Interim report january 1-march 31, 2001

INTERIM REPORT JANUARY 1-MARCH 31, 2001 ·Net sales fell to SEK 519M (682). ·Operating income amounted to SEK -74M (22). Income after financial items was SEK -79M (16). ·Significantly reduced sales volumes within Allgon Systems and Allgon Mobile Communications. ·Implementation of cost reduction programs which will generate positive effects from the second quarter. ·Notice of redundancy served on approximately 220 employees at the units in Åkersberga and Arninge. ·Success for Allgon Systems' ACE (radio coverage solutions) in North and South America which generated several important orders. ·Jeff Bork, new President and Tomas Kihlstrand, new Chief Financial Officer will take up their duties during the second quarter. Market Expansion of the infrastructure of mobile telephone networks in North America has slowed down. The causes are related to the general slow-down in the economy and in the financing requirements for licenses and investments. In addition, the preferred technology is now GSM 1900 MHz standard, as opposed to TDMA systems which has led to delays in making decisions relating to orders for radio base station equipment. The markets in Asia, especially China, in which Allgon Systems mainly sells repeaters and antennas to network operators, showed signs of a significant slow down during the quarter. Global sales of mobile telephone antennas for 2001 are estimated to amount to 450 million units. At the start of the year, operators and resellers had surplus inventories of mobile telephones and the year's production can, therefore, be expected to be lower. During the quarter, virtually all manufacturers of mobile telephones announced downgraded forecasts. The market has so far adopted a wait-and-see attitude to products which are built for G3. Group net sales and orders received Net sales fell to SEK 519M (682). Orders received fell to SEK 564M (601). Allgon Systems Net sales fell to SEK 325M (381). Sales declined in North America and in Asia, especially in China. Increased sales were registered in Europe and South America. Sales of repeater networks increased significantly during the quarter compared with the same period in the previous year. The investment within ACE (Allgon Coverage Engineering) aimed at large radio coverage projects has proved successful. A number of interesting orders were received during the quarter. Sales of antenna systems were slightly below the previous year's level. For sales of radio base equipment, the quarter meant a decline compared with the previous year. The rapid changeover to the GSM 1900 MHz standard in North America is the cause of substantially reduced sales of combiners. Replacement products are under development and are expected to be ready for delivery towards the end of the year. A number of cost reducing measures have been implemented within Allgon Systems in connection with strongly declining volumes within some product segments. During the quarter, redundancy notices were served on approximately 120 staff. In addition, a review of the cost structure in the company has been implemented including the cancellation of consulting resources. Operating income fell to SEK -19M (32). Allgon Mobile Communications Net sales fell to SEK 153M (277). Build-up of inventories during December and significantly lower than anticipated Christmas sales meant that both telephone manufacturers and distribution channels had surplus inventories of telephones at the start of the year. A general slow-down in the economy also contributed to a significant downward revision of sales of mobile telephones. Most forecasts indicate a global sales volume of approximately 450 million telephones. This is a decrease compared with forecasts at the end of the previous year, which indicated 550 million. As a consequence of the downward revised forecasts a cost savings program was implemented in February. This included serving redundancy notices on approximately 100 employees at the unit in Åkersberga (Stockholm). The sales volume amounted to approximately 20 million terminal antennas, which meant a decrease from the fourth quarter in 2000 of around five million antennas. The share of built-in antennas amounted to about 33 (0) percent in the first quarter. Operating income fell to SEK -15M (27). Allgon Microwave Net sales amounted to SEK 22M (24). During the quarter, the market for microwave links adopted a wait-and-see attitude with postponed orders from several telecom operators. During the quarter, new distribution agreements were concluded in important markets, including Germany and the United Kingdom. Outside Europe, Allgon Microwave concentrates its marketing activities