Ericsson Nikola Tesla d.d. — Management Reports 2013

Feb 13, 2014

Ericsson Nikola Tesla d.d.

The Management Report on the Ericsson Nikola Tesla Group performance and comments on financial results in 2013

Highlights:

• Sales revenue: MHRK 1,345.2
• Gross margin: 16.4%
• Operating profit: MHRK 127.2
• Net profit: MHRK 144.4
• Cash flow from operating activities: MHRK 141.2

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

"Despite the challenging business environment in all markets, Ericsson Nikola Tesla in 2013 achieved excellent business results and strengthened its market position. During the year, we continued to work on numerous strategic projects and initiatives, relying on technological leadership, our employees' skills and competences, as well as on partnership with our customers. The activities focused on the efficiency improvement and cost optimization contributed to good results, contributing to profitability increase.

Consequently, operating profit increased by 9.1%, while net profit increased by 13.7% YoY. Gross margin increased to 16.4%, primarily due to a more favorable product/service mix. Return on sales (ROS) increased to 10.7%. Total cash balances, including current financial assets, amounted to MHRK 521.2 as at December 31, 2013. The Company ended the year with a solid cash flow from operating activities, amounting to MHRK 141.2 and cash conversion of 98%. The Company has a stabile balance sheet with total assets of MHRK 1,048.1 and equity ratio of 64%.

A positive trend in sales revenues was recorded in almost all markets. In the domestic market, telecom operators continued to invest in electronic communication, primarily due to implementation of new technologies (IMS, 3G network expansion, LTE...). During 2013, we strengthened our market share in the Croatian market and achieved an increase in sales revenue, despite of an uncertain economic

PRESS INFO February 13, 2014

situation. A significant increase in sales revenue was also achieved in the neighboring countries, where, among other things, we signed a strategic contract in the area of the transformation systems for Operation Support (OSS) in Bosnia and Herzegovina market. We also worked on implementing 3G network in Kosovo and commissioned LTE in Montenegro. In CIS markets, the Company is repositioning itself, in order to adjust to the challenging and dynamic market environment. Sales revenues decreased YoY, as expected, considering the large deal with Rostelecom, which was signed and almost fully realized in 2012. The activities on modernization and building of mobile networks with the customers in Georgia and Russia, as well as on implementation of a pilot project of the healthcare information system in Armenia, are ongoing.

We continue to contribute to the vision of the networked society and Ericsson technological leadership with innovative e-Solutions such as e-Health, e-Call, e-Cadaster and land registry etc.

A significant part of our activities is related to research and development activities, and other expert activities within the Ericsson market. During the year, we have strengthened our position, which resulted in the increased business volume and new responsibilities. Sales revenue from research and development activities in the segments of advanced radio networks, platforms and fixed network servers, as well as from the other expert centers' activities, account for 42% of total sales revenue.

In 2013, we solidified our core business, employed 160 professionals mainly on research and development activities, and marked the 60th anniversary of the collaboration with the Ericsson Corporation. We also took important steps to build a leadership position in new and targeted key areas (4G/LTE, OSS/BSS, TV and media distribution, services and cloud solutions). We are gradually increasing allocation of resources and continuously develop competencies in the specified key areas. Furthermore, we continue to stay more focused on profitable growth, higher efficiency, further working capital improvement and competitiveness.

Over time, we expect the telecommunication industry in our markets to recover. A further growth in demand for fast and ultra-fast Internet access, multimedia content and cloud services is expected. The number of users of "smart" mobile user devices will significantly grow (smartphone and tablets). There will be a strong growth in fixed and mobile network data traffic. Mobile broadband access will continue its strong growth, by further implementing 3G and 3.5G mobile technologies, and in Croatia, by more intensive implementation of LTE Technology.

In edge and core networks, the transformation to "all IP" next generation convergent networks will continue. We also expect modernization of OSS (Operation Support System) and BSS (Business Support System), as well as the IPTV platforms. All this will, in the end, enable the operators to provide a broad spectrum of convergent services with the emphasis on the greater end user experience.

