Interim Report January 1- June 30, 2000

INTERIM REPORT JANUARY 1 - JUNE 30 2000 * Net sales rose by 36 percent to SEK 1,314 million (963). * Order intake increased by 21 percent to SEK 1,276 million (1,051). * Operating income improved by 23 percent to SEK 55 million (45). Income after financial items fell by 39 percent to SEK 30 million (50). One-off effects totaling SEK 35 million relating to the sale of the vehicle antenna operation and surplus pension funds from SPP affected income positively. * Investments in Allgon Microwave and Wireless Solutions affected operating income by SEK -55 million (-26). Market Expansion of the infrastructure of the mobile telephone networks in North America remained strong. Several American operators have merged, alternatively acquired other operators with the objective of achieving a nationwide system. In Brazil the European standard 1800 MHz has now been adopted which will lead to increased investments in infrastructure. Subscriber growth remains strong in Europe. In several countries the distribution between prepaid cash cards and ordinary subscriptions shows that the number of new subscribers with prepaid cash cards exceeds the number with fixed period subscriptions. A recovery in South-East Asia can be noted in the form of increased subscriber growth and capacity expansion. The subscriber trend in China remains strong. In Japan expansion and investments are underway in the the third generation's mobile telephone networks. Allgon estimates that global sales of mobile telephones will exceed 400 million during the year 2000. Second quarter 2000 Allgon's net sales for the second quarter rose by 20 percent to SEK 632 million (528). Operating income increased by 50 percent to SEK 33 million (22). Profit after financial income fell by 35 percent to SEK 14 million (23). The investments in Allgon Microwave and Wireless Solutions affected income negatively by SEK -29 million (-13). As previously announced, the vehicle antenna operation was divested during the second quarter which brought about a positive one-off effect of SEK 20 million. In addition, SEK 15 million is included in income which represents surplus pension funds from SPP (Swedish Staff Pension) insurance company. Group net sales and order intake Net sales rose by 36 percent to SEK 1,314 million (963). Order intake increased by 21 percent to SEK 1,276 million (1,051). Allgon Systems Net sales rose by 52 percent to SEK 765 million (503). The increase was especially significant in North and South America. Sales of repeater networks fell slightly in Asia and Europe. Allgon Systems received a supplementary order from the Chilean operator, Entel, regarding repeater networks for 15 subway stations in Santiago, Chile. Sales of radio equipment and antenna systems developed very positively, especially in North America. During the second quarter, production of base station antennas started in Wuxi, China. Allgon Microwave Net sales amounted to SEK 46 million (0). During the second quarter, delivery agreements were concluded with new customers in Europe and agreements were made regarding test installations in Australia and China. The functionality of the microwave with Ethernet protocol is very competitive. Allgon Mobile Communications Net sales rose by 9 percent to SEK 501 million (460). Sales of terminal antennas were weaker than expected as Allgon's market developed more rapidly towards fixed and built-in antennas at the expense of retractable antennas. This brought about overcapacity in production and had an unfavorable effect on the income of Allgon Mobile Communications. Allgon's distribution between retractable, fixed and built-in antennas was 36/63/1 (40/60/0) percent. Allgon is working with several projects for built-in antennas for a number of mobile phone manufacturers. Nokia is among Allgon's customers for these components. Allgon estimates that built-in antennas will be delivered in volumes during the fourth quarter 2000. During the second quarter a new concept, Allgon Tulip, was launched for fixed mobile telephone antennas, optimized for mass production and a high level of flexibility. Allgon has launched its new concept for the next generation's antenna