Ericsson Nikola Tesla d.d. — Earnings Release 2014

Apr 29, 2014

Ericsson Nikola Tesla d.d.

The Management Report on Ericsson Nikola Tesla Group business situation and comments on the financial results for Q1 2014

Highlights:

• Sales revenues: MHRK 315.4
• Gross margin: 17.8%
• Operating profit: MHRK 31.1
• Net profit: MHRK 34.1
• Cash flow from operating activities: MHRK: 9.9

Gordana Kovačević, the President of Ericsson Nikola Tesla, commented on the Company's performance:

Ericsson Nikola Tesla continued a solid business performance in Q1 2014, despite the current market environment. A significant increase in sales revenue was achieved in the domestic market, amounting to 37%. Ericsson market has a positive trend and an increase in revenue, as planned. However, the total sales revenue decreased by 5% year-over-year, as a result of decrease in sales revenue in other export markets. A political and economic uncertainty in the countries in which we traditionally achieve good export results, resulted in operators' investment slow down and postponement.

We achieved a net profit of MHRK 34.1, which accounts for 10.8 % return on sales. We ended the quarter with a solid balance sheet and equity ratio of 69%. Total cash funds, including short term financial assets at the end of Q1 amount to MHRK 523.2, which is 51% of total assets. Thanks to a healthy financial situation and a high level of liquid assets, we can this year again, provide exceptional return on investment to our shareholders.

We remain focused on strengthening our position and sales in new and targeted areas for telecom operators (4GIP, OSS/BSS, TV and media distribution, network design and optimization and managed services) and in the segment regarding industry and society (health, e-business systems, safety). We still remain focused on operational efficiency, profitability and risk management.

This year's Mobile World Congress in Barcelona was the telecommunication industry central spot to get acquainted with the solutions and applications, which show the kind of possibilities the future brings. Ericsson presented a range of novelties, such as an extremely fast mobile broadband access, world firsts in LTE Advanced Carrier Aggregation and Coordinated Radio Access Network, Global Network Operations Center with live data from a real network, the latest achievements in LTE Broadcast and digital signing. Furthermore, expect for presenting Ericsson PSI Coverage Solution implemented in Vipnet network, solutions and applications were presented, in which Ericsson Nikola Tesla experts participated on preparation and development.

I would like to highlight that, throughout the innovation programs and processes and individual employee goals; we encourage the development of innovative organizational culture. In doing so, we put the emphasis on two main areas: improvement/ growth of business and improvement of the way of working.

In a transforming ICT market, we are well positioned as a reliable partner to our Customers in recognizing new market opportunities."

Financial Highlights:

• Sales revenues decreased by 5% YoY to MHRK 315.4 (Q1 2013: MHRK 330.2). In total sales revenues, the domestic market accounts for 34%, export to Ericsson market accounts for 47%, and export to other markets 19%.
• Network infrastructure amounted to MHRK 159.9 (51% of total Sales revenues), Professional Services MHRK 145.6 (46% of total Sales revenues), and Support Solutions MHRK 9.9 (3% of total Sales revenues).
• Gross profit amounts to MHRK 56.2 (Q1 2013: MHRK 65.2), decreased by 14% YoY. Gross margin decreased to 17.8% (Q1 2013: 19.8%) due to business mix.
• Distribution and administrative expenses increased year-over-year to MHRK 25.5 (Q1 2013: 22.3), due to activities focused on new business opportunities.
• Operating profit decreased by 26% to MHRK 31.1 (Q1 2013: MHRK 42.1), due to lower gross margin.

• Net finance income decreased to MHRK 3.0 (Q1 2013: MHRK 6.8) as a result of lower interest revenues and lower exchange rate gains.

• Net profit decreased by 30% YoY to MHRK 34.1 (Q1 2013: MHRK 48.9). ROS is 10.8% (Q1 2013: 14.8%).

• Cash flow from operating activities is MHRK 9.9 (Q1 2013: MHRK 1.4).
• Total cash balances, including short term financial assets at the end of the quarter, amounted to MHRK 523.2 which accounts for 50,8% of total assets (end of 2013: MHRK 521.2, i.e. 49,7% of total assets).
• The Company has a strong balance sheet with total assets of MHRK 1,030.0. The equity ratio is 69%.
• With related parties, the transactions were as follows: sales of products and services amounted to MHRK 133.1 (Q1 2013: MHRK 128), while the purchase of products and services amounted to MHRK 93.8 (Q1 2013: MHRK 132.2).
• Balances outstanding with related parties as at March 31, 2014 were as follows: receivables amounted to MHRK 68.6 (end of 2013: MHRK 71.8), and payables amounted to MHRK 51.8 (end of 2013: MHRK 60.9).