mainly on China, South Korea and Australia. During the quarter, several orders were received for the new 18 GHz link which was launched onto the market in May 2000. The further development of the unique Ethernet application is proceeding according to plan and Allgon Microwave consolidated its market-leading position in Scandinavia. To enable Allgon Microwave to exploit its potential more efficiently, discussions are underway relating to collaboration or possibly a partnership with other operators in the sector. Operating income fell to SEK -15M (-12). Wireless Solutions Net sales amounted to SEK 19M (-). During the quarter, a cost reduction program was implemented aimed at adapting the organization to the anticipated sales volume. This also includes the phasing out of a number of consultants. Serial production of Bluetooth products continues with a backlog of approximately SEK 60M. The first delivery of WLAN will be made during the spring. Wireless Solutions' products attracted considerable interest at the CEBIT fair in Hanover where the company's Bluetooth applications communicated with, among others, Ericsson's and Nokia's telephones. Efforts to find collaboration partners have been intensified. Operating income amounted to SEK -11M (-11). Consolidated results Operating income fell to SEK -74M (22). Significantly reduced sales volumes within Allgon Systems and Allgon Mobile Communications affected the results. Costs of a one-off nature attributable to agreed cuts to meet the changed volume situation were charged to income by SEK 19M. The losses in Allgon Microwave and Wireless Solutions, which are mainly attributable to development expenditure, were charged to the consolidated result by SEK 28M (25). A cost reduction program has been implemented in the Group to adapt the costs to the changed volume. Income after financial items fell to SEK -79M (16). Without hedging, the result would have been SEK 32M better. Financial position At March 31, 2001, the equity ratio amounted to 38 percent (December 31, 2000: 42 percent). Net borrowing amounted to SEK 391M at the period-end (December 31, 2000: SEK 370M). Capital expenditure During the period, capital expenditure in buildings and land, and machinery and equipment amounted to SEK 47M (94) gross. Changed dividend proposal Taking into account the result development of the Allgon Group for the first months of the year and the general uncertainty in the telecom market, the Board of Directors and the President have decided to propose to the Annual General Meeting that no dividend will be paid for 2000. Parent company Operations in the parent company, Allgon AB (publ) consist exclusively of Group co-ordination tasks and assets consist mainly of shares in subsidiaries. Accounting and valuation principles The same accounting principles and calculation methods have been applied as in the latest Annual Report. This Interim Report has not been the subject of special examination by Allgon's Auditors. New President and Chief Financial Officer Dr Jeff Bork has been appointed President and CEO of Allgon. He will take up his duties during the second quarter of 2001. Tomas Kihlstrand will take over as Chief Financial Officer on 7 May 2001. Future information dates May 16, 2001 Annual General Meeting July 13, 2001 Six-month Interim Report October 16, 2001 Nine-month Interim Report Täby, April 19, 2001 Allgon AB (publ) Lars Spongberg President and CEO For further information, please contact: Lars Spongberg Telephone: +44 8-540 822 31 President and CEO, Allgon AB Condensed Consolidated 2001 2000 1999 2000 Statement of Income (SEK Jan- Jan- Jan- Jan- M) Mar Mar Mar Dec Net sales 519 682 435 2,696 Cost of goods sold -375 -452 -261 - 1,814 Gross income 144 230 174 882 Selling expenses -67 -75 -55 -298 Administrative expenses -37 -36 -26 -167 Research and development -100 -91 -66 -376 costs Other operating -14 -6 -4 -14 income/expense Items affecting - - - 30 comparability Operating income -74 22 23 57 Net financial -5 -6 4 -30 income/expense Income after financial -79 16 27 27 items Taxes -4 -5 -8 -14 Minority interest of net -1 -1 -1 -3 income for the period Net income for the period -84 10 18 10 Earnings per share (SEK) -2.86 0.34 0.64 0.35 Numbers of shares at 29,26 29,18 28,80 29,26 period-end (000) 6 3 0 6 Average number of shares 29,26 29,08 28,80 29,19 (000) 6 8 0 2 Condensed Consolidated 2001 2000 1999 2000 Balance Sheet (SEK M) Mar Mar Mar Dec 31 31 31 31 Assets Fixed assets 596 558 247 570 Current assets 1,040 946 752 1,096 Total assets 1,636 1,504 999 1,666 Equity and liabilities Shareholders´ equity 616 678 573 693 Minority interests 5 3 4 4 Provisions 83 58 51 76 Long-term liabilities 221 