected ongoing projects:

» Ramping up production capacities in India

» Building up a service business in India

» Regional expansion of Von Roll Composites

in the USA and Asia



Inorganic growth

Concentration on core business

» Current focus on the core sectors of insulation, composites and technologies

» Looking out for promising market opportunities for inorganic growth in these areas

Clearly defined criteria

» Strategic fit

» Feasibility of a target return of >6% (EBIT margin)

Current projects:

» Ongoing analysis of the following projects:

» Europe: acquisition in the liquids sector

» Asia: acquisition in the technologies sector

One Von Roll through a focus on core business


Von Roll Group / Strategy - Structures and processes

Optimising the global production network

» Uniting strategically significant production capacities across the world

» Pooling expertise to boost innovative strength

Target for 2015

» Fewer production sites

» More modern machinery

» Lower maintenance outlay

» More efficient processes/improved capacity utilisation

Adjusting regional production capacities

Centres of excellence

» Expertise

» Production costs

» Proximity to customers

» Subsidies

» A more professional mica mining process

» Securing a reliable mica supply Ensuring mica availability

Exploiting local factors

Increasing the gross margin from 18% to >24%



Optimising management structures

Ongoing optimisation of management structures

» Introducing a matrix-based organisation

» Less redundancy between local, regional

and global functions

» Standardising processes

Americas

Asia

EMEA

BL

Co

mp

osit

es

BL

In

su

lati

on

Gro

up

fu

ncti

on

s

BL

Tech

no

log

ies

One Von Roll

through

structural

adjustment



Global integration of all sites and activities (ERP)

Target for 2015

One Von Roll

Current situation

Introducing a global IT landscape

Aims

One Von Roll guaranteed at system level

» Heterogeneous IT system landscape

» Redundant structures and processes

» Lack of transparency and a high degree of manual work

» All companies covered in functional terms by a single ERP solution

» Standardised processes and structures

» Central data management

» Harmonising and standardising core processes

» Automating and accelerating integrated business processes

» Group-wide efficiency and transparency

» Project start: September 2011

» Project end: complete implementation in 2014


Von Roll Group / Strategy - Aim

Increasing corporate value

Key figures 2011 Target for 2015

Sales CHF 543 million CHF 700-800 million

Gross margin 18% >24%

EBITDA margin 4.7% >9%

EBIT margin 1.2% >6%


Financial calendar

20 March 2012

Analyst and press conference for 2011

» 20 April 2012

Annual General Meeting

» 25 April 2012

Report on the 1st quarter

» 22 August 2012

Telephone conference to discuss the 1st half of 2012

» 24 October 2012

Report on the 3rd quarter

Contact

Susanne Berger

Corporate Communications

T +41 44 204 30 34

F +41 44 204 30 39

[email protected]

[email protected]

www.vonroll.com

Financial calendar and contact details


Disclaimer

This presentation is based on information currently available to

management. The forward-looking statements contained herein could

be substantially impacted by risks and influences that are not

foreseeable at present, so that actual results may vary materially

from those anticipated, expected or projected.

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