Ericsson Nikola Tesla d.d. — Management Reports 2015

Feb 13, 2015

Ericsson Nikola Tesla

The Management Report on Ericsson Nikola Tesla Group business performance and comments on 2014 financial results

Highlights:

• Sales revenue: MHRK 1,314.9
• Gross margin: 13.7%
• Operating profit: MHRK 81.4
• Net profit: MHRK 87.4
• Cash flow from operating activities: MHRK 176
• Proposed dividend: HRK 20 ordinary and HRK 70 extraordinary dividend per share

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

"Ericsson Nikola Tesla business results in 2014 show a continuous stable business performance. Sales revenues decreased by 2% year-over-year. Ericsson market records a significant increase in sales revenues, while the revenues are stable in the domestic market, thus neutralizing the revenue decrease in CIS and Southeast Europe markets. We have maintained our position among the Croatian leading exporters, especially when it comes to the export of knowledge/services.

A significant part of our activities relates to research&development and professional services in Ericsson market. This business segment records a continuous growth, and accounts for 48% of sales revenues. In 2014, our Research and Development Center was evaluated as one of the best and most reliable research centers within the Ericsson Group. The evaluation of the collaboration and achieved results represents an excellent foundation for further partnership, increased responsibility and sales growth. I would like to highlight that during 2014 we employed 174 new professionals, primarily in this segment.

In the domestic market, a stable sales trend was achieved, despite an unfavorable economic situation. The operators' capital expenditure was directed towards core network modernization and optimization, 3G and 4G radio access network expansion, fixed access network modernization, as well as investments in additional radio spectrum. The operators' focus on increased efficiency in running the business indicates a trend towards outsourcing of construction and maintenance of telecommunications infrastructure (managed services).

As one of main activities in 2014, I would like to highlight the successfully finished negotiations with Hrvatski Telekom (HT) on collaboration in managed services segment. Ericsson Nikola Tesla Servisi d.o.o. (EHR), a newly

founded Ericsson Nikola Tesla daughter company, provides maintenance of HT fixed and mobile network, within a five year contract. With 638 employees transferred from HT into the newly established company Ericsson Nikola Tesla Group now employs around 2,500 employees.

During 2014, a successful collaboration with strategic partner Vipnet continued, primarily in the segment of mobile telecom network expansion and modernization, including the mobile networks fourth generation (LTE). Vipnet and Ericsson Nikola Tesla are the winners of the Global Telecom Business Innovation Award 2014 for introducing PSI coverage energy efficient solution in the radio access network segment.

I would also like to highlight a successful realization of the project One Stop Shop for Joint Information System of Land Registry and Cadaster, as well as the project realization for the Agency for Medicinal Products and Medical Devices of Croatia. Both projects were financed by the European Union IPA programs. The service ePrescription, which we implemented in the health care system, is the winner of the "ICERIAS Customers' Friend" recognition, and thus this service also positioned Croatia among the best countries in Europe, according to the "European Health Consumer Index" for 2014.

Despite unfavorable economic and political developments in our major export markets, we have managed to use new business opportunities. I would like to highlight the continuous quality collaboration with the customers in the Bosnia and Herzegovina market in the segment of providing support service and upgrades of mobile and fixed networks, and in Belarus with our long time customer Velcom.

Net profit amounting to MHRK 87.4 was achieved, representing a 6.6% return on sales. The gross margin is lower year-over-year, as a result of changes in business mix and continuous price pressure. The selling and administrative expenses were decreased year-over-year. We had clear business and financial goals, focused on improvements of working capital, cash conversion and risk management. Pursuant to that, we finalized the year with a solid balance sheet, and equity ratio of 48%. A strong cash flow from operating activities was also realized, amounting to MHRK 176, so that, despite an extraordinary dividend paid in 2014, cash assets, including short term financial assets, amount to MHRK 231.

In line with our strategic plan, we stay focused on strengthening our position/ sales in new and targeted areas: IP networks, Cloud, TV and media, Industry & Society and OSS (Operations Support System) and BSS (Business Support System). We have started several strategic initiatives for 2015, focused on business development in all markets and improvement of profitability thorough cost efficiency and business excellence.

Our solid balance sheet enables us to continue to implement our strategy and quality returns to our shareholders. The Supervisory Board of Ericsson Nikola Tesla approved the Managing Director's proposal to propose to the Annual General Meeting of Shareholders ordinary dividend payout in the amount of 20 HRK per share and extraordinary dividend to the amount of 70 HRK per share. "

Financial summary:

Sales revenues amount to MHRK 1,314.9 (2013: MHRK 1,345.2), 2% less year-over-year. In total sales revenues the domestic market accounts for 25.4%, services to Ericsson 47.7% and other export markets

account for 26.9%. Increased share of Ericsson market in the total sales leads to lower business and financial risks.

