[PPT] - No. 1 global market position in high-end vacuum valve technology PowerPoint Presentation

SLIDE 1

Fourth quarter and full-year 2017 results

1

No. 1 global market position in high-end vacuum valve

technology

FOURTH QUARTER AND FULL-YEAR 2017 RESULTS

March 12, 2018

SLIDE 2

Fourth quarter and full-year 2017 results

2

Agenda

PASSION. PRECISION. PURITY.

Highlights Heinz Kundert, CEO 1

1

Fourth quarter and full-year 2017 financial results Andreas Leutenegger, CFO

2

Strategic drivers and outlook for 2018 Mike Allison, CEO 2

3

1 until March 12, 2018 2 effective March 13, 2018

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Fourth quarter and full-year 2017 results

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Record 2017 results on growing demand and expanding no. 1 global market position

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§ Record performance driven by strong growth, new products and cost reductions Expansion of leadership position in vacuum valves through substantial market share gains Global production capacity increased by

ver 80% to CHF 850

million in 2017 Vacuum content in advanced manufacturing processes continued to increase in 2017 Seven consecutive quarters of growth on a year-on-year basis since listing in April 2016 Market prospects for 2018 remain very positive

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Fourth quarter and full-year 2017 results

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Strong performance supported by all market segments

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1 Adjustment on Group level only 2 Segment margin based on segment net sales

Segment

(% of total net sales)

Net sales

CHF 99 / +21% Global Service (14%) Industry (6%) Valves (80%) CHF 554m / +40% CHF 692m / +36%

Adj. EBITDA1

/ margin2

CHF 48m / 48.2% CHF 13m / 21.5% CHF 189m / 31.7% CHF 215m / 31.1% VAT Group AG CHF 40m / +26%

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Fourth quarter and full-year 2017 results

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Key growth trends for VAT continued to drive business development

PASSION. PRECISION. PURITY.

§

Investments in memory for 3D NAND and DRAM continued

§

Technology inflections in logic / foundry

§

Highest level of valve performance required

§

Transition to OLED continued

§

Gen 10.5 investments for large LCD displays

§

China growth

§

Investments in solar power generation accelerated

§

Increasing demand for new PV technologies (PERC or CIGS1)

§

New wave in HB-LED

1 Copper, indium, gallium and selenide

§

Growth driven by bellows and components for semi, automotive, medical, aerospace etc.

§

Government contracts for particle physics (CERN, ITER)

End-market growth trend 2017 vs. 2016

Picture

Semiconductors

Picture Picture

Displays Industry & Research Solar

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Fourth quarter and full-year 2017 results

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VAT’s three growth dimensions delivered results

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2nd Dimension Equipment growth 3rd Dimension Vacuum valve growth 1st Dimension End market growth

§ End markets growing at unprecedented speed § Secular market drivers - digitalization everywhere (Big Data, IoT, AI, VR etc.) § Lower cyclicality - ubiquitous applications and functionalities § Volume § Technology inflections § 3D NAND, DRAM, Logic and Foundry § <10 nm features and multi layers § ALD/ALE/EUV § China § Shift into vacuum § Lithography - EUV § Thin film coatings for industrial applications (tribology) § Medical applications, aerospace and automotive (engine parts, batteries etc.)

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Fourth quarter and full-year 2017 results

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39% 39% 41% 45% 2014 2015 2016 2017

No. 1 market position further expanded
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Source: VLSI Research March 2018, 2017 full year preliminary data

1 All Industries includes semi & related, General Vacuum. 2 Semi & related includes Semiconductors, Displays, Solar, LED Lighting, Hard Disk Drive. 3 Semi includes Semiconductors, LED and HDD

Market share all industries 1

44% 45% 47% 51% 2014 2015 2016 2017

Market share semi & related 2

Total vacuum valve market size 2015: USD 531m 2016: USD 695m 2017: USD 875m Total vacuum valve market size 2015: USD 804m 2016: USD 977m 2017: USD 1’200m 53% 54% 57% 64% 2014 2015 2016 2017

Market share semi 3

Total vacuum valve market size 2015: USD 350m 2016: USD 393m 2017: USD 518m

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Fourth quarter and full-year 2017 results

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45% 6% 5% 5% 4% 4% 3% 3% 25% 2014 2015 2016 2017

ther

Source: VLSI Research March 2018, 2017 full year preliminary data

1 All Industries includes Semi & related, General Vacuum

Market share all industries 1

Total Vacuum Valves market size 2014: USD 767m 2015: USD 804m 2016: USD 977m 2017: USD 1’200m

VAT Market share all industries1

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Fourth quarter and full-year 2017 results

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Agenda

PASSION. PRECISION. PURITY.

