Bittium Oyj — Interim / Quarterly Report 2021

Aug 6, 2021

Bittium Corporation Half-Year Financial Report January-June 2021

Bittium Corporation Half-Year Financial Report January-June 2021

Stock exchange release

Free for publication on August 6, 2021 at 8.00 am (CEST +1)

Bittium Corporation Half-Year Financial Report January-June 2021

Bittium’s Operating Result Turned Positive During the Second Quarter of the Year

Unless otherwise mentioned, the figures in brackets refer to the corresponding
period in the previous year.

Summary April-June 2021

· Net sales was EUR 22.6 million (EUR 25.3 million), representing 10.4 percent
decrease year-on-year.
· The share of product-based net sales was EUR 16.7 million (EUR 18.4
million), representing 73.8 percent of the net sales. The share of Medical
Technologies products was EUR 5.6 million (EUR 3.4 million) and the share of
Defense & Security products was EUR 11.2 million (EUR 15.0 million).
· The share of services-based net sales was EUR 5.9 million (EUR 6.8 million),
representing 26.2 percent of the net sales.
· EBITDA was EUR 3.2 million (EUR 5.6 million).
· Operating result was EUR 0.7 million (EUR 2.7 million).
· Result for the period was EUR 0.5 million and earnings per share were EUR
0.015 (result for the period EUR 2.7 million and earnings per share EUR 0.076).
· Cash flow from operating activities was EUR 2.6 million (EUR -0.8 million).
· Net cash flow was EUR -1.1 million (EUR -5.1 million).

GROUP (MEUR) 4-6/2021 4-6/2020
3 months 3 months
NET SALES 22.6 25.3
Change of net sales, % -10.4 % 6.8 %
EBITDA 3.2 5.6
EBITDA, % of net sales 14.3 % 22.3 %
OPERATING PROFIT / LOSS 0.7 2.7
Operating profit / loss, % of net sales 3.3 % 10.7 %
RESULT OF THE PERIOD FROM CONTINUING OPERATIONS 0.5 2.7

CASH AND OTHER LIQUID ASSETS 18.9 26.3
EQUITY RATIO (%) 71.3 % 71.8 %
EARNINGS PER SHARE (EUR) 0.015 0.076

Summary January-June 2021

·
Net sales was EUR 39.7 million (EUR 42.5 million), representing 6.8 percent
decrease year-on-year.

· The share of product-based net sales was EUR 27.9 million (EUR 30.1
million), representing 70.3 percent of the net sales. The share of Medical
Technology products was EUR 13.5 million (EUR 9.5 million) and the share of
Defense & Security products was EUR 14.5 million (EUR 20.6 million).
· The share of services-based net sales was EUR 11.8 million (EUR 12.5
million), representing 29.7 percent of the net sales.
· EBITDA was EUR 4.2 million (EUR 8.4 million).
· Operating profit was EUR -0.7 million (EUR 2.9 million).
· Result for the period was EUR -1.0 million and earnings per share were EUR
-0.029 (result for the period EUR 2.5 million and earnings per share EUR 0.071).
· Cash flow from operating activities was EUR 1.2 million (EUR 0.3 million).
· Net cash flow was EUR -5.8 million (EUR -8.8 million).

GROUP (MEUR) 1-6/2021 1-6/2020
6 months 6 months
NET SALES 39.7 42.5
Change of net sales, % -6.8 % 28.7 %
EBITDA 4.2 8.4
EBITDA, % of net sales 10.6 % 19.7 %
OPERATING PROFIT / LOSS -0.7 2.9
Operating profit / loss, % of net sales -1.8 % 6.7 %
RESULT OF THE PERIOD FROM CONTINUING OPERATIONS -1.0 2.5

CASH AND OTHER LIQUID ASSETS 18.9 26.3
EQUITY RATIO (%) 71.3 % 71.8 %
EARNINGS PER SHARE (EUR) -0.029 0.071

Outlook for 2021

The spread of new variants of the coronavirus and the global disruption in the
availability of electronic components have a significant impact on the global
market, also causing uncertainty for the development of Bittium's business
towards the end of the year.

Bittium expects the net sales in 2021 to grow from the previous year (EUR 78.4
million in 2020) and the operating result to improve from the previous year (EUR
2.1 million in 2020).

More information about Bittium’s market outlook is presented in this report in
the section “Market outlook”.

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

Bittium’s CEO Hannu Huttunen

The year 2021 has developed according to our expectations, and the second
quarter’s net sales and operating result improved from the first quarter. The
markets are slowly recovering from the coronavirus pandemic, but the spread of
the new virus variants creates uncertainty in the future outlook. In addition,
further uncertainty is caused by the global disruption in the availability of
electronic components, which has prevented us from delivering some of the
product deliveries to our customers on time. It is possible that the shortage of
the components will affect the development of our product business also during
the rest of the year.

In the first half of the year, we expanded our product portfolio in all our
product areas and launched, among others, the home sleep apnea testing solution
Bittium Respiro™, Bittium OmegaSnap™ electrode for long-term ECG measurements,
the advanced device and network management system Bittium Tactical Management
Suite™, and the secure communication application Bittium Secure Call™ for public
authorities and companies.

Cooperation with our largest customers both in Finland and abroad continued to
be good. Due to the shortage of components, we had to postpone deliveries of
tactical communication products, which was also reflected in the first half net
sales compared to the corresponding period of the previous year. Bittium Tough
SDR™ vehicle radio product development project was completed. The Finnish Army
has adopted the Bittium Tactical Wireless IP Network™ (TAC WIN) wireless
backbone network used in the M18 management system for operational use. In
addition, the Finnish Army has acquired Bittium Tough SDR™ radios for testing
use and will continue the development and implementation of the radio family as
a part of the M18 management system. We expect further orders for hand and
vehicle radios during 2022. The development of radio waveforms in the Bittium
Tough SDR™ product family continues in co-operation with the Finnish Defense
Forces.

The tender for the Spanish Army's project for new vehicle radios was completed,
and despite a very good pilot phase, we did not win the tender itself. However,
as the coronavirus situation eases, the international market for tactical
communications is slowly beginning to normalize and we will be able to continue
piloting with potential new customers.

Continuous security attacks are increasing the authorities' interest in secure
phones, which was partly reflected in the growing demand for secure phones. We
received important security approvals for our terminals and their back-end
systems, which is an excellent demonstration of our strong security expertise.
Sales of Bittium Tough Mobile™ 2 C have developed positively during the first
half of the year.

The reseller cooperation regarding the Mexsat satellite phones, which started at
the beginning of the year with a Mexican telecommunications solution provider
Inmosat, has progressed well and product deliveries have begun. Cooperation with
a reliable local operator facilitates the sale and maintenance of the equipment.
The reseller agreement covers the exclusive sale of Mexsat satellite phones to
Mexican state authorities and national security organizations.

Demand for medical technology products in the first half of the year increased
significantly from the corresponding period of the previous year. In particular,
demand increased for Bittium Faros™ devices, which measure the electrical
activity of the heart. The market for medical neurophysiology products has
reopened as the need for hospital care due to the coronavirus pandemic eases.
Testing of the new devices has begun, and we have delivered several Bittium
BrainStatus™ EEG measuring devices to customers in Austria, Finland, and
Germany, as well as in Asia. The medical device approval process for the sleep
apnea measuring device, launched at the beginning of the year, is underway and
the goal is to start selling the devices later this year. All Bittium's
cardiology and neurophysiology solutions, also including sleep apnea measurement
devices, operate on the same cloud-based service and analytics platform, meeting
the market's needs to digitize remote diagnostic service processes more widely
than before.

Demand for R&D services remained stable. We continued to provide connectivity
solutions to our customers in wireless communication, medical technology, and
industrial manufacturing markets. The goal is to further increase the number of
R&D service projects and expand the customer base.

We have gained several new customers during the first half of the year and the
business has developed positively. The market is recovering despite the spread
of coronavirus variants worldwide. The biggest risk of achieving this year's
targets is the availability of electronic components, but we will continue our
efforts to procure the necessary components in our products.

Financial Performance in January-June 2021

Bittium’s net sales in January-June 2021 decreased by 6.8 percent year-on-year
to EUR 39.7 million (EUR 42.5 million).

The share of product-based net sales was 70.3 percent and was EUR 27.9 million
(EUR 30.1 million). The share of Medical Technologies products was EUR 13.5
million (EUR 9.5 million) and the share of Defense & Security products and
systems was EUR 14.5 million (EUR 20.6 million). The decrease in product-based
net sales was due to the postponement of Defense business product deliveries to
the second half of the year.

