Ericsson Nikola Tesla d.d.

Earnings Release • Apr 26, 2018

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 Q1 2018

Highlights:

• Sales revenue: MHRK 341.0
• Gross margin: 17.7%
• Operating profit: MHRK 42.4
• Profit before tax: MHRK 41
• Net profit: MHRK 30.3
• Cash flow from operating activities: MHRK 9.4

Gordana Kovačević, the President of Ericsson Nikola Tesla comments:

In Q1 2018, Ericsson Nikola Tesla Group sales revenue amounted to MHRK 341, down by 5.4% year-over-year. In line with expectations, there was a continuous revenue growth from services to Ericsson, primarily driven by expansion of responsibilities in our R&D center and other competence centers. We hired 73 new experts in Q1, and thus at the end of Q1 Ericsson Nikola Tesla Group had 3,088 employees.

At the event "Focused on the future", we made public our gaining of new responsibilities in the development of the fifth-generation of mobile communications (5G), which will result in the expansion of our R&D activities in Osijek along with the existing locations in Zagreb and Split. This is an investment that will enable hiring of a substantial number of experts, and activities at a new location, with all their positive influence, will contribute to the economic and technological development of Slavonia. With its 1,300 employees, the company's R&D center represents the largest R&D center in Croatia that already creates advanced solutions for customers worldwide. New activities will additionally strengthen our position in Ericsson and other markets. The "Focused on the future" event also featured the first live demonstration of 5G technology in Croatia. It is the development of new solutions, products and services based on 5G technology that will enable new business models to our partners, operators and other industries and at the same time create opportunities for new job openings. By entering a new technology cycle, the company will need to make additional significant investments.

Despite lower sales revenue on domestic market, in Q1 we signed several strategic contracts, which has strengthened our market position and created prerequisites for better positioning in the future periods. With Hrvatski Telekom, we signed a contract for further mobile network modernization using the latest Ericsson mobile networks solutions. We continued to cooperate with Vipnet on the implementation of a multi-year framework agreement that includes the modernization and extension of the radio access network. With the Ministry of Healthcare of the Republic of Croatia, we signed a contract related to a number of solutions which will enable a more efficient management of the healthcare system.

In the export markets, slow economic development and regulatory environment affected the level and dynamics of operators' investments. Marketing and sales activities are ongoing on several projects in the telecom segment, as well as in the Industry & Society segment.

Almost all key performance indicators show a positive trend compared to Q1 2017. Our continued focus on operational excellence improvements enabled cost savings, which in turn improved the margin and reduced our operational expenses.

Gross margin increased to 17.7%. Operating profit increased by 45.1% to MHRK 42.4, as a result of higher gross margin and lower sales and administrative costs. Net profit rose by 52% to MHRK 30.3. Q1 was closed with a lean balance sheet and an equity ratio of 34.7%. Working capital efficiency, expressed in Working Capital Days (WCD), was 27. A proactive collection of receivables resulted in a positive cash flow from operating activities. At the end of the quarter, total cash and cash equivalents, including short-term financial assets, amounted to MHRK 239.6.

At the Mobile World Congress (MWC) in Barcelona, Ericsson presented new developments and potential for business growth enabled by innovations in 5G, IoT and Digital business. One of demos in the area Innovate together showed the intelligent care system for the elderly, which was developed in Ericsson Garage Croatia. This system, called "Intelligent Care Assistance" can detect patterns in an elderly person's habits based on the data collected from unobtrusive sensors by using advanced machine learning algorithms.

The company continues to strengthen partnerships with Universities, start-ups and other scientific-research institutions by implementing joint projects, some of which are funded by the EU. During Q1, the following projects were implemented: Ensuring Optimal Healthcare for People with Mental Health Problems, Development and Implementation of the IT System for the Monitoring of the General Administrative Procedure Act (ZUP), and the first phase of the project WaterQ.