Business situation in major markets

In the domestic market, sales revenue amounted to MHRK 106.3, increased by 37% YoY.

An intensive collaboration with the strategic parent Vipnet is continued. IMS system upgrade was successfully finished, which opens numerous possibilities for implementation of new convergent solutions. In addition, the expansion and modernization of mobile telecom network is ongoing, including the fourth generation of mobile networks (LTE) and testing new functionalities, which contribute to enhanced quality and new services for end users, as well.

Business collaboration with T-HT continues in the segment of strategic migration to all-IP environment and on other projects, which will enhance this operator business efficiency.

With the operator Tele 2, activities on constructing 2G and 3G infrastructure continue, by introducing new functionalities and an increase in speed and capacity of mobile broadband internet access service. Contracts were signed on comprehensive service support and field maintenance of all network nodes.

In ICT for Industry and Society Segment, major activities concern upgrading the national ICT healthcare system, continued informatization of Land registry administration and upgrade/ expansion of communal and transport companies' communication infrastructure.

In export markets (except for Ericsson market) sales revenues amounted to MHRK 60.0, which is a decrease by 47% YoY.

In the markets of Southeast Europe (Bosnia and Herzegovina, Montenegro and Kosovo) sales revenues decreased by 22% YoY to MHRK 40.3.

In Bosnia and Herzegovina market, the collaboration with BH Telecom and HT Mostar continued in the segment of providing support services. It is certain that the political and economic uncertainty affects the operators' investment cycle. We expect new investments in further expansion of mobile and fixed networks.

In ICT segment for industry and society, expansion of Operational Communication Center (OKC) 112 ICT infrastructure in Bosnia and Herzegovina was successfully implemented.

In CIS market, sales revenues amounted to MHRK 19.7, which is a decrease by 67% YoY. Sales activities and arrangements related to mobile network modernization with several key customers are ongoing.

In the Ericsson market, sales revenue amounted to MHRK 149.1, which is an increase by 6% year-overyear. This market share in total sales revenues reached 47%.

Ericsson Nikola Tesla Research and Development Center (R&D) successfully continues in developing cutting edge products, as well as gaining new responsibilities within the Ericsson Corporation. The quality, competences and commitment of R&D team was positively evaluated by the managers of Ericsson organizations, which are responsible for development of certain products, in recently held regular evaluation meeting in Stockholm. The evaluation of the collaboration and the results so far, represents a good base for further business and expansion of responsibility.

In core network segment, an entire range of the existing and the work on new functionalities is ongoing. The development teams, working on User data management are expanding, which is related to the ending the development of functionalities targeted at the new product generations. Furthermore, the Unit for Radio Platform Development continues its initiated development of IP functionalities. In fixed core network, where we have the global responsibility for software package development, delivery and maintenance, and providing services to customers worldwide, broad expert knowledge contributed to the continuity of excellent results, especially in the evolution of communication networks based on internet protocols. The research and development, related to "Cloud Computing", as well as other researches, which enjoy the EU funds support, are ongoing.

Service Delivery Center experts have been engaged in numerous projects for the following customers: A1 Austria, British Telecom, Deutsche Telecom, Mobistar Belgium, O2 Great Britain, Orange Slovakia,

Telefonica Germany, Telenor Sweden, Vodafone Great Britain, Vodafone Netherlands, O2 Great Britain. We can highlight the activities related to IPTV project for A1 Austria and Telenor Sweden, VoLTE project for Deutsche Telecom and network modernization for British Telecom. The Centers' experts have also been providing consulting services and services of configuration and dimensioning for A1 Austria, Mosaic Ireland, O2 Great Britain, Slovak Telekom, Telefonica Great Britain, Vodafone Netherlands. Smart Rollout Support tool, developed in our Global Competence Center, was successfully implemented worldwide.

