09
A n n u A l R e p o R t
A bRief look At pARtneRtech
PartnerTech develops and manufactures electronic, mechanical and mechatronic products on behalf of leading businesses in the market areas of Defense and Maritime, Industry, Information Technology, MedTech
& Instrumentation, CleanTech and Point of Sale Applications.
PartnerTech’s role with its customers is to provide production expertise and take an integrated approach. That role requires the ability to manage the entire product life cycle, along with leading-edge skills in electronics, mechanics and systems integration. Those qualities allow us to create solutions that strengthen the customer’s competitiveness.
Among our key priorities are proximity to our customers, top quality, reliable delivery, short lead-times, and customer satisfaction.
PartnerTech has approximately 1,300 employees at plants in Sweden, Norway, Finland, Poland, the UK, the United States and China.
PartnerTech AB (www.partnertech.com), the parent company, has its head office in Vellinge, Sweden and is listed on the OMX Nordic Exchange Stockholm.
vision
Our vision is to be the obvious choice for business-to-business contract manufacturing.
Mission Our mission is to strengthen the competitiveness of our customers and their products through technical excellence and proven manufactu- ring skills.
business concept
PartnerTech develops and manufactures products under contract for companies with a leading position in selected business-to-business sectors of the European market.
As a contract manufacturer, we enhance the profitability and competitiveness of our customers by delivering services throughout the value chain – from components to integrated systems and complete products.
2 a b r i e f lo o k at Partn e rtec h
Development Services Supply Chain Management
Printed Circuit Board
Component Cables
Enclosures Sub Assembly System
Integration Logistics
Services After Sales
Printed Circuit Board Assembly
Box-Build
custoMeR centeRs
Partnertech is a strong contract manufacturer for both big and small product owners, primarily in the business-to-business sector. by turning over the optimal degree of responsibility to us, customers add knowledge and expertise that shorten the time from product concept to market launch. that is the Partnertech way of helping its customers grow and succeed. Medical device and it companies are among those that have benefited in that
way. in order to ensure the best possible service, Partnertech has set up local customer centers in
each market where it operates. that allows us to satisfy the desire of our customers for an ongoing dialog about technology and the market. a customer center can also coordinate Partnertech’s relationship with a customer that collaborates with our plants, product development centers and distribution centers in multiple geographic markets.
centeRs of excellence
Within its particular discipline, each center of excellence is in charge of tracking international and market trends, as well as pursuing production development, technological advances and investments on behalf of other group units. in other words, the centers of excellence serve as technological leaders. the goal is for Partnertech to boost the competitiveness of its customers in all areas and enable them to more fully benefit at each link in the value chain.
custoMeR offeRing
Partnertech offers services throughout the value chain and a product’s life cycle. the extent to which customers collaborate with Partnertech is completely up to them. Many of them start off by taking advantage of particular services, turning over greater responsibility as they grow comfortable with the relationship.
Customer
Development
Customer Center close to customer
Customer Center
Prototyping
Customer Center close to customer
NPI
Customer Center close to customer
Manufacturing
Location best suitable
Volume Manufacturing
Poland/China
Distribution
Location best suitable
a b r i e f lo o k at Partn e rtec h 3
c o n t e n t s
4 c o nte nts
2 A Brief Look at PartnerTech
5 2009 at a Glance
6 A Word from the CEO
9 Market
14 Service Offering and Market Areas
21 Strategy and Targets
22 Quality Assurance and Environmental Efforts
25 Employees and Values
30 Share and Shareholders
32 Corporate Governance
36 Five-year Summary
38 Management Report
41 Proposed Appropriation of Profit
42 Risk Management
44 Income statement
44 Statement of total comprehensive income
45 Comments on the Income Statement
46 Balance Sheet
48 Cash Flow Statement
49 Equity
50 Comments on the Balance Sheet and Cash Flow Statement
51 Accounting Policies
54 Notes
64 Auditor’s report
65 Definitions
66 Board of Directors
68 Group Management
70 Addresses
71 Annual General Meeting
71 Financial Reports for 2010
2009 At A glAnce
the year prioritized ongoing activities to streamline Partnertech’s industrial structure and strengthen our offering to improve customer value. as part of that effort, we decided to start up a new plant in Poland and to break our customer base down into six market areas, permitting the greater specialization for both parties. While the recession meant lower sales, having started to restructure at an early stage gave us the opportunity to be more proactive in adapting to market fluctuations.
net sales were sek 2,148.0 million (2,529.0).
operating loss was sek -3.5 million (28.5).
loss after tax was sek -21.5 million (5.2).
Amounts in SEK million (unless otherwise stated) 2009 2008 2007 2006 2005
net sales 2,148.0 2,529.0 2,643.6 3,057.2 2,013.9
operating profit/loss -3.5 28.5 -17.7 180.0 88.0
operating margin, % -0.2 1.1 -0.7 5.9 4.4
return on operating capital (rooc), % -0.4 3.1 -1.8 20.0 12.5
equity/assets ratio, % 41.5 39.6 38.4 36.6 35.2
average full-time employees 1,382 1,670 1,886 1,747 1,369
SEK million
2 000 1 750 1 500 2 250
2005 1 250
1 000 750 500 250
0 -4
-3 -2 -1 0 1 2 3 4
%
Net sales, SEK million Operating margin, %
6
2006 2007 2008 2009
2 500
5
2 750 7
3 000 3 250
8 9
3 500 10
nEt SAlES And opErAting mArgin
earnings per share after tax totaled sek -1.70 (0.41).
cash flow after investments amounted to sek 26.6 million (56.1).
the equity/assets ratio rose to 41.5% (39.6).
the board proposes that the annual general meeting distribute no dividend (no dividend for 2008) for the 2009 fiscal year.
Partnertech announced on february 17, 2010 that rune Glavare, the current President and ceo, will be leaving his position. leif thorwaldsson will be the new President and ceo.
groUp KEY rAtioS
200 9 at a G lan c e 5
the effort that Partnertech launched in 2008 focused on customer service, industrial structure and new market areas, as well as meeting challenges and taking advantage of new opportunities. that work continued in 2009. While i had hoped that we could swallow the entire bitter pill in 2008, the recession forced us to take additional measures that could adapt our capacity and efficiency to market conditions.