The European Commission's new study analyzed the impact of EU-Funded ICT research and development projects on active and healthy ageing. Three projects, in the development of which our company significantly contributed, were among the top 25 most influential projects in the last 11 years. These projects are: Carewell that enables multi-layer integration for patients with complex needs, eWALL that delivers innovative home environment, and UNIVERSAAL that supports an open platform for the so called Ambient Assisted Living.

In line with our strategy, we continue to strengthen our position in important areas: 4G/5G, OSS/BSS, Digital Transformation, Managed Services, and IoT through efficient implementation of transformation programs. In Ericsson internal market, our aim is to keep the existing responsibilities and expand them, while maintaining high quality of delivered services.

It is quite certain that economic uncertainty and business challenges will mark the entire year. Therefore, our strong focus remains on continuous adjustment to technological and market conditions, responsible risk management and optimal use of all resources."

Financial Highlights for the Group:

• Sales revenue amounted to MHRK 341 (Q1 2017: MHRK 360.4), 5.4% lower year-over-year. Of the total sales revenue, domestic market accounted for 17%, Ericsson services accounted for 69.7% (of which 12.3% related to MS in Croatia), while other export markets accounted for 13.3%.
• Sales in the Network segment amounted to MHRK 203.4 (Q1 2017: MHRK 175.5), Digital Services segment amounted to MHRK 95.4 (Q1 2017: MHRK 144.2), Managed Services segment amounted to MHRK 41.9 (Q1 2017: MHRK 39.7) and Other amounted to MHRK 0.3 (Q1 2017: MHRK 1).

PRESS INFO

April 26, 2018

• Gross profit amounted to MHRK 60.4 million (Q1 2017: MHRK 53.2), 13.7% up year-over-year. Gross margin increased to 17.7% (Q1 2017: 14.7%).
• Sales and administrative costs were 26.7% lower year-over-year and amounted to MHRK 17.8 (Q1 2017: MHRK 24.2).
• Operating profit amounted to MHRK 42.4 (Q1 2017: MHRK 29.2), an increase by 45.1% year-over-year.
• A loss of financial activities of MHRK 1.4 was realized (Q1 2017: loss of financial activities was MHRK 3 million) due to negative currency deviations.
• Profit before tax increased by 56.8% year-over-year and amounted to MHRK 41 (Q1 2017: MHRK 26.2).
• In Q1 2018, there were no tax incentives for R&D, as the State Aid for Research and Development Projects has not yet entered into force. Accordingly, the income tax liability was calculated amounting to MHRK 10.7 (Q1 2017: MHRK 6.2).
• Net profit was 52% higher year-over-year and amounted to MHRK 30.3 (Q1 2017: MHRK 19.9). Return on Sales (ROS) was 8.9% (Q1 2017: 5.5%).
• Cash flow from operating activities was MHRK 9.4 (Q1 2017: MHRK -65.9) due to proactive collection of receivables. The cash conversion rate was 17% (Q1 2017: -137%).
• Total cash and cash equivalents, including short-term financial assets as at March 31, 2018, amounted to MHRK 239.6 (31.4% of total assets), while at the end-2017 it amounted to MHRK 243.8 (29.7% of total assets).
• As at March 31, 2018, the Company had a lean balance sheet with total assets of MHRK 763.8, 7% lower compared to end-2017, mainly due to lower short-term receivables. Equity ratio amounted to 34.7% (end-2017: 28.7%).
• With related parties, the transactions were as follows: sales of products and services amounted to MHRK 203.8 (Q1 2017: MHRK 204.1), while procurement of products and services amount to MHRK 70.8 (Q1 2017: MHRK 60.1).
• As at March 31, 2018 balances outstanding with related parties were as follows: receivables amounted to MHRK 117.5 (end of 2017: MHRK 105.6), and payables to MHRK 79.8 (end of 2017: MHRK 124.4).
• The effects of adoption of new International Financial Reporting Standards (IFRS) effective on or after 1 January 2018 will have no material impact on the Company's earnings, retained or current, compared to previous years. The cumulative impact of the adoption will be recognised in retained earnings as of 1 January 2018 and comparatives will not be restated.

