SAF Tehnika

Quarterly Report • Feb 13, 2019

SAF Tehnika A/S Consolidated Interim Report for Q2 and 6 month of financial year 2018/2019 (July 1, 2018 – December 31, 2018)

TABLE OF CONTENTS

KEY DATA	3
Share and Shareholdings	4
Information on Management and Supervisory Board members	5
Information on professional and educational background of the management board members	6
Information on professional and educational background of the supervisory council members	8
Statement of Board's Responsibilities	10
Management Report	11
Consolidated Statement of Financial Position	15
Consolidated Statement of Profit or Loss for 6 month of the financial year 2018/2019	17
Consolidated cash flow statement for 6 months of the financial year 2018/2019	19
Statement of changes in consolidated equity for the 6 month period ended December 31, 2018	19
Notes for interim report	19
Note 1 Customer receivables Note 2 Other current receivables	20 20
Note 3 Inventories	20
Note 4 Non-current, intangible assets	21
Note 5 Tax liabilities	21
Note 6 Salary-related accrued expenses	21
Note 8 Bad receivables	24
Note 9 Salaries, bonuses and social expenses	24

KEY DATA

SAF Tehnika (hereinafter – the Group) is a telecommunications equipment company engaged in the development, production and distribution of digital microwave radio equipment. SAF Tehnika products provide wireless backhaul solutions for digital voice and data transmission covering wide frequency range and providing equipment for both licensed and un-licensed frequencies.

Know-how in modern wireless data transmission technologies, creativity in solutions, accuracy in design, precision in production and logistics make SAF Tehnika a unique designer and manufacturer of point-to-point microwave data transmission equipment. Located in Northern Europe, SAF Tehnika managed to acquire and consolidate valuable locally available intellectual resources of the microelectronics industry and spread its presence to more than 130 countries, covering all relevant market segments worldwide within just a decade.

Currently the Group consists of SAF Tehnika JSC (hereinafter – the Parent) operating from Riga, Latvia, a wholly owned subsidiary "SAF North America" LLC and "SAF Services" LLC. Both of the mentioned companies are operating from Denver, CO serving North American market.

SAF Tehnika JSC is a public joint stock company incorporated under the laws of the Republic of Latvia. The shares of AS SAF Tehnika are quoted on Nasdaq Riga stock exchange.

Commercial Registry Nr.: 40003474109 VAT Registry Nr.: LV40003474109 Beginning of financial year: 01.07.2018 End of financial year: 30.06.2019 Phone: +371 67046840 E-mail: info@saftehnika.com

Legal address: Ganību dambis 24a Rīga, LV-1005 Latvija

Share and Shareholdings

SAF Tehnika shareholders (over 5%) as of 09.11.2018.

Shareholder	Ownership interest (%)
Didzis Liepkalns	17.05%
Andrejs Grišāns	10.03%
Normunds Bergs	9.74%
SIA "Koka zirgs"	8.84%
Juris Ziema	8.71%
Vents Lācars (inheritence estate)	6.08%

SAF Tehnika share price and OMX Riga index development for the reporting period SAF Tehnika (SAF1R) Period: July 1, 2018 – December 31, 2018 Currency: EUR Marketplace: Nasdaq Riga

Information on Management and Supervisory Board members

SAF Tehnika Management Board:

Name	Position	Ownership interest (%)
Normunds Bergs	Chairman	owns 9.74% of shares
Didzis Liepkalns	Member	owns 17.05% of shares
Zane Jozepa	Member	owns no shares
Janis Bergs	Member	owns no shares

SAF Tehnika Supervisory Board:

Name	Position	Ownership interest (%)
Juris Ziema	Chairman	owns 8.71% of shares
Andrejs Grisans	Vice-Chairman	owns 10.03% of shares
Ivars Senbergs	Member	owns 2 shares
Aira Loite	Member	owns 7700 shares
Sanda Salma	Member	owns no shares

Information on professional and educational background of the management board members

Normunds Bergs, is Chairman of the Board and Chief Executive Officer of SAF Tehnika AS. Mr. Bergs is one of the founders of SIA Fortech (co-founding company of SAF Tehnika AS) where during the periods from 1990 to 1992 and 1999 to 2000 he acted as Managing Director and General Director, respectively. Following SIA Fortech's merger with AS Microlink in 2000, Mr. Bergs became Chief Executive Officer of SAF Tehnika AS and a member of the Management Board of AS Microlink. From 1992 to 1999, Mr. Bergs worked for World Trade Centre Riga, where he held the position of General Director and became a Member of the Board of Directors in 1998. Mr. Bergs graduated from the Riga Technical University with a degree in radio engineering in 1986.