• Sales in the network infrastructure segment amounts to MHRK 700.2 (53.3% of total sales revenue), service segment amounts to MHRK 569.3 (43.3% of total sales revenue), and solution support segment amounts to MHRK 45.4 (3.4% of total sales revenue).
• The gross profit amounts to MHRK 179.6 (2013: MHRK 220.1), a decrease by 18.4% year-over-year. The gross margin decreased to 13.7% (2013: 16.4%), due to changes in business mix and price pressure.
• Selling and administrative expenses decreased by 3.1% to MHRK 90.5 (2013: MHRK 93.4).
• The operating profit decreased by 36% and amounts to MHRK 81.4 (2013: MHRK 127.2).
• Financial income decreased by 59.7% year-over-year, and amounts to MHRK 6.9 (2013: MHRK 17.1), primarily due to less yielding assets put at work. The financial risk has been reduced due to discontinuation of using balance sheet for customer financing.
• Net profit decreased by 39.5% year-over-year and amounts to MHRK 87.4 (2013: MHRK 144.4). Return on sales (ROS) is 6.6% (2013: 10.7%).
• Cash flow from operating activities amounts to MHRK 176 (2013: MHRK 141.2). The cash conversion is 117%.
• Total cash and cash equivalents, including short term financial assets as at December 31, 2014 amount to MHRK 231 (33% of total assets), compared to MHRK 521.2 as at December 31, 2013 (49.7% of total assets).
• The Company has a solid balance sheet with total assets of MHRK 699.6. The equity ratio is 48%.
• With related parties, sales of products and services amounted to MHRK 634.5 (2013: MHRK 576.4), while purchase of products and services amounted to MHRK 367.9 (2013: 477.7).
• As at December 31, 2014 Ericsson Nikola Tesla outstanding receivables amounted to MHRK 86.6 (end of 2013: MHRK 71.8), and outstanding payables were MHRK 46.5 (end of 2013: MHRK 60.9).

Business situation in major markets

In the domestic market, a total of MHRK 333.8 sales revenue was realized, 2% decrease year-over-year.

During 2014, successful collaboration was continued with strategic partner Vipnet, primarily through the expansion and modernization of mobile telecom network and testing new functionalities, which contribute to the increased quality, as well as new services for end users. The upgrade and modernization of package core network and the upgrade of IMS system were successfully finished, which opens numerous possibilities for introducing new convergent solutions.

Business collaboration with HT continued, through a number of strategic projects for development of HT network and services. Thus, an exceptionally important project started, regarding introducing international DT IMS technology center that will provide services to other DT Group operators in the region. Thus, HT additionally strengthened its position within DT Group, as a technology leader in advanced communication technologies. Business collaboration with HT in Q4 was marked by a successful continuous implementation of MPLS (Multi-Protocol Label Switching) architecture in core and access IP network. Moreover, the quarter was marked by a successful delivery of services, regarding construction and maintenance of telecommunications infrastructure.

With mobile operator Tele2 the collaboration continued by introducing new functionalities and increasing capacity of the existing core network, which allowed the operator to efficiently introduce new services within the Networked Society. Furthermore, collaboration was on improving the access network, with a special emphasis on speed increase and introduction of new functionalities of mobile broadband Internet access.

In ICT solutions for Industry and Society business segment, during Q4 several contracts were signed for further business processes computerization in eHealth. The project "mHealth" is one of the first commercial projects, with the aim to monitor chronic patients' health via mobile solution delivery. A new modern integration platform for CEZIH (Central Healthcare Information System of the Republic of Croatia system) was also delivered, which will enable a faster and an easier integration of all applications and ensure the highest level of authorization and authentication within the system.

In export markets (except for Ericsson market) sales revenue amounts to MHRK 353.1, a decrease by 19% year-over-year. The political and economic uncertainty in the region and beyond, impacts the operators' investment cycle, and thus, investments are partially reduced.

In the markets of Southeast Europe (Bosnia and Herzegovina, Montenegro and Kosovo), sales revenues decresed by 19% year-over-year, and amount to MHRK 207.5.