The Group opted to adopt the new IFRS 15 standard using the modified retrospective approach. The impact of IFRS 15 implementation is estimated to be immaterial to equity at transition date, 1 January 2018.

IFRS 9 introduces new rules and a new impairment model for financial assets. Based on the assessments undertaken to date, the Group does not expect a material impact in the loss allowance for trade creditors and other financial assets.

Business situation in major markets

In the domestic market sales revenue amounted to MHRK 57.9, a decrease by 34.1% year-over-year.

With strategic partner Vipnet, we continued to cooperate on implementation of a multi-year frame agreement that encompasses the modernization and expansion of radio access network by using the state-of-the-art technologies from Ericsson's extensive portfolio. The collaboration in the field of transport telecom network and core network continues, which contributes to an increased service quality and new services for end users. Testings of new functionalities in various segments are ongoing, demonstrating speeds of 750 Mbit/s in radio access network, which is already supported by more than 10% of the available mobile devices.

With Hrvatski Telekom, a further mobile network modernization was agreed, which will enable an even better coverage, higher speeds and network capacity and, consequently, a better user experience. The contracted support will include Ericsson's latest solutions related to mobile networks. Business cooperation in the segment of fixed telecommunication network modernization, and the delivery of telecommunication infrastructure build and maintenance services continues.

During Q1, for the mobile operator Tele 2 we increased the voice core network capacity, continued to work on the extension of microwave transport network and provide support services for voice core network.

In ICT for Industry&Society, we signed a contract for the delivery of a solution for an efficient healthcare system management with the Ministry of Healthcare of the Republic of Croatia. The Smart parking project in Split was successfully implemented.

In export markets (except Ericsson market) sales revenue amounted to MHRK 45.4, a decrease by 9.7% yearover-year.

In the markets of Southeast Europe (Bosnia and Herzegovina, Montenegro and Kosovo) sales revenue amounted to MHRK 24, an increase of 20.5% year-over-year. The collaboration with operators in the segment of maintenance and modernization of fixed and mobile networks is ongoing.

In CIS market, sales revenue amounted to MHRK 21.5, a decrease by 29.4% year-over-year. Sales in the first quarter is in line with plans. In the following quarter, we expect to increase market share in LTE segment in Belarus. Marketing and sales activities continue with the existing and new customers in telecom and e-healthcare segments.

In Ericsson market, sales revenue amounted to MHRK 237.6, an increase by 7% year-over-year. The contribution of Ericsson Nikola Tesla Servisi d.o.o., a daughter company of Ericsson Nikola Tesla d.d., to revenue in this market segment amounted to MHRK 42 (Q1 2017: MHRK 38.5).

In Ericsson Nikola Tesla Research & Development Center, expansion of responsibilities for the development of 5G network systems is ongoing, in radio networks and data management.

The activities within other development units are ongoing as planned, focused on the development of Network Functions Virtualization, with the aim to enable new solutions on the cloud platform.

The unit for the development of services in fixed networks defined new development plans, showing the continuity of business in this segment.

At the end of Q1, at the R&D management meeting which gathered the representatives of all units with which we cooperate in Ericsson Corporation, our R&D Center was once again recognized by innovative organizational culture and was highly evaluated for the work quality and efficiency. The possibility of further extension of responsibilities was highlighted.

Technology incubator Ericsson Garage Croatia is focused on marketing and monetization of solutions in the field of analytics, IoT, Virtual Reality/Augmented Reality, machine learning, etc. Other than at the Mobile World Congress, the projects on which Ericsson Garage Croatia worked were presented to our customers and partners at the event "Taste of Barcelona". The quality of the projects was recognized globally, and we received the invitation from Ericsson Corporation to present our Garage solutions at similar customer events.

The experts of Center for Services and Solutions for Networks & Media have been engaged in projects for numerous customers worldwide, such as: LGI Group, MTN Republic of South Africa, Orange Group, Swisscom Switzerland, Telekom Austria Group (TAG), Vodafone Netherlands. These are complex activities of expert analysis, creation of new innovative solutions, optimization and upgrading of the existing networks, and consulting. There are ongoing activities related to the development and implementation of software tools for mobile networks management and optimization.

