The General Assembly of Ericsson Nikola Tesla (ETK) was held on 12th May 2005. The Assembly was marked by the tenth anniversary of Ericsson's taking major shareholding in the company – the constituent assembly of then formed joint stock company Ericsson Nikola Tesla was held on 13th May 1995.

Snježana Bahtijari, the director of Company Communication, presided the Assembly and conducted its procedures due to request by the Supervisory Board. At the Assembly 695.900 votes i.e. shares were present, a sufficient number for legal validity of decisions made. Gordana Kovačević, the managing director of the company and Maria Radtke, the finance director presented to shareholders the business year 2004 and its key performance parameters, the outlook for 2005 and the results accomplished in the first quarter of 2005.

As the key performance indicators and general information on the business year 2004 have already have been presented on the intranet, Internet and in the company newspaper we shall report here on the new information and decisions adopted by the Assembly.

Until now Ericsson Nikola Tesla has already accomplished some of its business objectives for 2005. Among the first in Croatia the company adopted the Corporate Governance principles. In commercial area a new partnership was established with Tele2, the third mobile telephony operator in Croatia and an agreement was signed with Monet Montenegro for the modernization of their GSM network with the newest services.

ETK signed with Vodatel, the major Croatian Internet service provider, an agreement for the delivery of communication solutions and equipment that shall enable Vodatel to enter soon the fixed telephony market in the country.

The latest news is an agreement in Kazakhstan with the customer TelecomNet for the building of multiservice networks. The value of the contract is EUR 39 million and it is the largest single business contract ever signed in the history of the company.

Financial performance in the first quarter of 2005 corresponds to the plan. The major market according to accomplished net sales is Croatia that participates with 32 percent in the total sales revenue. Profit before tax rose (+10 percent) primarily owing to lower exchange rate variation and to higher gross margin. Cash flow from operations is positive and it amounts to HRK 183 million.

The price of shares has risen over 30 percent since the beginning of 2005.

When summing up the business results of Ericsson Nikola Tesla it was stressed that due to new responsibilities obtained within global Ericsson, esp. in the Research and Development area and within the Global Services Center we recorded a strong growth of employment in the company. To maintain present competitive advantages of ETK, further investment into employees’ competence development, into test plants, equipment and office space is required. Also, further development of leadership skills of managers is required to run the company better.

To adjust to customer requirements, to strengthen internal interconnection of functions and organizations through projects and processes, to encourage creativeness and to boost cost efficiency and finally, to make experts and teams visible and to award them adequately Ericsson Nikola Tesla implemented a new line organization, project and process organization.

The company is encountering new challenges in its business environment and these will be even more pronounced in the time to come. Meant are the new competitors, the pressure to lower prices, necessary adjustment to the needs of new customers, the policy of financing and crediting customers, the privatization in telecommunications in the CIS market and more intensive work with the authorities and state-owned companies. We have to pay special attention to these challenges in the future.

After the address to shareholders by Gordana Kovačević and Maria Radtke, a member of the Supervisory Board, Zvonimir Jelić, reported on performed review by the Supervisory Board and Tony Ilijanić, the representative of KPMG Croatia d.o.o. as company auditor presented the report and expert opinion about the company's business performance in 2004.

The present shareholders and their proxies adopted the decision on the approval of report on performed review of operations in 2004 by the Supervisory Board, on the approval of the conduct of business as performed by the managing director, the chairman and members of the Supervisory Board and on changes and amendments to the Statute of the joint stock company.

The decision was adopted on the payment of dividend to the amount of 18 HRK per share from the non-allocated retained earnings from previous years and on the redemption of equity of the Company to the amount of 100 HRK per share to all shareholders who seven days ahead of the Assembly had on their securities account with the Central Depository Agency (i.e. on 5th May 2005) shares of the Company. The dividend shall be paid on 10th August 2005 at the latest. The payment of difference due to equity redemption is expected early next year.

A decision was also adopted on allocating the profit from the last year to retained earnings and the approval was given to the managing director to assign a part of retained earnings to key employees and members of management by distributing treasury shares of the Company.

For the Company auditor for 2005 again KPMG Croatia d.o.o. from Zagreb was appointed.

At the end, Josip Galinec, the chairman of the Shareholders’ Association of Ericsson Nikola Tesla, and Zlatko Vojnić, the chairman of the ETK Association of Small Shareholders (UMDT) conveyed the commendation by shareholders to the management of the company for their conductance of business and achieved business results and they emphasized that “it feels good to be a shareholder of ETK.”

Communication Ericssona Nikola Tesla