In Bosnia and Herzegovina market, the collaboration was continued with operators BH Telecom and HT Mostar, on providing support services, upgrade and expansion of mobile and fixed networks. In Q4 2014, a contract with BH Telecom was signed on 2G radio network expansion and multimedia upgrade, by which prerequisites are realized for M2M communication.

In Kosovo market, the collaboration on expanding Ipko mobile networks continued, and in Montenegro with Crnogorski Telekom.

In CIS market, sales revenues amounted to MHRK 145.5, a decrease by 19% year-over-year. The activities on projects of mobile networks modernization and construction with several key customers are ongoing. There is no financial exposure to Russia and Ukraine.

In the Ericsson market, sales revenue amounted to MHRK 628, an increase by 10.4% year-over-year.

Ericsson Nikola Tesla Research and Development Center (R&D) continues its successful work. At the end of 2014, new deals have been agreed, related to cloud computing, i.e. verification deals for new Ericsson cloud platform.

In line with the plans, the teams working on user data management have been expanded. At the end of 2014, 150th node of the latest product generation was released to commercial operation in the global market. Our Center experts participated in its development and implementation support.

The Radio Platform Development Unit also expanded its work scope in the segment of new generation base station development.

Our global and regional centers show excellent results. In fixed core network segment, where we have the global responsibility for development, implementation and support, we would like to highlight several successful projects for A1 Austria, Etisalat Egypt, and the continued cooperation on projects for Telia Sonera, France Telecom, Eircom Ireland, Telefonica Spain and Telenor Norway.

The Service Delivery Center experts have been engaged in numerous projects in the markets worldwide. We can highlight the activities related to IP RAN project for A1 Austria, IPTV project for A1 Austria, Telenor Sweden and Vodafon Ireland, 2G "swap" project for A1 Austria, VoLTE projects for Deutsche Telekom, Vodafone Great Britain and Vodafone Netherlands, LTE Broadcast for Vodafone Germany, IMS "Pasau" program for Deutsche Telekom, network optimization projects for Mobistar Belgium and British Telecoma network modernization. The Centers' experts have also been providing consulting services and services of configuration and dimensioning for A1 Austria, Deutsche Telekom, KPN Netherlands, Slovak Telekom, Magyar Telecom Hungary, MCCI Iran, MTN Iran, MTN Nigeria, MTN Sudan, Mobilink Pakistan, Mobily Saudi Arabia, Mosaic Ireland, O2 Great Britain, STC Saudi Saudi Arabia, Slovak Telekom, Telefonica Great Britain, Telekom Slovenia, Turkcell Turkey, Vodafone Netherlands, Vodafone Germany and Zain Sudan.

The Global Competence Centre experts are working on the realization of several strategic global projects. Our Global Center is the leader of Deep drive partnership programme for mobile network performance scanning for Ericsson key customers. It is also the leader of Ericsson Customer Experience Management program. This is a service development project with the aim to improve the perception of end users while using mass social services (Facebook, Twitter, WhatsApp…). For this project the Croatian team was also assigned the responsibility of the prime global center for service delivery. The software tool, Smart Rollout Support, for network optimization, developed in our global center, was successfully implemented worldwide.

Our collaboration with the universities in the county and abroad continues. One of the forms of cooperation in 2014 was the Summer Camp, 14th in a row. During Summer Camp, a total of 82 students from Croatia and abroad participated. Assisted by mentors from Ericsson Nikola Tesla and colleagues from Ericsson R&D centers from Sweden, China and Hungary they worked on development projects. A total of 28 projects were realized, regarding support to company's laboratory for the networked society, IPTV, VisualCom and m-commerce, telecommunication network visualization and related services, research&development tools as well as software engineering and development.

PRESS INFO

February 13, 2015

Other information

Ericsson Nikola Tesla major shareholders (as at Dec 31, 2014)

	No. of	% of share
	shares	capital
Telefonaktiebolaget LM Ericsson	653.473	49.07
Hypo Alpe-Adria-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	32.961	2.48
Hypo Alpe-Adria-Bank d.d. / PBZ Croatia osiguranje Mandatory Pension Fund, B category	30.615	2.30
PBZ d.d. / State Street client account	30.274	2.27
PBZ d.d. / The Bank of New York as custodian	22.407	1.68
Zagrebačka banka d.d. / Custodian Account for Unicredit Bank Austria AG	13.558	1.02
Zagrebačka banka d.d. / State Street Bank and Trust Company, Boston	12.350	0.93
PBZ d.d. / Custodian Client Account	9.347	0.70
Hypo Alpe-Adria-Bank d.d. / Raiffeisen Volontary Pension Fund	7.934	0.60
Other shareholders	395.217	29.67

Share price information in 2014:

Highest (HRK)	Lowest (HRK)	Closing (HRK)	Market cap. (in MHRK)
1,659.00	1,250.02	1,299.00	1,729.8

PRESS INFO February 13, 2015

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.

