Ericsson Nikola Tesla d.d.

Annual Report • Jul 25, 2017

Ericsson Nikola Tesla d.d.

The Management Report on the Company and Ericsson Nikola Tesla Group business performance with comments on the financial results for H1 2017

Highlights:

• Sales revenue: MHRK 709
• Gross margin: 13.6%
• Operating profit: MHRK 52.9
• Income before tax: MHRK 48.9
• Net profit: MHRK 37.4
• Cash flow from operating activities: MHRK -59.3

Gordana Kovačević, the President of Ericsson Nikola Tesla, comments:

"In H1 2017, sales revenue of Ericsson Nikola Tesla Group decreased by 2.9 percent year-over-year. Despite continuous sales revenue growth from services in Ericsson market and an increase in sales revenue in the domestic market, we were not able to fully neutralize the decline in sales in CIS market and markets of Southeast Europe. Despite numerous business challenges, we have maintained the position of the largest ICT exporter and the leading exporter of knowledge in Croatia. In line with our expectations, Ericsson market records a positive trend and an increase in revenue, primarily due to expansion of our responsibilities and new competencies of our R&D experts and our other expert centers. We have successfully entered into new technology areas, which resulted in high value added job openings. In H1 2017, we hired 145 new experts. At the end of H1, Ericsson Nikola Tesla Group had 3017 employees.

Gross profit increased by 5.5 percent, while operating profit increased by 3.7 percent year-over-year. Due to operational and financial negative currency effects, profit before tax is lower by 8.2 percent year-over-year, and amounts to MHRK 48.9. Net profit has declined by 26.8 percent to MHRK 37.4. The absence of tax incentives for R&D activities has directly impacted the decrease in net profit year-over-year.

Gross margin increased year-over-year to 13.6 percent. We closed H1 with a healthy balance sheet and an equity ratio of 40.7 percent. Working capital efficiency, expressed in Working Capital Days (WCD), is 32 days. Total cash and cash equivalents, including short term financial assets at the end of Q2 amount to MHRK 205.4. In line with expectations, we had a negative cash flow from operating activities, mainly due to a decreased inflow from customers. Regardless of quarterly volatility, the annual cash flow projection is as planned.

Sales revenue realized in the domestic market record growth due to an increase in sales revenue in the Industry & Society segment. We are proud to actively participate in national projects, such as the State Border Control, healthcare digitization and the Joint Information System of Land Registry and Cadaster. The growth in domestic sales has partially neutralized the decline in sales in CIS and Southeast Europe market.

With the aim to create new business opportunities in export markets, we continue with intense marketing and sales activities. At the 20th International Economy Fair – Mostar 2017, we presented the latest technology solutions for the digital economy, with a focus on IoT solutions for agriculture and tourism and at the largest Belarusian International Forum on Telecommunications, Information and Banking Technologies "TIBO-2017" jointly with beCloud operator we presented an innovative corporate ICT transport solution.

Comprehensive transformation is ongoing across Ericsson corporation as well as in our company. Ericsson Nikola Tesla is intensively engaged in transformation and is implementing organizational and structural changes in line with both market and our customers' demands. We want to strengthen our position in strategic areas: 4G/5G, Managed Services, Operations Support Systems and Business Support Systems (OSS and BSS), Cloud solutions, Industry& Society solutions, and services for Ericsson internal market. To be able to meet the requirements of a very demanding global market in a timely and quality manner, the company has been investing intensely in knowledge, skills and competencies of our experts, and shall continue to do so in the future. We expect that economic and political uncertainty will continue throughout 2017. Therefore, we will focus on strengthening profitability, cost efficiency and responsible risk management. "

Financial Highlights for the Group:

• Sales revenue amounts to MHRK 709 (H1 2016: MHRK 730.3), a decrease by 2.9% year-over-year. Of the total sales revenue, the domestic market accounts for 19.5%, services to Ericsson account for 65.8% (of which 12% relates to Managed Services in Croatia), while other export markets participate with 14.7%.
• Sales in the Networks segment amount to MHRK 440.6 (62.1% of the total sales revenue), in IT & Cloud segment it amounts to MHRK 266.7 (37.6% of the total sales revenue), and in the Media segment it is MHRK 1.7 (0.2% of the total sales revenue).
• Gross profit amounts to MHRK 96.3 (H1 2016: MHRK 91.3), an increase by 5.5% year-over-year. Gross margin increased year-over-year, amounting to 13.6 % (H1 2016: 12.5%).
• Sales and administrative costs increased by 9.5% year-over-year to MHRK 43.1 (H1 2016: MHRK 39.4), primarily as a result of variable compensation to employees and intensified marketing and sales activities.
• Operating profit amounts to MHRK 52.9, an increase by 3.7% year-over-year (H1 2016: MHRK 51).
• Loss from financial activities amounts to MHRK 4 (H1 2016: gain from financial activities amounted to MHRK 2.2), primarily due to negative currency effects.