The long term basis of our industry remains attractive and, with our strategic initiatives, we are well positioned for further supporting our customers in a transforming ICT market".

Financial Summary:

• Sales revenues decreased by 29.7% YoY to MHRK 1,345.2 (2012: MHRK 1,913.3). In total sales revenue the domestic market accounts for 25.3%, and export accounts for 74.7% (Ericsson market 42.3%, and other export markets account for 32.4%).
• Network sales amounted to MHRK 769.1 (57.2% of total sales), Services amounted to MHRK 535.2 (39.8% of total sales), and Support Solutions amounted to MHRK 40.9 (3% of total sales).
• Gross profit of MHRK 220.1 (2012: MHRK 211.6), increased by 4% YoY. Gross margin increased to 16.4% (2012: 11.1%) as a result of a more favorable product/service mix.
• Distribution and administrative expenses decreased by 3.9% to MHRK 93.4 (2012: MHRK 97.2).
• Operating profit increased by 9.1% to MHRK 127.2 (2012: MHRK 116.6) primarily as a result of products/service mix, further efficiency increase and financial risk management.
• Net finance income decreased by 29.9% YoY to MHRK 17.1 (2012: MHRK 24.4), as a result of lower interest gains, partially offset by foreign exchange gains.
• Net profit increased by 13.7% YoY to MHRK 144.4 (2012: MHRK 126.9). Return on sales (ROS) is 10.7% (2012: 6.6%).
• Cash flow from operating activities amounted to MHRK 141.2 (2012: MHRK 297.8). The cash conversion is 98%.
• Total cash balances, including current financial assets as at December 31, 2013 amounted to MHRK 521.2 (49.7% of total assets), compared to MHRK 657 (56.2% of total assets) as at December 31, 2012.
• The Company has a stabile balance sheet with total assets of MHRK 1,048.1. The equity ratio is 64 %.
• As at December 31, 2013 Ericsson Nikola Tesla receivables outstanding amounted to MHRK 360 (end of 2012: MHRK 385.3).

• Major transactions with related parties were as follows: sales of products and services amounted to MHRK 576.4 (2012: MHRK 567.1), purchase of products and services amounted to MHRK 477.7 (2012: MHRK 1,088.3).

• Receivables outstanding with related parties, as at December 31, 2013, amounted to MHRK 71.8 (end of 2012: MHRK 81.2), and payables outstanding were MHRK 60.9 (end of 2012: MHRK 115.7).

• Due to compliance with IFRS requirements and Ericsson Nikola Tesla Group consolidation, financial data for the previous year were reclassified to be comparable with the current reporting period.

Business Situation in Major Markets

In the domestic market, sales revenues amounted to MHRK 341, showing growth of 27% YoY.

During 2013, a successful collaboration with the strategic partner Vipnet continued in various segments. The expansion and modernization of radio access infrastructure continues, including the fourth generation of mobile networks (LTE), and the testing of new functionalities, which contribute to the increased quality as well as new services for end users. The collaboration on building and modernization of radio transmitting network, as well as the core network package expansion continues. The negotiations were successfully completed and an agreement on continuation of collaboration in modernization segment and IMS system expansion was signed, which opens numerous possibilities for new convergent solutions and services.

Business collaboration with T-HT resulted in successful integration of solution, based on IMS backbone, for providing new generation services towards more demanding business users. The migration program to all-IP network continued, which is T-HT strategic guideline in its transformation to a modern operator. Thus, the number of migrated users that use all-IP environment as a primary telephone line rapidly increases. Currently, the implementation and execution of the acceptance tests for the projects of centralized RCS (Rich Communication Suite) solution into IMS environment reached the final stage. With this, T-HT will start to use the potentials of a convergent architecture. Besides, Ericsson Nikola Tesla and T-HT simultaneously work on a number of other projects, which will increase business efficiency.

During the year, with the mobile operator Tele2, there was continuous work on further 2G and 3G infrastructure construction, and implementation of new functionalities, with special emphasis on increasing the speed and mobile broadband internet access coverage. A successful collaboration with this operator was also confirmed by signing the contract on core network comprehensive modernization and the contract on complete support service for all the new nodes. In Q4 the modernization of Tele2 network core nodes was finished, which allowed the operator to efficiently introduce new networked society services.

