Interim report January-March 2000

INTERIM REPORT JANUARY-MARCH 2000 * Profit after financial items increased 116%, to SEK 18.8 million (8.7) * Sharply higher orders received: Net sales for the period increased 33%, to SEK 250.4 million (188.3) * Earnings per share after full tax increased to SEK 1.73 (0.82) * Manufacturer of prototypes in telecommunications acquired Market trends In Partner Tech's segment of the market for contract manufacturing, demand has grown substantially in the past few years, a trend that is expected to persist. The greatest improvement has been in telecommunications and information technology. Previously, demand was primarily for modules or pure volume production. Now there is a growing need for suppliers with development expertise that can also assume total responsibility for products and processes. To satisfy these new requirements, suppliers must invest in product development and technological resources. PartnerTech's business concept is to offer complete solutions that integrate product development and production. As part of that approach, the Company has developed a "Design & Engineering Centers" concept, with facilities in Järfälla and Åtvidaberg. In this way, PartnerTech brings together resources for developing products and production processes to give customers the best overall expertise and service. This innovative thinking, combined with the Company's high standards for product development and manufacturing, positions it well to satisfy the needs of its customers. Net sales, earnings and profitability The demand for PartnerTech's services remained positive during the quarter. Substantial increases came late in the first quarter and early in the second quarter of 2000. In the first quarter, net sales increased 33%, to SEK 250.4 million (188.3). For comparable units the increase was 11%. Most of the growth was in the telecommunications and information technology areas. The first quarter is normally the weakest. In the first quarter, operating profit rose 116%, to SEK 20.5 million (9.5), generating an operating margin of 8.2% (5.1). Profit after financial items for the same period was SEK 18.8 million (8.7), an increase of 116% from the same period last year. Quarterly performance SEK million Q1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 1 -98 -98 -98 -98 -99 -99 -99 -99 -00 Net sales 120,7 136,7 122,8 205,5 188,3 209,9 171,2 238,1 250,4 * Oper. profit 2,9 9,1 6,3 14,7 9,5 21,1 17,8 17,3 20,5 * Oper. margin 2,4% 6,7% 5,1% 7,1% 5,1% 10,1% 10,4% 7,3% 8,2% * Excluding "Items affecting comparability" (SEK -4.1 million, Q4 1998) Financial position and liquidity At the end of the quarter, the Group's working capital was SEK 148.4 million (89.4). The increase was primarily attributable to completed acquisitions as well as sharply higher capacity utilization and inventory build-up for deliveries early in the second quarter. Net investments during the period totaled SEK 4.7 million (2.2). The cash flow after investments of SEK -32.9 million for the period was primarily attributable to substantially higher capacity utilization, which led to an increase in inventories and accounts receivable. The Group's net borrowing, that is interest-bearing liabilities less cash and equivalents, amounted to SEK 144.9 million (44.3) at the end of the period. Unutilized credits granted were SEK 33.4 million (30.1) at that date. The equity/assets ratio at March 31, 2000 was 28.8% (30.3). Personnel PartnerTech's expansion is reflected in its growing staff. The number of full-time employees averaged 768 (571) during the first quarter of 2000. There were 787 (559) full-time employees at the end of the period. Key events At March 8, PartnerTech signed a collaboration agreement with Sigma, an IT consulting company. Sigma's cutting-edge expertise and complementary resources will further strengthen PartnerTech in the area of product development. The collaboration is aimed at reducing the time from concept to launch for customers' new products and services, primarily in the areas of telecommunications and medical technology. At March 23, Partner Tech acquired 100% in Temo Finmekaniska