Experts from Services and Solutions Center for Digital Services were engaged in various projects for customers, such as: A1 Slovenia, British Telecom United Kingdom, KDDI Japan, Maktel Macedonia, MTel Bulgaria, Ogero Lebanon, Orange Belgium, Post Luxembourg, Swisscom Switzerland, Telekom Austria Group (TAG), Telekom Serbia, TIM Italy, T-Mobile Czech Republic, Telefonica in Colombia, Germany, Netherlands and the United Kingdom, Telestra Australia, Veon Russia, Vodafone Netherlands, Wind3 Italy, and Wind Greece. These activities include design, network applications, Cloud infrastructure and digital business systems.

The company Ericsson Nikola Tesla Servisi successfully provided the services of monitoring, maintenance and build of Hrvatski Telekom's telecommunication network. In Q1, all project goals were reached or exceeded, thus providing additional value to our strategic customer, as well as to end users of customer's telecommunication services.

Other information

Ericsson Nikola Tesla Annual General Meeting shall be held on June 20, 2018. The right to participate at the Annual General Meeting have all shareholders, or their proxies, respectively, who register to participate until June 13, 2018, at the latest.

The shareholders who have the Company shares registered on their securities account in the Central Depository & Clearing Company on June 28, 2018 are entitled for dividend payment of HRK 32.5 per share. Ex-dividend date is June 27, 2018.

Ericsson Nikola Tesla major shareholders (as at March 31, 2018)

	Number of shares	% of share capital
Telefonaktiebolaget LM Ericsson	653,473	49.07
Addiko Bank d.d. / Raiffeisen mandatory pension fund, B category	123,514	9.28
Societe Generale-Splitska banka d.d. / Erste Plavi mandatory pension fund, B category	41,890	3.15
Zagrebačka banka d.d. / Unicredit Bank Austria AG – clients account	17,300	1.30
Addiko Bank d.d. / PBZ Croatia osiguranje mandatory pension fund, B category	16,810	1.26
PBZ d.d. / The Bank of New York as custodian	16,271	1.22
Zagrebačka banka d.d. / State Street and Trust Company, Boston	13,935	1.05
PBZ d.d. / custodian client account	9,544	0.72
Addiko Bank d.d. / Raiffeisen voluntary pension fund	7,934	0.60
OTP BANKA d.d./INS683	7,677	0.58
Other shareholders	423,302	31.77

Share price information in Q1 2018:

Highest (HRK)	Lowest (HRK)	Closing (HRK)	Market cap. (In MHRK)
1,240.00	1,105.00	1,165.00	1,551.4

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 non-consolidated 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 2018 to 31 March 2018 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

Reporting period: 1.1.2018. to 31.03.2018 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 Number of employees: 21 2.293 (at the end of year) Consolidated Report Business activity code: NO 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 +385 (0)1 365 3174 Telefaks: 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 (signature of authorized representative)	ENCLOSURE 1
			(seal)

