Interim Report April – June 2016

A strong quarter for software sales outside Enea’s Key Accounts

Enea improved revenue, operating profit and operating margin in the second
quarter 2016. Enea reported a stable operating margin of over 20 percent and
increased earnings per share.

  ·  Revenue in the second quarter were SEK 124.1 (120.2) million, a 3 percent
increase. In the first six months of the year, revenue increased to SEK 244.9
(237.6) million.
  ·  Operating profit for the second quarter was up to SEK 28.8 (26.5) million,
corresponding to an operating margin of 23.2 (22.1) percent. Operating profit
for the first six months of the year rose to SEK 55.8 (49.8) million,
corresponding to an operating margin of 23.2 (22.1) percent.
  ·  Earnings per share were up to SEK 1.48 (1.30) for the second quarter, and
SEK 2.86 (2.49) for the first six months of the year.
  ·  Cash flow from operating activities was SEK 41.1 (54.7) million for the
quarter and SEK 79.9 (68.4) million for the first six months of the year. Cash
and cash equivalents and financial investments amounted to SEK 196.6 (187.6)
million at the end of the quarter.
  ·  Enea paid SEK 4.20 (3.60) per share through an automatic redemption program
on
14 June, which corresponds to a transfer of SEK 66.8 (57.8) million to
shareholders.

April to June 2016

(second quarter previous year in brackets)

  · Revenue, SEK 124.1 (120.2) million
  · Revenue growth, 3 (16) %
  · Revenue growth, currency adjusted, 4 (8) %
  · Operating profit, SEK 28.8 (26.5) million
  · Operating margin, 23.2 (22.1) %
  · Net profit after tax, SEK 23.5 (20.8) million
  · Earnings per share, SEK 1.48 (1.30)
  · Change in earnings per share, 14 (19) %
  · Cash flow (from operating activities), SEK 41.1 (54.7) million
  · Cash and cash equivalents and financial investments, SEK 196.6 (187.6)
million

Anders Lidbeck, President and CEO comments:

“New business
Going into 2016, our target was to keep our operating margin stable at levels
above 20 percent, and with the ambition to keep increasing our earnings in
absolute terms, and earnings per share, on 2015. Looking back at the second
quarter, we achieved an operating margin of 23.2 (22.1) percent, and a 14
percent increase in earnings per share to SEK 1.48 (1.30). Operating profit for
the quarter was SEK 28.8 million, a 9 percent increase compared with the same
period last year. This means that for the first half-year 2016, we increased
operating margin to 22.8 (21.0) percent and increased operating profit by 12
percent to SEK 55.8 (49.8) million in the quarter compared to the corresponding
period of 2015. In the same period, earnings per share increased by 15 percent.

Revenue increased by 3 percent on the corresponding quarter of the previous
year. Revenues from our services business progressed well, representing 31
percent of revenues in the quarter. At the beginning of the quarter, we secured
a major new deal in the US within our services business, which we will continue
to deliver in the third quarter. As I have written many times previously, expert
knowledge, not only confined to our products, but also the capacity to deliver
integrated projects effectively and with high quality is, and will remain, a key
component in a world where open source is becoming ever more significant.
Accordingly, our service business will become strategically more central to
Enea. But once again, it is our software business outside Key Accounts that is
in the highest growth in year-on-year terms, and growing in North and South
America, Europe and Asia. We are in the midst of a clear realignment. Revenues
from Key Accounts are continuing to reduce as a share of total, while once
again, we achieved growth of over 20 percent in Worldwide Software Sales
compared to the corresponding period of the previous year. This means that for
the quarter, Worldwide Software Sales represent 24 percent of revenues compared
to 14 percent just over two years ago. This is a major change for Enea, and we
are really satisfied to have achieved this with increasing profit margins.

An award-winning team
The market for building the communication systems of the future is in
fundamental transformation, and it is critical that Enea is part of this
process. This is why we are continuing to make substantial investments in our
product portfolio and offering to the market. In the first half-year, we
invested over SEK 43 million in what we refer to as product development, and
expect to maintain this tempo in the second half-year. We are continuing to
invest in our proprietary products, and solutions based on open source. In
recent quarters, our work has included producing an ARM variant of the new
version of the OPNFV platform known as Brahmaputra, which is the second—and thus
enhanced—release of this platform. We have managed this project in close
partnership with ARM, and in the past quarter, we were able to demo the results
of this process at the NFV World Congress in San Jose. Our work on OPNFV and
Brahmaputra has attracted attention in several contexts, and our team received
the Director’s Award at the OPNFV Summit in Berlin in the quarter for their
efforts.