Highlights Heinz Kundert, CEO 1

1

Fourth quarter and full-year 2017 results Andreas Leutenegger, CFO

2

Strategic drivers and outlook for 2018 Mike Allison, CEO 2

3

1 until March 12, 2018 2 effective March 13, 2018

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Fourth quarter and full-year 2017 results

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Full-year 2017 – Group key figures

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Third party net sales CHF 692 m +36%

Adj. EBITDA

CHF 215 m +36%

Adj. EBITDA margin

31.1% (unchanged) EBIT margin 25.8% (+2.5pp) Free cash flow CHF 109m

15%

Free cash flow margin 16% FCF conversion 51% Net debt/EBITDA 0.7x Dividend 2017 of CHF 4.00 per share1

1 for the financial year 2017; proposal of the VAT Board of Directors to its shareholders at the AGM on May 17, 2018

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Fourth quarter and full-year 2017 results

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Full year order intake in line with sales increase; Q4 order development not indicative of fundamentals

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in CHF million

168

186

562

736

122

166

2016 2017 Q4 order intake Full-year order intake Year-end order backlog

Full-year 2017 +31% Q4 2017 +11%

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Fourth quarter and full-year 2017 results

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Strong full-year net sales increase; adj. EBITDA margin flat despite significant investments in future growth

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in CHF million

143

199

508

692

158

215

2016 2017 Q4 net sales Full-year net sales Full-year adj. EBITDA

31.1%

adj. EBITDA margin

+36%

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Fourth quarter and full-year 2017 results

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508 692 97 100 (12) (1)

Net sales bridge

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§ Volume and product mix increases both drive top line growth § Negative price impact only due to volume rebates to large customers

2016 Volume Product mix Price FX 2017

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Fourth quarter and full-year 2017 results

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Net sales by region

Full-year 2017 net sales CHF 692 million

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Net sales by segment

80% Valves 14% Global Service 6% Industry 51% Asia 33% North America 16% EMEA

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Fourth quarter and full-year 2017 results

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Valves – 80% of net sales

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Semiconductors § Record results driven by demand for etch and deposition wafer fabrication equipment § Memory and logic chip demand remains at a very high level Display & Solar § Investments in OLED continues; investments in G10.5 fabrication equipment for LCD screens Modules § Strong growth as OEMs value the tailor made multi valve solutions that offer lowest possible process contamination General Vacuum § Growth in existing businesses; qualification for additional market segments

in CHF million

Q4 2017 Q4 2016 Change Order intake 152.7 139.7 9.3% Net Sales 159.7 116.4 37.2%

in CHF million

2017 2016 Change Order intake 590.6 443.3 33.2% Net sales 554.2 394.6 40.4% Inter-segment sales 41.1 32.2 27.6% Segment net sales 595.3 426.8 39.5% Segment EBITDA 188.6 129.3 45.9% EBITDA margin 31.7% 30.3%

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Fourth quarter and full-year 2017 results

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Global Service – 14% of net sales

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Growing installed base spurs substantial growth § Ongoing investments in manufacturing capacity for semiconductors and displays yield in fast expanding installed base § Demand for spare parts and specialty consumables such as spare gates growing § Proximity to customers is a key success factor; expansion of service network in 2017 especially in Korea and China § Retrofit and upgrade business opportunities at the heart of the Global Service strategy § Investment in dedicated service infrastructure on the premises of key customers

in CHF million

Q4 2017 Q4 2016 Change Order intake 21.5 20.9 2.9% Net Sales 28.6 20.4 40.2% in CHF million 2017 2016 Change Order intake 103.6 85.0 21.9% Net sales 98.7 81.9 20.5% Inter-segment sales