Balance Sheet

	as at 31 March 2018

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	197.601.203	211.439.168
I. INTANGIBLE ASSETS (004 do 009)	003	1.287.513	1.132.736
1. Research & Development expenditure	004
2. Patents, licences, royalties, trade marks, software&similar rights	005	1.287.513	1.132.736
3. Goodwill	006	0	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	98.010.608	98.321.186
1. Land	011	15.605.344	15.605.344
2. Property	012	30.071.396	29.532.587
3. Plants and equipment	013	42.219.839	40.112.828
4. Tools, plants&vehicles	014	8.315.942	8.616.637
5. Biological asset	015
6. Prepayments for tangible assets	016
7. Assets under construction	017	1.722.098	4.379.747
8. Other tangible assets	018	75.989	74.043
9. Investments property	019
III. FINANCIAL ASSETS (021 do 028)	020	28.947.849	28.467.734
1. Investments in subsidiaries	021	1.092.798	1.092.798
2. Loans to subsidiaries	022
3. Participating interests (stakes)	023
4. Loans to participating interest	024
5. Investments in securities	025
6. Loans & deposits	026	27.855.052	27.374.936
7. Other non-current financial assets 8. Investment accounted by equity method	027
IV. RECEIVABLES (030 do 032)	028	55.018.983	69.181.262
1. Receivables from subsidiaries	029	1.156.317	1.156.318
2. Receivables from credit sales	030 031	53.318.299	67.490.857
3. Other receivables	032	544.367	534.088
V. DEFERRED TAX ASSETS	033	14.336.250	14.336.250
C) CURENT ASSETS (035+043+050+058)	034	592.189.188	526.393.267
I. INVENTORIES (036 do 042)	035	17.347.970	38.408.095
1. Raw materials & consumables	036		747
2. Work in progress	037	17.347.970	38.407.348
3. Products	038
4. Merchandise	039
5. Prepayments for inventories	040	0	0
6. Other available-for-sale assets	041
7. Biological asset	042
II. RECEIVABLES (044 do 049)	043	345.235.285	281.961.036
1. Receivables for trade debt of subsidiaries	044	186.857.448	161.487.793
2. Trade receivables	045	140.802.419	111.949.865
3. Receivables for trade debts of participating entities	046
4. Amounts receivable from employees	047
5. Receivables from government agencies	048	2.239.325	2.301.783
6. Other receivables	049	15.336.093	6.221.594
III. FINANCIAL ASSETS (051 do 057)	050	84.520.095	84.527.688
1. Investments in subsidiaries	051
2. Loans to subsidiaries	052	0	0
3. Participating interests (stakes)	053
4. Loans to participating interest	054
5. Investments in securities	055	84.520.095	84.527.688
6. Loans & deposits	056
7. Other financial assets	057
IV. CASH AND CASH EQUIVALENTS	058	145.085.838	121.496.448
D) PREPAYMENTS AND ACCRUED INCOME	059	5.066.714	4.971.274
E) TOTAL ASSETS (001+002+034+059)	060	794.857.105	742.803.709
F) OFF-BALANCE SHEET ITEMS	061

EQUITY AND LIABILITES
A) EQUITY (063+064+065+071+072+075+078)	062	223.456.418	252.735.663
I. SHARE CAPITAL	063	133.165.000	133.165.000
II. CAPITAL RESERVES	064
III. RESERVES FROM PROFIT (066+067-068+069+070)	065	21.273.156	21.273.156
1. Legal reserves	066	6.658.250	6.658.250
2. Reserves for treasury shares	067	14.895.346	14.895.346
3. Treasury shares and stakes (less)	068	280.440	280.440
4. Statutory reserves	069
5. Other reserves	070
IV. REVALUATION RESERVES	071
V. RETAINED EARNINGS (073-074)	072	4.734.925	68.020.263
1. Retained earnings	073	4.734.925	68.020.263
2. Loss brought forward	074
VI. PROFIT OR LOSS FOR THE FINANCIAL YEAR (076-077)	075	64.283.338	30.277.245
1. Profit for the financial year	076	64.283.338	30.277.245
2. Loss for the financial year	077
VII. MINORITY INTEREST	078
B) PROVISIONS (080 do 082)	079	5.279.213	5.369.862
1. Provisions for redundancy costs	080	5.279.213	5.369.862
2. Provisions for tax obligations	081
3. Other provisions	082
C) NON-CURRENT LIABILITIES (084 do 092)	083	15.220.927	15.171.875
1. Amounts payable to subsidiaries	084	1.153.980	1.153.980
2. Liabilities for loans, deposits and other	085	0	0
3. Liabilities towards banks and other financial institutions	086	8.377.944	8.057.003
4. Amounts payable for prepayment	087	0	0
5. Trade payables	088	0	0
6. Amounts payable for securities	089	0	0
7. Liabilities toward participating interests	090	0	0
8. Other non-current liabilities	091	5.689.003	5.960.893
9. Deffered tax	092
D) CURRENT LIABILITIES (094 do 105)	093	359.589.638	301.358.838
1. Amounts payable to subsidiaries	094	135.507.890	92.051.601
2. Liabilities for loans, deposits and other	095
3. Liabilities towards banks and other financial institutions	096	0	0
4. Amounts payable for prepayment	097
5. Trade payables	098	113.421.232	85.448.369
6. Amounts payable for securities	099
7. Liabilities toward participating interests	100
8. Amounts payable to employees	101	91.900.759	87.800.749
9. Liabilities for taxes and contributions	102	18.759.757	35.883.351
10. Dividend payables	103
11. Liabilities directly associated with the assets classified as held for sale	104
12. Other current liabilities	105		174.769
E) ACCRUED CHARGES AND DEFERRED REVENUE	106	191.310.908	168.167.470
F) TOTAL EQUITY AND LIABILITIES (062+079+083+093+106)	107	794.857.105	742.803.709
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 2018 to 31 March 2018 INCOME STATEMENT