The share of services-based net sales was EUR 11.8 million (EUR 12.5 million),
representing 29.7 percent of the net sales.

Operating result in January-June 2021 was EUR -0.7 million (EUR 2.9 million).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME, MEUR 1-6 2021 1-6 2020
6 months 6 months
   Net sales 39.7 42.5
   Operating profit / loss -0.7 2.9
   Financial income and expenses -0.3 -0.3
   Result before tax -1.0 2.5
RESULT FOR THE PERIOD -1.0 2.5
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD -1.0 2.5

Result for the period attributable to:
   Equity holders of the parent -1.0 2.5
Total comprehensive income for the period attributable to:
    Equity holders of the parent -1.0 2.5

Earnings per share from continuing operations, EUR -0.029 0.071

·
Cash flow from operating activities was EUR 1.2 million (EUR 0.3 million).

· Net cash flow during the period was EUR -5.8 million, including as the most
significant items EUR 4.4 million R&D investments into own products and EUR 1.1
million dividend payment (EUR -8.8 million, including as the most significant
item EUR 7.4 million R&D investments into own products, no dividends was paid
during the comparison period).
· Equity ratio was 71.3 percent (71.8 percent).
· Net gearing was 3.2 percent (-3.5 percent).

Half Year Figures

GROUP’S NET SALES AND OPERATING RESULT, MEUR 1H/21 2H/20 1H/20 2H/19
Net sales 39.7 35.8 42.5 42.2
Operating profit (loss) -0.7 -0.8 2.9 4.7
Result before taxes -1.0 -0.9 2.5 4.4
Result for the period -1.0 -0.4 2.5 6.1

DISTRIBUTION OF NET SALES BY 1H/21 2H/20 1H/20 2H/19
PRODUCT AND SERVICES, MEUR aND
%
Product-based net sales 27.9 23.0 30.1 30.8
70.3 % 64.3 % 70.7 % 73.1 %
Services-based net sales 11.8 12.8 12.5 11.4
29.7 % 35.7 % 29.3 % 27.1 %

DISTRIBUTION OF PRODUCT-BASED NETSALES, MEUR AND % 1H/21 2H/20 1H/20
Defense & Security products 14.5 15.1 20.6
51.8 % 65.5 % 68.6 %
Medical Technologies products 13.5 8.0 9.5
48.2 % 34.5 % 31.4 %

DISTRIBUTION OF NET SALES BY MARKET AREAS, 1H/21 2H/20 1H/20 2H/19
MEUR AND %
Asia 0.3 0.2 0.2 0.1
0.6 % 0.5 % 0.4 % 0.3 %
Americas 14.4 6.4 7.1 12.7
36.4 % 17.8 % 16.7 % 30.2 %
Europe 25.0 29.3 35.2 29.3
62.9 % 81.7 % 82.8 % 69.6 %

Quarterly Figures

GROUP’S NET SALES AND OPERATING RESULT, MEUR 2Q/21 1Q/21 4Q/20 3Q/20 2Q/20
Net sales 22.6 17.0 21.8 14.0 25.3
Operating profit (loss) 0.7 -1.5 0.3 -1.0 2.7
Result before taxes 0.5 -1.6 0.2 -1.0 2.7
Result for the period 0.5 -1.6 0.7 -1.0 2.7

DISTRIBUTION OF NET SALES BY 2Q/21 1Q/21 4Q/20 3Q/20 2Q/20
PRODUCT AND SERVICES, MEUR aND
%
Product-based net sales 16.7 11.2 14.5 8.5 18.4
73.8 % 65.7 % 66.5 % 60.9 % 73.0 %
Services-based net sales 5.9 5.9 7.3 5.5 6.8
26.2 % 34.3 % 33.5 % 39.1 % 27.0 %

DISTRIBUTION OF PRODUCT 2Q/21 1Q/21 4Q/20 3Q/20 2Q/20
-BASED NET SALES, MEUR
aND %
Defense & Security 11.2 3.3 10.7 4.4 15.0
products
66.8 % 29.5 % 73.6 % 51.6 % 81.3 %
Medical Technologies 5.6 7.9 3.8 4.1 3.4
products
33.2 % 70.5 % 26.4 % 48.4 % 18.7 %

DISTRIBUTION OF NET SALES 2Q/21 1Q/21 4Q/20 3Q/20 2Q/20
BY MARKET AREAS, MEUR aND
%
Asia 0.1 0.1 0.1 0.1 0.1
0.6 % 0.7 % 0.5 % 0.5 % 0.4 %
America 7.2 7.2 2,9 3.5 2.2
31.9 % 42.5 % 13.3 % 24.8 % 8.8 %
Europe 15.3 9.7 18,8 10.5 22.9
67.5 % 56.9 % 86.2 % 74.7 % 90.8 %

Research and Development

Bittium continued to make significant investments to develop its own products
and product platforms. In January-June 2021, the R&D investments were EUR 11.0
million (EUR 12.0 million), representing 27.8 percent of the net sales (28.3
percent).

The R&D investments focused mainly on developing tactical communication system
and its products for the defense industry, developing different types of special
terminal products for authorities and their related security software, as well
as developing medical technology products.

The capitalized R&D investments are related to the investments in developing the
software defined radio based tactical radios, Bittium Tough SRD™ product family,
further development of tactical communication networks, and development of
medical technology products.

R&D INVESTMENTS, (MEUR)

                                             1-6 2021  1-6 2020
                                             6 months  6 months

Total R&D investments 11.0 12.0
Capitalized R&D investments -4.4 -7.4
Depreciations and impairment of R&D investments 2.5 2.9
Cost impact on income statement 9.1 7.6
R&D investments, % of net sales 27.8 % 28.3 %

CAPITALIZED R&D INVESTMENTS IN BALANCE SHEET, MEUR 1-6 2021 1-6 2020
6 months 6 months
Balance sheet value in the beginning of the period 46.6 39.1
Additions during the period 4.4 7.4
Depreciations and impairment of R&D investments -2.5 -2.9
Balance sheet value at the end of the period 48.5 43.6

Business Development in January-June 2021

The exceptional circumstances caused by the coronavirus pandemic still have some
impact on the global market situation, but the recovery from the pandemic has
already begun. The global shortage of components has become, which is slowing
down the manufacturing and thus causing delays in the delivery of products.

In the first half of the year, Bittium expanded its product and service offering
for the defense market by launching the advanced Bittium Tactical Management
Suite™, which includes separate device and network management systems. The
systems enable easy and secure management of Bittium's tactical communication
devices and networks during the deployment phase and during and after
operations.

In the domestic defense market, co-operation with the Finnish Defense Forces has
remained strong. Bittium received orders under framework agreements for the
software-defined radio-based Bittium Tactical Wireless IP Network™ (TAC WIN)
system’s products and Bittium Tough Comnode™ equipment, as well as a purchase
order for system support for TAC WIN software radio and Bittium Tough VoIP™
systems.

The product development project for Bittium Tough SDR™ vehicular radios was
completed. The Finnish Army has adopted the Bittium Tactical Wireless IP Network
(TAC WIN) wireless backbone network for the operational use of the M18
management system. In addition, the Finnish Army has acquired Bittium Tough SDR™
radios for testing use and will continue the development and implementation of
the radio family as a part of the M18 management system. Bittium expects further
orders for both handheld and vehicular radios during 2022. The development of
waveforms for the radios in the Bittium Tough SDR™ product family continues in
cooperation with the Finnish Defense Forces.

In the international defense and authority markets, Bittium continued to supply
and integrate its tactical communications system products with its Austrian,
Estonian, and other international customers. In May, a4ESSOR S.A.S (Alliance for
ESSOR), a joint venture to develop European secure software-defined radio
technology, in which Bittium is involved, received an official approval for the
ESSOR High Data Rate Base Waveform developed by the joint venture. The approval
is the result of two and a half years of development work involving all the
industrial partners of the ESSOR project, which are Bittium (Finland), Indra
(Spain), Leonardo (Italy), Radmor (Poland) and Thales (France). Bittium has
adapted the waveform to its own Bittium Tough SDR™ radios in cooperation with
the Finnish Defense Forces.

The security approval for the Bittium Tough Mobile™ 2 C and related back-end
system obtained in the second quarter has increased the authorities' interest in
secure smartphones. Phone sales increased, new customers were gained, and new
pilot projects were launched. The approval granted by the Finnish Transport and
Communications Agency Traficom's National Cyber Security Centre allows the
official Confidential classification level information to be created and
processed and transferred between smartphone and connected back-end solutions.
Also, the Bittium SafeMove® Mobile VPN software, which secures connections
between mobile devices and services, received a security approval by the Spanish
Security Authority, which corresponds to the international Restricted security
level. The approval enables the transfer of encrypted material with Bittium
SafeMove Mobile VPN software when used on a trusted platform.