Financial statements for the period 1 Jan 2014 to 31 Dec 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.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
080002028 Registration number (MBS):
84214771175 Personal identification number (OIB):
Issuer: ERICSSON NIKOLA TESLA D.D. ZAGREB
Postal code and location: 10000	ZAGREB
Street and number: Krapinska 45
E-mail: etk.company@ericsson.com
Internet address: www.ericsson.hr
Code and city / municipality ZAGREB 133
Code and county GRAD ZAGREB 21		Number of employees: (at the end of year)	1.807
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		+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
	(seal)	(signature of authorized representative)

Balance Sheet

as at 31 December 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	150.274.226
I. INTANGIBLE ASSETS (004 do 009)	003	2.111.635	1.295.766
1. Research & Development expenditure	004
2. Patents, licences, royalties, trade marks, software&similar rights	005	2.111.635	1.295.766
3. Goodwill	006		0
4. Prepayments for intangible assets	007
5. Intangible assets under construction	008
6. Other intangible assets	009
II. PROPERTY, PLANT AND EQUIPMENT (011 do 019)	010	131.326.468	129.752.400
1. Land	011	15.605.344	15.605.344
2. Property	012	33.250.765	30.024.740
3. Plants and equipment	013	75.158.060	76.182.440
4. Tools, plants&vehicles	014	6.232.259	5.261.361
5. Biological asset	015
6. Prepayments for tangible assets	016
7. Assets under construction	017	972.924	2.579.181
8. Other tangible assets	018	107.115	99.334
9. Investments property	019
III. FINANCIAL ASSETS (021 do 028)	020	8.350.806	7.436.826
1. Investments in subsidiaries	021	53.385	73.385
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	8.297.421	7.363.441
7. Other non-current financial assets	027
8. Investment accounted by equity method	028
IV. RECEIVABLES (030 do 032)	029	10.503.492	11.789.235
1. Receivables from subsidiaries	030
2. Receivables from credit sales	031	6.273.938	7.485.733
3. Other receivables	032	4.229.554	4.303.502
V. DEFERRED TAX ASSETS	033	0	0
C) CURENT ASSETS (035+043+050+058)	034	888.020.249	526.177.059
I. INVENTORIES (036 do 042)	035	44.678.667	21.128.206
1. Raw materials & consumables	036	3.930	5.185
2. Work in progress 3. Products	037	44.643.322	21.104.523
4. Merchandise	038
5. Prepayments for inventories	039	31.416	18.498
6. Other available-for-sale assets	040
7. Biological asset	041 042
II. RECEIVABLES (044 do 049)	043	329.227.610	278.862.384
1. Receivables for trade debt of subsidiaries	044	71.604.363	84.860.265
2. Trade receivables	045	242.235.216	178.882.847
3. Receivables for trade debts of participating entities	046
4. Amounts receivable from employees	047
5. Receivables from government agencies	048	1.201.552	739.029
6. Other receivables	049	14.186.479	14.380.243
III. FINANCIAL ASSETS (051 do 057)	050	109.844.549	44.080.317
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	44.080.317
6. Loans & deposits	056
7. Other financial assets	057
IV. CASH AND CASH EQUIVALENTS	058	404.269.422	182.106.153
D) PREPAYMENTS AND ACCRUED INCOME	059	1.142.695	1.931.795
E) TOTAL ASSETS (001+002+034+059)	060	1.041.455.345	678.383.080
F) OFF-BALANCE SHEET ITEMS	061