It is very satisfying that Enea’s efforts and professionals have been recognized
in this way. Congress delegates were also able to see Enea and Red Hat experts
presenting the ongoing security process in the OPNFV project. This is a direct
result of our commitment to selected open source projects, where we have played
a leading role in security on the OPNFV and Yocto projects. We are now
continuing our work on Colorado, the third—and further enhanced—release of the
OPNFV platform, scheduled for release in autumn 2016.

New, exciting projects
Apart from our work within open source and projects based on open source, we
also worked intensively on our own products in the quarter. We completed the new
version of our Element product, with a retained focus of what we usually refer
to as on-device management—a segment where we see new opportunities, not least
in NFV contexts. We have also worked intensively on our portfolio of operating
system solutions, and completed new versions of Enea OSE and Enea Linux in the
quarter. Operating systems remain the backbone of our product portfolio, and we
are continuing to secure new customers with our flagship OSE.

The fundamental technology and market trends are clear, and we are focusing just
as clearly on being part of these trends by developing new technology segments
and new business models, simultaneous with continuing to develop our existing
business. By enhancing, expanding and integrating the various products and
solutions we possess, and by still actively screening acquisitions, we are
building a progressively stronger position in a really attractive market. So we
can combine substantial investments in our product portfolio with continued
earnings growth, our long-term strategy is to continuously optimize our
organization. We are continuously seeking new ways to make our organization more
effective and competitive with a retained focus on excellence, quality and our
customers. We are continuing our endeavour to build a bigger and stronger
company, which delivers increasing value to customers, employees and
shareholders. With strong finances, good cash flows and a more secure market
position, we view the future with confidence.

We are reiterating our objective of achieving revenue growth for the full year
2016, and we expect earnings per share to improve compared to 2015.”

Press and analyst meeting
Press and financial analysts are invited to a press and analyst meeting where
Anders Lidbeck, President and CEO, will present and comment on the report.
Time: Wednesday July 20 at 08:30 am CEST.
Link: http://www.financialhearings.nu/?160720/enea
Phone number: SE: +46 856642669, UK: +44 2030089804

The full report is published at www.enea.com/investors

This information is information that Enea AB (publ) is obliged to make public
pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets
Act. The information was submitted for publication, through the agency of the
contact person set below, on July 20, 2016 at 7.20 CEST.

For more information visit www.enea.com/investors or contact:
Anders Lidbeck, President & CEO
E-mail: anders.lidbeck@enea.com

Julia Steffensen, Executive Assistant
Phone: +46 70 971 03 33
E-mail: julia.steffensen@enea.com

About Enea
Enea is a global supplier of network software platforms and world class
services, with a vision of helping customers develop amazing functions in a
connected society. We are committed to working together with customers and
leading hardware vendors as a key contributor in the open source community,
developing and hardening optimal software solutions. Every day, more than three
billion people around the globe rely on our technologies in a wide range of
applications in multiple verticals – from Telecom and Automotive, to Medical and
Avionics. We have offices in Europe, North America and Asia, and are listed on
Nasdaq Stockholm. Discover more at www.enea.com and start a conversation at
info@enea.com.

Enea®, Enea OSE®, Netbricks®, Polyhedra®, Zealcore®, Enea® Element, Enea®
Optima, Enea® LINX, Enea® Accelerator,  Enea® dSPEED Platform and COSNOS® are
registered trademarks of Enea AB and its subsidiaries. Enea OSE®ck, Enea OSE®
Epsilon, Enea® Optima Log Analyzer, Enea® Black Box Recorder, Polyhedra® Lite,
Enea® System Manager, Enea® ElementCenter NMS, Enea® On-device Management and
Embedded for LeadersTM are unregistered trademarks of Enea AB or its
subsidiaries. Any other company, product or service names mentioned above are
the registered or unregistered trademarks of their respective owner. © Enea AB
2016.