Didzis Liepkalns, is Member of the Board and Technical Director of SAF Tehnika. Mr.Liepkalns founded a private enterprise SAF in 1995 and co-founded the company SAF Tehnika AS in 1999. From 1985 to 1990 he worked as an engineer at the Institute of Electronic Engineering and Computer Sciences. Mr.Liepkalns has graduated Riga Technical University with a degree in radio engineering in 1985.

Zane Jozepa, is Member of the Board and Chief Financial Officer. Prior to her employment with SAF Tehnika, Ms.Jozepa has been working in the leading IT and telecommunication services provider in Latvia – SIA Lattelecom, which is a subsidiary company of SIA Citrus Solutions that provides design, construction and maintenance of the engineering and technical systems and infrastructure. Ms.Jozepa has been working as a Business Controller for the first two years. She became Head of Finance in 2008, and a Board Member in 2012. Ms.Jozepa gained her professional experience in finance while working for SIA Coca Cola HBC Latvia during 2001-2006. She has graduated the BA School of Business and Finance (Banku Augstskola) and has a BA degree in finance management.

Jānis Bergs, is Member of the Board, Vice President of Sales and Marketing, and the President of "SAF North America". From 2000 till 2006 Mr.Bergs was a Member of the Board and later CEO of AS Microlink. When Microlink was sold to the TeliaSonera group in 2006, Jānis became a shareholder and CEO of SIA FMS, where he worked until January 2015. Mr.Bergs was a Member of AS SAF Tehnika Council from November 2006 till August 2010, and for more than 10 years he has been managing the Latvian IT and Telecommunications Association (LIKTA) and the ICT cluster,

as well as giving lectures in business studies in Riga Business School. Mr.Bergs has graduated Riga Technical University as radio engineer and has an MBA degree from Riga Business School.

Information on professional and educational background of the supervisory council members

Juris Ziema, co-founder of the Company, is Chairman of the Supervisory Council and Production Department Director. From 1998 to 1999 he worked as an engineer at Mr. Liepkalns private enterprise SAF. From 1987 to 1999 Mr. Ziema worked as an engineer at the Institute of Electronic Engineering and Computer Sciences. Mr. Ziema has graduated Riga Technical University with a degree in radio engineering in 1987.

Andrejs Grišāns, co-founder of the Company, is Vice-Chairman of the Supervisory Council and Production Department Manager. Prior to joining the Company, he owned and managed a private company specializing in electronic equipment engineering, production and distribution. From 1992 to 1999 Mr. Grisans was involved in entrepreneurial activities in the field of radio engineering. He worked as an engineer-constructor at the Institute of Polymer Mechanics from 1984 to 1992 and in the constructing bureau Orbita from 1980 to 1984. Mr. Grisans has graduated Riga Technical University with a degree in radio engineering in 1980.

Ivars Šenbergs, Member of the Supervisory Council, also Chairman of the Board of SIA Juridiskais Audits, SIA Namipasumu parvalde, SIA Synergy Consulting, SIA IŠMU, SIA Dzirnavu centrs and Member of the Supervisory Council of AS MFS bookkeeping. From 1999 until 2000 he worked as Finance and Administrative Director at SIA Fortech. Mr. Šenbergs has graduated Faculty of Law, University of Latvia in 1986.

Aira Loite, Member of the Supervisory Council, since 2016 is Chief Financial Officer at Torgy Mek Group's and at the same time (since May 2018) also Director of SIA "Torgy Baltic" Ltd. From 2007 to 2015 she has been the Member of the Board of JSC "SAF Tehnika" and Director of Finance and Administration, and Managing Director since the end of 2011. From 2006 to 2007 she was Director of Business Information and Control Division at Lattelecom. From 2000 to 2006 she was a Member of the Board of Microlink Latvia and Head of Finance and Administration. A. Loite has graduated the University of Latvia in 1988 and holds Bachelor degree in Mathematics and MBA from Salford University, UK, obtained in 2009.