Other information

Ericsson Nikola Tesla Annual General Meeting shall be held on May 27, 2014. The right to participate at the Annual General Meeting have all shareholders, or their proxies, respectively, who register to participate until May 20, 2014, at the latest.

The shareholders who have the Company shares registered on their securities account in the Central Depository & Clearing Company on June 3, 2014, are entitled for the dividend payment in total amount of HRK 320 per share (HRK 20 regular dividend and HRK 300 extraordinary dividend). Ex-dividend date is May 30, 2014.

The dividend shall be paid on June 17, 2014.

The Annual General Meeting's Agenda, including the suggestions of all the decisions, was published on the Company's web page http://www.ericsson.hr/20140416-poziv.

Ericsson Nikola Tesla's major shareholders (as at March 31, 2014)

	Number	% of share
	of shares	capital
Telefonaktiebolaget LM Ericsson	653,473	49.07
Hypo Alpe-Adria-Bank d.d. / Raiffeisen Mandatory Pension Fund	123,.514	9.28
Societe Generale-Splitska banka d.d. / Erste Plavi Mandatory Pension Fund	32,961	2.48
Hypo Alpe-Adria-Bank d.d. / PBZ Croatia osiguranje Mandatory Pension Fund	30,615	2.30
PBZ d.d. / State Street client account	19,817	1.49
Zagrebačka banka d.d. / custodian client account for Unicredit Bank Austria AG	18,290	1.37
PBZ d.d. / The Bank of New York as custodian	17,822	1.34
Societe Generale-Splitska banka d.d. / AZ Mandatory Pension Fund	14,546	1.09
PBZ d.d. / Custodian Client Account	12,841	0.96
Zagrebačka banka d.d. / State Street Bank and Trust Company, Boston	11,650	0.87
Other shareholders	396,121	29.75

Q1 2014 share price information:

Highest (HRK)	Lowest (HRK)	Closing (HRK)	Market cap.
			(in MHRK)
1,659.00	1,445.00	1,600.00	2,130.6

PRESS INFO April 29, 2014

Ericsson Nikola Tesla d.d. Krapinska 45 Zagreb

OIB: 84214771175 Tax No.: 03272699

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 Jan 2014 to 31 March 2014 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 Communication 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 Phone: + 385 1 365 4556 Phone: +385 1 365 4431 Mobile: +385 91 365 4556 Mobile: +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 performance, please visit: http://www.ericsson.com/hr

Communication Ericsson Nikola Tesla

ENCLOSURE 1
Reporting period:	1.1.2014.	to	31.12.2014
	Quarterly Financial Report TFI-POD
Tax number (MB): 03272699
Registration number (MBS): 080002028
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: (at the end of year)	1.721
Consolidated Report NO			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 31 March 2014

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	152.292.402	145.707.856
I. INTANGIBLE ASSETS (004 do 009)	003	2.111.635	1.767.482
1. Research & Development expenditure	004
2. Patents, licences, royalties, trade marks, software&similar rights	005	2.111.635	1.767.482
3. Goodwill	006
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	131.326.468	128.388.482
1. Land	011	15.605.344	15.605.344
2. Property	012	33.250.765	32.394.535
3. Plants and equipment	013	75.158.060	73.208.298
4. Tools, plants&vehicles	014	6.232.259	5.598.296
5. Biological asset	015
6. Prepayments for tangible assets	016
7. Assets under construction	017	972.924	1.476.840
8. Other tangible assets	018	107.115	105.170
9. Investments property	019
III. FINANCIAL ASSETS (021 do 028)	020	8.350.806	8.375.422
1. Investments in subsidiaries 2. Loans to subsidiaries	021	53.385	53.385
3. Participating interests (stakes)	022 023
4. Loans to participating interest	024
5. Investments in securities	025
6. Loans & deposits	026	8.297.421	8.322.037
7. Other non-current financial assets	027
8. Investment accounted by equity method	028
IV. RECEIVABLES (030 do 032)	029	10.503.492	7.176.469
1. Receivables from subsidiaries	030
2. Receivables from credit sales	031	6.273.938	2.939.201
3. Other receivables	032	4.229.554	4.237.269
V. DEFERRED TAX ASSETS	033	0	0
C) CURENT ASSETS (035+043+050+058)	034	888.020.249	871.811.048
I. INVENTORIES (036 do 042)	035	44.678.667	50.117.990
1. Raw materials & consumables	036	3.930	3.709.502
2. Work in progress	037	44.643.322	46.377.010
3. Products	038
4. Merchandise	039
5. Prepayments for inventories	040	31.416	31.478
6. Other available-for-sale assets 7. Biological asset	041
II. RECEIVABLES (044 do 049)	042 043	329.227.610	306.423.469
1. Receivables for trade debt of subsidiaries	044		68.375.548
2. Trade receivables	045	313.839.579	222.713.864
3. Receivables for trade debts of participating entities	046
4. Amounts receivable from employees	047
5. Receivables from government agencies	048	1.201.552	1.184.785
6. Other receivables	049	14.186.479	14.149.272
III. FINANCIAL ASSETS (051 do 057)	050	109.844.549	104.027.729
1. Investments in subsidiaries	051
2. Loans to subsidiaries	052
3. Participating interests (stakes)	053
4. Loans to participating interest	054
5. Investments in securities	055	109.844.549	104.027.729
6. Loans & deposits	056
7. Other financial assets	057
IV. CASH AND CASH EQUIVALENTS	058	404.269.422	411.241.860
D) PREPAYMENTS AND ACCRUED INCOME	059	1.142.695	2.601.112
E) TOTAL ASSETS (001+002+034+059) F) OFF-BALANCE SHEET ITEMS	060	1.041.455.345	1.020.120.016
	061

