Interim Report January-March 1999

INTERIM REPORT JANUARY - MARCH 1999 * Orders received increased by 23 percent to SEK 531M (433). * Net sales rose by 6 percent to SEK 435M (412). * Income after financial items increased to SEK 27M (25). Operating income fell by 24 percent to SEK 23M (30). * Maintained market share and continued positive growth for terminal antennas. * Orders for SEK 25M referring to terminal antennas for satellite telephones. Market During the first few months of the year, several players on the market have adjusted their forecasts upward for mobile telephone sales in 1999. Allgon now estimates that the number of telephones sold during 1999 will amount to at least 240 million, an increase of 50 percent compared with 1998. During the past six months, subscriber growth in the USA has also proved stronger than previously assumed. It is now expected to exceed 30 percent for 1999. With regard to network expansion, increased activity has now been noticed in the USA. The activities which are being implemented to simplify tariff structures and improve the opportunities for enabling subscribers to use their telephones for calls over larger areas have contributed to this. Group net sales and orders received Net sales rose by 6 percent to SEK 435M (412). Orders received increased by 23 percent to SEK 531M (433). Business Area Systems Net sales fell by 1 percent to SEK 220M (222). Invoicing increased to customers in Europe, remained unchanged to customers in Asia and fell to customers in North America, mainly due to a weak beginning of the year. During the latter part of the quarter, some increase in sales was noted compared with the corresponding period in 1998. Sales of base station equipment developed weakly during the beginning of the quarter. Within the area of tower top amplifiers, Allgon was approved sole supplier to the German mobile telephone operator, E-plus. This contract runs for two years and is estimated to involve deliveries for SEK 15-20M during 1999 Sales of repeater systems developed very positively and increased compared with 1998, mainly in Asia and Europe. Sales of base station antennas were relatively stable with increased demand in North and South America. The new modular antenna family, which was launched during the quarter, was positively received. The launch of the new radio link products was made in March 1999. The project remains resource-intensive and was charged to income by SEK 8M more than during the first quarter 1998. Invoicing will start at the end of the year. Business Area Mobile Communications Net sales rose by 13 percent to SEK 215M (190). With regard to terminal antennas, Allgon is successfully maintaining its positions on a market which continues to develop with undiminished vigor. Volume growth compared to the first quarter of 1998 was stronger than growth in invoicing, which is connected with the continued price squeeze and changed product mix. Price levels have been relative stable compared to the previous quarter. The proportion of fixed antennas was at about the same level as in the previous quarter, approximately 60 percent. Sales of vehicle antennas developed positively and increased compared with the previous year. During the quarter, a combination antenna for systems for the surveillance of vehicle fleets was launched. The antenna consists of a dual band function for mobile telephony as well as an antenna function for GPS with built-in amplification. Allgon has successfully penetrated the emerging market for antennas for satellite telephones. This led to an additional order for SEK 25M. Delivery will be made during 1999. Income Allgon's income after financial items increased by 6 percent to SEK 27M (25). Operating income fell by 24 percent to SEK 23M (30). Allgon's net exposure to the USD amounts to approximately 40 percent of net sales. The exchange rate affected 1999 quarter's income positively by SEK 4M compared with 1998. Income after financial items would have been SEK 8M higher if Allgon had not had any hedging. The Group's forward exchange contracts covering deliveries which have not yet been made in the USA, i.e. contracts which have not yet been taken to income, amounted to USD 13M at the period-end, at an average rate of SEK 8.11 per USD. At the period-end, signed contracts were equivalent to 100 percent of anticipated payment flows for the next four months. Financial position At March 31, 1999, the equity ratio was 58 percent (62 percent at December 31, 1998). Net liquid assets amounted to SEK 124M at the period-end (SEK 199M at December 31, 1998). Capital expenditure During the period capital expenditure in buildings, land, machinery and equipment amounted to SEK 52M (27) gross, of which the ongoing construction for Allgon System accounted for SEK 22M. Upcoming information dates July 13,1999 Six-Month Interim Report October 31, 1999 Nine-Month Interim Report Åkersberga, April 15, 1999 Allgon AB (publ) Jan Edhäll President and CEO For further information please contact: Jan Edhäll +46 8 540 8 22 31 President, Allgon