• Profit before tax decreased by 8.2% year-over-year to MHRK 48.9 (H1 2016: MHRK 53.3).

• All tax losses carried forward on the basis of tax reliefs from R&D projects have been used in 2016. In line with that, in H1 2017, income tax liability amounting to MHRK 11.5 was calculated (H1 2016: MHRK 2.2).

• Net profit is MHRK 37.4 (H1 2016: MHRK 51), a decrease by 26.8% year-over-year. Return on Sales (ROS) is 5.3 % (H1 2016: 7%).
• Cash flow from operating activities amounts to MHRK 59.3 (H1 2016: MHRK 38.2). The cash conversion rate is – 65%.
• Total cash and cash equivalents, including short term financial assets, as at June 30, 2017 amount to MHRK 205.4 (25.8% of the total assets), while at the end of 2016, they amounted to MHRK 287.7 (35.6% of the total assets).
• The Company has a solid balance sheet with the total assets of MHRK 797.3. Equity ratio is 40.7%.
• With related parties, the transactions were as follows: sales of products and services amounted to MHRK 450.1 (H1 2016: MHRK 441), while procurement of products and services amount to MHRK 127 (H1 2016: MHRK 193.2).
• As at June 30, 2017 balances outstanding with related parties were as follows: receivables amounted to MHRK 121.5 (end of 2016: MHRK 90.9), and payables to MHRK 58.8 (end of 2016: MHRK 89.3).

Business situation in major markets

In the domestic market, sales revenue amounted to MHRK 138.5, an increase by 5 % year-over-year.

Cooperation with strategic partner Vipnet continued with modernization of radio access network and transport telecom network, and increasing of the 3G and 4G capacity. We continuously test new functionalities in various segments of core and access network to contribute to an increased service quality and new services for end users.

Business cooperation with Hrvatski Telekom (HT) was extended with a three-year contract on telecommunication equipment maintenance, and, in the segment of fixed telecommunication network modernization, by upgrading of the core IMS system. Furthermore, we delivered solutions for modernization of access, core and transport IP network of HT Group. The implementation of a part of MPLS access network within the Terastream project started. We also continued delivering build and maintenance services for Hrvatski Telekom's telecommunciation infrastructure.

With the mobile operator Tele2, we signed a contract for the core network upgrade, and already implemented it in part of the network. In line with requirements for capacity building in transport network, additional capacity of transport network in the segments of microwave and fiber optics were ordered, and delivered in a part of the network.

In the ICT solutions for Industry & Society segment, numerous activities continue in healthcare digitization. At the beginning of 2017, the Republic of Croatia Border Control System was successfully delivered. Seven border locations were equipped with the latest sensor equipment and connected into a joint "green border" surveillance system. A new

contract for further digitization of the Joint Information System for Land Registry and Cadaster was signed, including the continuation of activities on the OSS project (One Stop Shop).

In export markets (Ericsson market excluded), sales revenue amounted to MHRK 104.3, a decrease by 34.7 percent year-over-year.

In the markets of Southeast Europe (Bosnia and Herzegovina, Montenegro and Kosovo) sales revenue decreased by 25.3% year-over-year, amounting to MHRK 49.6. Long-term unfavorable economic and political situation in these markets has a negative impact on the level and the dynamics of operator investments. The collaboration with operators is ongoing in the segment of maintenance and modernization of fixed and mobile networks. With HT Mostar, we signed contracts related to mobile network management system extension and modernization and extension and modernization of radio access network. With BH Telecom, we signed a contract for modernization and extension of Operations Support System. The modernization and upgrade of 112 system for the Ministry of Security of Bosnia and Herzegovina was successfully implemented.

In CIS market, sales revenue amounted to MHRK 54.7, a decrease by 41.4 percent year-over-year. We are currently engaged in implementation of projects contracted during 2016. Strong marketing and sales activities continue, with the aim of improving and developing business with existing and new customers.