Bittium expanded its secure communication solution offering and launched a
secure Bittium Secure Call™ communication application targeted for authorities,
companies, and private persons. Security of the Bittium Secure Call
communication application covers end-to-end encrypted voice and video calls,
group calls, messages with attachments, group messaging, push-to-talk voice
messages, and a feature that destroys messages after a predefined time. The user
organization can easily integrate Bittium's complete information security
solution into its own back-end system, keeping the terminals and the
communication between them under its own control. This protects users from
security attacks and ensures that confidential information is not leaked to
third parties.

Bittium entered into a reseller partnership with Inmosat, a Mexican provider of
telecommunications solutions, concerning Mexsat satellite phones used in the
Mexsat satellite communications system designed for the Mexican state. The
agreement covers the exclusive sale of Mexsat satellite phones to Mexican state
authorities and national security organizations. The first order related to the
resale agreement was worth approximately EUR 5 million, of which approximately
half has already been delivered to the customer during the first half of the
year, and the rest of the order will be delivered by the end of this year.

Demand for Bittium's Faros™ ECG measuring devices increased during the review
period. Most of product deliveries were made to Preventice, a customer providing
remote monitoring services in the U.S. ECG market. Deliveries of the disposable
Bittium OmegaSnap™ patch electrode, which was launched for Faros devices at the
beginning of the year, started as planned and the electrode has received
positive feedback from customers. The electrode is specially designed for long
-term ECG measurements.

The market for medical neurophysiology products is reopening again as the
coronavirus pandemic eases. Hospitals and care facilities are also able to start
testing new technological devices, and several Bittium BrainStatus™ EEG
measuring devices were delivered to customers for pilot use. The medical device
certificated Bittium BrainStatus™ measures and monitors the electrical activity
of the brain, which improves treatment and facilitates and speeds up the work of
nursing staff, especially in the intensive care unit. Continuous monitoring of
brain electrical activity is an important method for assessing the state of
consciousness. In neurological emergencies, rapid initiation of treatment is
essential to prevent potential permanent harm.

As a follow-up to remote diagnostic solutions for measuring electrical activity
in the brain and heart, Bittium launched a new home-based sleep apnea testing
solution in the early part of the year. Bittium Respiro™ is a modern sleep apnea
research device and analysis service solution for service providers, hospitals,
clinics, and health centers. The solution focuses on testing sleep apnea at home
by recording and analyzing typical sleep-related respiratory disorders. In
addition to the recording device, this system includes analysis software that
utilizes artificial intelligence, which significantly speeds up the work of
doctors. The total solution utilizes Bittium's cloud-based and data-secure
service platform, which enables analyzes to be performed regardless of time and
place.

Bittium's cloud-based MedicalSuite™ service platform now includes all of the
company's cardiology and neurophysiology solutions, including sleep apnea
measurement solutions, enabling service operators to further digitize their
remote diagnostic service processes. Alongside the aging population, the global
coronavirus pandemic has provided a strong incentive to streamline and digitize
primary and specialist health care functions. In addition, the avoidance of
physical contacts has accelerated the transition to remote diagnostics and care.
Together, these factors increase the demand for both hardware and total service
solutions in the medical technology market.

Demand for Bittium's R&D services remained stable. Bittium continued to deliver
services and connectivity solutions to customers in wireless telecommunications,
medical technology and industrial manufacturing, and new international customers
were won in various industries. In the automotive software market, the pilot
project for the set-up of the first 5G connection was successfully completed and
the company participated in the automotive Car HMI trade fair in Germany. Demand
for R&D services is growing, especially in the areas of wireless communications
and the Open Radio Access Network (ORAN), an open radio access network
architecture. The goal is to further increase the number of product development
service projects and expand the customer base.

Other Significant Events during the Reporting Period

February 11, 2021 Bittium Corporation’s Financial Statement Bulletin January
-December 2020

February 11, 2021: Change in the Bittium Corporation’s Annual Report 2020
Release Date

February 11, 2021: Notice to the General Meeting of Bittium Corporation

February 11, 2021: Bittium Corporation: New Period in the Share-Based Incentive
Scheme for the Management of Bittium

February 24, 2021: Correction to the Notice to the General Meeting of Bittium
Corporation

March 2, 2021: Bittium Corporation: The Finnish Defence Forces Order Bittium TAC
WIN™ Products and Bittium Tough Comnode™ Devices Based on Framework Agreements
on the Purchase of the Products

March 19, 2021: Bittium Corporation’s Annual Report, Sustainability Report,
Corporate Governance Statement and Remuneration Report from 2020 Have Been
Published

March 22, 2021: Bittium Corporation’s Three Largest Shareholders Have Changed
Their Proposal to the Annual General Meeting to Be Held on April 14, 2021

March 22, 2021: Bittium Cancels the Notice to the Annual General Meeting
Published on February 11, 2021, and Publishes a New Notice to the Annual General
Meeting to Be Held on April 14, 2021

March 24, 2021: Bittium Corporation’s Directed Share Issue without Consideration
to Implement the Share-Based Incentive Scheme

March 29, 2021: New Shares of Bittium Corporation Registered in the Trade
Register

April 14, 2021: Decisions of the Annual General Meeting of Bittium Corporation;
General Meeting Decided to Distribute a Minority Dividend

April 29, 2021: Bittium Corporation’s Business Review January-March 2021

May 17, 2021: Change in Bittium Corporation’s Management Group

Significant Events after the Reporting Period

There were no significant events after the reporting period.

Market Outlook and the Implications of the Coronavirus Pandemic for Bittium

Bittium's customers operate in various industries, each of them having their own
industry specific factors driving the demand. A common factor creating demand
among the whole customer base is the growing need for higher quality and secure
data transfer. Due to the technology competences accrued over time and the long
history in developing mobile communication solutions, Bittium is in a good
position to offer customized solutions to its customers. Over thirty years of
experience and extensive competence in measuring biosignals also act as a basis
for medical technology solutions.

In 2020 and 2021, the global coronavirus pandemic has significantly affected the
global economy and market situation. Bittium’s business sales cycles are long by
their nature, but the pandemic has also affected Bittium’s business, among
others, by slowing down existing projects and postponing new projects. The
market is slowly beginning to recover from the effects of the pandemic, but the
global shortage of components will affect product manufacturing and thus the
ability to deliver products to customers on schedule.

The factors affecting the demand for Bittium’s products and services and the
effects of the coronavirus pandemic on them are described below:

Defense, Public Safety, and Information Security Markets

·
In the defense market’s tactical communications sector, the governments’ defense
forces and other authorities need networks that troops, who are more and more
constantly on the move, can use and transfer growing amounts of data securely.
This creates demand for Bittium Tactical Wireless IP Network™ (TAC WIN)
broadband network, Bittium Tough SDR™ handheld and vehicular radios, and for
other Bittium’s IP-based (Internet Protocol) tactical communication solutions
that fulfill the needs of data transfer of moving troops and individual
soldiers. Bittium continues efforts to bring its defense market targeted
products and services also to the international defense markets and aims to get
new international customers for its tactical communication system in 2021. Due
to the long sales cycles driven by purchasing programs of national governments,
it will take time to receive purchase orders.

· The financial difficulties caused by the coronavirus pandemic affect the
budgets of public finances such as states and public authorities and has
required postponing of procurement. This has somewhat delayed the launch of new
projects and receiving orders. Especially in the defense and authorities’
markets testing and piloting of products and systems are typical phases before
receiving orders of larger entities, and current circumstances due to the
pandemic situation have caused delays in them. However, market has begun to
recover from the effects of the pandemic. The global shortage of components
affects the availability of various components used in products, which affects
the company's ability to deliver products to its customers on time.
· The use of LTE technology, smartphones, and applications continue to
increase in special verticals, such as public safety, creating demand for
Bittium Tough Mobile™ secure LTE smartphone and other customized special
terminals based on Bittium’s own product platform. The awareness of mobile
security risks is growing, and the interest towards secure mobile devices is
increasing. The sales of the secure terminal products are expected to develop
moderately according to the nature of public safety markets.
· The smartphone sales process often involves testing and piloting systems and
equipment, possibly integrating third-party technologies, and possible local
regulatory approvals, which are typically lengthy processes. Exceptional
circumstances caused by the coronavirus pandemic may have a significant impact
on the progress of projects, which slows down the closings of larger
transactions.