In ICT for Industry & Society Segment, major activities are on upgrading the national ICT healthcare system, informatization of Land registry administration and upgrade/ expansion of communication infrastructure for utility and transport companies.

In export markets (except for Ericsson market) sales revenue decreased by 60% to MHRK 435.5, as a result of decreased sales revenue in CIS markets.

In the neighboring countries (Bosnia and Herzegovina, Montenegro and Kosovo), sales revenue increased by 25% YoY to MHRK 256.6.

The collaboration with the operators in the region on network upgrade and modernization continues. With BH Telecom, the largest telecom operator in Bosnia and Herzegovina, activities continue on 2G and 3G networks expansion and modernization. A pilot project related to LTE technology (4G) introduction is ongoing. We should highlight the contract with BH Telecom in OSS segment. In Q4, the contract on modernization of part of BH Telecom core network was signed. Within the contract, the existing MSS commutation subsystem upgrade and capacity increase was planned. The contract encompasses the latest version of Ericsson IP Multimedia system, which will enable BH Telecom to offer new multimedia services and further develop in the direction of IP-fication and convergence.

With HT Mostar, we collaborate on the expansion of coverage on the entire Bosnia and Herzegovina territory with 3G base stations, as well as on their connecting with the radio relay systems (Mini link). In Montenegro, major activities are on upgrade and modernization of mobile core network, IMS core network, expansion and optimization of radio access network performances and introduction of LTE technology.

Major activities in Kosovo are related to implementation of 3G technologies. In the beginning of the year, with the operator Ipko, a framework contract was signed, which defines strategic relations for the following period. Furthermore, earlier agreed projects, related to hardware and software upgrade of individual nodes of the existing network, i.e. the modernization of network elements, which in Ipko 's network, are in charge of data transmission, were realized, as well as introducing new WiFi solutions.

In ICT for Industry & Society Segment activities related to expansion and upgrade of Operational Communication Center (OKC) 112 ICT infrastructure in Bosnia and Herzegovina are ongoing.

In CIS market, sales revenues decreased by 80% YoY to MHRK 178.9, as expected, considering the large contract on the equipment delivery for 2G and 3G mobile network to Rostelecom, which was signed and almost fully realized in 2012. The activities on mobile network modernization and construction with the customers in Georgia and Russia are ongoing. In Q4, a contract on delivering a

PRESS INFO February 13, 2014

networked information health care system (e-Health system) pilot project was signed in Armenia. The implementation of this system also covers the execution of central hospital information system.

In the Ericsson market, sales revenue increased by 3% YoY to MHRK 568.7.

Ericsson Nikola Tesla Research and Development Center (R&D) successfully continued its activities on developing new functionalities and expanding its portfolio and responsibilities on a global level. Within the core network segment, a series of new functionalities was developed, related to Internet protocols, with a high level of quality of delivery. Our R&D teams contributed to development of new product generation in User data management. The Cabinet Viewer prototype, realized in Ericsson Nikola Tesla, was listed in the standard product line.

The Radio Platform Development Unit took over the activities on the verification for IP security micro RBS products and in general expanded the responsibilities in the scope of continued integration testing cycles.

In fixed core network segment, where we have the global responsibility for the development, delivery and software packages maintenance and delivering services to customers worldwide, broad expert knowledge contributed to the continuity of excellent results. We should highlight the projects for Morocco Telecom, MoC Kuwait, CTM Macao, Telenor Sweden.

Research activities concerning "Cloud Computing", financially supported by EU funds were expanded and placed in strategic focus for further development of telecommunication functionalities and services. The activity on the project named "eWall", for the development of support to senior citizens life, is continued.

Remote Patient Monitoring, developed for AT&T, within which Ericsson Nikola Tesla developed m2m SE (m2m Service Enablement) platform, was commissioned.