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	363.404.062	363.404.062	302.451.664	302.451.664
1. Sales revenue	112	359.344.204	359.344.204	297.807.081	297.807.081
2. Other operating income	113	4.059.858	4.059.858	4.644.582	4.644.582
II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	114	334.767.464	334.767.464	260.219.817	260.219.817
1. Changes in inventories of finished products and work in progress	115	-14.600.037	-14.600.037	-21.059.253	-21.059.253
2. Raw material and consumables used (117 do 119) a) Cost of raw materials & consumables	116	176.984.245 84.769.749	176.984.245 84.769.749	114.289.723 59.525.333	114.289.723 59.525.333
b) Cost of goods sold	117 118
c) Other costs	119	92.214.496	92.214.496	54.764.390	54.764.390
3. Staff costs (121 do 123)	120	153.183.251	153.183.251	150.464.196	150.464.196
a) Net salaries	121	79.595.910	79.595.910	83.388.600	83.388.600
b) Employee income tax and contributions	122	53.063.940	53.063.940	47.861.439	47.861.439
c) Employer's contributions	123	20.523.400	20.523.400	19.214.157	19.214.157
4. Depreciation and amortisation expense	124	9.718.008	9.718.008	8.213.327	8.213.327
5. Other costs	125	8.619.656	8.619.656	8.277.923	8.277.923
6. Impairment losses (127+128)	126	0	0	0	0
a) non-current assets (except financial assets)	127
b) current asssets (except financial assets)	128	0	0	0	0
7. Provisions	129
8. Other operating expenses	130	862.342	862.342	33.902	33.902
III. FINANCIAL INCOME (132 do 136)	131	645.252	645.252	456.196	456.196
1. Interest, foreign exhange gains, dividends and other income from related parties	132	64.632	64.632	0	0
2. Interest, foreign exchange gains, dividends and other income from non-related and other entities	133	593.589	593.589	448.603	448.603
3. Income from associates and ownership interests	134
4. Unrealized gains	135
5. Other financial income	136			7.593	7.593
IV. FINANCIAL EXPENSES (138 do 141)	137	3.685.477	3.685.477	1.850.108	1.850.108
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	3.685.477	3.685.477	1.850.108	1.850.108
3. Unrealized losses	140
4. Other financial expenses	141	12.969	12.969
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	364.049.314	364.049.314	302.907.860	302.907.860
X. TOTAL EXPENSES (114+137+143 + 145)	147	338.452.941	338.452.941	262.069.926	262.069.926
XI. PROFIT OR LOSS BEFORE TAX (146-147)	148	25.596.374	25.596.374	40.837.934	40.837.934
1. Profit before tax (146-147)	149	25.596.374	25.596.374	40.837.934	40.837.934
2. Loss before tax (147-146)	150	0	0	0	0
XII. INCOME TAX EXPENSE XIII. PROFIT OR LOSS FOR THE PERIOD (148-151)	151	5.981.873 19.614.501	5.981.873 19.614.501	10.560.690 30.277.245	10.560.690 30.277.245
1. Profit for the period (149-151)	152 153	19.614.501	19.614.501	30.277.245	30.277.245
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	19.614.501	19.614.501	30.277.245	30.277.245
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)	168	19.614.501	19.614.501	30.277.245	30.277.245
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 2018 to 31 March 2018