Segment net sales

98.7 81.9 20.5% Segment EBITDA 47.6 40.5 17.7% EBITDA margin 48.2% 49.4%

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Fourth quarter and full-year 2017 results

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Industry – 6% of net sales

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Investments in future growth § Accelerated growth in net sales to third parties, combined with rising internal demand for bellows § Introduction of new line of bellows with more corrosion-resistant materials § Fuel injection dampers with moderate growth in 2017, investment in additional production capacity to accommodate expected future growth § Slightly lower EBITDA margin as a result of strong growth in intersegment sales

in CHF million

Q4 2017 Q4 2016 Change Order intake 11.6 7.5 54.7% Net Sales 10.8 5.9 83.1% in CHF million 2017 2016 Change Order intake 42.0 33.6 25.0% Net sales 39.5 31.4 25.7% Inter-segment sales 22.6 15.4 46.8% Segment net sales 62.1 46.8 32.8% Segment EBITDA 13.4 10.3 29.2% EBITDA margin 21.5% 22.1%

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Fourth quarter and full-year 2017 results

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Substantially reduced finance cost negatively impacted by non-cash cost of unwinding finance structure

PASSION. PRECISION. PURITY.

§ Full impact of 300-million syndicated five-year revolving credit facility established in September 2016 § Reduced overall interest cost offset by unwinding finance structure by recycling of non-cash translation reserves in the amount of CHF 38.3 million § Effective tax rate of 14.1% positively impacted by US tax reform and accessibility of loss carry forwards in Malaysia and Romania

in CHF million

2017 2016 Change EBIT 178.7 118.3 51.1% Finance net

44.1
30.4

45.0% EBT 134.7 87.9 53.2% Income tax expenses

19.0
20.7
8.0%

Effective Tax Rate

14.1%
23.5%

Net income 115.7 67.2

72.1%

SLIDE 19

Fourth quarter and full-year 2017 results

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The unwinding of the finance structure and its impact on 2017 consolidated income statement

§ Unwinding of financing structure set up by the former private equity owners § VAT LUX III S.à r.l. with notional USD currency merged into VAT Management S.à r.l. § Recycling of translation reserves in the amount

f CHF 38.3 million booked in finance costs

§ No impact on cash flow, equity or total comprehensive income § Reported net income and EPS negatively affected

Reported Change Adjusted Change Net Income (CHFm) 116 72% 154 129% EPS 3.86 59% 5.13 111%

VAT Group AG Switzerland VAT Management S.à r.l. Luxembourg VAT Holding S.à r.l. Luxembourg VAT LUX II S.à r.l. Luxembourg VAT LUX III S.à r.l. Luxembourg VAT Holding AG Switzerland

100% 95% 5% 100% 100% 100%

VAT Group AG Switzerland VAT Holding AG Switzerland

100%

VAT Management S.à r.l. Luxembourg

100%

Old structure Simplified structure

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Fourth quarter and full-year 2017 results

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Investments in growth impacted free cash flow

PASSION. PRECISION. PURITY.

§ Improvement in cash flow from operations slowed down by substantial increase in working capital, however working capital as a percentage of sales remained unchanged at 20.1% compared to 2016 § Investments in additional capacity led to substantial higher CAPEX

146 156 +6% (18) (47) +158% 128 109

15%

Free cash flow

Cash flow from operating activities Cash flow from investing activities Free Cash Flow

2016 2017 88% 86% 51% 2015 2016 2017

Free cash flow conversion

SLIDE 21

Fourth quarter and full-year 2017 results

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Year-end net debt further reduced

PASSION. PRECISION. PURITY.