Sanda Šalma, Member of the Supervisory Council, employed by Microsoft Latvia, currently Small and Medium Business Lead for Baltic countries. From 2010 to 2012 worked for a developer company RIX Technologies, participated in the work group of Latvian IT Cluster. From 2008 to 2010 was Citizenship & Education Project Lead at Microsoft Latvia. From 2000 to 2006 she was Sales Account Manager at Baltic Transshipment Center sales in Baltics and St. Petersburg. She has graduated The University of St.Petersburg and holds BSc in Psychology and MBA from RISEBA and Salford University, UK.

Statement of Board's Responsibilities

The Board of SAF Tehnika JSC (hereinafter – the Parent) is responsible for preparing the consolidated financial statements of the Parent and its subsidiaries (hereinafter - the Group).

The consolidated financial statements are prepared in accordance with the source documents and present fairly the consolidated financial position of the Group as of 30 December, 2018 and the consolidated results of its financial performance and cash flows for the quarter then ended.

The above mentioned financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and are prepared on a going concern basis. Appropriate accounting policies have been applied on a consistent basis. The consolidated interim financial statements have been prepared based on the same accounting principles applied in the Consolidated Financial Statements for the year ended on June 30, 2018.

Prudent and reasonable judgments and estimates have been made by the management in the preparation of the financial statements.

The Board of SAF Tehnika JSC is responsible for the maintenance of proper accounting records, the safeguarding of the Group's assets and the prevention and detection of fraud and other irregularities in the Group. The Board is responsible for compliance with the requirements of normative acts of the countries the Group operates in (Latvia and United States of America).

The interim financial statements have been prepared in Euro.

_________________________

Zane Jozepa CFO, Member of the Management Board

Management Report

The Group's unaudited consolidated net turnover of the second quarter (Q2) of the FY 2018/2019 was 3.9 million euros, which is by 10% more than in Q2 of the FY 2017/2018.

The turnover in North/Latin Americas was 57% or 2.2 million euros. Compared with the turnover of the same quarter last financial year, the region's turnover increased by 29%. It is related to the implementation of a specific project in the region and it is the highest quarterly turnover since the beginning of the last year.

Sales in the European and CIS region is 37%, or 221 thousand euros, which is equivalent to the result of the Q2 of the previous financial year.

The AMEA (Asia, Middle East, Africa) region had a turnover of 5%, or 0.2 million. Compared with the same quarter last FY, the region's turnover dropped by 44%. In the previous financial year, high turnover was related to the implementation of a specific project in this region.

During the reporting period, SAF Tehnika participated in trade fairs, including the US largest exhibition for wireless internet service providers (WISP) – WISPAPALOOZA in Las Vegas, as well as in the largest African technology event – AfricaCom, and in the largest technology exhibition of the Middle East, Gitex, held in Dubai, UAE. In addition to other regular marketing activities, SAF Tehnika maintains its SAF blog by publishing case studies and daily updates.

During the reporting quarter, the Group sold its products in 52 countries.

The Group's unaudited consolidated turnover for the 6-month period of the FY 2018/2019 was 6.96 million euros, which is a 7% drop compared to the revenues of the same period in the previous financial year. Turnover fluctuations are affected by difference in the results of Q1.

During the 6-month period, revenues in North/Latin Americas represented 62% of the total Group's turnover and amounted to 4.3 million euros, thus demonstrating a 4% increase against the results of the first half of the previous financial year. Revenues from the European and CIS countries represented 30% of the total turnover, having decreased by 22%, or 570 thousand euros, against the

previous year. Last year's successful results in the region were related to the development of a data transmission solution tailored to customer-specific needs. Revenues from the AMEA (Asia, Middle East, Africa) region decreased by 18%, or 127 thousand euros, thus making 8% of the Group's total 6-month turnover.

Comparative charts of sales volumes (within 6 months) by regions:

The Group's expenditures did not exceed the planned levels, and were generally equivalent to those of the same period a year ago. The group continues to invest in designing of new products and product modifications.

The Group finished the Q2 of the FY 2018/2019 with losses of 149 thousand euros (unaudited). There was a loss of 258 thousand EUR in the second quarter of the previous year.