In Ericsson market, sales revenue amounts to MHRK 466.2, an increase by 6.3% year-over-year. Ericsson Nikola Tesla Servisi d.o.o., a daughter company of Ericsson Nikola Tesla d.d., contributed to this market segment with MHRK 85.1.

In Ericsson Nikola Tesla Research & Development Center (R&D) the activities within the Development Unit Networks related to radio systems software development have been significantly extended. The activities within Mobile Core, User Data Management and Cloud development units are carried out as planned. Operations' management and other heads of Ericsson development confirm that the organizational strength of our Research and Development Center is reflected in its continuous expansion in new activities and responsibilities with no risks to the work quality and delivery. Moreover, both sides have always expressed the readiness to further continue and intensify cooperation, which was particularly highlighted after Ericsson Corporation announced the new strategic guidelines. In line with that, recruitment and education of new experts is underway to facilitate our easier and more successful inclusion into current research and development projects. The research projects are ongoing on developing the network functions virtualization with the aim to enable new solutions on the Cloud platform. Experimental development within Ericsson Garage Croatia includes network security projects and projects that apply machine learning algorithms, for example, in elderly care.

The experts of Center for Services and Solutions for Networks & Media have been engaged in numerous complex projects for our customers worldwide, such as: Swisscom (Switzerland), Slovak Telekom (Slovakia), Vodafone, Three, and O2 (United Kingdom), A1 (Austria), China Unicom (China), MTN (Rwanda), Orange (Togolese Republic), Smartone (Hong Kong), TMO (USA), Alfa (Lebanon), Robi (Bangladesh). These are complex activities of expert

PRESS INFO July 25, 2017

analysis, creation of new innovative solutions, optimization and upgrade of existing networks and consultancy services. Intense work on the development and implementation of software tools for mobile networks management and optimization, such as: Smart Laptop, Smart Rollout Support, Rehoming Automation, and Ericsson Network Engineer, is ongoing.

Experts from Digital Services and Solutions Center were engaged in various demanding projects for customers worldwide, such as: Tango and Post from Luxembourg, Vodafone, O2, British Telecom/Everything Everywhere from the United Kingdom, Telekom Austria Group (TAG), Telecom Italy, Telekom Slovenije, T-Mobile and Vodafone Czech Republic, DIGI Hungary, DT Germany, Vimpelcom Russia, Orange Belgium, GO Malta, TMO USA, and DoCoMo Japan. These activities include design, network applications, Cloud and digital business systems infrastructure. We are proud that our customers on projects worldwide have given a positive feedback and congratulated our Services and Solutions Center experts on their engagement.

Ericsson Nikola Tesla Servisi d.o.o., a daughter company of Ericsson Nikola Tesla d.d., was given an extension of the contract for telecom network build, maintenance and monitoring with key customer and an extension in business volume in the segment of geodesy and documentation. In H1 2017, key projects of building mobile broadband network, as well as projects of designing and building of optical networks were successfully implemented. Delivery of high quality services continued in the segment of telecommunication network monitoring and maintenance. The quality of service realization was confirmed by ISO 9001:2015 certificate awarded in the segment of planning, design, geodesy, installation, testing, monitoring and maintenance of IT and electronic communications infrastructure and network.

PRESS INFO July 25, 2017

Other information

Ericsson Nikola Tesla major shareholders (as at 30 June, 2017)

	Number of shares	% of share capital
Telefonaktiebolaget LM Ericsson	653.473	49.07
Addiko d.d. / Raiffeisen mandatory pension fund, B category	123.514	9.28
Splitska banka d.d. / Erste Plavi mandatory pension fund, B category	41.890	3.15
Addiko d.d. / PBZ Croatia Insurance mandatory pension fund, B category	22.627	1.70
Zagrebačka banka d.d. / Unicredit Bank Austria AG – clients account	17.230	1.29
PBZ d.d. / The Bank of New York as Custodian	17.141	1.29
Zagrebačka banka d.d. / State Street and Trust Company, Boston	13.935	1.05
PBZ d.d. / custodian client account	9.069	0.68
Addiko d.d. / Raiffeisen voluntary pension fund	7.934	0.60
OTP BANKA d.d./INS683	6.944	0.52
Other shareholders	417.893	31.37

Share price information in Q2 2017:

Highest (HRK)	Lowest (HRK)	Closing (HRK)	Market cap. (In MHRK)
1,399.00	1,150.00	1247.00	1660.6

Ericsson Nikola Tesla d.d.