Telecommunication and Digitalization

·
In the mobile telecommunications, the implementation of 5G is accelerating in
pace. Investments in developing new features continue and the importance of
software development in the 5G network development expands. This creates demand
for Bittium’s R&D services. There is a wide range of frequencies allocated for
the 5G technology, thus creating the need to develop multiple products to cover
the market and creating demand for R&D services for development of product
variants. The different solution needs of the open radio frequency network
architecture, Open Radio Access Network (ORAN), will increase the demand for
Bittium's R&D expertise as new players enter into the traditional supplier
network. Also, the development of new devices utilizing 5G technology increases
the demand for Bittium’s services.

· As digitalization evolves, secure IoT (Internet of Things) has become a
significant development area in almost every industry. The increasing need for
companies to digitalize their operations, collect data wirelessly, and transfer
it to the internet and cloud services generate need for Bittium’s services and
customized solutions. To this end, the market needs secure devices, for both
demanding industrial and leisure applications, which collect information from
the sensors used by the device and create a reliable wireless connection to the
Internet and cloud services. New radio systems customized to IoT are being used
all over the world, and the number of digitalized devices increases
continuously. Along with the 5G technology being used, there will also be new
features in the IoT that enable, i.e., remote control of machines. Therefore,
the integration of different systems and technologies play an important role in
enabling complete digitalization services. There are several learning systems
and devices under development that use different kinds of artificial
intelligence (AI) technologies to ease and speed up the processing of large data
amounts.
· Changes in the digitalization of the automotive industry and new business
models as well as the automation of automotive operations create a need for
technological development. Most significant technology trends, such as
intelligent mobility, self-driving cars, electric cars, and connectivity, are
guiding needs for innovative software development. The share of software in cars
quickly is increasing, and software is becoming a major enabler and a
differentiator. The use of Android™ Automotive operating system in the In
-Vehicle Infotainment (IVI) systems is strongly entering the market. Several
carmakers have announced the launch of cars with Android Automotive. Bittium's
more than a decade of experience with the Android operating system and the
Google ecosystem combined with security know-how create good business
opportunities for this market.
· Travel restrictions caused by the coronavirus pandemic have slowed down the
sale of product development services. Even though the adaptation to the new
circumstances and operating methods has gone well, the restrictions have
somewhat slowed down the progress of the projects and gaining new customers.
However, the market is clearly recovering from the effects of the pandemic and
new projects have been launched.

Medical ECG, EEG, and Sleep Apnea Remote Monitoring Market

·
The medical technology market is undergoing significant development in patient
care, especially outside hospitals. There is an increasing focus on the
prevention of diseases and health problems through early diagnosis and the
discharge of patients at an earlier stage to reduce hospital and treatment days.
These actions significantly increase efficiency in health care processes and
lower costs.

· A prerequisite for early hospital discharge is the enabling of accurate and
precise follow-up and measurement opportunities in home conditions, which would
be enabled through remote monitoring. Remote monitoring and remote diagnostics
also enable specialists’ diagnoses regardless of time and place. Also, evolving
artificial intelligence-based algorithms become more common in supporting
physicians in making diagnoses. Remote monitoring and remote diagnostics make it
possible and faster to obtain more accurate diagnoses, which, in turn, speeds up
the start of the right kind of treatment. The market change will enable several
new providers to join the overall care service chain, without compromising the
quality of specialist services.
· For remote monitoring and remote diagnostics, Bittium provides its Bittium
Faros™ product family for remote heart monitoring, Bittium BrainStatus™ for
measuring the electrical activity of the brain, home sleep apnea testing
solution Bittium Respiro™, and different kind of diagnostics software offered by
Bittium.
· As the coronavirus pandemic spread, the number of non-emergency patients
going to treatments and tests to healthcare providers decreased. Several
hospitals and medical care facilities have postponed their non-emergency tests
and examinations and focused on the treatment of the pandemic patients as well
as on the actions aimed to prevent the virus from spreading. The pandemic
situation varies from country to country, but generally the market is beginning
to get back to normal again. In the long-term, the pandemic will accelerate the
use of remote services in hospitals and medical care facilities, and thus create
positive development on the demand of the remote monitoring products and
services.
· The global shortage of components affects the availability of various
components used in products and can affect the company's ability to deliver
products to its customers on time.

Risks and Uncertainties

Bittium has identified several business, market and finance related risk factors
and uncertainties that can affect the level of sales and profits.

The coronavirus pandemic has caused changes in the company’s operating
environment. The company management has been actively following and anticipating
the development of the pandemic and taken measures to prevent and remedy the
impacts of the pandemic. It is difficult to estimate the length of the situation
or its impacts on business operations and financial results.

The global disruption in the availability of electronic components has also
caused fast changes in the company’s operating environment. The company monitors
the development of the situation and actively strives to ensure the availability
of components required for product deliveries. Poor availability of components
can have a detrimental effect on the progress of customer projects and the
ability to deliver products.

Market Risks

The global economic uncertainty may affect the demand for Bittium’s services,
solutions, and products and provide pressure on, e.g., pricing. In the short
term, such uncertainty may affect, in particular, the utilization and
chargeability levels and average hourly prices of R&D services. Growing
political uncertainty may also affect the demand for Bittium’s services,
solutions, and products and the price competitiveness in the different
geographical areas. Bittium is also increasingly exposed to legal, economic,
political, and regulatory risks related to the countries in which its suppliers
and other cooperation partners are located. Such risks may result in delays in
deliveries or in situations where there will be no orders in the forecast
quantities, currency losses, elevated costs, or litigations and related costs.

As Bittium's customer base includes, among others, companies operating in the
field of telecommunication, defense, and other authorities, as well as companies
delivering products to them and companies operating in the healthcare sector,
the company is exposed to market changes in these industries.

A significant part of Bittium´s net sales accumulates from selling products and
R&D services to defense and other authorities, as well as companies delivering
products to them. Deviation in anticipated business development with such
customer concentrations may translate as a significant deviation in Bittium's
outlook, both in terms of net sales and operating result, during the ongoing
financial period and thereafter.

Bittium seeks to expand its customer base on a longer term and reduce dependence
on individual companies, and hence the company would thereby be mainly affected
by the general business climate in the industries of the companies belonging to
Bittium’s customer base instead of the development of individual customer
relationships. The more specific market outlook has been presented in this
report in the "Market outlook" section.

Business Related Risks

Bittium's operative business risks are mainly related to following items:
uncertainties and short visibility on customers' product program decisions,
their make or buy decisions and, on the other hand, their decisions to continue,
downsize or terminate current product programs, execution and management of
large customer projects, ramping up and down project resources, availability of
personnel in labor markets, accessibility on commercially acceptable terms and,
on the other hand, successful utilization of the most important technologies and
components, competitive situation and potential delays in the markets, timely
closing of customer and supplier contracts with reasonable commercial terms,
delays in R&D projects, realization of expected return on capitalized R&D
investments, obsolescence of inventories and technology risks in product
development causing higher than planned R&D costs, and risks related to the ramp
-up of product manufacturing. Revenues expected to come from either existing or
new products and customers include normal timing risks. Bittium has certain
significant customer projects, and deviation in their expected continuation
could also result in significant deviations in the company's outlook. In
addition, there are typical industry warranty and liability risks involved in
selling Bittium´s services, solutions, and products.

Bittium's product delivery business model faces such risks as high dependency on
actual product volumes, timing risks, and potential delays in the markets. The
above-mentioned risks may manifest themselves as lower amounts of products
delivered or higher costs of production, and ultimately, as lower profit.
Bringing Bittium’s products to international defense and other authorities’
markets may take longer than anticipated because the projects are typically
long, and the purchasing programs are prepared in the lead of national
governments and within the available financing. Once a supplier has been
selected, product deliveries are typically executed over several years.

Some of Bittium's businesses operate in industries that are heavily reliant on
patent protection and therefore face risks related to management of intellectual
property rights, on the one hand, related to accessibility on commercially
acceptable terms of certain technologies in the Bittium’s products and services,
and on the other hand, related to an ability to protect technologies that
Bittium develops or licenses from others from claims that third parties'
intellectual property rights are infringed. Additionally, parties outside of the
industries operate actively to protect and commercialize their patents and
therefore in their part increase the risks related to the management of
intellectual property rights. At worst, claims that third parties' intellectual
property rights are infringed could lead to substantial liabilities for damages.
In addition, the progress of the customer projects and delivery capability may
also be affected by potential challenges in global accessibility of key
technologies and components on commercially acceptable terms, as well as by the
acceptance of the necessary export licenses. The company changed its name to
Bittium Corporation as of July 1, 2015 and started using the new trademark. The
registration and the use of the new trademark can include customary risks
involved in taking in use a new trademark.