system, DCA, (Digital Controlled Antenna) which gives superior transmission quality and improves the performance for mobile Internet. A sales office was opened in Korea. Sales of antennas for satellite telephones amounted to SEK 32 million (7). Wireless Solutions Investments within Wireless Solutions continue. Operations are mainly concentrated on Bluetooth products, wireless networks (Wireless LAN) and Homewave, a wireless communication concept for use at home. During the quarter, Wireless Solutions became a member of the American Wireless Ethernet Compatibility Alliance (WECA). Income Allgon's gross margin fell, mainly because of overcapacity in Allgon Mobile Communication's operations. Allgon's operating income rose by 23 percent to SEK 55 million (45). Operating income is charged with the growth investments, Wireless Solutions and Allgon Microwave with SEK -55 million (-26). Income also includes SEK 15 million (0) which refers to the portion of the surplus pension funds of SEK 33 million that SPP in 1999 stated to be attributable to Allgon. This amount has been reported under other operating income/expenses. Income after financial items, which amounts to SEK 30 million (50), includes a positive one-off effect of approximately SEK 20 million from the divestment of the vehicle antenna operation. Income after financial items would have been SEK 19 million higher if Allgon had not had any hedging. An action program has been initiated to improve profitability. The program comprises intensified activities aimed at reducing production costs as well as a savings program for expenses. Investments in research and development continue vigorously in prioritized concepts and customer projects. Financial position At June 30, 2000, the equity ratio amounted to 47 percent (50 percent at December 31, 1999). Net borrowing amounted to SEK 247 million at the period-end (SEK 162 million at December 31, 1999). Capital expenditure During the period, capital expenditure in buildings and land, machinery and equipment amounted to SEK 136 million (127) gross, of which the new construction for Allgon Systems accounted for SEK 64 million (63). Acquisition of RF Integration Sweden AB At the beginning of July, Allgon acquired the consulting company, RF Integration Sweden AB, which operates in the segment for development of radio ASIC for wireless applications of voice and data transfer. The company possesses cutting edge expertise and will be included in Business Area Wireless Solutions after the acquisition. The purchase price amounted to SEK 9 million and will be paid via a new issue of 82,569 B shares. Goodwill amounts to approximately SEK 8 million and will be amortized over 10 years. The effect of the acquisition on Allgon's net income in the year 2000 is negligible. Under certain circumstances a supplementary purchase price will be paid until the period 2003 inclusive. This supplementary purchase price could be paid via a new issue of Allgon shares or via cash payment and is of the same size as the original purchase price. Future information dates October 17, 2000 Nine-Month Interim Report January 18, 2001 Year-end Report March 15, 2001 Annual General Meeting April 19, 2001 Three-Month Interim Report Täby, July 13, 2000 Allgon AB (publ) Jan Edhäll President and CEO For further information, please contact: Jan Edhäll Telephone: +46 8 540 822 31 President and CEO, Allgon AB Claes Silfverstolpe Telephone: +46 8 540 822 32 Chief Financial Officer, Allgon AB Condensed Consolidated 2000 1999 1998 1999 Statement of Income (SEK Jan-Jun Jan-Jun Jan-Jun Jan-Dec million) Net sales 1,314 963 847 2,136 Cost of goods sold -879 -590 -526 -1,340 Gross income 435 373 321 796 Selling expenses -149 -118 -94 -244 Administrative expenses -84 -56 -49 -123 Research and development -182 -145 -106 -297 costs Other operating 35 -9 -13 -8 income/expenses Operating income 55 45 59 124 Net financial -25 5 -4 3 income/expenses Income after financial 30 50 55 127 items Taxes -10 -14 -11 -44 Minority interests of net -2 -1 -1 -2 income for the period Net income for the period 18 35 43 81 Condensed Consolidated 2000 1999 1998 1999 Balance Sheet (SEK million) Jun 30 Jun 30 Jun 30 Dec 31 Assets Fixed