Service Delivery Center experts have been engaged in numerous projects for the following customers: A1 Austria, Deutsche Telecom, KPN Group Belgium, Eircom Ireland, EPT Luxemburg, Magyar Telecom Hungary, Mobistar Belgium, Polkomtel Poland, Swisscom Switzerland, Telefonica O2 Great Britain, Telenor Sweden, Vodafone Czech Republic, Vodafone Georgia, Vodafone Netherlands and Vodafone Germany. We can highlight mobile system SWAP for EPT Luxemburg, IPTV project for Telenor Sweden, VoLTE IP BB design and network integration for Deutsche Telecom, activities in the segment of LTE system for Swisscom Switzerland, Telefonica O2 Great Britain and Vodafone Germany and OSS/BSS projects for numerous customers in the Ericsson Region Western and Central Europe.

The Centers' experts have also been providing consulting services and optimization, configuration and dimensioning services for A1 Austria, EE Great Britain, H3G Austria, MCCI Iran, Mosaic Ireland, One Macedonia and P4 Poland, Slovak Telecom, Telefonica Great Britain, Tele2 Norway, Ufone Pakistan

and Vodafone Netherlands. The services related to mobile network management, as well as the corresponding tools for network optimization were delivered to Spain, Switzerland, Italy, Germany and Japan. One of our products, Smart laptop, was recognized on the global level, and its implementation program to all Ericsson regions is ongoing.

The Global Competence Centre was assigned new responsibilities in IMS, IP and User Data Management segments. Smart Rollout Support tool, developed in our Center became an official NRO (network rollout tool) for RWCE.

Other information

Ericsson Nikola Tesla major shareholders (as at Dec 31, 2013)

	No. of shares	% of share
		capital
Telefonaktiebolaget LM Ericsson	653.473	49.07
Hypo Alpe-Adria-Bank d.d. / Raiffeisen Mandatory Pension Fund	123.444	9.27
Societe Generale-Splitska banka d.d. / Erste Plavi Mandatory Pension Fund	32.961	2.48
PBZ d.d. / State Street client account	31.467	2.36
Hypo Alpe-Adria-Bank d.d. / PBZ Croatia osiguranje Mandatory Pension Fund	30.615	2.30
Zagrebačka banka d.d. / Custodian Account for Unicredit Bank Austria AG	22.802	1.71
PBZ d.d. / The Bank of New York as custodian	18.284	1.37
Societe Generale-Splitska banka d.d./ AZ Mandatory Pension Fund	15.376	1.15
PBZ d.d. / Custodian Client Account	12.969	0.97
Societe Generale-Splitska banka d.d.	8.062	0.61
Other shareholders	382.197	28.71

Share price information in 2012:

Highest (HRK)	Lowest (HRK)	Closing (HRK)	Market cap.
			(in MHRK)
1,584.00	1,234.00	1,470.00	1,957.5

PRESS INFO February 13, 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 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.

Audited financial statements for the period 1 Jan 2013 to 31 Dec 2013 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:	1.1.2013.	to	31.12.2013
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)	1.699
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 December 2013

