Update on the offer from REMEC and current trading

Update on the offer from REMEC and current trading The Board of Allgon notes the announcement by REMEC on 7 December 2000 extending the tender offer period to 12 January 2001. In view of this extension and the recent volatility in REMEC's and, hence, Allgon's share prices, the Board of Allgon is issuing this update to shareholders. The Board is also providing an update on Allgon's current trading and a revised forecast for the year to 31 December 2000. REMECs offer The period since the offer by REMEC to acquire Allgon was announced on 28 September, 2000 has seen significant volatility in the level of the NASDAQ, on which REMEC's shares are listed, and, more particularly, in the value of REMEC's shares. At close of business on Tuesday 12 December 2000, REMEC's share price stood at US$12.25, 60 per cent below the level on the announcement of the offer. As a result, the share-for-share offer currently values Allgon at SEK74 per share, as opposed to the original offer level of SEK161 per share. All shareholders on the register at 6 October 2000 have the right, under the terms of the REMEC offer, to sell up to 500 shares for SEK161 in cash. The Board of Allgon remains convinced of the commercial logic of a combination between Allgon and REMEC. The transaction would create a world class wireless infrastructure company and produce substantial synergies, estimated by REMEC's management to be at least US$20 million per annum. However, the recent sharp fall in REMEC's share price has significantly reduced the value of its offer. The extension of REMEC's tender offer timetable to 12 January 2001, whilst prolonging the uncertainty over Allgon's future, provides an opportunity for the Board and for shareholders to review the attractiveness of REMEC's offer in the New Year. The Board will provide a further update to shareholders in early January. The Board believes that Allgon has a strong future, whether as part of an enlarged REMEC or as an independent business. The trading update, set out below, highlights the continued outperformance of the Allgon Systems division, together with encouraging signs of the turnaround at Allgon Mobile Communications. Together, these underpin the Board's confidence in the ability of the company to deliver value to its shareholders. Current trading On 14 September, Allgon released a profit forecast for the year to 31 December 2000 and on 9 October the company released a preview of its Q3 results. With the availability of unaudited management accounts to 30 November 2000, Allgon is providing this update to shareholders on current trading. As indicated in the Q3 results preview on 9 October 2000, Allgon Systems has continued to perform strongly, in part aided by the US$ exchange rate. Our current expectation is that EBIT from this division will be close to 10 per cent. ahead of the forecast level of MSEK188. The outlook for 2001 is encouraging and, in the absence of a downturn in market conditions, management expects further strong growth year-on-year. Performance at Allgon Mobile Communications (AMC), the mobile handset antenna division, is also encouraging. The cost reduction programme announced in September 2000 is largely complete and Net Sales in Q4 have been ahead of expectations. Management is therefore cautiously optimistic about the outlook for 2001 after a difficult year in 2000, although the recovery will be weighted towards the second half of the year. EBIT for the year to 31 December 2000 is now expected to be somewhat higher than the 14 September forecast of MSEK26. By contrast, the Microwave division is having a disappointing Q4. A combination of higher US$ purchasing costs, the deferment of two orders into 2001 and additional development expenditure to reduce production costs means that the expected outcome for the year will be materially below the level forecast in the 14 September announcement. The current expectation is for a loss of MSEK45 at the EBIT level. We highlighted in the Q3 results preview announcement on 9 October 2000 that Wireless Solutions faced component supply issues and that this posed a risk to the 2000 forecast. The worldwide shortage of microchips for its Bluetooth and W-LAN products has continued and as a result commercial shipments of these products has been delayed. As a result, losses at Wireless Solutions are likely to be around MSEK77 compared to the 14 September forecast of MSEK50. Although net financial items includes some benefits from the stronger US$, partially offsetting the negative currency impact on the Microwave division, profit before tax is expected to be around MSEK55, as opposed to the forecast announced on 14 September of MSEK70. These figures are before taking account of exceptional costs relating to the offers from LGP and REMEC. In the event that REMEC's offer is not declared unconditional, these are expected to amount to around MSEK27. The Board of Allgon is encouraged by the continuing strength of the world- leading Allgon Systems division, as well as the positive signs of a faster-than-expected turnaound at AMC. Whilst the delays in moving into profitability at Microwave and Wireless Solutions are disappointing, the Board remains convinced of the potential of these businesses. For more information please contact: Jan Edhäll, President and CEO, Allgon AB Phone: +46-8-540 822 31 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 consists of antenna systems for infrastructure in mobile telephone networks; filters, combiners and similar products for base stations; repeater networks; microwave equipment; mobile telephone antennas; wireless local networks and Bluetooth products. Allgon's invoiced sales amounted to SEK 2,136 million in 1999. The number of employees at the end of 1999 amounted to 1,249. Allgon was founded in 1946. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/12/13/20001213BIT00770/bit0001.doc http://www.bit.se/bitonline/2000/12/13/20001213BIT00770/bit0002.pdf