We were able to sustain sales in the first quarter by mobilizing every ounce of our organizational flexibility.
because customers adjusted their volumes to avoid the
A MoRe AttRActive
offeRing
a W o r D f r o M t h e c e o
risk of stockpiling, we did not experience normal seasonal revenue growth in the second quarter. but they replenished their inventories after the third quarter vacation period and we did quite well in september. fourth quarter sales returned to levels typical of the second quarter and most of the third quarter.
SlowEr UptUrn
Due to the recession, some of our suppliers have substan- tially reduced their capacity. as a result, the upturn may be
6 a WorD froM the ceo
We further streamlined PartnerTech’s industrial structure in 2009.
Launching that effort at an early stage prepared us to confront the recession and gradually adapt to declining demand.
We will continue to improve our performance
in 2010 while concluding our major
reorganization project.
slower than the market would have liked. nevertheless, the european contract manufacturing industry expects growth to average 4-5 percent next year (lingering weakness in the western countries and strength in the eastern countries).
nEw plAnt
Given our target of accelerated sales growth in eastern europe and china, we decided to start a new Polish plant in 2010. the plant is on major shipping routes to all of europe and provides Partnertech with exciting growth
opportunities. the availability of highly trained employees at lower costs than northern europe is good news for our customers when it comes to both competition and profita- bility.
Many of our competitors had a tough time of it last year, and recessions tend to encourage restructuring deals. but no significant deals were concluded in 2009. Partnertech would benefit from an acquisition that added a new geo- graphic market to its existing business.
a Wor D froM th e ceo 7
“ in 2010 we will Refine the concept And woRk with ouR custoMeRs to tAke AdvAntAge of eveRy oppoRtunity thAt A business uptuRn hAs to offeR foR eAch of us
rUnE glAVArE
prESidEnt And CEo, pArtnErtECH
8 a WorD froM the ceo
grEAtEr foCUS on pErformAnCE
Partnertech’s action program expanded its focus on per- formance, technology and group-wide processes. We took an additional step in 2009 toward great uniformity and technological expertise in our manufacturing setup. at this point we have a joint structure through which our four centers of excellence coordinate production and technical innovation for all units of the group. that way we can more easily relocate pro- duction from one plant to another. a product is commonly tested and manufac- tured locally to start out with and trans- ferred to a low-cost country once volumes increase. toward the end of the product’s life cycle, local pro- duction or the use of a customer center to handle logistics and distribution near the customer’s mar- ket may again be in order. such an approach simplifies the effort to ensure the kind of competitiveness and flexibility that meet the varying needs of our customers.
Six mArKEt ArEAS
as of 2009, Partnertech’s existing customer base is broken down into six market areas: Defense and Maritime, industry, information technology, Medtech & instrumentation, cleantech and Point of sale applications. streamlining our industrial structure in that way presents our specialized skills to the market in a more transparent manner. the overhaul has already made an impact, particularly when it comes to the sense of security and confidence that cus- tomers feel in our various areas of expertise.
last but not least, we have optimized customer service by centralizing our sales organization to the customer center and plant level. that has made us more customer-oriented, which has not gone unnoticed.
dEliVEring CUStomEr VAlUE
Partnertech delivers customer value not only by cost-
effective and flexible production, but – in line with the wishes of many customers – by offering supplemental services throughout a product’s value chain. for instance, we often participate in a customer’s product development effort, not to mention our unique method for rendering more cost- effective the manufacture of new and existing products.
similarly we have distribution centers around the world to meet the needs of customers that use our logistics and after-sales services, as well as a robust strategic purchasing function based on a global supply chain. that is important, given that the choice of materials and the purchasing of components has a major impact on the total costs associ- ated with manufacturing a product.
growing StrongEr on EVErY front
by means of enhanced processes, upgraded purchasing routines and greater market presence, our goal for 2009 was to strengthen our customer service offering. Moreover, we wanted to broaden our logistics and after-sales services and seek new production opportunities, particularly in eastern europe. but we also targeted asia for this purpose.
looking back, i am satisfied that we accomplished a great deal during the year. leif thorwaldsson has the knowledge and experience needed to successfully lead Partnertech down the next leg of its journey in 2010 and beyond. our goals are to further improve performance and customer service while building on our industrial structure and organization.
While wishing leif the best of luck, i would like to take this opportunity to thank each of our shareholders for the confidence and trust they have exhibited during my years as President and ceo of Partnertech.
rune Glavare
President and ceo, Partnertech ab
we AccoMplished A gReAt deAl in 2009, And leif hAs whAt it tAkes to successfully leAd pARtneRtech down the next leg of its jouRney in 2010 And beyond
pARtneRtech Announced in
febRuARy thAt leif thoRwAldsson would took oveR As pResident And ceo in spRing 2010
“
Mar ket 9
contRAct
MAnufActuRing, the logicAl choice
Turning to a contract manufacturer such as PartnerTech is a logical step. Many product owners find it easier, and frequently more economical, to outsource production so that they can devote their resources to marketing, application development, technological upgrades and responsiveness to the needs of the market. The resulting division of responsibility frees up time, energy and capital that can be used to promote growth and expansion.
globAl And rEgionAl plAYErS
contract manufacturers fall into two main categories.
Global PlaYers
the few companies that belong to this category generally manufacture products and electronic components for the computer, consumer and telecommunications industries where very large-scale production is the name of the game.
they have access to large plants in low-cost countries, a global supply chain and the ability to ramp production both up and down.
reGional PlaYers
these small and medium-sized companies primarily manu- facture products or electronic components for the busi- ness-to-business market, usually on a more limited scale.
they operate regionally in the sense that one or more countries may be involved. such contract manufacturers often focus on a small number of specific segments and adapt their offering accordingly.
the category consists of only a few larger companies
(one of which is Partnertech) that can offer a broad range
of production and service options while often participating
in product development efforts. these large companies
can manufacture in low-cost countries and have a more
extensive global supply chain and purchasing network than
smaller players, which manufacture exclusively at the local
level in proximity to their customers.
