Teleste Oyj — Interim / Quarterly Report 2014

Aug 7, 2014

TELESTE CORPORATION INTERIM REPORT 1 JAN TO 30 JUN 2014

TELESTE CORPORATION INTERIM REPORT 1 JAN TO 30 JUN 2014

Turku, Finland, 2014-08-07 07:30 CEST (GLOBE NEWSWIRE) --

TELESTE CORPORATION INTERIM REPORT 7 AUGUST 2014 AT 08:30

TELESTE CORPORATION INTERIM REPORT 1 JAN TO 30 JUN 2014

INCREASED ORDERS RECEIVED AND NET SALES, INVESTMENTS INTO SERVICES BUSINESS
LOWERED PROFITABILITY

Second quarter of 2014
- Net sales amounted to EUR 49.4 (46.5) million, an increase of 6.3%
- Operating profit stood at EUR 1.4 (1.7) million, a decrease of 20.4%
- Undiluted earnings per share stood at EUR 0.05 (EUR 0.07)
- Orders received totalled EUR 50.3 (44.2) million, an increase of 13.8%
- Cash flow from operations was EUR 0.3 (4.1) million, a decrease of 92.5%

Outlook for 2014

We estimate that net sales and operating profit for the year 2014 will not
reach the 2013 level.

Comments on second quarter of 2014 by CEO Jukka Rinnevaara:"Demand for Video and Broadband Solutions was good and orders received
increased significantly over the comparative period. We managed to increase net
sales more than expected, especially in optical products and headends of access
networks. Growing areas of the market included particularly Germany, France and
the UK. Nevertheless operating profit failed to reach the level of the
reference period mainly due to the shift in sales towards lower-margin
products.

As for Network Services, we continued to implement structural changes and
investments designed to improve profitability and business expansion in Germany
and the UK. These investments for growth and restructuring costs reduced the
profitability of our services business. As for the new services business, we
expect net sales and profitability to improve right in the latter part of the
year."

Teleste Group in April to June 2014

Key figures (EUR million) 4-6/2014 4-6/2013 Change %

Orders received 50.3 44.2 +13.8%

Net sales 49.4 46.5 +6.3%

EBIT 1.4 1.7 -20.4%

EBIT % 2.8% 3.7%

Profit for the period 0.9 1.3 -29.0%

---

Other important key figures

Earnings per share, EUR 0.05 0.07 -29.6%

Cash flow from operations, M€ 0.3 4.1 -92.5%

Orders received by the Group in the second quarter totalled EUR 50.3 (44.2)
million, an increase of 13.8%. The year-on-year order backlog grew by EUR 5.1
million to EUR 17.4 (12.3) million.

Net sales grew by 6.3% amounting to EUR 49.4 (46.5) million. Compared to the
same period in the previous year, operating profit decreased by 20.4% standing
at EUR 1.4 (1.7) million, which is 2.8% (3.7%) of net sales. Operating profit
of Video and Broadband Solutions increased, whereas that of Network Services
was in the red. Personnel expenses amounted to EUR 15.4 (14.5) million.
Undiluted earnings per share were EUR 0.05 (0.07). Operating cash flow stood at
EUR 0.3 (4.1) million. Increased trade receivables decreased cash flow over the
comparative period.

Teleste Group in January to June 2014

Key figures (EUR million) 1-6/2014 1-6/2013 Change % 1-12/2013

Orders received 97.2 87.6 11.0% 188.9

Net sales 92.9 92.3 0.7% 192.8

EBIT 2.7 4.3 -38.4% 11.0

EBIT % 2.9% 4.7% 5.7%

Profit for the period 1.8 3.1 -40.4% 8.1

---

Other important key figures

Earnings per share, EUR 0.10 0.18 -40.4% 0.47

Cash flow from operations 1.8 4.3 -59.1% 10.0

Net gearing, % 18.2% 21.8% % 13.8%

Equity ratio, % 52.0% 48.5% % 52.7%

Personnel at period-end 1,303 1,325 -1.7% 1,261

Orders received by the Group improved by 11.0% standing at EUR 97.2 (87.6)
million. Net sales grew by 0.7% amounting to EUR 92.9 (92.3) million. Operating
profit decreased by 38.4% to EUR 2.7 (4.3) million. Personnel expenses amounted
to EUR 29.3 (28.9) million. Financial items totalled EUR 0.2 (0.2) million.
Taxes for the Group amounted to EUR 0.6 (1.1) million while the Group's tax
rate was 25.7% (26.4%). Undiluted earnings per share were EUR 0.10 (0.18).
Operating cash flow stood at EUR 1.8 (4.3) million.