§ Slightly higher net debt level § Higher draw-down from RCF reflecting higher capital expenditures and working capital

2 Net debt 2015 is calculated excl. shareholder loan as of December 31, 2015

§ Leverage further reduced as the result of stable net debt coupled with higher EBITDA § Year-end net debt/EBITDA decreased to 0.7x from 0.9x § No further de-leveraging expected

1 Five year revolving credit facility (RCF) over USD 300 million maturing 2021

1971 2161 +10% (63) (72) +25% 134 144 +7%

Net debt development

Gross debt Cash and cash equivalents Net debt 1.9x2 0.9x 0.7x December 31, 2015 December 31, 2016 December 31, 2017

Year-end leverage development

SLIDE 22

Fourth quarter and full-year 2017 results

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Status on FX exposure initiatives FX

EUR USD

§ Ongoing initiative to increase global sourcing (mainly Asia and Eastern Europe) § Nomination of debt in USD § FX hedging of up to 100% of net cash flows contracts on a 18-month rolling basis

JPY

§ EUR exposure increased due to sourcing and CAPEX in EUR § FX hedging of up to 100% of net cash flows contracts on a 18-month rolling basis

1 Net cash flow after financing activity incl. CAPEX and loan interest expense

Initiatives to mitigate the foreign exchange exposure

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Net cash flow exposure to main currencies1

44 26 5 (5) (75) 207 93 8 (56) (247) 2016 2017

USD JPY GBP EUR CHF

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Fourth quarter and full-year 2017 results

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VAT’s financial mid-term guidance

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Mid-term guidance (amended to former guidance at time of IPO) § Net sales growth: high single digit over the cycle at constant FX rates § EBITDA margin target: 33% of sales by 2020 § Effective tax rate: 18% to 20% of earnings before tax § CAPEX: 4% of sales over the cycle § TWC target: less than 20% of sales § Leverage : 1x Net debt / EBITDA § Cost of debt: LIBOR plus margin depending on leverage ratio § Dividend policy: return up to 100% of free cash flow to equity1 to shareholders as long as the Group’s net debt does not significantly exceed 1x EBITDA

1 Free cash flow to equity is calculated as cash flow from operation activities less cash flow from investing activities less interest paid and

the current portion of loan and borrowings due at the end of the period.

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Fourth quarter and full-year 2017 results

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Agenda

PASSION. PRECISION. PURITY.

Highlights Heinz Kundert, CEO 1

1

Fourth quarter and full-year 2017 results Andreas Leutenegger, CFO

2

Strategic drivers and outlook for 2018 Mike Allison, CEO 2

3

1 until March 12, 2018 2 effective March 13, 2018

SLIDE 25

Fourth quarter and full-year 2017 results

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VAT’s growth drivers remain intact – data generation continues to grow exponentially

A city of 1 million people is expected to generate 200m GB of data per day by 20201

Source: Applied Materials, Cisco

50m GB/ day 55m GB/ day 50m GB/ day

40m GB/day

4m GB/day 2m GB/day

Smart buildings Smart factories Public safety systems Autonomous cars Smart airplanes Social media

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Zetta- bytes

Global connected user platform 2006-2015 Computer proliferation 1996-2005 Mainframe computing 1985-1995

Mega- bytes Giga- bytes Exa- bytes

Data economy 2016 and beyond

Source: Lam Research Corporation

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Fourth quarter and full-year 2017 results

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Strong growth forecast for the IC market with reduced cyclicality

200

400 600 800 1'000 1'200 1'400

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 IC unit shipments (billion) IC sales (USD billion)

40%
30%
20%
10%

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

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

% change of IC unit shipments % change of IC sales (USD)

PASSION. PRECISION. PURITY.

SLIDE 27

Fourth quarter and full-year 2017 results

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Capital intensity is increasing across all WFE markets

LCD OLED

Display 3

OLED Evaporation
Etching
Encapsulation
ELA
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Planar 3D

NAND 2

Technologies

Etching incl. ALE
Deposition incl.

ALD

Etching
Deposition
Multi patterning
Vertical scaling
Etching
Deposition
New memory

materials Market segments1 VAT growth drivers

Increases in the technological complexity drives capex and vacuum intensity
Vacuum equipment portion of total equipment to grow from 52% in 2017 to 60% in 2022 4

1 Source: Applied Materials 2 WFE USD billion; greenfield 100k WSPM 3 Equipment USD billion; Gen 6 4 VLSI Research January 2018, Semi & related ratio of Vacuum fabrication equipment

~60%

28nm <7nm

Logic 2

~100%

25nm <16nm

DRAM 2

~40% ~425%

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Fourth quarter and full-year 2017 results

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Driving share gains through customer intimacy and trusted partnerships

PASSION. PRECISION. PURITY.