10 Market
pArtnErtECH’S poSition
Partnertech is a leading european business-to-business contract manufacturer. thus, it is among the big regional players. Most of Partnertech’s customers are in europe, but it operates in china and the United states as well to provide a local presence when needed.
although the contract manufacturing sector is relatively young, Partnertech has both industrial roots and long- standing experience of interindustry technology. in other words, we offer production of electronic components, mechanical components and a combination of the two.
that ability distinguishes Partnertech from many another regional players and lands it big contracts to manufacture integrated systems. the breadth of Partnertech’s offering resembles that of global players even though it produces on a smaller scale and its products are for the business-to- business market.
to maintain its leadership and capture additional market
share, a contract manufacturer of Partnertech’s rank must offer high performance, a suitable range of services, a global supply structure and access to low-cost production. among the factors that determine where manufacturing takes place are the scale of production, logistics, labor costs, proximity to end-customers and product maturity. the sum of these variables is crucial to a customer’s competitive- ness and lowers the total cost per manufactured unit.
as the contract manufacturing sector has evolved, Partnertech has carved out a strong position that proceeds from its broad service offering and responsive industrial structure, as well as its established electronics, mechanics and mechatronics expertise.
mArKEt trEndS
the total contract manufacturing market is projected to
average 4-5% annual growth over the next few years. the
most powerful driving force is globalization and the associ-
Mar ket 11
ated increase in competition and specialization. that is spurring a growing number of product owners to contract out their production, or to outsource more than they had done previously, in order to obtain cost benefits and greater flexibility. as a result, they also have more time for their core operations and can respond more quickly to fluctua- tions in the market. While consumer products have been the most powerful catalyst by virtue of their short product life cycles and high volumes, the need is also increasing in the business-to-business market.
both global and regional players are striving to expand their service offering. nowadays a contract manufacturer is expected to be a complete technology and service partner with leading-edge expertise in production-related areas, and many customers with business-to-business products need support through the entire life cycle. in addition to production and assembly, a contract manufacturer must therefore provide industrial design, product development,
prototype manufacture, new product introduction, logistics and after-sales services. a purchasing function that can create economies of scale and offer high-quality materials and competitive prices is also essential.
When it comes to complete products and systems that contain both software and mechanical components, custo- mers often seek proximity of production and the market.
shipping large products over long distances to reach the end-user is defensible from neither an environmental nor cost standpoint. Generally speaking, central and eastern european countries serve as low-cost options in europe, while china plays a similar role in asia.
the situation is different for electronic components,
which are easy to handle and distribute. relocation may
also be suitable for other products when the scale of pro-
duction increases and they enter a mature phase. relocating
the manufacture of electronic components, increasingly to
the asian countries, tends to be easier.
12 Market
oVErViEw of tHE mArKEt
the global contract manufacturing market is dominated by a handful of global players, such as foxconn and flextronics, that focus on consumer and other electronics-based, high- volume products. they do not compete with Partnertech, whose customers are in the business-to-business segment and require smaller scale production.
the 2010 global contract manufacturing market is an estimated eUr 120 billion. europe accounts for around 25 per cent or eUr 30 billion. the segments and geographic markets in which Partnertech operates represent approxi- mately eUr 5 billion. Partnertech currently has just under 5% of that business.
coMPetitors
other players with Partnertech’s orientation – kitron, benchmark, enics, note and scanfil – all have a strong regional base and global operations proceeding from europe and asia (the United states as well in Partnertech’s case). Partnertech also has local rivals in individual geo- graphic markets, but they operate in only a few disciplines and do not compete in any real sense with Partnertech’s total offering.
sector GroWth
rapid sector growth came to a halt in 2008, and 2009 saw a decline of approximately 20%.* Growth is expected to return but to be more gradual than in recent years. through 2013, the asian market is projected to grow the fastest while the United states and europe lose some steam. the forecast concerns the total contract manufacturing market, of which consumer products represent by far the greatest share. contract manufacturing of business-to-business products is expected to largely remain in europe and the United states. estimates are that eastern and central europe will account for most european growth.
overall prospects for the business-to-business contract manufacturing market remain bright. catalysts such as greater globalization and competition, along with demands for cost-effectiveness and short lead-times, will make product owners increasingly keen on engaging contract manufacturers.
*source: MMi/inforum Rest of the world
Europe 75%
25%
Consumer and automotive products Business-to-business
54%
46%
The global market for contract manufacturing
The European market for contract manufacturing
the segments and geographic markets in which Partnertech operates represent approximately eUr 5 billion, or 17%, of the total european market. Partnertech’s current share of that 17% is around 5%.
Mar ket 13
Customer
Development
Customer Center close to customer
Customer Center
Prototyping
Customer Center close to customer
NPI
Customer Center close to customer
Manufacturing
Location best suitable
Volume Manufacturing
Poland/China
Distribution
Location best suitable
How pArtnErtECH CollAborAtES witH itS CUStomErS
in order to ensure the best possible service, Partnertech has set up local customer centers in each market where it operates. that allows us to satisfy the desire of our custom- ers for an ongoing dialog about technology and the market.
the company has the electronics, mechanics, enclosure and systems integration
expertise required to manu- facture products in a number of different sectors.
Partnertech adopted measures in 2009 to further boost its competitiveness by upgrading group-wide processes, technologies and working methods, as well as optimizing its strategic purchasing function. the resulting improve- ment in flexibility and efficiency vis-à-vis our customers generated additional cost benefits.
a sinGle Point of contact
companies have varying needs for business-to-business contract manufacturing services. a product is commonly test- ed and manufactured locally to start out with and relocated to a low-cost country once volumes increase. a return to local production may occur at the end of the product life cycle.
pARtneRtech And its custoMeRs
regardless of where a product is manufactured, Partnertech’s local customer center retains responsibility for it. each center is in charge of the customers in its geographic market.
While gaining access to a global supply chain and cost-
14 service offerinG anD Market areas
PartnerTech is a strong contract manufacturer for both big and small product owners, primarily in the business-to-business sector.
By turning over the optimal degree of responsi- bility to us, customers reduce their total cost per
manufactured unit and shorten the time from
product concept to market launch.
se rvice offe r i nG an D Mar ket ar eas 15
optimized production, the customer has a single point of contact. to ensure close collaboration with Partnertech, a business chooses the customer center that best suits its need for expertise and geographic proximity. every product is manufactured at the plant that is most appropriate in terms of costs and distribution.
We have customer centers at plants in sweden, norway, finland, the Uk, Poland and the United states. We also maintain a far-reaching partner network of experts and producers, enabling flexibility and stability regardless of whether customers are growing in existing or new markets.
Partnertech currently serves customers that are based in Germany, france and the benelux countries.
teaMs of varioUs sPecialists
to pave the way for effective cooperation, we set up a team of Partnertech specialists before each project begins. the purpose is to make the product more competitive and ensure agreed-upon performance.