Krapinska 45

Zagreb

OIB: 84214771175

Pursuant to the Articles 407 to 410 of the Capital Market Law (Official Gazette 88/08 and 146/08) the Managing Director of the joint stock company Ericsson Nikola Tesla d.d. Zagreb, Krapinska 45 gives the following:

Statement of the Management Board responsibility

The accompanying consolidated and nonconsolidated financial statements have been prepared in compliance with the International Financial Reporting Standards (IFRS). The financial statements also comply with the provisions of the Croatian Financial Accounting Law valid as of the date of these financial statements.

Unaudited financial statements for the period 1 January 2017 to 30 June 2017 present a true and fair view of the financial position of the Company and of its financial performance and its cash flows in compliance with applicable accounting standards.

Managing Director:

Gordana Kovačević, MSc

For additional information, please contact: Snježana Bahtijari Orhideja Gjenero Company Communications Director Investor Relations Manager Ericsson Nikola Tesla d.d. Ericsson Nikola Tesla d.d. Krapinska 45 Krapinska 45 HR-10 002 Zagreb HR-10 002 Zagreb Tel.: 385 1 365 4556 Tel.: +385 1 365 4431 Mob.: +385 91 365 4556 Mob.: +385 91 365 4431 Fax: +385 1 365 3156 Fax: +385 1 365 3156 E-mail: snjezana.bahtijari@ericsson.com E-mail: orhideja.gjenero@ericsson.com

E-mail: odnosi.investitori@ericsson.com

For more information about Ericsson Nikola Tesla's business, please visit http://www.ericsson.hr

ENCLOSURE 1
Reporting period:	1.1.2017.	to	30.06.2017
	Quarterly Financial Report TFI-POD
Tax number (MB): 03272699
080002028 Registration number (MBS):
84214771175 Personal identification
number (OIB): Issuer: ERICSSON NIKOLA TESLA D.D. ZAGREB
Postal code and location: 10000	ZAGREB
Street and number: Krapinska 45
E-mail: etk.company@ericsson.com
Internet address: www.ericsson.hr
Code and city / municipality ZAGREB 133
Code and county GRAD ZAGREB 21			Number of employees: 2.214
Consolidated Report NO			(at the end of year) Business activity code: 2630
Entities in consolidation (according to IFRS)	Registered seat:		Tax number (MB):
Book-keeping office:
Contact person Tatjana Ricijaš
(Name and surname of contact person) Telephone: +385 (0)1 365 3343		Telefaks:	+385 (0)1 365 3174
E-mail: tatjana.ricijas@ericsson.com
Name and surname: Kovačević Gordana (authorized representatives)
Documents to be published:
1. Financial Statements (Balance Sheet, Income statement, Cash Flow Statement, Statement of Changes in Equity)
2. Management Commentary Statement with notes 3. Responsibility of the Management for the preparation of the financial statements
	(seal)		(signature of authorized representative)