Issuer: Ericsson Nikola Tesla d.d.
Item	AOP	Previous period	Current period
1	2	3	4
A) RECEIVABLES FOR REGISTARED UNPAID CAPITAL B) NON CURRENT ASSETS (003+010+020+029+033)	001	151.776.528	152.292.402
I. INTANGIBLE ASSETS (004 do 009)	002 003	4.314.288	2.111.635
1. Research & Development expenditure	004
2. Patents, licences, royalties, trade marks, software&similar rights	005	4.314.288	2.111.635
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	116.996.827	131.326.468
1. Land	011	15.605.344	15.605.344
2. Property	012	33.638.278	33.250.765
3. Plants and equipment	013	55.076.261	75.158.060
4. Tools, plants&vehicles	014	7.591.423	6.232.259
5. Biological asset	015
6. Prepayments for tangible assets	016
7. Assets under construction	017	4.970.624	972.924
8. Other tangible assets	018	114.897	107.115
9. Investments property	019
III. FINANCIAL ASSETS (021 do 028)	020	8.293.289	8.350.806
1. Investments in subsidiaries	021	52.656	53.385
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	8.240.633	8.297.421
7. Other non-current financial assets	027
8. Investment accounted by equity method	028
IV. RECEIVABLES (030 do 032)	029	22.172.124	10.503.492
1. Receivables from subsidiaries 2. Receivables from credit sales	030
3. Other receivables	031 032	18.507.944 3.664.180	6.273.938 4.229.554
V. DEFERRED TAX ASSETS	033		0
C) CURENT ASSETS (035+043+050+058)	034	999.582.941	888.020.249
I. INVENTORIES (036 do 042)	035	28.580.662	44.678.667
1. Raw materials & consumables	036	273.218	3.930
2. Work in progress	037	28.288.946	44.643.322
3. Products	038
4. Merchandise	039
5. Prepayments for inventories	040	18.498	31.416
6. Other available-for-sale assets	041
7. Biological asset	042
II. RECEIVABLES (044 do 049)	043	331.394.669	329.227.610
1. Receivables for trade debt of subsidiaries	044
2. Trade receivables	045	296.439.654	313.839.579
3. Receivables for trade debts of participating entities	046
4. Amounts receivable from employees	047
5. Receivables from government agencies	048	15.201.311	1.201.552
6. Other receivables	049	19.753.704	14.186.479
III. FINANCIAL ASSETS (051 do 057)	050	145.365.438	109.844.549
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	145.365.438	109.844.549
6. Loans & deposits 7. Other financial assets	056
IV. CASH AND CASH EQUIVALENTS	057
D) PREPAYMENTS AND ACCRUED INCOME	058	494.242.172 3.655.168	404.269.422 1.142.695
E) TOTAL ASSETS (001+002+034+059)	059 060	1.155.014.637	1.041.455.345
F) OFF-BALANCE SHEET ITEMS	061