Partnertech has relied on process-oriented flows since 2009. in other words, a Program Manager has full responsi- bility for deliveries and quality, including employees. the approach is superior to a functional organization when it comes to customer focus and service.
CEntErS of ExCEllEnCE
to further upgrade its production skills – as well as to ensure top-class electronics, machining, enclosure and systems integration services – Partnertech is continuing to develop its centers of excellence. each center is run by the leading unit in its particular sphere of expertise.
Within its specific discipline, each center of excellence is in charge of tracking international and market trends, as well as pursuing production development, technological advances and investments on behalf of other group units.
the goal is for Partnertech to boost the competitiveness of its customers in all areas and enable them to more fully benefit at each link in the value chain.
centers of excellence.
pArtnErtECH’S SErViCE offEring
Partnertech offers services throughout the value chain and a product’s life cycle. the extent to which customers col- laborate with Partnertech is completely up to them. Many of them start off by taking advantage of particular services, turning over greater responsibility as they grow comfortable with the relationship.
ProDUct DeveloPMent anD UniQUe cost reDUction MethoD
Partnertech’s local customer centers meet demands by the market for technical expertise at close range. We take part in the product development efforts of many customers when electronics, mechatronics, enclosure and software skills are required.
approximately 70% of a product’s total cost is deter- mined at the development stage, when proper design per- mits cost-effective purchasing, assembly and testing. a number of customers call on Partnertech to participate in new product development. others ask us to improve the quality and cost-effectiveness of their existing products and prototypes, as well as to design test systems.
furthermore, our integrated value analysis/value engi- neering (va/ve) concept provides unique expertise. in keeping with the concept, we perform an overview of a product so as to make it more cost-effective and optimize it for production. for instance, we analyze product design, as well as the choice of materials and supplier. Partnertech
actively employs va/ve to lower costs for both new and existing products. When va/ve is fully implemented, we can generate cost savings of 20-50% (sometimes more) per manufactured unit.
While our development engineers are focusing on pro- duction requirements, the customer’s product development function can devote more of its time and energy to putting together the kinds of applications that the market is looking for. Development and production are two sides of the same coin, and integrating them boosts efficiency and speeds up the overall process while generally lowering costs.
PUrchasinG
involving Partnertech’s purchasing function early on sets the stage for a top-quality, cost-effective product. the function is proactive in its choice of suppliers, making sure that it finds the right one for every purpose. We have a global network of suppliers that meet stringent requirements for quality and reliable delivery. for purchasing in asia, we have a separate unit in china and advanced cooperation with our chinese partner 3ceMs.
based on the demands of the customer’s project, we make sure that our supplier agreements will enable it to meet its commitments. as in all of our collaboration, we like to establish a dialog with the customer’s purchasing division in order to share experience and make sure that everything starts off on the right foot.
Development Services Supply Chain Management
Printed Circuit Board
Component Cables
Enclosures
Sub Assembly System
Integration Logistics
Services After Sales Printed Circuit
Board Assembly Box-Build
16 service offerinG anD Market areas
Development Services Supply Chain Management
Printed Circuit Board
Component Cables
Enclosures
Sub Assembly System
Integration Logistics
Services After Sales Printed Circuit
Board Assembly Box-Build
ProDUction
Partnertech’s structure of customer centers in various ge- ographic markets ensures not only technology and devel- opment sharing, but production optimization. Products can be manufactured close to the development and technical division of the customer, in a country with lower labor costs, or a combination of the two. because Partnertech manu- factures for selected segments of the market, we are fully acquainted with their requirements and specifications. our production know-how extends across a number of disci- plines, including printed circuit boards, encapsulated elec- tronics, mechanical processing, sheet metal work, assem- bly and systems integration.
before starting up production, we sit down with the customer to review the product and its various functions. if we are engaged at an early stage, we can set quality tar- gets while ensuring flexibility and short lead-times during the development effort.
loGistics anD after-sales
Many customers increasingly outsource logistics and after- sales services to Partnertech as well. the desire to shorten time-to-market and streamline their sales organization contributes heavily to that decision. among our services are warehousing near the end-customer, maintenance, repair and distribution, including customized logistics services.
Partnertech provides such services on a regular basis for many customers in both europe and the United states.
logistics services can be combined to meet the customer’s
requirements, enabling discretionary levels of service and more efficient distribution.
bEttEr oVErViEw of oUr worKing mEtHodS to provide improved customer service and make our role as a contract manufacturer more transparent, Partnertech carried on in 2009 with the change project it had launched in 2008. the effort involved strengthening operating efficiency by putting together new and better group-wide processes for logistics, production methods and the like.
Six mArKEt ArEAS
Partnertech has many years of experience in developing and manufacturing products for businesses in a variety of market areas. We have long collaborated with leading com- panies to continually upgrade our processes and production skills.
the challenge is not simply to meet the requirements of various standards, customers or markets. Just as important is to understand the particular market in which a customer does business. Partnertech’s competitive advantage over other contract manufacturers and the in-house manufac- turing processes of its customers stems from its flexible, cost-effective production options.
Partnertech’s strong suit consists of its superior skills when it comes to products with short time-to-market re- quirements, as well as those with stringent demands for documentation and traceability. furthermore, we can quickly alternate between the two types of products.
se rvice offe r i nG an D Mar ket ar eas 17
18 service offerinG anD Market areas
dEfEnSE And mAritimE mArKEt ArEA the Defense and Maritime market area typically manufac- tures components that are subject to stringent security and quality requirements, as well as products for use by the oil and other industries.
the area is characterized by long-term relationships.
once trust has been established, contracts run for many years. that minimizes volatility.
Partnertech, which meets the area’s special requirements for quality, dependability and reliable delivery, is certi fied according to the iso 9001:2000 Quality Management standard and the iso 14001:2004 environmental Manage- ment standard. the area offers experience with respect to traceability, documentation and advanced measuring equipment.
Particularly attractive services range from design to production (including difficult raw materials) and distribu- tion. Partnertech also offers procurement processes and after-sales services through its global network of produc- tion resources in europe, china and the United states.
exaMPles of ProDUcts
Partnertech has state-of-the-art skills in many segments of the area. among the products it manufactures are radar equipment, thermocameras, communications equipment, vibration control systems and remote surveillance equipment.
indUStrY mArKEt ArEA
the industry market area largely manufactures components and products for operator terminals, power & range control units and similar segments. because a number of custom- ers in this area are looking for large-scale production, it is integral to spearheading the development of Partnertech’s global structure.