Video and Broadband Solutions in April to June 2014

Key figures (1,000 €) 4-6/2014 4-6/2013 Change %

Orders received 27,898 23,350 +19.5%

Net sales 27,007 25,625 +5.4%

EBIT 1,835 2,308 -20.5

EBIT % 6.8% 9.0%

Orders received totalled EUR 27.9 (23.4) million, an increase of 19.5%. Order
backlog totalled EUR 17.4 (12.3) million. Net sales grew by 5.4% amounting to
EUR 27.0 (25.6) million. The strong demand for access network products
increased the year-on-year net sales to a higher level, even if net sales of
the video surveillance solutions fell from the comparative period. Operating
profit stood at EUR 1.8 (2.3) million making 6.8% (9.0%) of net sales. This
decline in the operating profit percentage was primarily due to lower volume of
sales of the video surveillance solutions over the period of comparison.

R&D expenses for the business area amounted to EUR 3.0 (2.7) million making
11.0% (10.5%) of net sales. Most of the R&D projects included further
development of the product families in production and customer-specific
projects. Capitalized R&D expenses amounted to EUR 0.3 (0.3) million.
Depreciation on capitalized R&D expenses equalled EUR 0.3 (0.5) million.

Video and Broadband Solutions in January to June 2014

Key figures (1,000 €) 1-6/2014 1-6/2013 Change % 1-12/2013

Orders received 52,794 44,769 +17.9% 97,815

Net sales 48,492 49,438 -1.9% 101,716

EBIT 2,635 4,744 -44.5% 9,460

EBIT % 5.4% 9.6% 9.3%

Orders received totalled EUR 52.8 (44.8) million, an increase of 17.9%. Net
sales decreased by 1.9% amounting to EUR 48.5 (49.4) million. Operating profit
decreased by 44.5% amounting to EUR 2.6 (4.7) million. The operating profit was
adversely affected particularly by the quiet early year and lower year-on-year
deliveries of video surveillance solutions. Product development expenses
equalled EUR 5.6 (5.1) million, in other words 11.5% (10.3%) of net sales.

Network Services in April to June 2014

Key figures (1000 €) 4-6/2014 4-6/2013 Change %

Orders received 22,405 20,870 7.4%

Net sales 22,405 20,870 7.4%

EBIT -452 -570

EBIT % -2.0% -2.7%

Second-quarter net sales stood at EUR 22.4 (20.9) million, which is 7.4% higher
than in the comparison period. Net sales increased primarily in Germany, where
the comparative period's net sales were lower than average. Operating result
was a loss standing at EUR -0.5 (-0.6) million, or -2.0% (-2.7%) of net sales.
This operating loss was caused by custom-specific rearrangements and increases
made in the installation capacity for future growth in Germany, as well as
investments aimed at business expansion in the UK. These changes will allow for
improved profitability and expansion of business in the rest of the year.

Network Services in January to June 2014

Key figures (1,000 €) 1-6/2014 1-6/2013 Change % 1-12/2013

Orders received 44,453 42,816 3.8% 91,060

Net sales 44,453 42,816 3.8% 91,060

EBIT 38 -404 n/a 1,587

EBIT % 0.1% -0.9% 1.7%

The year-on-year net sales grew by 3.8% amounting to EUR 44.5 (42.8) million.
Operating profit equalled EUR 0.0 (-0.4) million. While the demand for services
was good, customer-specific rearrangements in Germany and investments to expand
the business in the UK pulled the result down to zero.

Personnel and Organization in January to June 2014

In the period under review, the Group had an annual average of 1,275 people
(1,336/2013, 1,326/2012), of whom 562 (554) were employed by Video and
Broadband Solutions, and 713 (782) by Network Services. At the end of the
review period, the Group employed 1,303 people (1,325/2013, 1,348/2012) of whom
69% (74%/2013, 70%/2012) were stationed abroad. About 3% of the Group's
employees were working outside Europe.

Personnel costs amounted to EUR 29.3 million (28.9/2013, 30.5/2012).

Investments and Product Development in January to June 2014

Investments by the Group for the period under review totalled EUR 1.5 (4.6)
million accounting for 1.7% (5.0%) of net sales. As for the year-on-year
investments, EUR 3.5 million involved the acquisition of Asheridge. Product
development investments amounted to EUR 0.6 (0.6) million while other
investments equalled EUR 0.8 million.