The unaudited consolidated result for the 6-month period of the FY 2018/2019 is loss of 490 thousand euros. The Group's result of 6 months in the previous FY 2017/2018 was 131 thousand euros in profit.

During the 6-month period of the financial year, the Group had a negative net cash flow equaling to (-)140 thousand euros. The Group's net cash balance was 2.99 million euros at the end of the period.

In Q2 of the FY 2018/2019, 68 thousand euros were invested in acquisition of fixed assets.

Market Overview

The microwave radio market has not experienced any rapid changes over the past quarter, and we believe no such changes are expected in the near future, however, competition is increasing, especially in the segment of standard equipment.

There is still an increase in demand for radio systems that provide enhanced data transmission rate and can be enhanced or updated in order to increase data transmission capacity.

Guidelines

SAF Tehnika is the company with long-standing experience and expertise in microwave radio development and production.

The Group continues to explore market demand and problematic issues in order to be able to provide necessary product modifications, as well as continues investments in product development, increasingly focusing on the diversification of its product portfolio.

The Company's goal is to stabilize sales levels to ensure a positive net result in the long term. The Board of SAF Tehnika retains caution and refrains from making certain predictions regarding future sales volumes and financial results.

On 31 December 2018, the Group had 195 employees (there were 193 employees on 31 December 2017).

KEY indicators

	Q2 2017/18	Q2 2017/18	Q2 2016/17
	EUR	EUR	EUR
Net Sales	3,888,217	3,571,513	4,335,389
Earnings before interest, taxes and depreciation (EBITDA)	-86,349	-81,992	442,955
share of the turnover %	-2%	-2%	10%
Profit/loss before interest and taxes (EBIT)	-184,559	-179,097	353,849
share of the turnover %	-5%	-5%	8%
Net Profit	-148,599	-258,420	424,743
share of the turnover %	-4%	-7%	10%
Total assets	12,478,809	12,839,465	13,442,412
Total Owners equity	9,389,604	10,222,649	11,178,798
Return on equity (ROE) %	-1.26%	-1.90%	3.16%
Return on assets (ROA) %	-1.57%	-2.28%	3.70%
Liquidity ratio
Quick ratio %	97%	172%	239%
Current ratio %	215%	255%	315%
Earnings per share	-0.05	-0.09	0.14
Last share price at the end of period	2.32	6.45	3.51
P/E	-8.29	18.43	9.00
Number of employees at the end of reporting period	195	193	184

	Note	31.12.2018	31.12.2017
CURRENT ASSETS		EUR	EUR
Cash and bank		2 983 319	4 513 365
Customer receivables	1
Accounts receivable		3 465 234	2 046 232
Allowance for uncollectible receivables		-20 491	-31 100
Total		3 444 743	2 015 132
Other receivables
Other current receivables	2	32 851	145 165
Short-term loans		174 672	0
Total		207 523	145 165
Prepaid expenses
Prepaid taxes		170 757	43 979
Other prepaid expenses		198 739	189 709
Total		369 496	233 688
Inventories	3
Raw materials		1 136 722	1 312 102
Work-in-progress		1 895 332	2 119 176
Finished goods		1 546 166	1 678 194
Prepayments to suppliers		161 883	22 909
Total		4 740 103	5 132 381
TOTAL CURRENT ASSETS		11 745 185	12 039 730
NON-CURRENT ASSETS
Long-term financial assets
Investments in other companies		8 106	2 183
Long-term receivables	1	1 633	2 449
Total		9 739	4 632
NON-CURRENT physical assets	4
Plant and equipment		4 110 396	3 926 624
Other equipment and fixtures		1 978 351	1 976 122
Accumulated depreciation		-5 481 368	-5 249 437
Unfinished renovation works		2 390	0
Other long-term assets		0	2 266
Total		609 768	655 575
Intangible assets	4
Purchased licenses, trademarks etc.		114 117	132 467
Other long-term intangible assets		0	7 060
Total		114 117	139 527
TOTAL NON-CURRENT ASSETS		733 624	799 735
TOTAL ASSETS		12 478 809	12 839 465