Key Account Strategy §Strong key account teams §Industry leading applications and engineering capabilities §World class service capability §High R&D spending; innovation centers close to key accounts §Organic growth focus: leveraging our core competencies §Module solutions and motion components §Focus on integration, software, modules and controls §Joint development programs and partnerships with OEM’s §IP management §Capacity additions in 2017 and 2018 §Larger footprint in Asia §Agility and flexibility §Focus on quality and reliability Technology & Module Solutions Operational Excellence Application / Process Knowledge High Performance Teams

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Fourth quarter and full-year 2017 results

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Leveraging our core competencies to exceed industry requirements

PASSION. PRECISION. PURITY.

VAT core competencies

Semi Display Solar R&D Technology enablers

S ealing technology

üüü üüü üü üüü

Contamination management (zero defects)

üüü üü ü üü

Material & coating competence

üüü üü ü üüü

High speed control technology

üüü üüü ü ü

Module solutions

üüü üü ü ü

Precision motion components

üüü üüü üü ü

Vacuum design (total cost of ownership)

üüü üüü üü üüü

IP management

üüü üüü üü ü

M anufacturing, assembling and machining expertise

üüü üüü üüü üüü

Relevance to industry segments

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Fourth quarter and full-year 2017 results

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Priorities for 2018 and beyond – Harvest the incredible market opportunities

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Drive innovation across all market segments Trusted partnership with customers – solve their biggest problems Organization and people development

Oper. excellence:

Malaysia growth, capacity, quality, supply chain Service growth: harness growing installed base Address high potential adjacencies in R&D, industrial and other segments

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Fourth quarter and full-year 2017 results

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Conclusion & Outlook 2018

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§ The era of Big Data, augmented by rapid advances in artificial intelligence (AI), is gaining momentum, leading the company into a new phase of sustainable growth § Leading market position in vacuum-valves enables VAT to fully capture the growth potential presented by investments in semi and adjacent markets § Service opportunities to be actively pursued § Revenue growth of 15% to 20% expected at constant FX rates § EBITDA margin to progress towards target of 33% by 2020 § Substantial increase of net income and EPS expected § CAPEX to remain around 7% of net sales Outlook 2018

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Fourth quarter and full-year 2017 results

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Q&A Session

FOURTH QUARTER AND FULL-YEAR 2017 RESULTS

August 25, 2016

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Fourth quarter and full-year 2017 results

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Information

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Investor information Contact information Listing: SIX Swiss Exchange Michel Gerber Currency: CHF Head of Corporate Communications & Ticker symbol: VACN Investor Relations ISIN: CH 031 186490 1 Phone: +41 81 772 42 55 Legal Entity Identifier: 529900MVFK7NVALR7Y83 E-mail: m.gerber@vat.ch Financial calendar Q1 2018 Trading update Tuesday, April 17, 2018 Annual General Meeting Thursday, May 17, 2018 Ex-date Tuesday, May 22, 2018 Dividend payment Thursday, May 24, 2018 Half-year 2018 results Friday, August 24, 2018 Q3 20187 trading update Thursday, October 25, 2018 Full-year 2018 results Friday, March 8, 2019

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Fourth quarter and full-year 2017 results

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Forward looking statements

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Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Any statements contained herein that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should be considered to be forward-looking statements. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the company to be materially different from those expressed or implied by such forward looking

statements. Many of these risks and uncertainties relate to factors that are beyond the company’s ability to control
r estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market

participants, the performance, security and reliability of the company’s information technology systems, political, economic and regulatory changes in the countries in which the company operates or in economic or technological trends or conditions. As a result, investors are cautioned not to place undue reliance on such forward-looking statements. Except as otherwise required by law, VAT disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after this presentation was made.