Balance Sheet

as at 30 June 2017

Issuer: Ericsson Nikola Tesla d.d.
Item	AOP	Previous period	Current period
1	2	3	4
A) RECEIVABLES FOR REGISTARED UNPAID CAPITAL	001
B) NON CURRENT ASSETS (003+010+020+029+033)	002	204.635.689	200.066.035
I. INTANGIBLE ASSETS (004 do 009)	003	1.911.621	1.599.567
1. Research & Development expenditure	004
2. Patents, licences, royalties, trade marks, software&similar rights	005	1.911.621	1.599.567
3. Goodwill	006		0
4. Prepayments for intangible assets	007
5. Intangible assets under construction	008
6. Other intangible assets	009
II. PROPERTY, PLANT AND EQUIPMENT (011 do 019)	010	107.932.942	101.790.743
1. Land	011	15.605.344	15.605.344
2. Property	012	27.637.641	28.091.419
3. Plants and equipment	013	56.968.443	47.232.311
4. Tools, plants&vehicles	014	7.367.806	8.162.727
5. Biological asset	015
6. Prepayments for tangible assets	016
7. Assets under construction	017	269.937	2.619.064
8. Other tangible assets	018	83.770	79.879
9. Investments property	019
III. FINANCIAL ASSETS (021 do 028)	020	28.190.325	27.036.444
1. Investments in subsidiaries	021	73.385	419.144
2. Loans to subsidiaries 3. Participating interests (stakes)	022
4. Loans to participating interest	023 024
5. Investments in securities	025
6. Loans & deposits	026	28.116.940	26.617.300
7. Other non-current financial assets	027
8. Investment accounted by equity method	028
IV. RECEIVABLES (030 do 032)	029	53.042.871	56.081.351
1. Receivables from subsidiaries	030	2.041.774	841.797
2. Receivables from credit sales	031	50.395.179	54.647.434
3. Other receivables	032	605.918	592.120
V. DEFERRED TAX ASSETS	033	13.557.930	13.557.930
C) CURENT ASSETS (035+043+050+058)	034	563.101.414	559.881.208
I. INVENTORIES (036 do 042)	035	9.189.927	65.934.426
1. Raw materials & consumables	036
2. Work in progress	037	9.183.998	65.934.426
3. Products	038
4. Merchandise	039
5. Prepayments for inventories	040	5.929	0
6. Other available-for-sale assets	041
7. Biological asset	042
II. RECEIVABLES (044 do 049)	043	277.542.973	294.513.619
1. Receivables for trade debt of subsidiaries	044	90.140.539	121.737.178
2. Trade receivables	045	173.362.621	155.621.765
3. Receivables for trade debts of participating entities	046
4. Amounts receivable from employees	047
5. Receivables from government agencies	048	1.280.627	7.272.998
6. Other receivables	049	12.759.185	9.881.679
III. FINANCIAL ASSETS (051 do 057)	050	62.993.020	62.842.506
1. Investments in subsidiaries	051
2. Loans to subsidiaries	052		0
3. Participating interests (stakes)	053
4. Loans to participating interest	054
5. Investments in securities	055	62.993.020	62.842.506
6. Loans & deposits 7. Other financial assets	056
IV. CASH AND CASH EQUIVALENTS	057 058	213.375.495	136.590.656
D) PREPAYMENTS AND ACCRUED INCOME E) TOTAL ASSETS (001+002+034+059)	059 060	4.422.371 772.159.474	9.437.495 769.384.739
F) OFF-BALANCE SHEET ITEMS	061

EQUITY AND LIABILITES
A) EQUITY (063+064+065+071+072+075+078)	062	278.249.670	314.689.108
I. SHARE CAPITAL	063	133.165.000	133.165.000
II. CAPITAL RESERVES	064
III. RESERVES FROM PROFIT (066+067-068+069+070)	065	20.849.076	20.849.076
1. Legal reserves	066	6.658.250	6.658.250
2. Reserves for treasury shares	067	15.820.446	15.820.446
3. Treasury shares and stakes (less)	068	1.629.620	1.629.620
4. Statutory reserves	069
5. Other reserves	070
IV. REVALUATION RESERVES	071
V. RETAINED EARNINGS (073-074)	072	14.668.954	124.369.731
1. Retained earnings	073	14.668.954	124.369.731
2. Loss brought forward	074
VI. PROFIT OR LOSS FOR THE FINANCIAL YEAR (076-077)	075	109.566.640	36.305.301
1. Profit for the financial year	076	109.566.640	36.305.301
2. Loss for the financial year	077
VII. MINORITY INTEREST	078
B) PROVISIONS (080 do 082)	079	5.486.755	5.547.777
1. Provisions for redundancy costs	080	5.486.755	5.547.777
2. Provisions for tax obligations	081
3. Other provisions	082
C) NON-CURRENT LIABILITIES (084 do 092)	083	18.901.100	16.475.842
1. Amounts payable to subsidiaries	084	2.041.774	841.797
2. Liabilities for loans, deposits and other	085		0
3. Liabilities towards banks and other financial institutions	086	8.954.389	8.756.174
4. Amounts payable for prepayment	087		0
5. Trade payables	088		0
6. Amounts payable for securities	089		0
7. Liabilities toward participating interests	090		0
8. Other non-current liabilities	091	7.904.937	6.877.871
9. Deffered tax	092
D) CURRENT LIABILITIES (094 do 105)	093	264.297.352	255.723.565
1. Amounts payable to subsidiaries	094	96.211.444	68.527.217
2. Liabilities for loans, deposits and other	095
3. Liabilities towards banks and other financial institutions	096		0
4. Amounts payable for prepayment	097
5. Trade payables	098	42.594.642	101.005.769
6. Amounts payable for securities	099
7. Liabilities toward participating interests	100
8. Amounts payable to employees	101	82.421.635	56.107.683
9. Liabilities for taxes and contributions	102	43.069.632	30.082.896
10. Dividend payables	103
11. Liabilities directly associated with the assets classified as held for sale	104
12. Other current liabilities	105
E) ACCRUED CHARGES AND DEFERRED REVENUE	106	205.224.597	176.948.448
F) TOTAL EQUITY AND LIABILITIES (062+079+083+093+106)	107	772.159.474	769.384.739
G) OFF-BALANCE SHEET ITEMS	108
ANNEX TO THE BALANCE SHEET (to be filled in by entrepreneur submitting consolidated financial report)
A) CAPITAL AND RESERVES
1. Attributable to equity holders of the parent company's capital	109
2. Attributable to minority interest	110