assets 553 302 157 492 Current assets 906 761 689 889 Total assets 1,459 1,063 846 1,381 Equity and liabilities Shareholders´ equity 687 591 515 694 Minority interests 4 4 4 3 Provisions 60 53 34 63 Long-term liabilities 207 11 4 92 Current liabilities 501 404 289 529 Total equity and 1,459 1,063 846 1,381 liabilities 2000 1999 1998 1999 Key figures Jan-Jun Jan-Jun Jan-Jun Jan-Dec Orders received (SEK 1,276 1,051 874 2,266 million) Operating margin (%) 4 5 7 6 Profit margin (%) 2 5 7 6 Return on operating capital 12 20 35 20 (%) Return on capital employed 16 21 28 21 (%) Return on shareholders´ 5 12 17 13 equity (%) Equity ratio (%) 47 56 61 50 Interest-bearing liability 291 18 9 219 (SEK million) Average number of full-time 1,233 968 810 1,053 employees Capital expenditures for: - buildings and land (SEK 66 65 3 151 million) - machinery and equipment 70 62 52 130 (SEK million) Numbers of shares at 29,183 28,800 28,800 28,800 period-end (thousands) Earnings per share (SEK) 0.63 1.20 1.50 2.80 Equity per share (SEK) 24 21 18 24 Net sales (SEK million) 2000 1999 Change Jan-Jun Jan-June % Systems 765 503 52 Mobile Communications 501 460 9 Microwave 46 - - Wireless Solutions 2 - - Total 1,314 963 36 Europe 320 228 40 North & South America 751 405 85 Rest of world 243 330 -26 Total 1,314 963 36 QUARTERLY FIGURES Condensed Consolidated Statement of Income (SEK 1999 1999 1999 1999200 200 million) 0 0 Jan-Mar Apr-Jun Jul-Sep Oct-DecJan Apr - - Mar Jun Net sales 435 528 545 628682 632 Cost of goods sold -261 -329 -346 -404- - 452 427 Gross income 174 199 199 224230 205 Selling expenses -55 -63 -59 -67-75 -74 Administrative expenses -26 -30 -30 -37-36 -48 Research and development -66 -79 -72 -80-91 -91 costs Other operating -4 -5 9 -8-6 41 income/expenses Operating income 23 22 47 3222 33 Net financial 4 1 -7 5-6 -19 income/expenses Income after financial 27 23 40 3716 14 items Taxes -8 -6 -13 -17-5 -5 Minority interests of net -1 0 0 -1-1 -1 income for the quarter Net income for the quarter 18 17 27 1910 8 Condensed Consolidated Balance Sheet (SEK million) 1999 1999 1999 1999200 200 0 0 Assets Mar 31 Jun 30 Sep 30 Dec 31Mar Jun 31 30 Fixed assets 247 302 346 492558 553 Current assets 752 761 760 889946 906 Total assets 999 1,063 1,106 1,3811,5 1,4 04 59 Equity and liabilities Shareholders´ equity 573 591 613 694678 687 Minority interests 4 4 5 33 4 Provisions 51 53 47 6358 60 Long-term liabilities 11 11 11 92208 207 Current liabilities 360 404 430 529557 501 Total equity and 999 1,063 1,106 1,3811,5 1,4 liabilities 04 59 Key figures 1999 1999 1999 1999 2000 2000 Jan- Apr- Jul- Oct-Jan-MarApr-Jun Mar Jun Sep Dec Orders received (SEK 531 520 710 505 601 675 million) Operating margin (%) 5 4 9 5 3 5 Profit margin (%) 6 4 7 6 2 2 Return on operating capital 22 18 33 17 10 14 (%) Return on capital employed 23 19 33 22 13 17 (%) Return on shareholders´ 13 11 18 11 6 5 equity (%) Equity ratio (%) 58 56 56 50 45 47 Interest-bearing liability 18 18 18 219 335 291 (SEK million) Average number of full-time 908 1,028 1,121 1,155 1,199 1,267 employees Capital expenditures for: - buildings and land (SEK 24 41 35 51 55 11 million) - machinery and equipment 28 34 34 34 39 31 (SEK million) Number of shares at period-28,80 28,80 28,80 28,80 29,183 29,183 end (thousands) 0 0 0 0 Earnings per share (SEK) 0.64 0.57 0.96 0.64 0.34 0.29 Equity per share (SEK) 20 21 21 24 23 24 Net sales (SEK million) 1999 1999 1999 1999 2000 2000 Jan- Apr- Jul- Oct-Jan-MarApr-Jun Mar Jun Sep Dec Systems 220 283 288 355 381 384 Mobile Communications 215 245 257 273 277 224 Microwave - - - - 24 22 Wireless Solutions - - - - - 2 Total 435 528 545 628 682 632 Europe 113 115 113 162 169 151 North & South America 157 248 281 305 388 363 Rest of world 165 165 151 161 125 118 Total 435 528 545 628 682 632 2000 1999 Cash flow analysis (SEK Jan- Jan- million) Jun Jun Cash flow from current 84 74 operations Change in working capital -21 -41 Capital expenditure -124 -127 Cash flow after investments -61 -94 Financing 49 -22 Change in liquid funds -12 -116 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/07/13/20000713BIT00420/bit0001.doc http://www.bit.se/bitonline/2000/07/13/20000713BIT00420/bit0002.pdf