Partnertech is certified in accordance with the iso 9001:2000 Quality Management standard and iso 14001:2004 environmental Management standard. the established supply chain is highly suitable for production in this area, which requires high-quality components to meet stringent durability and service cost criteria.
Partnertech’s fundamental structure ensures the kind of flexibility needed to quickly retool small-scale production among a variety of options. furthermore, the company’s global network of manufacturing resources in europe, china and the United states optimizes the quality and cost-effec- tiveness of a product throughout its life cycle.
exaMPles of ProDUcts
Partnertech has decades of experience in this market area.
among the products it manufactures are systems for remote
reading of electrical meters, control units for revolving
doors, forklifts and industrial robots.
se rvice offe r i nG an D Mar ket ar eas 19
informAtion tECHnologY mArKEt ArEA the information technology market area often obtains major contracts for advanced, encapsulated electronic components (box build assembly) and other products.
along with the industry market area, these products drive the expansion of Partnertech’s global structure, given that their size and their range of applications are frequently suited to large-scale production.
Partnertech is certified in accordance with the iso 9001:2000 Quality Management standard and iso 14001:2004 environmental Management standard. be- cause time tends to be a critical factor, Partnertech offers its skills even during the product development phase. Just as important are the resources that Partnertech eventually provides when it comes to distribution and after-sales.
Partnertech can also optimize both existing and new products to lower their production costss. savings run as high as 50% per manufactured unit.
exaMPles of ProDUcts
Partnertech has many years of experience in this area.
among the products it manufactures are security cameras, broadband routers, videoconferencing systems, base station antennas, microwave links and terminals for information systems and industrial robots.
mEdtECH & inStrUmEntAtion mArKEt ArEA the Medtech & instrumentation market area offers a vital combination of technical, regulatory and market expertise.
Partnertech meets basic standards such as iso 9001:2000 Quality Management and iso 14001:2004 environmental Management, as well as industry-specific standards such as iso 13485 for the production of medical devices. the company also complies with the Quality system regulation (Qsr) for the United states, the Pharmaceuti- cal affairs law (Pal) for Japan, and the Medical Device Directive (MDD) and in vitro Diagnostic Device Directive (ivDD) for europe..
Partnertech’s many years of experience and thorough familiarity with the market are particularly valuable for busi- nesses that commercialize new discoveries and concepts.
the company’s knowledge of the various development steps can help a product endure regulatory scrutiny and win official approval. Partnertech’s local customer centers facilitate close technical collaboration, which is particularly important in this area.
exaMPles of ProDUcts
Partnertech can boast of long, successful involvement in
medical technology production, including blood analysis,
dialysis, radiology and anesthesia equipment, allergy and
Dna testing instruments, and printed circuit boards for
various types of instruments.
20 service offerinG anD Market areas
ClEAntECH mArKEt ArEA
the expanding cleantech market area reflects the direction of public policy. comprising both components and complete systems, the area often utilizes the expertise surrounding each of the company’s disciplines.
Partnertech is certified in accordance with the iso 9001:2000 Quality Management standard and iso 14001:2004 environmental Management standard. the company’s mechanical and electronic skills provide a solid foundation for production in this area. We offer design, manufacture, testing and distribution in a way that ensures proper care of the customer’s product from the very start.
Many businesses have rapidly expanding capacity requirements. Partnertech’s size and global presence can satisfy those needs while sparing its customers the expense of major investment in production processes.
exaMPles of ProDUcts
Partnertech has the knowledge and experience that the manufacture of products (often complex) in this area demands. typical products are recycling and reverse vend- ing machines, heat pump systems and weather station equipment.
mArKEt ArEA point of SAlE AppliCAtionS Partnertech has many years of experience when it comes to payment systems, card readers and similar products. the company possess advanced, far-reaching product develop- ment skills and is often contracted for high-level outsourcing.
customers in this area frequently outsource production of complete systems and modules.
Partnertech is certified in accordance with the iso 9001:2000 Quality Management standard and iso 14001:2004 environmental Management standard. be- sides advanced production that includes assembly and sys- tems integration, Partnertech offers after-sales services such as maintenance and repair at the local level. that con- serves time resources, strengthens a customer’s service offering and brand, and minimizes environmental impact.
exaMPles of ProDUcts
Partnertech has superior precision mechanics skills that
are decisive to functional solutions in this area. among the
products it manufactures are cash handling systems, card
readers, printers for terminals and cash registers, and
equipment for paper handling and other advanced flexible
mechanics.
strateGY an D tarG ets 21
Partnertech’s strategy is to scrupulously ensure that our range of services maximize customer value. our sales or- ganization is decentralized to the local customer centers in the various geographical markets. such an approach maxi- mizes market presence, facilitates customer contact and strengthens the Partnertech brand as a contract manufac- turer with a strong focus on customers and familiarity with needs at the local level.
Working collaboratively, Partnertech strives to create customer value by means of cost-effective, flexible production, along with supplemental services throughout a product’s entire value chain. supplemental services are associated with product development and cost-effectiveness measures, as well as purchasing, logistics and after-sales. in response to the wishes that our customers have expressed with regard to logistics and after-sales, we are building new and larger distribution centers in europe and the United states while expanding our range of services in this area.
a configuration and distribution center started up in atlanta, Georgia during 2009. When the new unit for sheet metal work and systems integration opens in Poland during 2010, customers will have greater access to distribution services in central europe.
as Partnertech’s core activity, manufacturing must pro- vide agreed-upon quality and performance in every respect.
thus, our units are based on uniform, overall structures and processes that enable us to readily relocate production among them and generate economies of scale, thereby boosting the competitiveness of our customers.
Partnertech’s four centers of excellence, which spear- head our production and technological progress, are con-
stantly improving. they control and manage our skills while ensuring that all group units maintain the kind of technical superiority that is integral to efficient, quality-assured pro- duction processes.