Financing Risks

Global economic uncertainty may lead to payment delays, increase the risk for
credit losses, and weaken the availability and terms of financing. To fund its
operations, Bittium relies mainly on income from its operative business and may
from time to time seek additional financing from selected financial
institutions. Bittium has EUR 20.0 million senior loan and EUR 10.0 million
committed overdraft credit facility agreement with Nordea Bank Plc. Maturity
date for the senior loan is May 24, 2024, and the credit limit agreement is
valid until May 24, 2024. Bittium has EUR 10.0 million committed overdraft
credit facility agreement with OP Corporate Bank Plc valid until May 24, 2022.

These agreements include customary covenants related to, among other things,
equity ratio, transferring property, and pledging. There is no assurance that
additional financing will not be needed in case of investments, networking
capital needs, or clearly weaker than expected development of Bittium's
businesses. Customer dependency in some parts of Bittium's business may
translate as an accumulation of risk with respect to outstanding receivables and
ultimately with respect to credit losses.

Statement of Financial Position and Financing

The figures presented in the statement of financial position of June 30, 2021,
are compared with the statement of the financial position of December 31, 2020
(MEUR).

                           Jun 30, 2021  Dec 31, 2020

Non-current assets 87.0 86.4
Current assets 74.3 71.7
Total assets 161.3 158.0

Share capital 12.9 12.9
Other capital 99.3 101.3
Total equity 112.3 114.2
Non-current liabilities 21.8 21.9
Current liabilities 27.3 21.8
Total equity and liabilities 161.3 158.0

Cash flow of the review 1-6/2021 1-12/2020
period:
+ profit of the period +/- 5.2 14.1
Adjustment of accrual basis
items
+/- Change in net working -3.7 -6.8
capital
- interest, taxes and -0.3 -0.5
dividends
= net cash from operating 1.2 6.9
activities
- net cash from investing -5.2 -15.9
activities
- net cash from financing -1.8 -1.5
activities
= net change in cash and cash -5.8 -10.5
equivalents

The amount of gross investments in the period under review was EUR 5.8 million.
Net investments for the review period totaled to EUR 5.6 million. The total
amount of depreciation during the period under review was EUR 4.9 million. The
amount of interest-bearing debt, including finance lease liabilities, was EUR
22.4 million at the end of the reporting period (EUR 22.5 million). Bittium's
equity ratio at the end of the period was 71.3 percent (73.1 percent).

The Group's liquidity remained good despite the uncertainty caused by the
coronavirus pandemic and the global disruption in the availability of electronic
components. Securing cash flow has not required any special adjustment measures
and no significant changes have been identified in the credit risks of trade
receivables.

Cash and other liquid assets at the end of the reporting period were EUR 18.9
million (EUR 24.7 million). Net cash flow during the period was EUR -5.8
million. The net cash flow resulted from EUR 4.4 million investments made into
own product development and EUR 1.1 million dividend payment as the most
significant items (EUR -10.5 million including EUR 13.6 million investments made
into own product development, no dividends were paid in the corresponding
period).

Bittium has a EUR 20.0 million senior loan and a EUR 10.0 million committed
overdraft credit facility agreement with Nordea Bank Finland Plc. Maturity date
for the senior loan is May 24, 2024, and the credit limit agreement is valid
until May 24, 2024. Bittium has EUR 10.0 million committed overdraft credit
facility agreement with OP Corporate Bank Plc valid until May 24, 2022. At the
end of the review period, no limits from these facilities were in use.

Bittium follows a hedging strategy that has an objective to ensure the business
margins in changing market circumstances by minimizing the influence of exchange
rates. According to the hedging strategy principles, the net position in the
currency is hedged when it exceeds the euro limit defined in the hedging
strategy. The net position is determined based on accounts receivable, accounts
payable, order book, and budgeted net currency cash flow.

Personnel

The Bittium group employed an average of 670 people in January-June 2021. At the
end of June 2021, the company had 664 employees (684 employees at the end of
2020).

Changes in the Company’s Management

On May 17, 2021, Bittium announced that Mr. Sammy Loitto, Senior Vice President,
Sales and a member of Bittium Corporation’s Management Group, will transfer to
another company. Mr. Loitto acted as Senior Vice President, Sales at Bittium for
three years, and successfully developed Bittium’s sales and sales management
processes, environment, and systems during his career.

The company decided that it will divide its sales management and development
into the Company’s three product and service areas, which are Defense &
Security, Medical Technologies, and Connectivity Solutions. Dividing the sales
activities into product and service areas in this context enables even stronger
sales management and development. After the change, Bittium has product and
service area specific sales management, which reports to the heads of the
product and service areas in their positions. As a result, sales development is
better targeted to the needs of each product and service areas. The changes have
taken effect on June 1, 2021.

As of June 1, 2021, Bittium Corporation’s management group consists of the
following persons: Mr. Hannu Huttunen, CEO (Chairman); Mr. Pekka Kunnari, CFO;
Mr. Kari Jokela, CLO; Mrs. Karoliina Malmi, Vice President Communications and
Marketing; Mr. Arto Pietilä, Senior Vice President Medical Technologies; Mr.
Jari Sankala, Senior Vice President Defense & Security; Mr. Tommi Kangas, Senior
Vice President Connectivity Solutions; and Mr. Jari-Pekka Innanen, Vice
President, Engineering.

Flagging Notifications

There were no changes in the ownership during the period under review that would
have caused flagging notifications which are obligations for disclosure in
accordance with Chapter 2, section 9 of the Securities Market Act.

Notifications of Managers’ Transactions

February 17, 2021: Name of the person subject to the notification requirement:
Erkki Veikkolainen, Member of the Board. Notification type: initial
notification. Nature of transaction: Receipt of a Share-Based Incentive.
Transaction date: February 12, 2021. Venue: XHEL: Aggregated transactions:
volume 21,273 shares, volume weighted average price: EUR 6.69477. Venue DHEL:
Aggregated transactions: volume 6,653 shares, volume weighted average price: EUR
6.71062. Venue TQM: Aggregated transactions: volume 425 shares, volume weighted
average price: EUR 6.66000. Venue BEUP: Aggregated transactions: volume 1,126,
volume weighted average price: EUR 6.75197. Venue CEUD: Aggregated transactions:
volume 523, volume weighted average price: EUR 6.73000.

April 6, 2021: Name of the person subject to the notification requirement: Hannu
Huttunen, CEO. Notification type: initial notification. Nature of transaction:
Receipt of a Share-Based Incentive. Transaction date: March 30, 2021. Venue: not
applicable. Aggregated transactions: volume 3,142 shares, volume weighted
average price: EUR 0.00.

April 6, 2021: Name of the person subject to the notification requirement: Sammy
Loitto, other senior manager. Notification type: initial notification. Nature of
transaction: Receipt of a Share-Based Incentive. Transaction date: March 30,
2021. Venue: not applicable. Aggregated transactions: volume 993 shares, volume
weighted average price: EUR 0.00.

April 6, 2021: Name of the person subject to the notification requirement: Arto
Pietilä, other senior manager. Notification type: initial notification. Nature
of transaction: Receipt of a Share-Based Incentive. Transaction date: March 30,
2021. Venue: not applicable. Aggregated transactions: volume 993 shares, volume
weighted average price: EUR 0.00.

April 6, 2021: Name of the person subject to the notification requirement: Tommi
Kangas, other senior manager. Notification type: initial notification. Nature of
transaction: Receipt of a Share-Based Incentive. Transaction date: March 30,
2021. Venue: not applicable. Aggregated transactions: volume 993 shares, volume
weighted average price: EUR 0.00.

April 6, 2021: Name of the person subject to the notification requirement: Jari
Sankala, other senior manager. Notification type: initial notification. Nature
of transaction: Receipt of a Share-Based Incentive. Transaction date: March 30,
2021. Venue: not applicable. Aggregated transactions: volume 993 shares, volume
weighted average price: EUR 0.00.

May 4, 2021: Name of the person subject to the notification requirement: Erkki
Veikkolainen, Member of the Board. Notification type: initial notification.
Nature of transaction: Purchase. Transaction date: April 30, 2021. Venue: XHEL.
Aggregated transactions: volume 10,000 shares, volume weighted average price:
EUR 6.99261.