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	25.596.374	40.837.934
2. Depreciation and amortisation	002	9.718.008	8.213.327
3. Increase in liabilities	003
4. Decrease in receivables	004	6.791.659	50.175.257
5. Decrease in inventories	005
6. Other increase in cash flow	006	11.007.118	15.811.545
I. Total increase in operating cash flow (001 do 006)	007	53.113.158	115.038.064
1. Decrease in liabilities	008	99.278.181	103.981.216
2. Increase in receivables	009
3. Increase in inventories	010	14.643.400	21.060.125
4. Other decrease in cash flow	011
II. Total decrease in operating cash flow (008 do 011)	012	113.921.581	125.041.342
A1) NET INCREASE IN OPERATING CASH FLOW
(007-012)	013
A2) NET DECREASE IN OPERATING CASH FLOW	014	60.808.423	10.003.278
(012-007)
CASH FLOW FROM INVESTMENT ACTIVITIES
1. Proceeds from sale of property, plant and equipment	015	41.268	73.290
2. Net disposal of financial assets	016
3. Interest received	017	704.616	561.497
4. Dividend received	018
5. Other cash from investing activities	019	9.696	17.598
III. Total cash flow from investing activities (015 do 019)	020	755.580	652.385
1. Purchase of property, plant and equipment and intangible assets	021	8.949.715	12.724.034
2. Purchase of financial instruments	022
3. Other cash flow used in investing activites	023	345.759
IV. Total cash flow from investing activities (021 do 023) B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES	024	9.295.474	12.724.034
(020-024)	025
B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES		8.539.894	12.071.649
(024-020)	026
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		19.000
3. Repayment of finance lease	033
4. Repurchase of treasury shares	034
5. Other cash flow used in financial activities	035	3.209.430	1.495.463
VI. Total cash flow used in financial activities (031 do 035)	036	3.209.430	1.514.463
C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES	037
(030-036) C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES
(036-030)	038	3.209.430	1.514.463
Total increase in cash flow (013 – 014 + 025 – 026 + 037 – 038)	039
Total decrease in cash flow (014 – 013 + 026 – 025 + 038 – 037)	040	72.557.747	23.589.390
Cash and cash equivalents at the beginning of the period	041	213.375.495	145.085.838
Increase in cash and cash equivalents	042	0	0
Decrease in cash and cash equivalents	043	72.557.747	23.589.390
Cash and cash equivalents at the end of the period	044	140.817.748	121.496.448

for the period from 31.3.2018 1.1.2018 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	20.849.076	21.273.156
4. Retained earnings	004	14.668.954	68.020.263
5. Profit or loss for the period	005	109.566.640	30.277.245
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	278.249.670	252.735.663
11. Foreign exchange differences from investments in foreign operations	011	0	0
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	0	0
17 b. Minority interest	019

STATEMENT OF CHANGES IN EQUITY

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		Digital services			Managed Services	Other		Unallocated		Total
		31.03.2018. 31.03.2017.	31.03.2018.	31.03.2017.	31.03.2018.		31.03.2017. 31.03.2018.	31.03.2017.	31.03.2018.	31.03.2017.	31.03.2018.	31.03.2017.
	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn	'000 kn
Segment sales revenue	202.715	174.403	94.000	144.237	778	39.677	314	1.027	0	0	297.807	359.344
Operating profit	40.848	30.960	12.637	10.705	761	751	33	491	-12.048	-14.270	42.232	28.637

2. Transactions with related parties

	'000 kn	31.03.2018. 31.03.2017. '000 kn
Total sales	214.745	206.995
Total purchases	121.617	103.714

3. Balances with related parties

	'000 kn	31.03.2018. 31.12.2017. '000 kn
Receivable	162.644	188.014
Payable	93.206	136.662

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