The General Assembly of the joint stock company Ericsson Nikola Tesla took place on May 18, 2004. The Assembly was conducted by Rajko Pfaff, the deputy president of the company. At the Assembly 760.688 votes i.e. shares were represented. Åke Enell, the president of the company and Maria Radtke, the finance director addressed the shareholders and presented the business results of the company in 2003.

Åke Enell emphasized that the performance in 2003 complied with plan. Stable net sales, stable income and lower operational expenses were achieved. Orders booked went down, which complied with expectations, and positive cash flow was achieved. The overall satisfying result is greatly based on the cost saving activities carried out over the last couple of years and on strong sales efforts in domestic and foreign markets.

 

The export sales accounted for 80% in total net sales of the company. In 2003 Croatia was the largest single market, followed by Russia, Sweden, Montenegro, Belarus, Bosnia and Herzegovina, Kazakhstan and Ukraine. In the domestic market a contract for the informatization of the primary health care system was signed, and together with VIP-Net the pilot UMTS program was successfully carried out.

 

During 2003 the company obtained several awards and recognitions, for instance the Golden Marten as the best large company in Croatia. As the first company in the Ericsson Group and in Croatia Ericsson Nikola Tesla obtained the certificate Recognized for Excellence issued by the European Foundation for Quality Management, EFQM.

 

New responsibilities assigned to the Research and Development Center and to Customer Solutions and Sales Support Center contributed to improved positioning of Ericsson Nikola Tesla within the Ericsson Group. Ericsson Nikola Tesla is one of the strongest information – communication companies in the region.

 

In the second part of his presentation Åke Enell concentrated on the plans for the current year. Our objective is to be the preferred supplier of the communication – information technology in Croatia and in our export markets, also to secure our position within Ericsson and to expand our business platform. The prioritized activities of the company will continue to be the competence shift activities, efficiency and productivity boost and cost optimization. Considering the business environment of the company slightly diminished business volume is to be expected.

Maria Radtke, the finance director, presented the financial performance of the company in 2003 and in the 1st quarter of 2004

 

The company managed to keep sales at the same level expressed in HRK, but due to a drop in a foreign exchange value of USD, we actually had to sell more than in 2002. Operating expenses remained at the same low level, but high provisions for doubtful receivables increased the total costs. Through hedging the company achieved positive currency deviations compared to losses in 2002. The company also accomplished a positive cash flow amounting to 148 MHRK, which fully covered the redemption amount of HRK 100 per share paid to shareholders. Future investment needs are related to investments in buildings (to reduce vacancy costs), to investments in E-systems, technology, and competence development in the field of 3G.

 

In the first quarter of 2004 the company achieved very good results in Belarus and in Bosnia and Herzegovina. Sales in Croatia also increased compared to the same period last year.

 

A very important activity during 2003 was the listing of Ericsson Nikola Tesla shares in the quotation of public stock companies on the Zagreb Stock Exchange, ZSE. Since then the price has increased by 96%. In March 2004 the company shares were included in CROBEX – the official ZSE share index, as one of the ten most traded shares over the past six months.

 

Finally Maria Radtke commented on the transactions between Ericsson Nikola Tesla and the companies within the Ericsson Group. The rising purchasing volume by Ericsson is closely related to the rise in net sales and in cost of sales as Ericsson is the major supplier of the majority of products in the product portfolio of Ericsson Nikola Tesla. At the same time the company achieved revenues from service sales to the companies in the Ericsson group that are by 161% higher than the revenues in 1998.

Zvonimir Jelić, a member of the Supervisory Board reported on the supervision of performed activities, Toni Ilijanić, representative of the KPMG Croatia d.d., the company auditor for 2003, presented a report and expert opinion on business performance of the company in 2003.

 

By secret vote the Assembly approved the report supplied by the Supervisory Board, the allocation of the retained earnings for 2003, and the conductance of business as performed by the president of the company and finally the actions performed by the Supervisory Board and its chairman. Decisions were made on the modifications and additions to the Statute, on the recall of Mats Dahlin, the chairman of the Supervisory Board and of Pär Lövgren, the deputy chairman of the Supervisory Board, and on the appointment of Ragnar Bäck, the chairman of Ericsson Operations in Central and Eastern Europe and of Carita Jönsson, Head of Tax, Country and Operations Control within Group Function Finance at LM Ericsson as the new members of the Supervisory Board.

 

Again KPMG Croatia, the joint stock company, was appointed as the Ericsson Nikola Tesla auditor for 2004. The Assembly also passed the decision on the payout of dividend amounting to HRK 17 per share to all shareholders who seven days ahead of the Assembly (May 11, 2004) have on their securities account with the Central Depository Agency shares of Ericsonn Nikola Tesla. The dividend shall be paid out till August 16, 2004 at the latest.

 

It was decided with the majority of votes that the Company shares shall not be listed into the quotation on the Stockholm Stock Exchange till the end of 2004. The counter proposals of a group of shareholders to have the shares listed in the first quotation on Zagreb or Varaždin Stock Exchange till September 30 /December 31, 2004 were not accepted either.

 

Also, with the majority of votes the proposal was declined to appoint a special auditor to re-audit the business operations of the Company with the purpose of verifying the Ericsson Nikola Tesla operations with the companies in the Ericsson Group.