Financing and Capital Structure in January to June 2014

Operating cash flow stood at EUR 1.8 (4.3) million. This decrease in cash flow
from operating activities was mainly due to increased trade receivables. At the
end of the period under review, the amount of unused binding stand-by credits
amounted to EUR 17.0 (14.0) million. Credit limits are valid until August 2015.

The Group's equity ratio equalled 52.0% (48.5%) and net gearing 18.2% (21.8%).
On 30 June 2014, the Group's interest-bearing debt stood at EUR 24.1 (27.7)
million.

Key Risks by the Business Areas

Founded in 1954, Teleste is a technology and services company consisting of two
business areas: Video and Broadband Solutions and Network Services. With Europe
as the main market area, our clients include European cable operators and
specified organizations in the public sector.

As to Video and Broadband Solutions, client-specific and integrated deliveries
of solutions create favourable conditions for growth, even if the involved
resource allocation and technical implementation pose a challenge involving,
therefore, also reasonable risks. Our customers' network investments vary based
on the relevant need for upgrading and their financial structure. Significant
part of Teleste's competition comes from the USA so the exchange rate of euro
up against the US dollar affects our competitiveness. The exchange rate
development of the Chinese renminbi to euro affects our material costs.

The company hedges against short-term currency exposure by means of forward
contracts. The situation in the European financial markets may slow down our
customers' investment plans. Furthermore, a weakening in the consumer
purchasing power in Europe could slow down the network investments by the cable
operators. Competition increased by the new service providers (OTT) may
undermine the cable operators' ability to invest. Availability of components is
subject to natural phenomena, such as floods and earthquakes. Severe weather
conditions have an impact on the business areas' ability to deliver products
and services. Correct technological choices and their timing are vital for our
success.

Net sales of Network Services comes, for the most part, from a small number of
large European customers, so a significant change in the demand for our
services by any one of them is reflected in the actual deliveries and
profitability. To ensure quality of services and cost-efficiency along with
efficient service process management, customer satisfaction and improvements in
productivity require innovative solutions in terms of processes, products and
logistics. Smooth operation of cable networks requires effective technical
management and functional hardware solutions in accordance with contractual
obligations. This, in turn, demands continuous and determined development of
skills and competences in Teleste's own personnel as well as those of our
subcontractors. In addition, Teleste's ability to deliver and compete may be
constrained by the adequacy of our sub-contractor network capacity. Tender
calculation and management of larger projects with overall responsibility are
complex and include risks.

It is important for our business areas to take into account any market
developments such as consolidations taking place among the clientele and
competition. The threats to information systems must be minimized to ensure
business continuity. The Board of Directors annually reviews any essential
risks related to the company operation and their management. Risk management is
an integral part of the strategic and operational activities of the business
areas. Risks are reported to the Board on a regular basis.

The company has covered any major risks of loss involving the business areas
through insurance policies. Insurance will also cover credit loss risks related
to sales receivables. In the period under review, no such legal proceedings or
judicial procedures were pending that would have had any essential significance
for the Group operation.

Group Structure

Parent company Teleste has branch offices in Australia, the Netherlands, and
Denmark with subsidiaries in 14 countries outside Finland. Teleste Management
Oy was merged with the parent company on 28 February 2014. Teleste Management
II Oy, founded in December 2011, has been consolidated in the Teleste Group
figures on account of financial arrangements.

Shares and Changes in Share Capital

On 30 June 2014, EM Group Oy was the largest single shareholder with a holding
of 23.23%.

In the period under review, the lowest company share price was EUR 4.25 (3.78)
and the highest was EUR 4.86 (4.47). Closing price on 30 June 2014 stood at EUR
4.55 (4.09). According to Euroclear Finland Ltd the number of shareholders at
the end of the period under review was 5,052 (5,086). Foreign ownership
accounted for 4.81% (5.83%). From 1 January to 30 June 2014, trading with
Teleste share at NASDAQ OMX Helsinki amounted to EUR 5.9 (5.6) million. In the
period under review, 1.3 (1.3) million Teleste shares were traded on the stock
exchange.

At the end of June 2014, the Group held 1,189,654 of its own shares, of which
the parent company Teleste Corporation had 647,654 shares while the Group and
controlled companies had 542,000 shares, respectively. At the end of the
period, the Group's holding of the total amount of shares amounted to 6.27%
(6.35%).

The share subscription period for stock option rights 2007C began on 1 April
2012 and ended on 30 April 2014. Stock option rights 2007C enabled subscription
of 280,000 shares in total. Based on option rights 2007C, a total of 256,998
Teleste Corporation's new shares were subscribed. Those 2007C option rights
that were not used before the expiry of the subscription period, are null and
void.

