diff --git a/Readme.md b/Readme.md
index 8b5837b..5816f5b 100644
--- a/Readme.md
+++ b/Readme.md
@@ -11,7 +11,7 @@ Display is able to render tiles + sprites, 8x16 sprites are implemented but unte
 
  - Test 01 fails because of DAA
  - Test 02 fails because interrupts are not fully implemented.
- - Test 03 fails, probably because of flags.
+ - Test 03 passes
  - Test 04 passes
  - Test 05 fails
  - Test 06 passes (LD R, R)
diff --git a/src/cpu.rs b/src/cpu.rs
index 186746c..b5fd4f3 100644
--- a/src/cpu.rs
+++ b/src/cpu.rs
@@ -1168,9 +1168,8 @@ impl CPU {
                     self.set_pair_value(REG_N_H, REG_N_L, v);
 
                     self.clear_flag(FLAG_N);
-                    self.set_clear_flag(FLAG_C, old > v);
-                    // Is this correct? I don't know:
-                    self.set_clear_flag(FLAG_H, (old & 0x8 | sp & 0x8) == 1 && v & 0x8 == 0);
+                    self.set_clear_flag(FLAG_C, old > v && sp > 0);
+                    self.set_clear_flag(FLAG_H, ((old & 0xFFF) + (sp & 0xFFF)) > 0xFFF);
                     8
                 },
                 0x3A => {