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2016-11-03

Bittium Oyj: Bittium Corporation Interim Report January-September 2016

Stock exchange release

Free for publication on November 3, 2016 at 8.00 a.m. (CET+1)

Bittium Corporation Interim Report January-September 2016

Services business continued its positive development in
January-September 2016, but product-based net sales were lower
compared to last year

Summary July-September 2016

·
The net sales were EUR 14.1 million (EUR 11.1 million, 3Q 2015),
representing an increase of 26.2 percent year-on-year.

·
The share of the product-based net sales was EUR 2.2 million (EUR 2.5
million, 3Q 2015) and the share of the services-based net sales was
EUR 11.8 million (EUR 8.6 million, 3Q 2015).

·
Operating profit was EUR 0.9 million (EUR 0.0 million, 3Q 2015).

·
Net cash flow was EUR -1.8 million (EUR 575.5 million, 3Q 2015,
including the cash flow resulted from the sale of the Automotive
business and the cash flow of the cancelled demerger process).

·
Earnings per share were EUR 0.032 (EUR 0.001, 3Q 2015).

GROUP (MEUR) 7-9/2016 7-9/2015
3 months 3 months
NET SALES 14.1 11.1
Change of net sales, % 26.2 % 11.7 %
OPERATING PROFIT / LOSS 0.9 0.0
Operating profit / loss, % of net sales 6.5 % 0.2 %
EBITDA 1.6 0.7
CASH AND OTHER LIQUID ASSETS 105.9 617.5
EQUITY RATIO (%) 90.1 % 97.9 %
EARNINGS PER SHARE (EUR) 0.032 0.001

Summary January-September 2016

·
The net sales grew to EUR 45.2 million (EUR 41.6 million, 1-9 2015),
representing an increase of 8.7 percent year-on-year.

·
The share of the product-based net sales was EUR 7.5 million (EUR 11.3
million, 1-9 2015) and the share of the services-based net sales was
EUR 37.4 million (EUR 30.1 million, 1-9 2015).

·
Operating profit was EUR 1.6 million (EUR 1.5 million, 1-9 2015).

·
Net cash flow was EUR -16.9 million (EUR 574.2 million, 1-9 2015,
including the cash flow resulted from the sale of the Automotive
business and the cash flow of the cancelled demerger process).

·
Earnings per share were EUR 0.058 (EUR 0.009, 1-9 2015).

GROUP (MEUR) 1-9/2016 1-9/2015 2015
9 months 9 months 12 months
NET SALES 45.2 41.6 56.8
Change of net sales, % 8.7 % 13.7 % 7.8 %
OPERATING PROFIT / LOSS 1.6 1.5 2.3
Operating profit / loss, % of net sales 3.5 % 3.6 % 4.1 %
EBITDA 3.7 3.2 4.8
CASH AND OTHER LIQUID ASSETS 105.9 617.5 122.8
EQUITY RATIO (%) 90.1 % 97.9 % 90.5 %
EARNINGS PER SHARE (EUR) 0.058 0.009 0.020

Bittium's CEO Hannu Huttunen

The net sales of the third quarter in 2016 grew to EUR 14.1 million,
representing an increase of 26.2 percent year-on-year. The share of
the product-based net sales was EUR 2.2 million, which was slightly
lower than in the corresponding period last year. The share of the
services-based net sales was EUR 11.8 million. The service business
developed positively thanks to the increased demand in R&D services
for special terminal products. Operating result in the third quarter
was EUR 0.9 million. Cash flow was EUR -1.8 million, mainly due to
the investments made into our new office building in Oulu, Finland.

Net sales in January-September 2016 were EUR 45.2 million,
representing a growth of 8.7 percent year-on-year. The share of the
product-based net sales was EUR 7.5 million (16.5 percent of net
sales). The decline in the product-based net sales was caused by the
ending of product deliveries of a special terminal project for a
US-based customer during the corresponding period. The share of the
services-based net sales grew to EUR 37.4 million due to the
increased demand for special terminal products' R&D services.
Operating profit January-September 2016 grew year-on-year and was EUR
1.6 million.

In the beginning of October Bittium received information according to
which significant customer cooperation with a global network
equipment manufacturer will reduce during 2017. In case the planned
actions of the customer will materialize in full, these actions might
have a negative effect to Bittium's net sales and operating result in
2017. Despite this bad news, the demand for Bittium's R&D services
has developed positively during the third quarter. The product
development project for the Mexican Ministry of Communication and
Transportation to develop Android-based mobile devices that use both
terrestrial and satellite connection for their MEXSAT system has
continued according to plans, and demand for R&D services at IoT
markets has developed positively.