Note 1.: APPENDIX TO THE BALANCE SHEET (to be filled in by entites who submitting consolidated financial statements).

INCOME STATEMENT

for the period 01 January 2017 to 30 June 2017

Issuer: Ericsson Nikola Tesla d.d.
Item	AOP	Previous period		Current period
		Cumulative	Quarter	Cumulative	Quarter
1	2	3	4	5	6
I. OPERATING INCOME (112+113)	111	726.474.433	398.108.459	712.649.268	349.269.498
1. Sales revenue	112	718.696.816	394.186.105	704.471.516	345.127.312
2. Other operating income	113	7.777.618	3.922.355	8.177.752	4.142.186
II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	114	677.975.647	376.523.114	661.276.438	326.533.267
1. Changes in inventories of finished products and work in progress	115	-49.313.629	-40.942.539	-56.750.554	-42.150.517
2. Raw material and consumables used (117 do 119)	116	399.465.841	250.240.650	365.704.626	188.720.381
a) Cost of raw materials & consumables	117	168.885.758	117.955.351	132.625.637	47.855.888
b) Cost of goods sold	118
c) Other costs	119	230.580.084	132.285.299	233.078.988	140.864.493
3. Staff costs (121 do 123)	120	285.475.775	141.870.299	309.909.143	156.725.892
a) Net salaries	121	150.550.509	74.475.230	158.864.187	86.369.687
b) Employee income tax and contributions		94.910.707	46.950.999	107.929.769	47.764.418
	122
c) Employer's contributions	123	40.014.559	20.444.071	43.115.187	22.591.787
4. Depreciation and amortisation expense	124	23.587.389	11.599.703	19.200.894	9.482.887
5. Other costs	125	16.433.657	11.582.312	20.542.523	11.922.867
6. Impairment losses (127+128)	126	1.014.152	1.116.962	1.136.021	1.160.313
a) non-current assets (except financial assets)	127
b) current asssets (except financial assets)	128	1.014.152	1.116.962	1.136.021	1.160.313
7. Provisions
	129
8. Other operating expenses	130	1.312.462	1.055.728	1.533.785	671.443
III. FINANCIAL INCOME (132 do 136)	131	3.253.777	2.865.674	1.211.891	553.670
1. Interest, foreign exhange gains, dividends and other income from related parties	132	201.243	146.326	92.152	27.520
2. Interest, foreign exchange gains, dividends and other income from non-related and other
entities	133	1.216.729	931.826	1.119.739	526.150
3. Income from associates and ownership interests	134
4. Unrealized gains	135
5. Other financial income	136	1.835.805	1.787.522	0	0
IV. FINANCIAL EXPENSES (138 do 141)	137	1.013.173	3.635	5.202.993	1.504.547
1. Interest, foreign exchange losses and other expenses with related parties	138
2. Interest, foreign exchange differences and other expenses with non-related and other
entities	139	1.013.173	3.635	4.875.279	1.189.802
3. Unrealized losses	140
4. Other financial expenses	141			327.714	314.745
V. SHARE OF INCOME OF ASSOCIATES	142
VI. SHARE OF LOSS OF ASSOCIATES	143
VII. EXTRAORDINARY - OTHER INCOME	144
VIII. EXTRAORDINARY - OTHER EXPENSES	145
IX. TOTAL INCOME (111+131+142 + 144)	146	729.728.210	400.974.133	713.861.159	349.823.168
X. TOTAL EXPENSES (114+137+143 + 145)	147	678.988.819	376.526.749	666.479.431	328.037.814
XI. PROFIT OR LOSS BEFORE TAX (146-147)	148	50.739.391	24.447.384	47.381.728	21.785.354
1. Profit before tax (146-147)	149	50.739.391	24.447.384	47.381.728	21.785.354
2. Loss before tax (147-146)	150	0	0	0	0
XII. INCOME TAX EXPENSE	151	1.629.205	1.629.205	11.076.427	5.094.554
XIII. PROFIT OR LOSS FOR THE PERIOD (148-151)	152	49.110.186	22.818.179	36.305.301	16.690.800
1. Profit for the period (149-151)	153	49.110.186	22.818.179	36.305.301	16.690.800
2. Loss for the period (151-148)	154	0	0	0	0
ANNEX TO THE PROFIT AND LOSS ACCOUNT (to be filled in by entities submitting consolidated financial statements)
XIV. PROFIT OR LOSS FOR THE PERIOD
1. Attributable to owners of the company	155
2. Attributable to non-controlling interests	156
STATEMENTS OF COMPREHENSIVE INCOME (to be filled by entities who work in compliance with IFRS)
I. PROFIT OR LOSS FOR THE PERIOD (= 152)	157	49.110.186	22.818.179	36.305.301	16.690.800
II. OTHER COMPREHENSIVE INCOME /LOSS BEFORE TAX (159 do 165)	158	0	0	0	0
1. Exchange differences arising from foreign operations	159
2. Revaluation of non-current assets and intangible assets	160
3. Gains or loss available for sale investments	161
4. Gains or loss on net movement on cash flow hedges	162
5. Gains or loss on net investments hedge	163
6. Share of the other comprehensive income/loss of associates	164
7. Acturial gain / loss on post employment benefit obligations	165
III. TAX ON OTHER COMPREHENSIVE INCOME OF THE PERIOD	166
IV. NET OTHER COMPREHENSIVE INCOME OR LOSS FOR THE YEAR (158-166)	167	0	0	0	0
V. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD (157+167)		49.110.186	22.818.179	36.305.301	16.690.800
	168
APPENDIX Statement of Comprehensive Income (to be filled in by entities submitting consolidated financial statements)
VI. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD
1. Attributable to owners of the company	169
2. Attributable to non-controlling interests	170