EQUITY AND LIABILITES
A) EQUITY (063+064+065+071+072+075+078)	062	754.105.074	670.003.716
I. SHARE CAPITAL	063	133.165.000	133.165.000
II. CAPITAL RESERVES	064
III. RESERVES FROM PROFIT (066+067-068+069+070)	065	34.916.456	15.710.740
1. Legal reserves	066	20.109.780	6.658.250
2. Reserves for treasury shares	067	21.734.610	18.623.622
3. Treasury shares and stakes (less)	068	6.927.934	9.571.133
4. Statutory reserves	069
5. Other reserves	070
IV. REVALUATION RESERVES	071
V. RETAINED EARNINGS (073-074)	072	459.924.527	377.268.845
1. Retained earnings	073	459.924.527	377.268.845
2. Loss brought forward	074
VI. PROFIT OR LOSS FOR THE FINANCIAL YEAR (076-077)	075	126.099.091	143.859.131
1. Profit for the financial year	076	126.099.091	143.859.131
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	4.451.998	4.697.246
1. Amounts payable to subsidiaries	084
2. Liabilities for loans, deposits and other	085
3. Liabilities towards banks and other financial institutions	086		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	4.451.998	4.697.246
9. Deffered tax	092
D) CURRENT LIABILITIES (094 do 105)	093	245.851.584	218.195.008
1. Amounts payable to subsidiaries	094
2. Liabilities for loans, deposits and other	095
3. Liabilities towards banks and other financial institutions	096	1.710.458
4. Amounts payable for prepayment	097
5. Trade payables	098	155.165.205	126.047.166
6. Amounts payable for securities	099
7. Liabilities toward participating interests	100
8. Amounts payable to employees	101	76.227.025	73.109.162
9. Liabilities for taxes and contributions	102	12.748.896	19.038.681
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	150.605.981	148.559.375
F) TOTAL EQUITY AND LIABILITIES (062+079+083+093+106)	107	1.155.014.637	1.041.455.345
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 2013 to 31 December 2013 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	1.917.819.106	342.240.245	1.326.755.261	388.389.289
1. Sales revenue 2. Other operating income	112 113	1.901.791.410 16.027.696	337.078.029 5.162.216	1.309.461.060 17.294.201	382.426.337 5.962.952
II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	114	1.802.129.536	304.701.939	1.201.792.862	356.782.733
1. Changes in inventories of finished products and work in progress	115	-6.374.289	6.790.883	-15.616.928	13.400.382
2. Raw material and consumables used (117 do 119)	116	1.285.181.254	159.345.152	700.364.814	203.887.111
a) Cost of raw materials & consumables	117	1.016.573.311	80.713.403	409.329.154	98.768.858
b) Cost of goods sold c) Other costs	118	268.607.944	78.631.749	291.035.661	105.118.253
3. Staff costs (121 do 123)	119 120	441.362.575	117.382.182	448.027.655	116.032.293
a) Net salaries	121	233.450.970	59.262.170	231.656.600	52.123.911
b) Employee income tax and contributions	122	148.344.909	42.997.812	157.712.440	49.133.430
c) Employer's contributions	123	59.566.696	15.122.200	58.658.615	14.774.952
4. Depreciation and amortisation expense	124	44.557.282	12.144.961	40.233.269	11.174.032
5. Other costs	125	30.321.236	4.243.587	23.027.681	8.468.171
6. Impairment losses (127+128) a) non-current assets (except financial assets)	126	1.528.107	1.617.451	944.850	545.752
b) current asssets (except financial assets)	127 128	1.528.107	1.617.451	944.850	545.752
7. Provisions	129
8. Other operating expenses	130	5.553.372	3.177.724	4.811.520	3.274.993
III. FINANCIAL INCOME (132 do 136)	131	26.219.051	9.615.283	19.054.349	5.229.571
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	20.661.853	8.399.623	15.638.655	4.367.002
entities
3. Income from associates and ownership interests	134
4. Unrealized gains 5. Other financial income	135 136	5.557.197	1.215.660	3.415.694	862.569
IV. FINANCIAL EXPENSES (138 do 141)	137	1.817.517	22.660	157.616	112.845
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	1.817.517	22.660	157.616	112.845
3. Unrealized losses	140
4. Other financial expenses	141
V. SHARE OF INCOME OF ASSOCIATES	142
VI. SHARE OF LOSS OF ASSOCIATES VII. EXTRAORDINARY - OTHER INCOME	143 144
VIII. EXTRAORDINARY - OTHER EXPENSES	145
IX. TOTAL INCOME (111+131+142 + 144)	146	1.944.038.157	351.855.528	1.345.809.609	393.618.860
X. TOTAL EXPENSES (114+137+143 + 145)	147	1.803.947.053	304.724.599	1.201.950.478	356.895.578
XI. PROFIT OR LOSS BEFORE TAX (146-147)	148	140.091.104	47.130.929	143.859.131	36.723.283
1. Profit before tax (146-147)	149	140.091.104	47.130.929	143.859.131	36.723.283
2. Loss before tax (147-146)	150	0	0	0	0
XII. INCOME TAX EXPENSE XIII. PROFIT OR LOSS FOR THE PERIOD (148-151)	151 152	-13.992.013 126.099.091	-13.992.013 33.138.916	143.859.131	36.723.283
1. Profit for the period (149-151)	153	126.099.091	33.138.916	143.859.131	36.723.283
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) II. OTHER COMPREHENSIVE INCOME /LOSS BEFORE TAX (159 do 165)	157 158	126.099.091 0	33.138.916 0	143.859.131 0	36.723.283 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 6. Share of the other comprehensive income/loss of associates	163 164
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	126.099.091	33.138.916	143.859.131	36.723.283
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	115.689.570	37.538.306	124.962.399	31.606.556

CASH FLOW STATEMENT - Indirect method in the period 01 January 2013 to 31 December 2013