May 5, 2021: Name of the person subject to the notification requirement: Hannu
Huttunen, CEO. Notification type: initial notification. Nature of transaction:
Purchase. Transaction date: May 3, 2021. Venue: XHEL. Aggregated transactions:
volume 633 shares, volume weighted average price: EUR 6.83490. Venue: XTXE.
Aggregated transactions: volume 367 shares, volume weighted average price: EUR
6.84000.

May 17, 2021: Name of the person subject to the notification requirement: Veli
-Pekka Paloranta, Member of the Board. Notification type: initial notification.
Nature of transaction: Receipt of a Share-Based Incentive. Transaction date: May
12, 2021. Venue: XHEL. Aggregated transactions: volume 1,505 shares, volume
weighted average price: EUR 6.57415.

May 17, 2021: Name of the person subject to the notification requirement: Riitta
Tiuraniemi, Member of the Board. Notification type: initial notification. Nature
of transaction: Receipt of a Share-Based Incentive. Transaction date: May 12,
2021. Venue: XHEL. Aggregated transactions: volume 1,505 shares, volume weighted
average price: EUR 6.57398.

May 17, 2021: Name of the person subject to the notification requirement: Petri
Toljamo, Member of the Board. Notification type: initial notification. Nature of
transaction: Receipt of a Share-Based Incentive. Transaction date: May 12, 2021.
Venue: XHEL. Aggregated transactions: volume 1,505 shares, volume weighted
average price: EUR 6.57406.

May 17, 2021: Name of the person subject to the notification requirement: Pekka
Kemppainen, Member of the Board. Notification type: initial notification. Nature
of transaction: Receipt of a Share-Based Incentive. Transaction date: May 12,
2021. Venue: XHEL. Aggregated transactions: volume 1,505 shares, volume weighted
average price: EUR 6.57403.

May 17, 2021: Name of the person subject to the notification requirement: Erkki
Veikkolainen, Member of the Board. Notification type: initial notification.
Nature of transaction: Receipt of a Share-Based Incentive. Transaction date: May
12, 2021. Venue: XHEL. Aggregated transactions: volume 2,635 shares, volume
weighted average price: EUR 6.57403.

Decisions of the Annual General Meeting of Bittium Corporation

Bittium's Annual General Meeting was held on April 14, 2021, at 1.00 pm at the
company's headquarters in Oulu, Finland. Shareholders and their proxy
representatives could participate in the meeting and exercise their rights only
by voting in advance and by making counterproposals and presenting questions in
advance. The meeting could not be attended on-site. The Annual General Meeting
was arranged in accordance with an exceptional meeting procedure based on the
temporary legislation to limit the spread of the Covid-19 pandemic (677/2020)
approved by the Finnish Parliament.

Use of the Profits Shown on the Balance Sheet and Authorizing the Board of
Directors to Decide on Distribution of Dividend

Based on the shareholder vote concerning minority dividend, the Annual General
Meeting decided in deviation from the proposal of the Board of Directors that a
minority dividend corresponding to half of the profit for the financial period
shall be paid in accordance with Chapter 13, Section 7 of the Companies Act. The
Board of Directors of the company had proposed to the Annual General Meeting
that no dividend be distributed by the Annual General Meeting based on the
adopted balance sheet for the financial period of January 1, 2020 - December 31,
2020. The total amount of the minority dividend to be distributed was EUR
1,110,327.74, corresponding to EUR 0.0311 per share.

The dividend was paid to shareholders who on the dividend record date April 16,
2021, were registered in the company's shareholders' register held by Euroclear
Finland Oy. The dividend was paid on April 23, 2021. All the shares in the
company were entitled to the dividend with the exception of shares possibly held
by the Company on the dividend record date.

Election and Remuneration of the Members of the Board of Directors

The Annual General Meeting decided that the Board of Directors shall comprise
five (5) members. Mr. Erkki Veikkolainen, Ms. Riitta Tiuraniemi, Mr. Veli-Pekka
Paloranta, and Mr. Pekka Kemppainen were re-elected as members of the Board of
Directors for a term of office expiring at the end of the next Annual General
Meeting. Further, Mr. Petri Toljamo was elected as a new member of the Board of
Directors for a corresponding term of office.

At its assembly meeting held on April 14, 2021, the Board of Directors elected
Mr. Erkki Veikkolainen as the Chairman of the Board of Directors. Further, the
Board has resolved to keep the Audit Committee. Ms. Riitta Tiuraniemi (Chairman
of the committee), Mr. Petri Toljamo, and Mr. Veli-Pekka Paloranta were elected
as members of the Audit Committee.

The Annual General Meeting resolved that the following monthly remuneration
shall be paid to the members of the Board of Directors: to the chairman of the
Board of Directors EUR 3,150 and to the other members of the Board of Directors
EUR 1,800 each. In addition, the members of the Board of Directors are entitled
to compensation for attending Board meetings as follows: the chairman of the
Board EUR 875 for each meeting and other members EUR 500 for each meeting. In
addition, the members of the Board of Directors are entitled to compensation for
attending Committee meetings as follows: the chairman of the Committee EUR 600
for each meeting and other Committee members EUR 400 for each meeting. Travel
expenses of the members of the Board of Directors shall be reimbursed in
accordance with the Company's travel policy. The General Meeting also decided
that 50 percent of the total amount of the monthly remuneration of the members
of the Board of Directors will be paid at once as Bittium Corporation's shares
acquired for the price formed in public trading, through share issue or, in
special circumstances if share based remuneration cannot be paid for some
reason, in money. The shares will be acquired according to the share purchase
program of the company. A member of the Board of Directors may not transfer the
shares received as remuneration before his/her membership in the Board of
Directors has ended.

Election and Remuneration of the Auditor

Ernst & Young Oy, authorized public accountants, was re-elected auditor of the
company for a term of office ending at the end of the next Annual General
Meeting. Ernst & Young Oy has notified that Mr. Jari Karppinen, APA, will act as
responsible auditor. It was decided that the remuneration to the auditor shall
be paid against the auditor's reasonable invoice.

Authorizing the Board of Directors to Decide on the Repurchase of the Company’s
own Shares

The Annual General Meeting authorized the Board of Directors to decide on the
repurchase of the Company's own shares as follows.

The number of own shares to be repurchased shall not exceed 3,500,000 shares,
which corresponds to approximately 9.80 percent of all of the shares in the
company as at the date of the Annual General Meeting. Only the unrestricted
equity of the company can be used to repurchase own shares on the basis of the
authorization.

Own shares can be repurchased at a price formed in public trading on the date of
the repurchase or otherwise at a price formed on the market.

The Board of Directors decides how own shares will be repurchased. Own shares
can be repurchased using, inter alia, derivatives. Own shares can be repurchased
otherwise than in proportion to the shareholdings of the shareholders (directed
repurchase).

The authorization cancels the authorization given by the Annual General Meeting
on June 15, 2020, to decide on the repurchase of the company's own shares.

The authorization is effective until June 30, 2022.

Authorizing the Board of Directors to Decide on the Issuance of Shares as well
as the Issuance of Special Rights Entitling to Shares

The Annual General Meeting authorized the Board of Directors to decide on the
issuance of shares and special rights entitling to shares referred to in Chapter
10 Section 1 of the Companies Act as follows.

The number of shares to be issued shall not exceed 3,500,000 shares, which
corresponds to approximately 9.80 percent of all of the shares in the company as
at the date of the Annual General Meeting.

The Board of Directors decides on all the conditions of the issuance of shares
and of special rights entitling to shares. The authorization concerns both the
issuance of new shares as well as the transfer of treasury shares. The issuance
of shares and of special rights entitling to shares may be carried out in
deviation from the shareholders' pre-emptive rights (directed issue).

The authorization cancels the authorization given by the General Meeting on June
15, 2020 to decide on the issuance of shares as well as the issuance of special
rights entitling to shares referred to in Chapter 10 Section 1 of the Companies
Act.

The authorization is effective until June 30, 2022.

Annual Report, Sustainability Report, Corporate Governance Statement and Salary
and Remuneration Report from 2020

On March 19, 2021 Bittium Corporation published its Annual Report,
Sustainability Report, Corporate Governance Statement, and Salary and
Remuneration Report from the year 2020.

The reports are available at https://www.bittium.com both in Finnish and in
English. Annual Report, Sustainability Report, and Corporate Governance are
available also at https://annualreport.bittium.com.

Invitation to a Press Conference

Bittium will hold a webcast regarding the Half-Year Financial Report January
-June 2021 for media, analysts, and institutional investors on Friday, August 6,
2021, at 9.00 am (CEST+1). The conference will be held in Finnish. Bittium will
also hold a webcast for media, analysts, and institutional investors in English
on the same day at 11.00 am (CEST+1).