CASH FLOW STATEMENT - Indirect method in the period 01 January 2017 to 30 June 2017

Item Previous period Current period 1 2 3 4 CASH FLOW FROM OPERATING ACTIVITIES 1. Profit before tax 001 50.739.391 47.381.728 2. Depreciation and amortisation 002 23.587.389 19.200.894 3. Increase in liabilities 003 97.403.517 4. Decrease in receivables 004 5. Decrease in inventories 005 6. Other increase in cash flow 006 2.570.969 1.299.068 I. Total increase in operating cash flow (001 do 006) 007 174.301.265 67.881.690 1. Decrease in liabilities 008 46.733.112 2. Increase in receivables 009 88.363.477 21.170.753 3. Increase in inventories 010 51.515.543 56.744.500 4. Other decrease in cash flow 011 II. Total decrease in operating cash flow (008 do 011) 012 139.879.020 124.648.365 A1) NET INCREASE IN OPERATING CASH FLOW 013 34.422.245 (007-012) A2) NET DECREASE IN OPERATING CASH FLOW 014 56.766.675 (012-007) CASH FLOW FROM INVESTMENT ACTIVITIES 1. Proceeds from sale of property, plant and equipment 015 40.240 100.182 2. Net disposal of financial assets 016 51.803.193 3. Interest received 017 1.504.413 1.199.296 4. Dividend received 018 128.883 5. Other cash from investing activities 019 19.158 III. Total cash flow from investing activities (015 do 019) 020 53.476.728 1.318.635 1. Purchase of property, plant and equipment and intangible assets 021 12.336.085 17.119.602 2. Purchase of financial instruments 022 89.000.000 3. Other cash flow used in investing activites 023 10.167.453 353.459 IV. Total cash flow from investing activities (021 do 023) 024 111.503.538 17.473.061 B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES 025 (020-024) B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES 026 58.026.810 16.154.425 (024-020) CASH FLOW FROM FINANCIAL ACTIVITIES 1. Proceeds from issuance of financial instruments 027 2. Proceeds from loans 028 3. Other cash flow from financial activities 029 V. Total cash flow from financial activities (027 do 029) 030 0 0 1. Repayment of interest-bearing borrowings 031 2. Dividend paid 032 132.845.626 82.310 3. Repayment of finance lease 033 4. Repurchase of treasury shares 034 5. Other cash flow used in financial activities 035 1.302.731 3.781.428 VI. Total cash flow used in financial activities (031 do 035) 036 134.148.357 3.863.738 C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES 037 (030-036) C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES 038 134.148.357 3.863.738 (036-030) Total increase in cash flow (013 – 014 + 025 – 026 + 037 – 038) 039 Total decrease in cash flow (014 – 013 + 026 – 025 + 038 – 037) 040 157.752.921 76.784.838 Cash and cash equivalents at the beginning of the period 041 218.499.492 213.375.495 Increase in cash and cash equivalents 042 0 0 Decrease in cash and cash equivalents 043 157.752.921 76.784.838 Cash and cash equivalents at the end of the period 044 60.746.571 136.590.657	Issuer: Ericsson Nikola Tesla d.d.
		AOP

