As previously communicated in our results announcements starting from Q3 2009, in the current economic climate there is increased risk and uncertainty with regards the ultimate collectability of some of our Customer loans and receivables balances.

 

With specific reference to Customer Financing balances in Kazakhstan that totaled MHRK 298 at 31 March 2010, we have recognised an impairment charge in respect of these balances equivalent to MHRK 126. The balances existed in respect of a transaction that was concluded in 2005 under which Ericsson Nikola Tesla provided Customer Financing, fully secured by trade finance instruments from BTA - at that time the No1 Bank in Kazakhstan. BTA is currently undergoing a financial restructuring process, due to its inability to payout its liabilities in full.

 

Risk Management in Ericsson Nikola Tesla is considered a fundamental part of healthy financial management and an integral part of corporate value creation. The Company has monitored the situation on the Kazakhstan market closely and has made all efforts to minimize risk and recuperate the maximum amount possible. We are operating in a global economic environment that is driven by unprecedented economic events and levels of government intervention. Accordingly, we have already taken steps in partnership with Banks and Financial Institutions to secure all future significant Customer financing exposures are managed through these Financial institutions with no recourse to Ericsson Nikola Tesla.

 

At 31 March 2010, the company reported MHRK 601.3 in respect of Cash, Cash equivalents and financial assets, total assets of MHRK 1,530.9 and an Equity ratio of 80.7%. Underlying Operating performance in Q1 2010 delivered a ROS of 11.06% and Operating Cashflow of MHRK 64.5.

 

After recognizing this impairment, the Company's credit risk is significantly reduced and Balance Sheet remains strong. Further, although the total value of expected future Cash receipts in respect of these specific Customer Financing balances in Kazakhstan is now reduced to MHRK 172, we anticipate that timing of these Cash receipts will now be significantly accelerated.

 

Company. Company Communication of Ericsson Nikola Tesla