AB Claes Silfverstolpe +46 8 540 8 22 32 Chief Financial Officer, Allgon AB Allgon's business concept is to develop, manufacture and market radio-based solutions and other products for wireless telephony and data communications. Allgon's product range comprises systems and components for base stations, repeaters and transmission, as well as antenna solutions. Allgon's invoiced sales amounted to SEK 1,725 million in 1998, with 901 employees as of year- end. Allgon was founded in 1946 Condensed Consolidated 1999 1998 1997 1998 Statement of Income (SEK Jan- Jan-Jan-Mar Jan- million) Mar Mar Dec Net sales 435 412 385 1725 Cost of goods sold -261 -259 -243 -1048 Gross income 174 153 142 677 Selling expenses -55 -42 -39 -186 Administrative expenses -26 -28 -19 -105 Research and development -66 -50 -39 -224 costs Other operating -4 -3 -19 -18 income/expenses Operating income 23 30 26 144 Net financial income/expense 4 -5 2 -3 Income after financial items 27 25 28 141 Taxes -8 -3 -7 -31 Minority interest of net -1 -1 0 -3 income for the year Net income for the year 18 21 21 107 Condensed Consolidated 1999 1998 1997 1998 Balance Sheet (SEK million) Mar 31 Mar 31 Mar 31 Dec 31 Assets Fixed assets 247 147 107 213 Current assets 752 683 583 731 Total assets 999 830 690 944 Shareholders´ equity and liabilities Shareholders´ equity 573 512 416 579 Minority interests 4 3 1 3 Provisions 51 34 31 60 Long-term liabilities 11 4 - 11 Current liabilities 360 277 242 291 Total liabilities and 999 830 690 944 shareholders´ equity 1999 1998 1997 1998 Key figures Jan- Jan-Jan-Mar Jan- Mar Mar Dec Orders received (SEK 531 433 421 1764 million) Operating margin (%) 5 7 7 8 Profit margin (%) 6 6 7 8 Return on operating capital 22 36 32 42 (%) Return on shareholders´ 13 17 21 20 equity (%) Equity ratio (%) 58 62 60 62 Interest-bearing net 18 9 10 19 liability (SEK million) Average number of full-time 908 801 706 865 employees Capital expenditures for: (SEK million) - buildings and land 24 - - 54 - machinery and equipment 28 27 16 96 Number of shares at period- 28 800 28 800 14 400 28 800 end (thousands) Earnings per share (SEK)* 0,64 0,73 0,73 3,70 Equity per share (SEK)* 20 18 14 20 *Adjusted for new share issue Net sales (SEK million) 1999 1998 Change Jan- Jan- % Mar Mar System 220 222 -1 Mobile Communications 215 190 13 Total 435 412 6 Europe 113 116 -3 North & South America 157 177 -11 Rest of world 165 119 39 Total 435 412 6 QUARTERLY FIGURES Condensed Consolidated 1998 1998 1998 1998 1999 Statement of Income (SEK Jan- Apr-Jul-Sep Oct- Jan- million) Mar Jun Dec Mar Net sales 412 435 447 431 435 Cost of goods sold -259 -267 -278 -244 -261 Gross income 153 168 169 187 174 Selling expenses -42 -52 -41 -51 -55 Administrative expenses -28 -21 -22 -34 -26 Research and development -50 -56 -53 -65 -66 costs Other operating -3 -10 -5 0 -4 income/expenses Operating income 30 29 48 37 23 Net financial -5 1 -2 3 4 income/expenses Income after financial items 25 30 46 40 27 Taxes -3 -8 -11 -9 -8 Minority share of net income -1 0 -1 -1 -1 Quarterly income 21 22 34 30 18 Condensed Consolidated 1998 1998 1998 1998 1999 Balance Sheet (SEK million) Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Assets Fixed assets 147 157 198 213 247 Current assets 683 689 695 731 752 Total assets 830 846 893 944 999 Shareholders´ equity and liabilities Shareholders´ equity 512 515 547 579 573 Minority interests 3 4 4 3 4 Provisions 34 34 34 60 51 Long-term liabilities 4 4 4 11 11 Current liabilities 277 289 304 291 360 Total liabilities and 830 846 893 944 999 shareholders´ equity 1998 1998 1998 1998 1999 Key figures Jan- Apr-Jul-Sep Oct- Jan- Mar Jun Dec Mar Orders received (SEK 433 441 428 462 531 million) Operating margin (%) 7 7 11 8 5 Profit margin (%) 6 7 10 9 6 Return on operating capital 36 33 52 39 22 (%) Return on shareholders´ 17 17 26 21 13 equity (%) Equity ratio (%) 62 61 62 62 58 Interest-bearing net 9 9 9 19 18 liability (SEK million) Average number of full-time 801 819 969 871 908 employees Capital expenditures for: (SEK million) - buildings and land - 3 43 8 24 - machinery and equipment 27 25 22 22 28 Numbers of shares at period- 28 800 28 800 28 800 28 800 28 800 end (thousands) Earnings per share (SEK)* 0,73 0,77 1,18 1,03 0,64 Equity per share (SEK) * 18 18 19 20 20 *Adjusted for new share issue 1998 1998 1998 1998 1999 Net sales (SEK million) Jan- Apr-Jul-Sep Oct- Jan- Mar Jun Dec Mar System 222 226 255 235 220 Mobile Communications 190 209 192 196 215 Total 412 435 447 431 435 Europe 116 144 100 119 113 North & South America 177 177 235 180 157 Rest of world 119 114 112 132 165 Total 412 435 447 431 435 1999 1998 Cash flow analysis (SEK Jan- Jan- million) Mar Mar Cash flow from current 37 47 operations Change in working capital -37 -39 Capital expenditure -52 -27 Cash flow after investments -52 -19 Financing -23 0 Change in liquid funds -75 -19 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/04/15/19990415BIT00200/bit0001.doc http://www.bit.se/bitonline/1999/04/15/19990415BIT00200/bit0002.pdf