EQUITY AND LIABILITES
A) EQUITY (063+064+065+071+072+075+078)	062	670.003.716	705.232.992
I. SHARE CAPITAL	063	133.165.000	133.165.000
II. CAPITAL RESERVES	064
III. RESERVES FROM PROFIT (066+067-068+069+070)	065	15.710.740	15.710.740
1. Legal reserves	066	6.658.250	6.658.250
2. Reserves for treasury shares	067	18.623.622	18.623.622
3. Treasury shares and stakes (less)	068	9.571.133	9.571.133
4. Statutory reserves	069
5. Other reserves	070
IV. REVALUATION RESERVES	071
V. RETAINED EARNINGS (073-074)	072	377.268.845	523.478.801
1. Retained earnings	073	377.268.845	523.478.801
2. Loss brought forward	074
VI. PROFIT OR LOSS FOR THE FINANCIAL YEAR (076-077)	075	143.859.131	32.878.452
1. Profit for the financial year	076	143.859.131	32.878.452
2. Loss for the financial year	077
VII. MINORITY INTEREST	078
B) PROVISIONS (080 do 082)	079	0	0
1. Provisions for redundancy costs	080
2. Provisions for tax obligations	081
3. Other provisions	082
C) NON-CURRENT LIABILITIES (084 do 092)	083	4.697.246	4.825.431
1. Amounts payable to subsidiaries	084
2. Liabilities for loans, deposits and other	085
3. Liabilities towards banks and other financial institutions	086	0	0
4. Amounts payable for prepayment	087
5. Trade payables	088
6. Amounts payable for securities	089
7. Liabilities toward participating interests	090
8. Other non-current liabilities	091	4.697.246	4.825.431
9. Deffered tax	092
D) CURRENT LIABILITIES (094 do 105)	093	218.195.008	155.993.029
1. Amounts payable to subsidiaries	094		46.274.652
2. Liabilities for loans, deposits and other	095
3. Liabilities towards banks and other financial institutions	096
4. Amounts payable for prepayment	097
5. Trade payables	098	126.047.166	39.230.250
6. Amounts payable for securities	099
7. Liabilities toward participating interests	100
8. Amounts payable to employees	101	73.109.162	49.272.235
9. Liabilities for taxes and contributions	102	19.038.681	21.215.892
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	148.559.375	154.068.565
F) TOTAL EQUITY AND LIABILITIES (062+079+083+093+106)	107	1.041.455.345	1.020.120.016
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).