fo he io d fro 3 0. 6. 2 0 1 7 t 1. 1. 2 0 1 7 to r p er m
I te m	A O P	Pre vio us rio d pe	Cu nt rio d rre pe
1	2	3	4
1. S ha i l ta re ca p	0 0 1	133 .16 5.0 00	13 3.1 65 .00 0
Ca i l re 2. ta p se rve s	0 0 2
3. Re fro f i t se rve s m p ro	0 0 3	21 .13 1.2 56	20 .84 9.0 76
4. Re ine d e ing ta arn s	0 0 4	13 .91 6.5 73	12 4.3 69 .73 1
Pr f i los for he io d 5. t o t o r s p er	0 0 5	49 .11 0.1 86	36 .30 5.3 01
6. Re lua ion f p lan d e ip t ty, t a t va o rop er p n q me n u	0 0 6
Re lua ion f in i b le 7. t tan ts va o g as se	0 0 7
Re lua ion f f ina ia l f ina ia l a i la b le for le 8. t ts va o nc nc ss e av a sa	0 0 8
O 9. he lua ion t t r re va s	0 0 9
1 0. To l c i l a d r ( A O P 0 0 1 do 0 0 9 ) ta ta ap n es erv es	0 1 0	21 7.3 23 .01 4	31 4.6 89 .10 8
f fer fro for 1 1. Fo ig ha d i inv tm ts in ig t ion re n e xc ng e en ce s m es en e n o p era s	0 1 1		0
Cu 1 2. d de fer d t a tax rre n n re es	0 1 2
1 3. Ca h f low he dg s e	0 1 3
C 1 4. ha in t ing l ic ies ng es ac co un p o	0 1 4
1 5. Pr ior d j tm t ea r a us en y	0 1 5
O he ha in i 1 6. t ty r c ng es eq u	0 1 6
1 7. To ta l inc / de in i ty ( A O P 0 1 1 do 0 1 6 ) rea se cre as e eq u	0 1 7	0	0
Pa ha in bs i d iar 1 7 a t c ren om p an y s re su y	0 1 8	0	0
b. M ino i in 1 7 ty ter t r es	0 1 9

Items that decrease equity have negative sign

Items from 001 to 009 are state of balance sheet date

Notes to the Financial Statements

1. Segment reporting

	Ne tw ork	s	IT & Clo	ud	Me	dia	Un all oc	ate d	To tal
	30 .6. 20 17 '00 0 k n	30 .6. 20 16 Re sta te d '00 0 k n	30 .6. 20 17 '0 00 kn	30 .6. 20 16 Re sta te d '0 00 kn	30 .6. 20 17 '0 00 kn	30 .6. 20 16 Re sta te d '00 0 k n	30 .6. 20 17 '00 0 k n	30 .6. 20 16 Re sta te d '00 0 k n	30 .6. 20 17 '00 0 k n	30 .6. 20 16 '00 0 k n
Se les nt g me sa re ve nu e	43 8.6 92	46 7.2 81	26 4.0 55	25 1.2 65	1.7 24	15 1	0	0	70 4.4 72	71 8. 69 7
Op tin fit era g p ro	41 .29 0	42 .75 5	37 .48 9	22 .99 0	47 3	14	-27 .88 0	-17 .25 9	51 .37 3	48 .49 9

2. Transactions with related parties

	30 .6. 20 17 '00 0 k n	30 .6. 20 16 '00 0 k n
To l sa les ta	45 6.3 00	44 8.1 75
To l p ha ta urc se s	21 6.6 26	28 9.9 29

3.Balances with related parties

	30 .6. 20 17 '00 0 k n	30 .6. 20 16 '00 0 k n
Re iva b le ce	12 2.5 79	90 .40 7
Pa b le y a	69 .36 9	99 .85 8

4.Other notes to the financial statements are disclosed within the Management Board report.