In the third quarter we continued the R&D investments in our products
and product platforms aiming for growth especially in the
international defense, mobile security and public safety markets. The
investments still focused mainly on products targeted for mobile
security and public safety markets. The development of the Bittium
Tough Mobile™ secure LTE smartphone and the pilot deliveries of the
products were continued during the third quarter. R&D investments
were also continued in the Bittium SafeMove® product family and these
remote access solutions were presented at the healthcare exhibition
HETT Show in London. The development of the tactical communication
system Bittium Tactical Wireless IP Network™ (TAC WIN), used by the
Finnish Defence Forces, continued. Also product deliveries related to
that system were continued during the third quarter. The development
in the public safety and mobile security markets has been slightly
slower than estimated.

We will continue to look for inorganic growth opportunities according
to our strategic guidelines and our focus in this year will be on the
internationalization and enabling growth. The growing need for
wireless connectivity, increasingly growing amount of data transfer
and the need for secure data transfer create demand for Bittium's
competence, products and product platforms. Despite of the reduction
of the customer cooperation in the network equipment markets, Bittium
still has good conditions to continue to grow in the future in a long
term.

Significant events after the review period

On October 5th, Bittium announced to have received information
according to which significant customer cooperation with a global
network equipment manufacturer will reduce during 2017. According to
the information received, if the planned actions of the customer will
materialize in full, these actions might have a negative effect on
Bittium's net sales and operating result in 2017.

The reduction of the cooperation will not have an effect on the
Bittium's outlook for the year 2016. Bittium will publish the outlook
for the year 2017 in connection with the financial statement bulletin
January-December 2016.

As part of the strategy work, Bittium will evaluate the effects of the
reduction of the cooperation on the financial targets given on July
1, 2015 in connection with company's strategic guidelines. These
financial targets published were as follows: The target during 2015 -
2017 is to grow the net sales at least 10 percent annually and reach
EBIT level 10 percent of net sales at the latest in 2017. Bittium
targets, by the year 2017, to clearly increase the share of net sales
generated from own products and product platforms, from the 26.7
percent level of net sales in 2014.

Outlook for 2016

Bittium expects that the net sales in 2016 will grow from the previous
year (EUR 56.8 million, in 2015). The operating profit is expected to
be at the same level as in the previous year (EUR 2.3 million, in
2015). The company has not given operating profit guidance for 2016
prior to this.

More information about Bittium's market outlook is presented in the
section "Market outlook" in this Interim Report.

More information about other uncertainties regarding the outlook is
presented in this Interim Report in the section "Risks and
uncertainties" and on the company's internet pages at
www.bittium.com.

Invitation to a press conference

Bittium will hold a press conference on the Interim Report
January-September 2016 for media, analysts and institutional
investors in Restaurant Savoy, Eteläesplanadi 14, Helsinki, Finland,
on Thursday November 3, 2016 at 9.30 am (CET+1). The press conference
will be held in Finnish.

Bittium will also hold a telephone conference on the same day at 10.30
am. The dial-in number for the conference call is +44 203 059 8125.
The confirmation code is "Bittium". The conference can also be
followed live as an audiocast, accessible at
www.bittium.com/investors. The conference call will be held in
English. A recording of the audiocast and the presentation will be
available after the conference on Bittium's website at
www.bittium.com/investors.

Bittium

Bittium specializes in the development of reliable, secure
communications and connectivity solutions leveraging its 30 years
legacy of expertise in advanced radio communication technologies.
Bittium provides innovative products and customized solutions based
on its product platforms and R&D services complementing its
communications and connectivity solutions. Bittium offers proven
information security solutions for mobile devices and portable
computers. Net sales of continuing operations in 2015 were EUR 56.8
million and operating profit was EUR 2.3 million. Bittium is listed
on Nasdaq Helsinki. www.bittium.com

Bittium Corporation's Interim Report January-September 2016

Financial performance in January-September 2016

Bittium's net sales during January-September 2016 increased by 8.7
percent year-on-year to EUR 45.2 million (EUR 41.6 million, in 1-9
2015).

The share of the product-based net sales was EUR 7.5 million (EUR 11.3
million, in 1-9 2015), which resulted mainly from the product
deliveries of the tactical communication system to the Finnish
Defence Forces, product deliveries of Bittium Tough Mobile LTE
smartphones, and from the delivery of other terminal products for
authorities use. The product-based net sales decreased year-on-year
mainly because of the ending of product deliveries of a special
terminal project for a US-based customer during the corresponding
period.

The share of the services-based net sales was EUR 37.4 million (EUR
30.1 million, in 1-9 2...

Författare WKR

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