Consolidated Statement of Financial Position

LIABILITIES AND OWNERS' EQUITY		31.12.2018	31.12.2017
CURRENT LIABILITIES		EUR	EUR
Debt obligations
Short-term loans from financial institutons		83	2 920
Customer prepayments for goods and services		220 823	221 339
Accounts payable		1 767 508	1 713 006
Tax liabilities	5	146 355	117 826
Salary-related accrued expenses	6	686 915	467 896
Provisions for guarantees		11 184	6 294
Deffered income		256 337	87 535
TOTAL CURRENT LIABILITIES		3 089 205	2 616 816
OWNERS' EQUITY
Share capital		4 158 252	4 158 252
Paid in capital over par		2 851 726	2 851 726
Other reserves		8 530	8 530
Retained earnings		2 855 657	3 074 985
Net profit for the financial year		-490 181	130 946
Currency translation reserve		5 620	-1 790
TOTAL OWNERS' EQUITY		9 389 604	10 222 649
TOTAL LIABILITIES AND OWNERS' EQUITY		12 478 809	12 839 465

Consolidated Statement of Profit or Loss for 6 month of the financial year 2018/2019

	Note	31.12.2018	31.12.2017
		EUR	EUR
Net sales	7	6 960 374	7 494 880
Other operating income		25 363	197 259
Total income		6 985 737	7 692 139
Direct cost of goods sold or services rendered		-3 407 064	-3 165 683
Marketing, advertising and public relations expenses		-373 555	-357 042
Bad receivables	8	-4 064	2 752
Operating expenses		-654 090	-689 211
Salaries and social expenses	9	-2 490 150	-2 437 069
Bonuses and social expenses	9	-390 865	-380 384
Depreciation expense		-197 433	-195 889
Other expenses		-22 736	-22 570
Operating expenses		-7 539 956	-7 245 096
EBIT		-554 219	447 043
Financial income (except ForEx rate difference)		12 648	11 246
Financial costs (except ForEx rate difference)		- 2	-32
Foreign exchange +gain/(loss)		51 392	-242 766
Financial items		64 038	-231 552
EBT		-490 181	215 491
Corporate income tax		0	-84 545
Profit after taxes		-490 181	130 946
Net profit/(loss)		-490 181	130 946

*Earnings per share EPS 31.12.2018. = -0.17 EUR

EPS 31.12.2017. = 0.04 EUR

Consolidated Statement of Profit or Loss for Q2 of the financial year 2018/2019

	31.12.2018	31.12.2017
	EUR	EUR
Net sales	3 888 217	3 571 513
Other operating income	22 175	107 394
Total income	3 910 392	3 678 907
Direct cost of goods sold or services rendered	-1 890 904	-1 688 854
Marketing, advertising and public relations expenses	-226 163	-190 823
Bad receivables	685	-14 433
Operating expenses	-347 030	-374 223
Salaries and social expenses	-1 303 095	-1 270 566
Bonuses and social expenses	-217 451	-207 368
Depreciation expense	-98 210	-97 105
Other expenses	-12 783	-14 633
Operating expenses	-4 094 951	-3 858 004
EBIT	-184 559	-179 097
Financial income (except ForEx rate difference)	6 149	5 107
Financial costs (except ForEx rate difference)	0	- 1
Foreign exchange +gain/(loss)	29 811	-46 881
Financial items	35 960	-41 775
EBT	-148 599	-220 872
Corporate income tax	0	-37 548
Net profit/(loss)	-148 599	-258 420

*Earnings per share EPS 31.12.2018. = -0.05 EUR

EPS 31.12.2017. = -0.09 EUR

Consolidated cash flow statement for 6	months of the financial year 2018/2019
-------------------------------------------	----------------------------------------

	31.12.2018	31.12.2017
	EUR	EUR
CASH GENERATED FROM OPERATIONS (of which)	-132 433	-99 175
Cash received from customers	7 076 413	8 087 072
Cash paid to suppliers and employees	-7 331 021	-8 114 177
Paid/Received VAT, corporate income tax	122 175	-72 070
NET CASH USED IN INVESTING ACTIVITIES (of which)	-106 538	-117 140
Cash paid for purchasing non-current physical assets	-117 767	-128 370
Interest received	11 229	11 230
NET CASH USED IN FINANCING ACTIVITIES (of which)	102 066	-1 798 870
Short-term loans	43 668	0
Repayment of short-term loans	-30	-7 477
Cash received from EU fonds	58 428	198 628
Dividends paid	0	-1 990 021
Effects of exchange rate changes	-3 776	20 163
TOTAL CASH FLOW:	-140 681	-1 995 023
Cash and cash equivalents as at the beginning of period	3 124 000	6 508 388
Cash and cash equivalents as at the end of period	2 983 319	4 513 365
NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS	-140 681	-1 995 023