Issuer: Ericsson Nikola Tesla d.d.
Item	AOP	Previous	Current period
		period
1	2	3	4
CASH FLOW FROM OPERATING ACTIVITIES 1. Profit before tax		140.091.104	143.859.131
2. Depreciation and amortisation	001 002	44.557.282	40.233.269
3. Increase in liabilities	003	49.625.671
4. Decrease in receivables	004	57.810.432	10.548.029
5. Decrease in inventories	005
6. Other increase in cash flow	006
I. Total increase in operating cash flow (001 do 006)	007	292.084.489	194.640.430
1. Decrease in liabilities	008		21.129.782
2. Increase in receivables	009
3. Increase in inventories	010	5.875.995	16.098.006
4. Other decrease in cash flow	011	5.807.522	5.856.087
II. Total decrease in operating cash flow (008 do 011)	012	11.683.517	43.083.875
A1) NET INCREASE IN OPERATING CASH FLOW
(007-012)	013	280.400.972	151.556.555
A2) NET DECREASE IN OPERATING CASH FLOW
(012-007)	014
CASH FLOW FROM INVESTMENT ACTIVITIES
1. Proceeds from sale of property, plant and equipment	015	4.919.453	4.916.591
2. Net disposal of financial assets	016		37.000.000
3. Interest received	017	22.297.966	11.799.393
4. Dividend received	018
5. Other cash from investing activities	019	593.711
III. Total cash flow from investing activities (015 do 019)	020	27.811.130	53.715.984
1. Purchase of property, plant and equipment and intangible assets	021	33.046.822	63.805.802
2. Purchase of financial instruments	022	74.580.000
3. Other cash flow used in investing activites	023
IV. Total cash flow from investing activities (021 do 023)	024	107.626.822	63.805.802
B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES (020-024)	025
B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES
(024-020)	026	79.815.692	10.089.819
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		1.835.290
V. Total cash flow from financial activities (027 do 029)	030	0	1.835.290
1. Repayment of interest-bearing borrowings	031	1.708.979	1.669.299
2. Dividend paid	032	225.695.060	225.851.290
3. Repayment of finance lease	033
4. Repurchase of treasury shares	034	2.462.870	5.754.187
5. Other cash flow used in financial activities	035	1.694.679
VI. Total cash flow used in financial activities (031 do 035)	036	231.561.588	233.274.776
C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES (030-036)	037
C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES
(036-030)	038	231.561.588	231.439.486
Total increase in cash flow (013 – 014 + 025 – 026 + 037 – 038)	039
Total decrease in cash flow (014 – 013 + 026 – 025 + 038 – 037)	040	30.976.308	89.972.749
Cash and cash equivalents at the beginning of the period	041	525.218.480	494.242.172
Increase in cash and cash equivalents	042
Decrease in cash and cash equivalents	043	30.976.308	89.972.749
Cash and cash equivalents at the end of the period	044	494.242.172	404.269.423

STATEMENT OF CHANGES IN EQUITY

for the period from 31.12.2013 1.1.2013 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	459.924.527	377.268.845
5. Profit or loss for the period	005	126.099.091	143.859.131
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	754.105.074	670.003.716
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		Services		Support services		Unallocated		Total
	31.12.2013. '000 kn	31.12.2012. '000 kn	31.12.2013. '000 kn	31.12.2012. '000 kn	31.12.2013. '000 kn	31.12.2012. '000 kn	31.12.2013. '000 kn	31.12.2012. '000 kn	31.12.2013. '000 kn	31.12.2012. '000 kn
Segment sales revenue	737.089	1.236.899	533.531	518.502	38.842	146.390	0	0	1.309.461	1.901.791
Operating profit/(loss)	49.374	60.464	105.439	80.171	1.163	5.478	-31.014	-30.423	124.962	115.690

2. Transactions with related parties

	31.12.2013. '000 kn	31.12.2012. '000 kn
Total sales	577.426	567.117
Total purchases	449.635	1.081.357

3. Balances with related parties

	31.12.2013. '000 kn	31.12.2012 '000 kn
Receivable	71.604	82.360
Payable	57.941	102.537

4 As of 31 December 2013, total receivables balances outstanding was MHRK 372.6 (31.12.2012: MHRK 392.7).

5. The Company has restated the accompanying statement of comprehensive income for the comparative period ended 31 December 2012. The restatement reflects adjustments to align statement of comprehensive income with IFRS-based Ericsson Group directives.

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