Link to the Finnish webcast: https://bittium.videosync.fi/2021-08-06-bittium-q2
-fin
Link to the English webcast: https://bittium.videosync.fi/2021-08-06-bittium-q2
-eng

Recordings of both webcasts and the presentation will be available after the
conference on Bittium’s website at www.bittium.com/investors.

Oulu, August 6, 2021

Bittium Corporation
The Board of Directors

Further Information:

Hannu Huttunen
CEO
Tel. +358 40 344 5466

Pekka Kunnari
CFO
Tel. +358 40 344 2229

Distribution:

Nasdaq Helsinki
Major media

Bittium Corporation Condensed Financial Statements and Notes January - June 2021

(unaudited)

The Half-year Financial Report has been prepared in accordance with IAS 34
Interim Financial Reporting.

CONSOLIDATED STATEMENT OF 1-6/2021 1-6/2020 1-12/2020
COMPREHENSIVE INCOME (MEUR) 6 months 6 months 12 months
Continuing operations
NET SALES  39.7 42.5 78.4
Other operating income 1.3 0.3 0.9
Work performed by the undertaking 0.3 0.1 0.3
for its own purpose and capitalized
Raw materials -10.1 -11.2 -21.2
Personnel expenses -20.5 -17.2 -32,5
Depreciation -4.9 -5.5 -11.4
Other operating expenses -6.5 -6.1 -12.5
Share of profits in associated -0.0 0.0 0.0
companies
OPERATING PROFIT (LOSS) -0.7 2.9 2.1
Financial income and expenses -0.3 -0.3 -0.4
PROFIT BEFORE TAX -1.0 2.5 1.6
Income tax 0.0 0.0 0.5
PROFIT FOR THE PERIOD FROM -1.0 2.5 2.2
CONTINUING OPERATIONS
Discontinued operations

Profit for the year from
discontinued operations
PROFIT FOR THE PERIOD -1.0 2.5 2.2

Other comprehensive income:
Items that may be reclassified
subsequently to the statement of
income
  Exchange differences on 0.1 0.0 -0.2
translating foreign operations
Other comprehensive income for the 0.1 0.0 -0.2
period total
TOTAL COMPREHENSIVE INCOME FOR THE -1.0 2.5 1.9
PERIOD

Profit for the year attributable to
  Equity holders of the parent -1.0 2.5 2.2

Total comprehensive income for the
period attributable to
  Equity holders of the parent -1.0 2.5 1.9

Earnings per share from continuing
operations, EUR
  Basic earnings per share -0.029 0.071 0.061
  Diluted earnings per share -0.029 0.071 0.061

Earnings per share from
discontinued operations, EUR
  Basic earnings per share
  Diluted earnings per share

Earnings per share from continuing
and discontinued operations, EUR
  Basic earnings per share -0.029 0.071 0.061
  Diluted earnings per share -0.029 0.071 0.061

Average number of shares, 1000 pcs 35,698 35,693 35,693
Average number of shares, diluted, 35,698 35,693 35,693
1000 pcs

CONSOLIDATED STATEMENT OF June 30. 2021 June 30. 2020 Dec. 31. 2020
FINANCIAL POSITION (MEUR)
ASSETS
Non-current assets
  Property, plant and 21.9 23.0 22.8
equipment
  Goodwill 5.8 5.8 5.8
  Intangible assets 50.6 46.3 49.0
  Other financial assets 1.5 1.6 1.6
  Other non-current 1.1 1.3 1.2
receivables
  Deferred tax assets 6.0 5.5 6.0
Non-current assets total 87.0 83.6 86.4
Current assets
  Inventories 20.1 21.4 20.9
  Trade and other 35.4 30.9 26.1
receivables
  Financial assets at fair 5.7 5.6 5.7
value through profit or
loss
  Cash and short-term 13.1 20.7 19.0
deposits
Current assets total 74.3 78.7 71.7
TOTAL ASSETS 161.3 162.3 158.0

EQUITY AND LIABILITIES
Equity attributable to
equity holders of the
parent
  Share capital 12.9 12.9 12.9
  Invested non-restricted 26.0 26.0 26.0
equity fund
  Translation difference 1.0 1.1 0.9
  Retained earnings 72.4 74.9 74.5
Total equity 112.3 114.9 114.2

Non-current liabilities
  Deferred tax liabilities 0.2 0.3 0.3
  Provisions
  Interest-bearing 21.3 21.2 21.4
liabilities
  Other non-current 0.2 0.3 0.3
liabilities
  Advances received
Non-current liabilities 21.8 21.8 21.9
total
Current liabilities
  Trade and other payables 23.1 22.3 18.1
  Provisions 3.1 2.2 2.6
  Interest-bearing loans 1.1 1.2 1.1
and borrowings
Current liabilities total 27.3 25.6 21.8
Total liabilities 49.1 47.4 43.8
TOTAL EQUITY AND 161.3 162.3 158.0
LIABILITIES

CONSOLIDATED STATEMENT OF CASH FLOWS  (MEUR) 1-6/2021 1-6/2020 1-12/2020
6 months 6 months 12 months
CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year from continuing operations -1.0 2.5 2.2
Profit for the year from discontinued operations
Adjustment of accrual basis items 6.2 6.1 12.0
Change in net working capital -3.7 -8.0 -6.8
Interest paid on operating activities -0.4 -0.4 -0.6
Interest received from operating activities 0.1 0.1 0.1
Income taxes paid -0.0 -0.0 -0.0
NET CASH FROM OPERATING ACTIVITIES 1.2 0.3 6.9

CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment -0.5 -0.4 -1.4
Purchase of intangible assets -4.6 -8.0 -14.5
Purchase of investments/associated companies -0.0 -0.0
Sale of investments/associated companies 0.0
Sale of property, plant and equipment
Sale of intangible assets 0.0
NET CASH FROM INVESTING ACTIVITIES -5.2 -8.4 -15.9

CASH FLOW FROM FINANCING ACTIVITIES
Borrowings
Repayment of borrowing
Payment of finance liabilities -0.7 -0.7 -1.5
Dividend paid -1.1
NET CASH FROM FINANCING ACTIVITIES -1.8 -0.7 -1.5

NET CHANGE IN CASH AND CASH EQUIVALENTS -5.8 -8.8 -10.5
Cash and cash equivalents at beginning of period 24.7 35.2 35.2
Cash and cash equivalents at end of period 18.9 26.3 24.7

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (MEUR)
A = Share capital
B = Invested non-restricted equity fund
C = Translation difference
D = Retained earnings
E = Non-controlling interests
F = Total equity

                             A     B    C     D  E      F

Shareholders equity on Jan. 12.9 26.0 1.1 72.3 112.3
1, 2020
Comprehensive income for the
period
  Profit/loss for the period 2.5 2.5
  Exchange differences on 0.0 0.0
translating foreign
operations
Total comprehensive income 0.0 2.5 2.5
for the period
Transactions between the
shareholders
  Distribution of dividends
  Share-related compensation 0.0 0.0
Total transactions between 0.0 0.0
the shareholders
Other changes -0.0 -0.0
Shareholders equity on June 12.9 26.0 1.1 74.9 114.9
30, 2020

                             A     B    C     D  E      F

Shareholders equity on Jan. 12.9 26.0 0.9 74.5 114.2
1, 2021
Comprehensive income for the
period
  Profit/loss for the period -1.0 -1.0
  Exchange differences on 0.1 0.1
translating foreign
operations
Total comprehensive income 0.1 -1.0 -1.0
for the period
Transactions between the
shareholders
  Distribution of dividends -1.1 -1.1
  Share-related compensation 0.1 0.1
Total transactions between -1.0 -1.0
the shareholders
Other changes 0.0 0.0
Shareholders equity on June 12.9 26.0 1.0 72.4 112.3
30, 2021

NOTES TO THE HALF YEAR FINANCIAL REPORTING

ACCOUNTING PRINCIPLES FOR THE HALF YEAR FINANCIAL REPORTING:

The Half Year Financial Report has been prepared in accordance with IAS 34
Interim Financial Reporting. Bittium Corporation has applied the same accounting
principles in the preparation of this Half Year Report as in its Financial
Statements for 2020, except for the adoption of new standards and
interpretations effective during 2021. The forthcoming revisions or amendments
of the standards are not expected to have significant impact on the consolidated
financial statements.