EQUITY AND LIABILITES
A) EQUITY (063+064+065+071+072+075+078)	062	670.003.716	329.657.396
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	22.942.695
1. Legal reserves	066	6.658.250	6.658.250
2. Reserves for treasury shares	067	18.623.622	24.746.708
3. Treasury shares and stakes (less)	068	9.571.133	8.462.264
4. Statutory reserves	069
5. Other reserves	070
IV. REVALUATION RESERVES	071
V. RETAINED EARNINGS (073-074)	072	377.268.845	90.799.764
1. Retained earnings	073	377.268.845	90.799.764
2. Loss brought forward	074
VI. PROFIT OR LOSS FOR THE FINANCIAL YEAR (076-077)	075	143.859.131	82.749.938
1. Profit for the financial year	076	143.859.131	82.749.938
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	9.469.071
1. Amounts payable to subsidiaries	084		4.133.330
2. Liabilities for loans, deposits and other	085
3. Liabilities towards banks and other financial institutions	086
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	5.335.741
9. Deffered tax	092
D) CURRENT LIABILITIES (094 do 105)	093	218.195.008	198.862.924
1. Amounts payable to subsidiaries	094	57.940.927	62.755.317
2. Liabilities for loans, deposits and other	095
3. Liabilities towards banks and other financial institutions	096		0
4. Amounts payable for prepayment	097
5. Trade payables	098	68.106.238	45.195.377
6. Amounts payable for securities	099
7. Liabilities toward participating interests	100
8. Amounts payable to employees	101	73.109.162	67.949.062
9. Liabilities for taxes and contributions	102	19.038.681	22.963.168
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	140.393.689
F) TOTAL EQUITY AND LIABILITIES (062+079+083+093+106)	107	1.041.455.345	678.383.080
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 December 2014 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	1.326.755.261	388.389.289	1.297.166.060	388.210.637
1. Sales revenue 2. Other operating income	112 113	1.309.461.060 17.294.201	382.426.337 5.962.952	1.279.279.252 17.886.808	383.344.076 4.866.561
II. OPERATING EXPENSES (115+116+120+124+125+126+129+130)	114	1.201.792.862	356.782.733	1.222.112.421	365.159.665
1. Changes in inventories of finished products and work in progress	115	-15.616.928	13.400.382	30.213.912	22.249.301
2. Raw material and consumables used (117 do 119)	116	700.364.814	203.887.111	598.906.770	177.384.189
a) Cost of raw materials & consumables	117	409.329.154	98.768.858	293.861.778	74.310.673
b) Cost of goods sold c) Other costs	118	291.035.661	105.118.253	305.044.992	103.073.516
3. Staff costs (121 do 123)	119 120	448.027.655	116.032.293	501.142.823	134.277.362
a) Net salaries	121	231.656.600	52.123.911	253.128.180	75.606.999
b) Employee income tax and contributions	122	157.712.440	49.133.430	176.303.163	38.847.088
c) Employer's contributions	123	58.658.615	14.774.952	71.711.480	19.823.275
4. Depreciation and amortisation expense	124	40.233.269	11.174.032	45.742.425	12.073.011
5. Other costs 6. Impairment losses (127+128)	125	23.027.681 944.850	8.468.171 545.752	27.567.655 14.003.764	3.170.379 15.333.833
a) non-current assets (except financial assets)	126 127
b) current asssets (except financial assets)	128	944.850	545.752	14.003.764	15.333.833
7. Provisions	129
8. Other operating expenses	130	4.811.520	3.274.993	4.535.073	671.592
III. FINANCIAL INCOME (132 do 136)	131	19.054.349	5.229.571	7.698.310	3.844.751
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 entities	133	15.638.655	4.367.002	6.994.415	3.687.951
3. Income from associates and ownership interests	134
4. Unrealized gains	135
5. Other financial income	136	3.415.694	862.569	703.895	156.801
IV. FINANCIAL EXPENSES (138 do 141)	137	157.616	112.845	2.010	132
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	157.616	112.845	2.010	132
3. Unrealized losses	140
4. Other financial expenses	141
V. SHARE OF INCOME OF ASSOCIATES	142
VI. SHARE OF LOSS OF ASSOCIATES	143
VII. EXTRAORDINARY - OTHER INCOME	144
VIII. EXTRAORDINARY - OTHER EXPENSES IX. TOTAL INCOME (111+131+142 + 144)	145 146	1.345.809.609	393.618.860	1.304.864.370	392.055.389
X. TOTAL EXPENSES (114+137+143 + 145)	147	1.201.950.478	356.895.578	1.222.114.432	365.159.797
XI. PROFIT OR LOSS BEFORE TAX (146-147)	148	143.859.131	36.723.283	82.749.938	26.895.592
1. Profit before tax (146-147)	149	143.859.131	36.723.283	82.749.938	26.895.592
2. Loss before tax (147-146)	150	0	0	0	0
XII. INCOME TAX EXPENSE	151
XIII. PROFIT OR LOSS FOR THE PERIOD (148-151) 1. Profit for the period (149-151)	152 153	143.859.131 143.859.131	36.723.283 36.723.283	82.749.938 82.749.938	26.895.591 26.895.591
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	143.859.131	36.723.283	82.749.938	26.895.591
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) APPENDIX Statement of Comprehensive Income (to be filled in by entities submitting consolidated financial statements)	168	143.859.131	36.723.283	82.749.938	26.895.591
VI. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD
1. Attributable to owners of the company	169
2. Attributable to non-controlling interests	170
		124.962.399	31.606.556	75.053.638	23.050.972