for the period 01 January 2014 to 31 March 2014 INCOME STATEMENT

Issuer: Ericsson Nikola Tesla d.d.	AOP
Item		Previous period			Current period
1	2	Cumulative 3	Quarter 4	Cumulative 5	Quarter 6
I. OPERATING INCOME (112+113)	111	330.850.948	330.850.948	315.807.053	315.807.053
1. Sales revenue	112	327.037.711	327.037.711	310.700.150	310.700.150
2. Other operating income	113	3.813.238	3.813.238	5.106.903	5.106.903
II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	114	289.283.052	289.283.052	286.107.179	286.107.179
1. Changes in inventories of finished products and work in progress 2. Raw material and consumables used (117 do 119)	115 116	-1.524.180 169.845.460	-1.524.180 169.845.460	-1.686.973 142.915.015	-1.686.973 142.915.015
a) Cost of raw materials & consumables	117	112.030.643	112.030.643	85.174.540	85.174.540
b) Cost of goods sold	118
c) Other costs	119	57.814.817	57.814.817	57.740.475	57.740.475
3. Staff costs (121 do 123)	120	105.486.382	105.486.382	123.401.105	123.401.105
a) Net salaries b) Employee income tax and contributions	121	56.321.239 36.342.859	56.321.239 36.342.859	60.565.977 46.901.331	60.565.977 46.901.331
c) Employer's contributions	122 123	13.632.742	13.632.742	15.933.797	15.933.797
4. Depreciation and amortisation expense	124	9.369.338	9.369.338	10.911.861	10.911.861
5. Other costs	125	3.594.929	3.594.929	7.974.153	7.974.153
6. Impairment losses (127+128)	126	1.819.920	1.819.920	1.482.211	1.482.211
a) non-current assets (except financial assets)	127
b) current asssets (except financial assets) 7. Provisions	128	1.819.920	1.819.920	1.482.211	1.482.211
8. Other operating expenses	129 130	691.204	691.204	1.109.806	1.109.806
III. FINANCIAL INCOME (132 do 136)	131	7.374.654	7.374.654	3.178.972	3.178.972
1. Interest, foreign exhange gains, dividends and other income from related parties	132
2. Interest, foreign exchange gains, dividends and other income from non-related and other	133	6.591.222	6.591.222	2.913.195	2.913.195
entities
3. Income from associates and ownership interests 4. Unrealized gains	134
5. Other financial income	135 136	783.432	783.432	265.777	265.777
IV. FINANCIAL EXPENSES (138 do 141)	137	26.972	26.972	393	393
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	139	26.972	26.972	393	393
entities
3. Unrealized losses 4. Other financial expenses	140 141
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	338.225.602	338.225.602	318.986.024	318.986.024
X. TOTAL EXPENSES (114+137+143 + 145) XI. PROFIT OR LOSS BEFORE TAX (146-147)	147 148	289.310.024 48.915.578	289.310.024 48.915.578	286.107.572 32.878.452	286.107.572 32.878.452
1. Profit before tax (146-147)	149	48.915.578	48.915.578	32.878.452	32.878.452
2. Loss before tax (147-146)	150			0	0
XII. INCOME TAX EXPENSE	151
XIII. PROFIT OR LOSS FOR THE PERIOD (148-151)	152	48.915.578	48.915.578	32.878.452	32.878.452
1. Profit for the period (149-151) 2. Loss for the period (151-148)	153 154	48.915.578 0	48.915.578 0	32.878.452 0	32.878.452 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) II. OTHER COMPREHENSIVE INCOME /LOSS BEFORE TAX (159 do 165)	157 158	48.915.578 0	48.915.578 0	32.878.452 0	32.878.452 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) APPENDIX Statement of Comprehensive Income (to be filled in by entities submitting consolidated financial statements)	168	48.915.578	48.915.578	32.878.452	32.878.452
VI. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD
1. Attributable to owners of the company	169
2. Attributable to non-controlling interests	170
		41.567.896	41.567.896	29.699.874	29.699.874

CASH FLOW STATEMENT - Indirect method in the period 01 January 2014 to 31 March 2014