Partnertech satisfies the market’s need for low-cost production by manufacturing high volumes in Poland and china. the new unit in southern Poland is optimally located in terms of costs, educational level, infrastructure and prox- imity to market. Partnertech is looking to expand its asian offering in a similar manner.
in summary, Partnertech may very well offer the broadest range of service and production options among regional contract manufacturers. our vision is to be in the forefront of every discipline while safeguarding our strong, integrated offering and competitive industrial structure. that is the kind of strategy that allows us to deliver greater customer value.
financial tarGets
financial strength is integral to success. as a contract manufacturer, Partnertech operates in a young sector that is subject to change, invests regularly in machinery and human resources, and encounters volume fluctuations and unforeseen developments that must be dealt with.
stRAtegy And tARgets
PartnerTech is one of the leading European business-to-business contract manufacturers.
The company focuses on product owners, primarily in Europe, while maintaining a structure that allows us to accompany customers as they enter new markets PartnerTech’s major strategic overhaul in 2008 served as the basis for its efforts in 2009.
pArtnErtECH’S finAnCiAl tArgEtS
Annual growth ≥ 10%
Operating margin ≥ 7%
Capital turnover rate, multiple ≥ 3
Return on operating capital ≥ 20%
Equity/assets ratio ≥ 30%
our total Quality Management (tQM) concept dictates a focus on customers, constant improvement, a process orientation and fact-based decision-making. a typical con- crete goal is to substantially shorten the time from produc- tion order until the product leaves the plant. Partnertech’s business system excels in
meeting the iso 9001 Quality Management standard, iso 14001 environmental Management standard and iso 13485 Medical Device standard
supporting customer-specific requirements, such as fDa’s Quality system regulation (Qsr)
ConStAnt improVEmEntS
Partnertech employees must be able to make constant im- provements while eliminating any problems and shortcom- ings before they grow serious and compromise quality or
customer performance. a series of group-wide total Quality Management (tQM) tools support them in that effort. as an integral part of day-to-day operations, the tools encourage employee commitment, as well as guiding our customer teams as they formulate objectives and activities in partner- ship with the customer.
the tools are broken down into four main categories.
MonitorinG anD folloW-UP
these tools include 5s, which stands for sort, systematize, straighten up, secure and standardize. key ratios such as Yield and overall equipment efficiency (oee) measure process quality. the ratios are regularly reviewed at the team room of each plant. employees can continually monitor their quality and performance and obtain information about current customer requirements and preferences.
intensive quAlity AssuRAnce And enviRon-
MentAl effoRts
22 QUalitY assUrance anD environMental efforts
PartnerTech pursues its quality assurance effort with a focus on customer requirements and awareness throughout the organization, shorter lead-times and greater flexibility.
The objective of PartnerTech’s group-wide
Total Quality Management (TQM) system is to
maintain an ambitious vision of quality.
risk eliMination
the 10-step supplier Quality assurance Plan (sQaP) tool is used to ensure superior production quality. other tools include producibility reviews, failure mode and effects analysis (fMea), analyses of measurement accuracy and serial production verification runs.
iMProvinG Processes
the six sigma tools and problem resolution teams focus on skills development, willingness to change and efficient/
flexible production. all types of waste are to be minimized and resources are to be used wisely. Partnertech also con- ducts frequency and methods studies.
iMProvinG ProDUcts
these tools include value analysis/value engineering (va/ve)
and six sigma. va/ve involves an overview of a product in order to make it as cost-effective as possible and optimize it for production.
these quality assurance tools are vital to a business like Partnertech for a number of reasons. they are important when independent parties evaluate our organization in relation to the iso 9001, iso 14001 and iso 13485 standards. the Dnv (Det norske veritas) foundation performs reviews throughout the year to verify that we meet our stringent requirements and identify that which bears improving.
Six SigmA – A world-lEAding improVEmEnt ConCEpt
six sigma is a world-leading, clearly structured quality improvement concept for more complex problems.
Partnertech academy conducted Yellow belt trainings and associated improvement projects during the year. the Partnertech organization now has many Yellow belts, Green belts and black belts (the highest level). Product quality, efficiency, delivery times and cost-effectiveness have benefited as a result.
worKing mEtHodS And qUAlitY ASSUrAnCE the standardization of working methods provides Partnertech with both quality and efficiency. as a result, we can more easily control and monitor the assembly process.
because our customers require flexibility, we must be able to safely and efficiently relocate production. Group- wide trainings and processes/procedures promote skills development and quality awareness among our production engineers.
Partnertech uses the supplier Quality assurance Plan (sQaP) with both customers and suppliers. sQaP is a generally accepted method for seeing to it that a product or process meets customer-specific requirements.
Partnertech academy conducts regular sQaP trainings to assure and optimize quality and cost-effectiveness throughout the value chain. our goal is to increasingly in- volve customers and suppliers as much as possible in order to guarantee quality, efficiency and low costs for everyone concerned.
QUalitY assU rance an D e nvi ron M e ntal e fforts 23
StAndArdizEd SUppliEr AgrEEmEntS Partnertech put together a standardized agreement pack- age for suppliers during the year. the group’s code of con- duct is included in the package. the company is currently engaged in an intensive effort to conclude agreements with all of its large, critical and new suppliers on the basis of the package.
foCUS on oUr EnVironmEntAl Effort Partnertech has a group-wide environmental certificate in accordance with iso 14001. it covers all units, as well as future acquisitions. the company’s environmental manage- ment system and purchasing processes place environmen- tal demands on suppliers as well.
besides being the natural consequence of our quest for long-term sustainable development, Partnertech’s intensive environmental effort reflects the demands of most customers.
Questions about the use of materials, recyclability and energy consumption are generally essential to limiting the environ- mental impact of the products. When it comes to recycling and phasing out hazardous substances, Partnertech follows
the restriction of the Use of certain hazardous substances (rohs) and registration, evaluation and authorization of chemicals (reach) regulations of the european Union.
some of Partnertech’s activities involve discharges into the water and air, as well as consumption of cutting fluids, which include:
• purification and recycling of waste water
• sorting of refuse to be either recycled or incinerated
• use of biofuels for heating
• replacement of solvent-based lacquer with powder lacquer
EnVironmEntAl tArgEtS in 2009 And 2010 Partnertech’s environmental targets in 2009 focused on further reducing the use of electrical power, gas, water and chemicals, as well as recycling more. the same targets are in effect for 2010.
Partnertech measures carbon dioxide emissions during shipment and has a company car policy that includes in- centives to drive fuel-efficient vehicles. the business travel policy stresses the importance of minimizing environmental impact.