Statement of changes in consolidated equity for the 6 month period ended December 31, 2018

	Share capital	Share premium	Other reserves		Currency translation	Retained earnings	Total
	EUR	EUR	EUR	reserve EUR	EUR	EUR
As at 30 June 2017	4 158 252	2 851 726	8 530	5 207	5 065 006	12 088 721
Dividend relating to 2016/2017	-	-		-	-1 990 021	-1 990 021
Currency translation difference	-	-	-	-3 195	-	-3 195
Profit for the year	-	-	-	-	-219 328	-219 328
As at 30 June 2018	4 158 252	2 851 726	8 530	2 012	2 855 657	9 876 177
Currency translation difference	-	-	-	3 608	-	3 608
Profit for the period	-	-	-	-	-490 181	-490 181
As at 30 December 2018	4 158 252	2 851 726	8 530	5 620	2 365 476	9 389 604

Notes for interim report

Note 1 Customer receivables

	31.12.2018 EUR	31.12.2017 EUR
Long-term receivables	1 633	2 449
Accounts receivable Provisions for bad and doubtful accounts receivable	3 465 234 (20 491)	2 046 232 (31 100)
Total short term accounts receivable	3 444 743	2 015 132
Total receivables	3 446 376	2 017 581

As compared to the same balance sheet date of the previous financial year the total receivables have increased

Note 2 Other current receivables

	31.12.2018 EUR	31.12.2017 EUR
Other current receivables	32 851	145 165

Other current receivables include the amounts of calculated co-financing from Investment and Development Agency of Latvia (LIAA) for export and competitiveness projects

Note 3 Inventories

	31.12.2018 EUR	31.12.2017 EUR
Raw materials	1 762 280	1 936 970
Allowance for slow-moving items	(625 558)	(624 868)
Work-in-progress	1 895 332	2 119 176
Finished goods	1 546 166	1 678 194
Prepayments to suppliers	161 883	22 909
	4 740 103	5 132 381

As compared to 31 December 2017, total inventories decreased by 8%.

The Group maintains the amount of raw materials and auxiliary supplies at the defined level to be able to deliver all products in the Group's product portfolio within the competitive timeframes. The Group's inventories must include previously produced and sold equipment components in order to provide corresponding maintenance service.

Note 4 Non-current, intangible assets

	31.12.2018 EUR	31.12.2017 EUR
Plant and equipment	4 110 396	3 926 624
Other equipment and fixtures	1 978 351	1 976 122
Accumulated depreciation	(5 481 368)	(5 249 437)
Unfinished renovation works	2 390	-
Other long term assets	-	2 266
	609 768	655 575
Purchased licenses, trademarks etc.	114 117	132 467
Other long-term intangible assets	-	7 060
	114 117	139 527
Total non-current, intangible assets	723 885	795 102

During Q2, the Group acquired fixed assets and intangible assets in the amount of 68 thousand euros – mainly, in order to ensure production and testing processes, as well as to acquire office equipment.

Note 5 Tax liabilities

	31.12.2018 EUR	31.12.2017 EUR
Tax liabilities	146 355	117 826

The increase of the previous period is related to the fact that wages for December were paid in December. During the reporting period, wages for December were paid in January.

Note 6 Salary-related accrued expenses

	31.12.2018 EUR	31.12.2017 EUR
Salary-related accrued expenses	686 915	467 896

The increase of the previous period is related to the fact that wages for December were paid in December. During the reporting period, wages for December were paid in January.

Note 7 Segment information

a) The Group's operations are divided into two major structural units – SAF branded equipment designed and produced in-house - CFIP and Freemile (Etherent/Hybrid/ superPDH systems), Integra (Integrated carrier-grade Ethernet microwave radio), Spectrum Compact (measurement tools for radio engineers) as the first structural unit and 3rd party products for resale, like Antennas, cables, some OEMed products and accessories as the second unit.