208 11 214 Current liabilities 711 557 360 679 Total equity and 1,636 1,504 999 liabilities 1,666 2001 2000 1999 2000 Key figures Jan- Jan- Jan- Jan- Mar Mar Mar Dec Orders received (SEK M) 564 601 531 2,434 Operating margin (%) -14 3 5 2 Profit margin (%) -16 1 6 0 Return on operating -29 10 22 6 capital (%) Return on capital employed -20 13 23 10 (%) Return on equity (%) -51 6 13 1 Equity ratio (%) 38 45 58 42 Interest-bearing liability 448 335 18 440 (SEK M) Average number of full- 1,259 1,199 908 1,268 time employees Capital expenditures for: - buildings and land (SEK - 55 24 36 M) - machinery and equipment 47 39 28 166 (SEK M) Depreciation (SEK M) -28 -25 -18 -122 Equity per share (SEK) 21 23 20 24 Net sales distributed by 2001 2000 Chang Business e Area (SEK M) Jan- Jan- % Mar Mar Systems 325 381 -15 Mobile Communications 153 277 -45 Microwave 22 24 -8 Wireless Solutions 19 - Total 519 682 -24 Europe 142 169 -16 North & South America 298 388 -23 Rest of world 79 125 -37 Total 519 682 -24 QUARTERLY FIGURES Condensed Consolidated 2000 2000 2000 2000 2001 Statement of Income (SEK Jan- Apr- Jul- Oct- Jan- M) Mar Jun Sep Dec Mar Net sales 682 632 672 710 519 Cost of goods sold -452 -427 -469 -466 -375 Gross income 230 205 203 244 144 Selling expenses -75 -74 -66 -83 -67 Administrative expenses -36 -48 -38 -45 -37 Research and development -91 -91 -90 -104 -100 costs Other operating - 44 15 -29 -14 income/expense Items affecting -6 -3 -8 3 - comparability Operating income 22 33 16 14 -74 Net financial -6 -19 2 -7 -5 income/expense Income after financial 16 14 18 -21 -79 items Taxes -5 -5 -4 0 -4 Minority interest of net -1 -1 0 -1 -1 income for the quarter Quarterly income 10 8 14 -22 -84 Earnings per share (SEK) 0.34 0.29 0.45 -0.73 -2.86 Number of shares at period-29,18 29,18 29,26 29,26 29,26 end (000) 3 3 6 6 6 Average number of shares 29,08 29,18 29,24 29,26 29,26 (000) 8 3 5 6 6 Condensed Consolidated 2000 2000 2000 2000 2001 Balance Sheet (SEK M) Mar Jun Sep Dec Mar 31 30 30 31 31 Assets Fixed assets 558 553 598 570 596 Current assets 946 906 1,018 1,096 1,040 Total assets 1,504 1,459 1,616 1,666 1,636 Equity and liabilities Shareholders´ equity 678 687 712 693 616 Minority interests 3 4 3 4 5 Provisions 58 60 55 76 83 Long-term liabilities 208 207 216 214 221 Current liabilities 557 501 630 679 711 Total equity and 1,504 1,459 1,616 1,666 1,636 liabilities 2000 2000 2000 2000 2001 Key figures Jan- Apr- Jul- Oct- Jan- Mar Jun Sep Dec Mar Orders received (SEK M) 601 675 611 547 564 Operating margin (%) 3 5 2 -2 -14 Profit margin (%) 1 1 2 -3 -16 Return on operating 10 14 7 -5 -29 capital (%) Return on capital employed 13 17 14 -2 -20 (%) Return on equity (%) 6 5 8 -12 -51 Equity ratio (%) 45 47 44 42 38 Interest-bearing liability 335 291 359 440 448 (SEK M) Average number of full- 1,199 1,267 1,329 1,277 1,259 time employees Capital expenditures for: - buildings and land (SEK 55 11 0 -31 - M) - machinery and equipment 39 31 40 57 47 (SEK M) Depreciation (SEK M) -25 -25 -30 -42 -28 Equity per share (SEK) 23 24 24 24 21 2000 2000 2000 2000 2001 Net sales distributed by Jan- Apr- Jul- Oct- Jan- Mar Jun Sep Dec Mar Business Area (SEK M) Systems 381 384 462 476 325 Mobile Communications 277 224 173 196 153 Microwave 24 22 34 32 22 Wireless Solutions - -2 3 6 19 Total 682 632 672 710 519 Europe 169 151 149 157 142 North & South America 388 363 406 390 298 Rest of world 125 118 117 163 79 Total 682 632 672 710 519 Operating income 2000 2000 2000 2000 2001 distributed by Business Area (SEK M) Jan- Apr- Jul- Oct- Jan- Mar Jun Sep Dec Mar Systems 32 35 75 56 -19 Mobile Communications 27 31 *) -29 16 -15 Microwave -12 -12 -9 -12 -15 Wireless Solutions -11 -17 -22 -26 -11 Total 36 37 15 34 -60 Common Group costs -11 0 4 **) -45 -10 ***) Goodwill amortization -3 -4 -3 -3 -4 Operating income 22 33 16 -14 -74 *) Includes capital gain on divestment of the vehicle antenna operation of SEK 28 M **) Includes surplus funds from SPP of SEK 30 M ***) Includes costs attributable to the offer situation of SEK -28 M 2001 2000 Cash flow analysis (SEK M) Jan- Jan- Mar Mar Cash flow from current -42 43 operations Change in working capital 61 -40 Capital expenditure -40 -94 Cash flow after -21 -91 investments Financing 8 92 Change in liquid funds -13 1 2001 2000 Change in equity (SEK M) Jan- Jan- Mar Mar Opening balance as per 693 694 December 31 Change in translation 7 -1 difference Dividend - -25 Net income for the quarter -84 10 Closing balance according to balance sheet as per March 31 616 678 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/19/20010419BIT00800/bit0002.doc http://www.bit.se/bitonline/2001/04/19/20010419BIT00800/bit0002.pdf