Issuer: Ericsson Nikola Tesla d.d.
Item	AOP	Previous period	Current period
1	2	3	4
CASH FLOW FROM OPERATING ACTIVITIES
1. Profit before tax	001	48.915.578	32.878.452
2. Depreciation and amortisation	002	9.369.338	10.911.861
3. Increase in liabilities	003
4. Decrease in receivables	004		23.021.974
5. Decrease in inventories	005
6. Other increase in cash flow	006
I. Total increase in operating cash flow (001 do 006)	007	58.284.917	66.812.287
1. Decrease in liabilities	008	4.418.237	52.010.834
2. Increase in receivables	009	35.707.717
3. Increase in inventories	010	878.909	5.439.323
4. Other decrease in cash flow	011	3.740.786	301.822
II. Total decrease in operating cash flow (008 do 011)	012	44.745.650	57.751.979
A1) NET INCREASE IN OPERATING CASH FLOW
(007-012)	013	13.539.267	9.060.308
A2) NET DECREASE IN OPERATING CASH FLOW	014
(012-007)
CASH FLOW FROM INVESTMENT ACTIVITIES
1. Proceeds from sale of property, plant and equipment	015	273.650	15.500
2. Net disposal of financial assets	016		5.920.549
3. Interest received	017	3.416.445	2.429.355
4. Dividend received	018
5. Other cash from investing activities	019
III. Total cash flow from investing activities (015 do 019)	020	3.690.095	8.365.403
1. Purchase of property, plant and equipment and intangible assets	021	13.413.691	11.431.546
2. Purchase of financial instruments	022	23.540.037
3. Other cash flow used in investing activites	023	73.282
IV. Total cash flow from investing activities (021 do 023)	024	37.027.010	11.431.546
B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES	025
(020-024) B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES
(024-020)	026	33.336.915	3.066.143
CASH FLOW FROM FINANCIAL ACTIVITIES
1. Proceeds from issuance of financial instruments	027
2. Proceeds from loans	028	3.162
3. Other cash flow from financial activities	029	2.882.594	987.290
V. Total cash flow from financial activities (027 do 029)	030	2.885.755	987.290
1. Repayment of interest-bearing borrowings	031
2. Dividend paid	032		9.017
3. Repayment of finance lease	033
4. Repurchase of treasury shares	034
5. Other cash flow used in financial activities	035
VI. Total cash flow used in financial activities (031 do 035)	036	0	9.017
C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES
(030-036)	037	2.885.755	978.273
C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES	038
(036-030)
Total increase in cash flow (013 – 014 + 025 – 026 + 037 – 038)	039		6.972.438
Total decrease in cash flow (014 – 013 + 026 – 025 + 038 – 037)	040	16.911.893
Cash and cash equivalents at the beginning of the period	041	494.242.172	404.269.422
Increase in cash and cash equivalents	042		6.972.438
Decrease in cash and cash equivalents	043	16.911.893	0
Cash and cash equivalents at the end of the period	044	477.330.279	411.241.860

for the period from 31.3.2014 1.1.2014 to
Item	AOP	Previous period	Current period
1	2	3	4
1. Share capital	001	133.165.000	133.165.000
2. Capital reserves	002
3. Reserves from profit	003	34.916.456	15.710.740
4. Retained earnings	004	586.571.122	523.478.801
5. Profit or loss for the period	005	48.915.578	32.878.452
6. Revaluation of property, plant and equipment	006
7. Revaluation of intangible assets	007
8. Revaluation of financial financial assets available for sale	008
9. Other revaluations	009
10. Total capital and reserves (AOP 001 do 009)	010	803.568.157	705.232.992
11. Foreign exchange differences from investments in foreign operations	011
12. Current and deferred taxes	012
13. Cash flow hedge	013
14. Changes in accounting policies	014
15. Prior year adjustment	015
16. Other changes in equity	016
17. Total increase/decrease in equity (AOP 011 do 016)	017	0	0
17 a. Parent company share in subsidiary	018
17 b. Minority interest	019

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

	Networks		Professional services		Support services		Unallocated		Total
	31.3.2014. '000 kn	31.3.2013. '000 kn	31.3.2014. '000 kn	31.3.2013. '000 kn	31.3.2014. '000 kn	31.3.2013. '000 kn	31.3.2014. '000 kn	31.3.2013. '000 kn	31.3.2014. '000 kn	31.3.2013. '000 kn
Segment sales revenue	155.245	192.522	145.605	126.206	9.850	8.310	0	0	310.700	327.038
Operating profit/(loss)	-251	8.467	36.874	39.288	803	219	-7.726	-6.406	29.700	41.568

2. Transactions with related parties

	31.3.2014. '000 kn	31.3.2013. '000 kn
Total sales	133.395	128.398
Total purchases	89.756	124.346

3. Balances with related parties

	31.3.2014. '000 kn	31.12.2013 '000 kn
Receivable	68.376	71.604
Payable	46.275	57.941

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