CASH FLOW STATEMENT - Indirect method in the period 01 January 2014 to 31 December 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	143.859.131	82.749.938
2. Depreciation and amortisation	002	40.233.269	45.742.425
3. Increase in liabilities	003
4. Decrease in receivables	004	12.321.618	33.699.082
5. Decrease in inventories	005		23.550.461
6. Other increase in cash flow	006		16.536.110
I. Total increase in operating cash flow (001 do 006)	007	196.414.018	202.278.016
1. Decrease in liabilities	008	21.129.782	23.772.833
2. Increase in receivables	009
3. Increase in inventories	010	16.098.006
4. Other decrease in cash flow	011	7.629.676
II. Total decrease in operating cash flow (008 do 011)	012	44.857.463	23.772.833
A1) NET INCREASE IN OPERATING CASH FLOW (007-012)	013	151.556.555	178.505.183
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	4.916.591	193.390
2. Net disposal of financial assets	016	140.000.000	112.000.000
3. Interest received	017	11.799.393	5.950.763
4. Dividend received	018
5. Other cash from investing activities	019		999.228
III. Total cash flow from investing activities (015 do 019)	020	156.715.984	119.143.381
1. Purchase of property, plant and equipment and intangible assets	021	63.805.802	45.185.055
2. Purchase of financial instruments	022	103.000.000	45.900.000
3. Other cash flow used in investing activites	023
IV. Total cash flow from investing activities (021 do 023) B1) NET INCREASE IN CASH FLOW FROM INVESTING ACTIVITIES	024	166.805.802	91.085.055
(020-024)	025		28.058.326
B2) NET DECREASE IN CASH FLOW FROM INVESTING ACTIVITIES		10.089.819
(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	1.835.290
V. Total cash flow from financial activities (027 do 029)	030	1.835.290	0
1. Repayment of interest-bearing borrowings	031	1.669.299
2. Dividend paid	032	225.851.290	424.933.178
3. Repayment of finance lease	033
4. Repurchase of treasury shares	034	5.754.187	2.768.045
5. Other cash flow used in financial activities	035		1.025.556
VI. Total cash flow used in financial activities (031 do 035) C1) NET INCREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES	036	233.274.776	428.726.779
(030-036)	037
C2) NET DECREASE IN CASH FLOW FROM FINANCIAL ACTIVITIES (036-030)	038	231.439.486	428.726.779
Total increase in cash flow (013 – 014 + 025 – 026 + 037 – 038)	039
Total decrease in cash flow (014 – 013 + 026 – 025 + 038 – 037)	040	89.972.749	222.163.270
Cash and cash equivalents at the beginning of the period	041	494.242.172	404.269.422
Increase in cash and cash equivalents	042		0
Decrease in cash and cash equivalents	043	89.972.749	222.163.270
Cash and cash equivalents at the end of the period	044	404.269.423	182.106.153

STATEMENT OF CHANGES IN EQUITY

for the period from 31.12.2014 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	15.710.740	22.942.695
4. Retained earnings	004	377.268.845	90.799.764
5. Profit or loss for the period	005	143.859.131	82.749.938
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	670.003.716	329.657.396
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
	31.12.2014. '000 kn	31.12.2013. '000 kn	31.12.2014. '000 kn	31.12.2013. '000 kn	31.12.2014. '000 kn	31.12.2013. '000 kn	31.12.2014. '000 kn	31.12.2013. '000 kn	31.12.2014. '000 kn	31.12.2013. '000 kn
Segment sales revenue	676.645	737.088	564.935	533.531	37.699	38.842	0	0	1.279.279	1.309.461
Operating profit/(loss)	38.388	49.374	67.896	105.439	763	1.163	-31.993	-31.014	75.054	124.962

2. Transactions with related parties

	31.12.2014. '000 kn	31.12.2013. '000 kn
Total sales	644.972	577.426
Total purchases	394.442	449.635

3. Balances with related parties

	31.12.2014. '000 kn	31.12.2013 '000 kn
Receivable	102.179	71.604
Payable	71.689	57.941

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