24 QUalitY assUrance anD environMental efforts
efficient teAMwoRk stRengthens pARtneRtech
Skilled, committed employees with the ability to handle the unique product of each customer are decisive to PartnerTech’s growth and development.
Thus, it is essential that we maintain a corporate culture that encourages skills development, motivation and cooperation, thereby improving our prospects for attracting and retaining talented people while ensuring a flexible organization.
Group-wide processes, methods and tools lay the founda- tion for efficient teamwork and makes Partnertech better at optimizing the skills of each individual and function. that
e M PloYe es an D valU es 25
strengthens the capabilities of the entire organization.
the human resources function focused on a handful of selected tasks in 2009. the goal was to take advantage of synergies and economies of scale to support and strengthen both employers and the organization by syn- chronizing working methods, processes and tools. to attract and retain highly capable employees, we continued to up- grade our hiring process, reward system, skills develop- ment program and leadership training. the function pro- ceeded from clearly defined roles and responsibilities adapted to the needs of employees to support a finely tuned, flexible organization based on the group’s strategy.
cultivating employee commitment that is rooted in the company’s established values and involves active human resources efforts at all levels requires group-wide training through Partnertech academy.
the idea is to further strengthen human and organiza-
tional resources by means of a working method that high-
lights supervisors and employees. the goal is for the entire
group to use uniform methods, tools and processes.
A StrAtEgY implEmEntAtion tool
Partnertech academy is group management’s strategy im- plementation tool. thus, the academy’s trainings are always linked to maximizing customer value and process efficiency.
the goal is to strengthen the organization’s operating capability and involve employees in Partnertech’s strategic orientation. the main topics are leadership, sales, purchasing, production efficiency, logistics flow and economic estima- tion models of profitability.
the academy’s improvement teams are deeply involved in development of the trainings. that creates a desire for knowledge among employees and offers them a practical way to make a difference.
heavy emphasis was placed in 2009 on creating and conducting sales trainings, as well as identifying new in- struction tools. in 2010, Partnertech is launching its leader- ship concept and expanding its supply flow trainings.
EmploYEE SAtiSfACtion
Partnertech conducted an employee survey during the year.
the response rate was over 80%. Despite the restructuring that was carried out during the year, the responses revealed widespread satisfaction with Partnertech as an employer.
Particularly gratifying was a considerable improvement in the employee satisfaction index. Partnertech will conduct improvement activities at both the local and global level in 2010 to further boost employee satisfaction, and hopefully performance as well.
implEmEnting plAnS in 2010
the human resources effort is transitioning in 2010 from analysis and development to adoption and implementation of group-wide working methods, processes and tools. the human resources function, supervisors and employees will all benefit.
leadership development is one of the most important areas in this respect. one goal is to make sure that Partnertech has an effective process and efficient tools for performance reviews. another goal is to introduce a program that can identify and prepare highly capable employees for the challenges of the future.
human resources will also help supervisors analyze the company’s capabilities at the functional, unit and group level in order to define and carry out activities aimed at maximizing those capabilities. Partnertech academy trainings will be crucial to that effort.
26 eMPloYees anD valUes
e M PloYe es an D valU es 27
Key ratios 2007 2008 2009
average full-time employees 1,886 1,670 1,382 sales per employee (sek thousand) 1,402 1,514 1,554
average age 41 41 41
EmploYEE KEY rAtioS
brEAKdown bY gEndEr
Women 29%
(28%)
Men 71%
(72%)
EdUCAtionAl lEVEl
college 19%
(24%)
high school diploma and below 68%
(63%)
offiCE worKErS/EmploYEd UndEr A CollECtiVE AgrEEmEnt
office workers 31%
(32%) employed under a collective
agreement 69%
(68%)
totAl groUp EmploYEES
swedish units 42%
(40%) non-swedish units 58%
(60%)
AVErAgE pEriod of EmploYmEnt
1–5 years 32%
(32%)
longer than 5 years 59%
(57%) academic training,
3 years or longer 13%
(13%)
shorter than 1 year 9%
(11%)
SHArEd VAlUES
links to success has long provided Partnertech employees with shared values – six clear rules of conduct that stress the importance of personal commitment and articulate the ways that employees and the organization can jointly im- prove customer service:
sUccess breeDs sUccess
– promoting the success of our customers ensures that we will be successful as well
YoU can coUnt on Us
– we keep our promises and always deliver superior quality We are one teaM
– we have clear roles and help each other achieve common objectives
straiGht to the Point
– we communicate openly and modestly, showing respect and appreciation for each other
i’ll Do it
– we act in a way that is good for the company We are cost-Wise
– common sense dictates that we question unnecessary costs and look for more creative solutions
promoting oUr brAnd
links to success also serves a vital function in the group’s brand promotion effort. adopting and following our rules of conduct permits our employees to make Partnertech’s brand even more credible. that communicates expertise, a service orientation and a sense of togetherness for the purpose of supporting our assignments, creating value and achieving our targets. it also helps attract and retain the best employees.
HEAltH And SAfEtY
Partnertech pursues a systematic effort focused on ergo-
nomics and fitness activities aimed at promoting workplace
health and safety. the effort is governed by a separate
policy, as well as rules for systematic work environment
initiatives, and is to satisfy both psychological and social
criteria. among the objectives are suitable premises, fit-
ness allowances and the ability of employees to affect their
workstations so that their tasks are ergonomically sound.
28
29
share and shareholders
SHARE CAPITAL AND NUMBER OF SHARES
On December 31, 2009, PartnerTech AB’s share capital totaled SEK 63,324,920 allocated among 12,664,982 shares. Each share entitles the holder to one vote at the annual general meeting, and all shares provide equal rights to participation in the company’s assets and profit. PartnerTech is listed on the Nasdaq OMX Stockholm Exchange.
SHAREHOLDER STRUCTURE
On December 31, 2009, PartnerTech AB had 3,002 share- holders (2,824). The ten largest shareholders held 9,895 thousand (9,735) shares, representing 78.1% (76.8) of the total shares and votes. Institutions and other legal entities controlled 85.9% (88.1) of the capital and votes. Foreign shareholders accounted for 7.7% (13.8) of the capital and votes.
DIVIDEND POLICY
PartnerTech targets a dividend representing 30% of its profit after tax assuming that its financial position so permits. Since listing its share on the stock exchange in 1997, PartnerTech has paid annual dividends as shown in the adjacent table.
