STOCKHOLM, Sweden, April 22, 2002 (PRIMEZONE) -- Allgon:
SEK M Jan- Jan-Mar
Mar 2001
2002
Orders received 376 564
Net sales 367 519
Operating income -39* -74*
Income after financial
items -45* -79**
* Income for the first quarter of 2002 was positively affected by SEK 12M through capitalization of development expenditure; see accounting and valuation principles below.
**Income for the first quarter 2001 includes one-off costs of SEK 19M.
-- Net sales and orders received increased during March following a
weak January and February
-- A number of significant 3G orders were received for base station
antennas, filters and microwave links
-- Strong sales of base station antennas, whereas sales of combiners fell
-- Continued reduction of expenses
-- Allgon's opinion of the market in 2002 remains unchanged, i.e. the
market will be weak in the first six months but will improve during
the second half of the year.
Market
In the USA, the expansion of GSM has resulted in increased sales, in particular of base station antennas.
In China, subscriber growth was lower than anticipated which resulted in a reduced expansion rate of the operators' networks. However, GSM continues to grow slightly, whereas the expansion of CDMA has been postponed. This has affected Allgon's sales of base station antennas and repeaters.
In Europe, investment in GSM is low pending the take-off of 3G.
Within 3G, Allgon has achieved a strong position through agreements with a large number of system suppliers and operators for deliveries of base station antennas, filters and microwave links.
The market for mobile telephones was weak in the first quarter but is expected to grow during the year. The anticipated increase is, in particular, driven by the fact that a large number of new mobile telephone models are due to be launched. Many will be equipped with color screens and support functions for new services such as MMS.
Group net sales and orders received
Net sales fell to SEK 367M (519). Orders received fell to SEK 376M (564).
Allgon Systems
Net sales fell to SEK 264M (325). The fall is almost exclusively due to reduced sales of TDMA Combiners in the American market.
Allgon is the main supplier of base station antennas for the GSM expansion to a major operator in North America. An aggressive expansion plan has resulted in high invoicing during the first quarter. Close collaboration aimed at developing new antenna models has been initiated with yet another large operator. This is expected to lead to future orders. In Europe, orders received for new antenna models for 3G increased. Allgon has also increased its market share for GSM in Eastern Europe. In addition, Allgon has noted increased demand for advanced antenna systems which handle several frequencies.
Sales of repeaters and coverage solutions were mainly made to customers in Europe and North America where several important orders were received during the quarter. At the end of the quarter, Allgon noted increased activities in all markets.
Sales of combiners continue to fall. Deliveries of filter panels for UMTS and CDMA to European and American system suppliers are expected to start during the third quarter. Allgon's new MCPA (Multi Carrier Power Amplifier) attracted much attention at the American telecom fair, CTIA.
Operating income fell to SEK -17M (-19). Operating income was positively affected by SEK 5M which was attributable to capitalization of development expenditure. Last year's operating income includes one-off costs of SEK 6M.
Allgon Mobile Communications
Net sales fell to SEK 84M (153).
Sales of mobile telephone antennas were temporarily weak in the first quarter due to the ongoing change of models at some manufacturers. In addition to lower volumes, the fall in net sales is due to a changed product mix in which the proportion of built-in antennas exceeded 50 percent for the quarter.
A volume increase is anticipated during the remainder of 2002 as our customers estimate that sales of mobile telephones will increase by 5-10 percent compared with the previous year.
Operating income improved to SEK 3M (-15). Operating income was positively affected by SEK 6M attributable to capitalization development expenditure. The previous year's income includes one-off costs of SEK 10M.
Allgon Microwave
Net sales fell to SEK 19M (22).
GSM expansion is weak in Europe pending 3G. At the turn of the year, two important agreements were concluded for delivery of radio links to Svenska UMTSnat and Teracom. During the quarter, two agreements were signed in Asia. Deliveries relating to these agreements are expected to start in the third quarter.
Operating income fell to SEK -16M (-15). Operating income was positively affected by SEK 1M which was attributable to capitalization of development expenditure.
Consolidated results
Allgon's operating income improved to SEK -39 M (-74) and operating income after financial items to SEK -45M (-79).
Income was positively affected by SEK 12M which was attributable to capitalization of development expenditure for new products. The previous year's results include business area Wireless Solutions, which was divested in the second quarter, with SEK -11M and one-off costs totaling SEK 19M.
The fall in net sales and the product mix resulted in a lower gross margin. This was largely compensated for through reduced expenses, resulting from action programs implemented during 2001. There was also a reduction in expenses in relation to the fourth quarter of the previous year.
Income after financial items would have been SEK 6M (-32) lower had Allgon not had any hedging. On the closing date, there were forward contracts, which have not yet been taken up as income, amounting to USD 4M at an average spot rate of SEK 10.37.
Financial position
At March 31, 2002, the equity ratio amounted to 44 percent (December 31, 2001: 42 percent). Cash flow before financing operations amounted to SEK - 17M (-21) and the net debt to SEK 207M (December 31, 2001: SEK 194M) at the period end.
Capital expenditure
During the period, capital expenditure in buildings and land, and machinery and equipment amounted to SEK 6M (47) gross. Capital expenditure in intangible fixed assets amounted to SEK 12M gross (-) for the period.
Parent company
Operations in the parent company, Allgon AB (publ), consist of Group co- ordination tasks such as Group management, finance management and IT co- ordination. Assets consist mainly of shares in subsidiaries. During the period, sales amounted to SEK 0M (0) and income after financial items to SEK -8M (-26).
Accounting and valuation principles
This report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR20 Interim reporting.
From January 1, 2002, Allgon applies the Swedish Financial Accounting Standards Council's new recommendation RR15 Intangible assets in its consolidated accounts. In accordance with RR15, expenditure for development of new products, production and information systems shall be reported as an intangible asset if such expenditure is not highly likely to lead to financial benefits for the company in the future. The acquisition value of such an intangible asset shall be written off over its estimated economic life. Allgon's chosen application of the new rules means that very strict demands are set for expenditure for development to be reported as an asset. During the first quarter of 2002, expenditure for development of new products totaling SEK xM has been reported as an asset. The depreciation period for the asset applied by Allgon amounts to between 6-36 months. In accordance with Allgon's previous accounting principles, all expenditure for development of new products was written off continuously.
Apart from the application of RR15, the same accounting principles and calculation methods have been applied in this Interim Report as in the latest Annual Report. Other recommendations by the Swedish Financial Accounting Standards Council have had no effect on the company's results and position.
This Interim Report has not been the subject of special examination by Allgon's Auditors.
Future information dates: July 16, 2002: Interim Report January 1 - June 30, 2002 Taby, April 22, 2002 For further information, please contact: Jeff Bork President and CEO, Allgon AB Telephone: +46 8-540 822 31 Tomas Kihlstrand Chief Financial Officer, Allgon AB Telephone: +46 8-540 822 32
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