ALTERNATIVE PERFORMANCE MEASURES

In this report, Bittium uses alternative performance measures in accordance with
the guidelines issued by the European Securities and Markets Authority (ESMA).
Alternative performance measures are derived from performance measures reported
in accordance to International Financial Reporting Standards (IFRS). Alternative
performance measures are used to better reflect the operational business
performance and to enhance comparability between financial periods. They are
reported in addition to, but not substituting, the performance measures reported
in accordance with the IFRS. The definitions of the common alternative
performance measures are listed below.

EBITDA =
Operating profit + depreciations

Net gearing % =
Interest-bearing liabilities - cash and deposits and short-term investments x
100

Total equity

Equity per share =
Equity attributable to equity holders of the parent

Share issue adjusted number of the shares at the end of the period

SEGMENT-INFORMATION (MEUR)

Bittium Corporation does not have segments that require reporting according to
IFRS 8 standard.

NET SALES OF GEOGRAPHICAL AREAS (MEUR) 1-6/2021 1-6/2020 1-12/2020
6 months 6 months 12 months
Net sales
  Europe 25.0 35.2 64.5
  Americas 14.4 7.1 13.5
  Asia 0.3 0.2 0.4
Net sales total 39.7 42.5 78.4

RELATED PARTY TRANSACTIONS 1-6/2021 1-6/2020 1-12/2020
6 months 6 months 12 months
Employee benefits for key management and stock 1.1 0.8 1.5
options expenses total. continuing operations

New Share-Based Incentive Scheme for the Management of Bittium Corporation
started in 2020. The Performance Share Plan consists of three annually
commencing three-year performance share plans, PSP 2020-2022, PSP 2021-2023, and
PSP 2022-2024, each with a one-year performance period, which is followed by the
payment of the share reward and a two-year transfer restriction period. The
commencement of the following two plans, PSP 2021-2023, and PSP 2022-2024, is,
however, subject to a separate Board decision. The members of Bittium's
Management Group are eligible to participate in the second PSP 2021-2023 plan.
The performance measures based on which the potential share reward under PSP
2021-2023 will be paid are the revenue growth and cash flow before financial
items of Bittium. A precondition for the payment of the share reward is, in
addition, that the employment relationship of the participant with Bittium
continues at the time the reward is paid. The potential reward will be paid in
shares of Bittium.

SHARE-BASED REMUNARATION OF THE MANAGEMENT
Form of the reward Shares
Grant date Feb 10, 2021
Total amount of the shares at the most 111 900
Share price at the grant date, EUR 6.87
Total expenses of the reward at the most, EUR million 0.7
Execution In shares

CONSOLIDATED 4-6/202 1-3/202 10 7-9/202 4-6/202
STATEMENT OF 1 1 -12/202 0 0
COMPREHENSIVE 3 month 3 month 0 3 month 3 month
INCOME BY QUARTER s s 3 month s s
(MEUR) s
Continuing
operations
NET SALES 22.6 17.0 21.8 14.0 25.3
Other operating 0.7 0.6 0.3 0.3 0.2
income
Work performed by 0.1 0.2 0.1 0.1 0.1
the undertaking
for its own
purpose and
capitalized
Raw materials -6.4 -3.7 -6.0 -3.9 -8.0
Personnel -10.3 -10.1 -9.0 -6.3 -8.8
expenses
Depreciation -2.5 -2.5 -3.0 -2.9 -3.0
Other operating -3.5 -3.0 -4.0 -2.3 -3.1
expenses
Share of profits 0.0 -0.0 -0.0 -0.0 0.0
in associated
companies
OPERATING PROFIT 0.7 -1.5 0.3 -1.0 2.7
(LOSS)
Financial income -0.2 -0.1 -0.1 -0.0 0.0
and expenses
PROFIT BEFORE TAX 0.5 -1.6 0.2 -1.0 2.7
Income tax -0.0 0.0 0.5 0.0 0.0
PROFIT FOR THE 0.5 -1.6 0.7 -1.0 2.7
PERIOD FROM
CONTINUING
OPERATIONS
Discontinued
operations
Profit for the
period from
discontinued
operations
PROFIT FOR THE 0.5 -1.6 0.7 -1.0 2.7
PERIOD
Other -0.0 0.1 -0.1 -0.1 -0.1
comprehensive
income
TOTAL 0.5 -1.4 0.6 -1.2 2.6
COMPREHENSIVE
INCOME FOR THE
PERIOD

Profit for the
period
attributable
to:
  Equity holders 0.5 -1.6 0.7 -1.0 2.7
of the parent
Total
comprehensive
income for the
period
attributable to:
  Equity holders 0.5 -1.4 0.6 -1.2 2.6
of the parent

CONSOLIDATED STATEMENT 4-6/2021 1-3/2021 10-12/2020 7-9/2020 4-6/2020
OF CASH FLOWS BY 3 months 3 months 3 months 3 months 3 months
QUARTER
Net cash from operating 2.6 -1.4 5.1 1.5 -0.8
activities
Net cash from investing -2.3 -2.9 -4.1 -3.4 -3.9
activities
Net cash from financing -1.5 -0.3 -0.4 -0.4 -0.4
activities
Net change in cash and -1.1 -4.6 0.6 -2.3 -5.1
cash equivalents

FINANCIAL PERFORMANCE RELATED 1-6/2021 1-6/2020 1-12/2020
RATIOS 6 months 6 months 12 months
STATEMENT OF COMPREHENSIVE
INCOME (MEUR)
Net sales 39.7 42.5 78.4
Operating profit (loss) -0.7 2.9 2.1
   Operating profit (loss), % -1.8 6.7 2.7
of net sales
Profit before taxes -1.0 2.5 1.6
   Profit before taxes, % of -2.6 5.9 2.1
net sales
Profit for the period from -1.0 2.5 2.1
continuing operations
PROFITABILITY AND OTHER KEY
FIGURES
Interest-bearing net 3.6 -4.0 -2.1
liabilities, (MEUR)
Net gearing, % 3.2 -3.5 -1.9
Equity ratio, % 71.3 71.8 73.1
Gross investments, (MEUR) 5.8 9.0 17.4
Average personnel during the 670 666 673
period, continuing operations
Personnel at the period end, 664 680 684
continuing operations

AMOUNT OF SHARE ISSUE Jun. 30. 2021 Jun. 30. 2020 Dec. 31. 2020
ADJUSTMENT (1.000 pcs)
At the end of period 35 702 35 693 35 693
Average for the period 35 698 35 693 35 693
Average for the period 35 698 35 693 35 693
diluted with stock
options

STOCK-RELATED FINANCIAL RATIOS 1-6/2021 1-6/2020 1-12/2020
(EUR) 6 months 6 months 12 months
Earnings per share from
continuing operations. EUR
   Basic earnings per share -0,029 0.071 0.061
   Diluted earnings per share -0.029 0.071 0.061

Earnings per share from
discontinued operations. EUR
   Basic earnings per share
   Diluted earnings per share

Earnings per share from
continuing and discontinued
operations. EUR
   Basic earnings per share -0,029 0.071 0.061
   Diluted earnings per share -0.029 0.071 0.061

Equity *) per share 3.14 3.22 3.20

*) Equity attributable to equity
holders of the parent

MARKET VALUES OF SHARES (EUR) 1-6/2021 1-6/2020 1-12/2020
6 months 6 months 12 months
Highest 7.89 7.47 7.67
Lowest 5.79 3.40 3.40
Average 6.59 5.40 5.74
At the end of period 6.36 6.22 5.79

Market value of the stock, (MEUR) 227.1 222.0 206.7
Trading value of shares, (MEUR) 48.3 63.5 117.9
Number of shares traded, (1.000 pcs) 7 323 11 750 20 557
Related to average number of shares % 20.5 32.9 57.6

SECURITIES AND Jun. 30. 2021 Jun. 30. 2020 Dec. 31. 2020
CONTINGENT LIABILITIES
(MEUR)
AGAINST OWN
LIABILITIES
Floating charges
Mortgages are pledged
for liabilities
totaled
Guarantees 3.0 0.1 0.1
Rental liabilities
   Falling due in the 0.1 0.1 0.1
next year
   Falling due after
one year
Other contractual
liabilities
   Falling due in the 2.1 0.9 2.3
next year
   Falling due after 0.8 1.1 1.2
one year

Material purchase 15.6 12.3 11.5
commitments

NOMINAL VALUE OF Jun. 30. 2021 Jun. 30. 2020 Dec. 31. 2020
CURRENCY DERIVATIVES
(MEUR)
Foreign exchange
forward contracts
  Market value -0.1 0.0 0.0
  Nominal value 1.4 1.0 0.6

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