Verkstad AB, a manufacturer of prototypes and short production runs using high-speed processing that is active in the telecommunications industry. The company, which has annual sales of approximately SEK 60 million, will strengthen PartnerTech, chiefly in prototype manufacture and as a product development partner for customers. As agreed upon in March, PartnerTech began to deliver "C pens" to C- Technology's U.S. customers in April. PartnerTech will assemble the products and take charge of distribution and logistics. The products will be shipped from PartnerTech's new plant in Atlanta, Georgia. Financial Reports The six-month report will be released on Thursday, August 10, and the interim report for the third quarter on Wednesday, October 25. PartnerTech AB April 26, 2000 Mikael Jonson President For additional information, please contact Mikael Jonson, President, by phone +46 70 678 10 01, or Jonas Arkestad, Chief Financial Officer, phone +46 40 10 26 42. The Company's auditors have not examined this interim report. 2000 1999 1999 CONSOLIDATED INCOME STATEMENT Jan- Jan- Jan- (SEK million) Mar Mar Dec Net sales 250.4 188.3 807.4 Cost of goods and services sold - - - 220.7 174.4 715.5 Gross profit 29.7 13.9 91.9 Selling expenses -6.4 -2.7 -13.0 Administrative expenses -2.9 -1.7 -13.3 Items affecting comparability Other operating income 0.7 0.3 1.5 Other operating expenses -0.6 -0.3 -1.5 Operating profit 20.5 9.5 65.7 Net financial items -1.7 -0.8 -3.1 Profit after financial items 18.8 8.7 62.5 Tax on profit for the period -5.7 -2.4 -17.1 NET PROFIT FOR THE PERIOD 13.0 6.2 45.5 2000 1999 1999 CONSOLIDATED BALANCE SHEET 31 31 31 (SEK million) mars mars dec ASSETS Fixed assets 158.7 54.5 159.6 Current assets - Inventories 188.1 116.8 148.5 - Accounts receivable 147.3 115.2 131.4 - Other current assets 4.8 2.0 5.1 - Cash and equivalents 1.6 18.1 0.6 Total current assets 341.8 252.0 285.5 TOTAL ASSETS 500.4 306.5 445.2 SHAREHOLDERS' EQUITY AND LIABILITIES Shareholders' equity 144.2 92.9 131.2 Long-term interest-bearing 144.3 62.4 101.2 liabilities Current interest-bearing 2.2 11.4 liabilities Total interest-bearing 146.5 62.4 112.6 liabilities Long-term non-interest-bearing 17.9 6.6 17.9 liabilities (provisions) Accounts payable 111.5 83.7 97.5 Other current non-interest- 80.3 60.9 86.0 bearing liabilities Total non-interest-bearing 209.7 151.2 201.4 liabilities TOTAL SHAREHOLDERS' EQUITY & 500.4 306.5 445.2 LIABILITIES CONSOLIDATED STATEMENT OF 2000 1999 1999 CHANGES IN FINANCIAL POSITION (SEK Jan- Jan- Jan- million) Mar Mar Dec Net profit 13.0 6.2 45.5 Reversal of 5.4 2.4 12.4 depreciation/amortization Capital gain/loss 0.3 0.0 Change in deferred tax 11.3 liability Change in working capital -46.9 13.7 1.6 Net investments -4.7 -2.2 -117.4 Cash flow after -32.9 20.1 -46.5 investments Change in loans 32.3 -2.4 26.1 Change in lease debt 1.6 21.7 Dividends -3.0 Issue of subscription - 2.0 rights, net CHANGE IN LIQUID FUNDS 1.0 17.7 0.3 2000 1999 1999 KEY RATIOS Jan- Jan- Jan- Mar Mar Dec Gross margin, % 11.9% 7.4% 11.4% Operating margin, % 8.2% 5.0% 8.1% Profit margin, % 7.5% 4.6% 7.7% Return on operating 30.8% 26.1% 41.7% capital (ROOC), %* Return on shareholders' 37.9% 27.8% 42.6% equity, %* Equity/assets ratio, % 28.8% 30.3% 29.5% * The profitability ratios are calculated based on the average of quarterly balances. 2000 1999 1999 PER SHARE DATA Jan- Jan- Jan- Mar Mar Dec No. of shares at end 7 560 7 560 7 560 of period, '000 Profit after full 1.73 0.82 6.01 income tax, SEK Adjusted equity, SEK 19.08 12.29 17.35 Employee stock options issued in 1999 will increase the number of shares on issue no more than 288,800, or 3.8%. Business Concept PartnerTech develops and manufactures electronic products under contract for leading growth companies, primarily in telecommunications, IT and medical technology. As a systems supplier, PartnerTech grows and develops with its customers by maintaining flexibility, broad geographic coverage, and superior service. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/26/20000426BIT01200/bit0001.doc http://www.bit.se/bitonline/2000/04/26/20000426BIT01200/bit0002.pdf