DIVIDEND FOR 2009
The Board proposes that the annual general meeting distribute no dividend for the 2009 fiscal year (SEK 0.00 per share for fiscal 2008). The proposal is based on the ongoing economic downturn, which reduced sales and earnings for the year and
makes the prospects for a rapid recovery uncertain. The group’s investment plans represent an additional factor.
OPTIONS
Pursuant to a decision of the April 25, 2007 annual general meeting, an option program for senior executives and other key employees of the group is currently running. The program includes warrants and employee stock options corresponding to subscription for 125,000 new shares. The redemption price is SEK 134.50 for the warrants and SEK 123.19 for the employee stock options. The program expires on May 31, 2010. Refer to Note 28 for more information.
DIVIDEND
Year Amounts in SEK million % of profit after tax
1997 1.9 16
1998 3.0 18
1999 5.7 12
2000 12.5 14
2001 0.0 0
2002 0.0 0
2003 0.0 0
2004 5.7 16
2005 15.8 30
2006 38.0 31
2007 0.0 0
2008 0.0 0
2009 0.0 0 (proposed)
Change in Par value/
Change in Total share capital Total share capital ratio
Type of transaction no. of shares shares (SEK) (SEK) (SEK)
1984 Company’s foundation 270,000 270,000 27,000,000 27,000,000 100
1997 Bonus issues – 270,000 10,800,000 37,800,000 100
1997 20:1 split 7,290,000 7,560,000 – 37,800,000 5
2000 Issue of new shares (subscription for options) 1,000 7,561 000 5,000 37,805,000 5
2001 Non-cash issue (acquisition of shares 647,414 8,208,414 3,237,070 41,042,070 5
in EQ Elektroniq AB)
2001 Non-cash issue (acquisition of shares 102,586 8,311,000 512,930 41,555,000 5
in Baltic Microwaves Sp. z o.o. and EQ Elektroniq AB)
2001 Issue of new shares (acquisition of shares 211,907 8,522,907 1,059,535 42,614,535 5
in Baltic Microwaves Sp. z o.o. and EQ Elektroniq AB)
2001 Non-cash issue 2,900,000 11,422,907 14,500,000 57,114,535 5
2005 Non-cash issue (acquisition of shares
in KSH-Productor Oy) 407,811 11,830,718 2,039,055 59,153,590 5
2005 Issue of new shares (subscription for options) 306,666 12,137,384 1,533,335 60,686,920 5
2006 Non-cash issue (acquisition of shares
in TH Kristiansen AS) 315,724 12,453,109 1,578,620 62,265,545 5
2006 Non-cash issue (acquisition of shares
in Hansatech Ltd Group) 211,875 12,664,982 1,059,375 63,324,920 5
CHANGES IN SHARE CAPITAL
The following changes have taken place in PartnerTech’s share capital since its foundation.
3 0 S HAR E AN D S HAR E H O LD E R S
PRICE PERFORMANCE AND TRADING VOLUMES OF THE PARTNERTECH SHARE
The price of the PartnerTech share rose by 68% in 2009. During the same period, the Nasdaq OMX Stockholm Exchange in- creased by 47%. The PartnerTech share closed at SEK 26.00 (15.50) on December 31, 2009. PartnerTech’s market capitali- zation on December 31, 2009 was SEK 329 million. The market capitalization was SEK 196 million on December 31, 2008 and SEK 408 million at the time of the 1997 listing. A total of 4.7 million (3.2) shares, or an average of 18,749 (12,774) per session, were traded in 2009. The share was traded during all possible 2009 sessions.
PARTNERTECH’S SHAREHOLDER STATISTICS 12-31-2009
No. of shares No. of % of No. of % of
shareholders shareholders shares shares
1 – 200 1,745 58.1 202,050 1.60
201 – 1 000 892 29.7 532,160 4.20
1,001 – 10,000 316 10.5 946,579 7.47
10,001 – 100,000 38 1.2 1,089,453 8.60
100,001 – 11 0.5 9,894,740 78.13
Total 3,002 100.0 12,664,982 100.0
Foreign shareholdings 115 3.8 980,566 7.7
% of shareholdings
by legal entities 253 8.4 10,880,964 85.9
2009 2008 2007 2006 2005
Thousands of shares at end of year 12,665 12,665 12,665 12,665 12,137
No. of shares after dilution 12,665 12,665 12,665 12,665 12,137
Earnings per share after full income tax., SEK -1.70 0.41 -1.96 9.79 4.49
Earnings per share after full income tax and dilution, SEK -1.70 0.41 -1.96 9.79 4.49
Dividend per share, SEK* 0.00 0.00 0.00 3.00 1.30
Equity per share. SEK 42.17 43.47 44.11 47.28 36.39
Equity per share after dilution,* SEK 42.17 43.47 44.11 47.28 36.39
Closing share price for the year, SEK 26.00 15.50 35.70 127.50 103.50
Market capitalization, SEK million 329 196 452 1 615 1 256
P/E multiple neg. 37.8 neg. 13.0 23.1
Dividend yield, % 0.0 0.0 0.0 2.4 1.3
Dividend rate, % 0.0 0.0 0.0 31.0 29.7
Share price/equity, % 62 36 81 270 284
* According to proposal of the Board of Directors
SHARE DATA
500 1 000 1 500 2 000
2005 2006 2007 2008 2009
15 20 40 60 80 100 120 140
Number of shares traded Thousands Share
SIX General Index
PartnerTech
© NASDAQ OMX
PARTNERTECH’S 10 LARGEST SHAREHOLDERS 12-31-2009
Shareholder Thousand shares %
Bure Equity* 5,443.0 43.0
AB Traction 1,719.2 13.6
Livförsäkringsaktiebolaget Skandia 759.5 6.0
Barclays Cap Sec Cayman Client 439.5 3.5
Försäkringsaktiebolaget, Avanza pension 438.2 3.5
Länsförsäkringar Fondförvaltning AB 349.1 2.8
Verdipapirfond Odin Sverige 275.2 2.2
Fjärde AP-fonden 188.4 1.5
Awake Swedish Equity Fund 166.8 1.3
Nordnet Pensionsförsäkring AB 115.9 0.9
Total 9,894.7 78.1
* Skanditek Industriförvaltning AB and Bure Equity AB merged on January 27, 2010.
S HAR E AN D S HAR E H O LD E R S 3 1