• CFIP –product line is represented by:
• a split mount PhoeniX hybrid radio system with Gigabit Ethernet + 20 E1 interfaces;
• Lumina high capacity Full Outdoor all-in-one radio with Gigabit Ethernet traffic interface;
• CFIP-108 entry level radio perfect for upgrade of E1 networks into packet data networks;
• Marathon FIDU low frequency low capacity system for industrial applications and rural telecom use.

Freemile 17/24, an all outdoor hybrid radio system to be used in 17 and 24 GHz unlicensed frequency bands and providing Ethernet/E1 interfaces for user traffic

All CFIP radios are offered in most widely used frequency bands from 300MHz to 38 GHz, thus enabling the use of CFIP radios all across the globe. PhoeniX radio represents the type of microwave radio which is still dominating market share point of view.

Integra – is a next generation radio system employing latest modem technology on the market as well as radio technology in an innovative packaging.

Spectrum Compact is the latest product line in SAF's portfolio, it is a measurement tool for field engineers for telecom, broadcasting and other industries using radio technologies. It comprises of a number of units covering several frequency bands and proving various functionality.

This note provides information about division of the Group's turnover and balance items by structural units by product type for 6 month of the financial year 2018/19 and financial year 2017/18.

	CFM; CFIP; FreeMile		Other		Total
	2018/19	2017/18	2018/19	2017/18	2018/19	2017/18
	EUR	EUR	EUR	EUR	EUR	EUR
Segment assets	8 195 994	7 017 749	1 369 582	1 351 826	9 565 576	8 369 575
Undivided assets					2 913 233	4 469 890
Total assets					12 478 809 12 839 465
Segment liabilities	2 145 040	1 997 206	175 782	131 268	2 320 822	2 128 474
Undivided liabilities					768 383	488 342
Total liabilities					3 089 205	2 616 816
Net sales	6 568 753	7 074 285	391 621	420 595	6 960 374	7 494 880
Segment results	1 874 530	2 499 161	153 499	202 282	2 028 029	2 701 443
Undivided expenses					-2 607 612	-2 451 659
Profit from operations					-579 583	249 784
Other income					25 363	197 259
Financial income (except ForEx rate difference)					12 648	11 246
Financial costs (except ForEx rate difference)					-2	-32
Foreign exchange +gain/(loss)					51 393	-242 766
Profit before taxes					-490 181	215 491
Corporate income tax					0	-84 545
Profit after taxes					-490 181	130 946
Net profit					-490 181	130 946
Other information
Additions of property plant and
equipment and intangible asets	44 032	41 893	0	0	44 032	41 893
Undivided additions					77 247	90 806
Total additions of property plant and
equipment and intangible asets					121 279	132 699
Depreciation and amortization	107 500	109 426	0	0	107 500	109 426
Undivided depreciation					89 933	86 463
Total depreciation and amortization					197 433	195 889

b) This note provides information about division of the Group's turnover and assets by geographical regions (customer location) for 6 month of the financial year 2018/19 compared to the same period of financial year 2017/18.

	Net sales		Assets
	2018/19 EUR	2017/18 EUR	31.12.2018 EUR	31.12.2017 EUR
Americas	4 334 198	4 171 240	1 311 775	866 494
Europe, CIS Asia, Africa, Middle East	2 060 261 565 915	2 630 065 693 575	2 028 355 106 247	981 836 169 250
	6 960 374	7 494 880	3 446 376	2 017 581
Unallocatted assets	-	-	9 032 433	10 821 884
	6 960 374	7 494 880	12 478 809	12 839 465

Note 8 Bad receivables

	31.12.2018 EUR	31.12.2017 EUR
Bad receivables	(4 064)	2 752

Provisions for doubtful and bad accounts receivable were calculated according to Group's provision calculation policy. The Group starts to calculate provisions for customers who delays payment terms more than 3 months. Additional provisions were calculated for debts were probability not to receive payment is high, although agreed payment term has not come yet.

Note 9 Salaries, bonuses and social expenses

	31.12.2018 EUR	31.12.2017 EUR
Salaries and social expenses	2 490 150	2 437 069
Bonuses and social expenses	390 865	380 384
	2 881 015	2 817 453

The amount of salaries and social payments were generally equivalent to those of the same period in the previous year.