On 30 June 2014, the registered share capital of Teleste stood at EUR
6,966,932.80 divided in 18,985,588 shares.

Decisions by the Annual General Meeting

The Annual General Meeting (AGM) of Teleste Corporation on 1 April 2014
confirmed the financial statements for 2013 and discharged the Board of
Directors and the CEO from liability for the financial period. The AGM
confirmed the dividend of EUR 0.19 per share proposed by the Board. The
dividend was paid out on 11 April 2014.

Ms. Marjo Miettinen, Mr. Pertti Ervi, Ms. Jannica Fagerholm, Mr. Esa Harju, Mr.
Kai Telanne and Mr. Petteri Walldén continue in Teleste's Board of Directors.
Ms. Marjo Miettinen was elected Chair of the Board in the organizational
meeting held immediately after the AGM.

Authorized Public Accountants KPMG Oy Ab continues as the auditor until the
next AGM. Mr. Esa Kailiala, accountant authorized by the Central Chamber of
Commerce of Finland, was chosen auditor-in-charge.

On 1 April 2014, the Annual General Meeting decided on the following
authorizations of the Board of Directors:

• Purchases of own shares: maximum of 1,200,000 shares. This authorization is
  valid for 18 months from the date of the decision.
• Issue of new shares: maximum of 4,000,000 shares, valid for three years from
  the date of the decision.
• Disposal of own shares in possession: maximum of 1,800,000 shares, valid for
  three years from the date of the decision.
• Based on the special rights granted by the Company, the number of shares to
  subscribe may not exceed 2,500,000 shares; these special rights are included in
  the maximum warrants concerning new shares and the Group's own shares mentioned
  above. This authorization will be valid for three years from the date of the
  decision.

Outlook for 2014

Video and Broadband Solutions aim at maintaining a strong market position in
Europe and expand into selected new markets. Network capacity will continue to
increase driven by the new broadband and video services provided by the
operators. New products in line with communication standard Docsis 3.1 will
enable network operators to activate their investments in the rest of the year.
Price erosion in the market continues. The positive trend in the video
surveillance market will continue, but the public sector decisions to start
projects may be delayed in the current economic climate. We estimate
profitability of Video and Broadband Solutions to improve compared to the first
half of the year.

The business objective of Network Services is to develop the operational
efficiency and give up any unprofitable services activities during the year. We
estimate the demand for comprehensive network services in our key target
markets to continue at par with the comparative year and the profitability to
improve compared to the first half of the year.

We estimate that net sales and operating profit for the year 2014 will not
reach the 2013 level.

6 August 2014

Teleste Corporation Jukka Rinnevaara
Board of Directors President and CEO

This interim report has been compiled in compliance with IAS 34, as it is
accepted within EU, using the recognition and valuation principles with those
used in the Annual Report.Teleste has prepared this interim report applying the
same accounting principles as those described in detail in it's the
consolidated financial statements. The data stated in this report is unaudited.
The changes in IAS1, IFRS13 and IAS19 have been applied in this interim report
and they do not have any material impact on the financial reporting.

STATEMENT OF COMPREHENSIVE INCOME 4-6/ 4-6/ Change % 1-12/
(tEUR) 2014 2013 2013
Net Sales 49,412 46,495 6.3 % 192,775
Other operating income 317 0 n/a 840
Materials and services -25,261 -21,997 14.8 % -94,456
Personnel expenses -15,363 -14,455 6.3 % -56,949
Other operating expenses -6,721 -7,144 -5.9 % -26,536
Depreciation -1,001 -1,161 -13.8 % -4,628
Operating profit 1,383 1,738 -20.4 % 11,047
Financial income and expenses -125 -103 21.4 % -386
Profit after financial items 1,258 1,635 -23.1 % 10,660
Profit before taxes 1,258 1,635 -23.1 % 10,660
Taxes -355 -364 -2.5 % -2,513
Net profit 903 1,271 -29.0 % 8,147
Attributable to:
Equity holders of the parent 903 1,271 -29.0 % 8,147
Earnings per share for result of the year attributable to the equity holders of
the parent
(expressed in € per share)
Basic 0.05 0.07 -29.6 % 0.47
Diluted 0.05 0.07 -29.0 % 0.46
Total comprehensive income for the
period (tEUR)
Net profit 903 1,271 -29.0 % 8,147
Possible items with future net
profit effect
Translation differences -141 -516 -72.7 % -559
Fair value reserve 8 27 -70.4 % 16
Total comprehensive income for the 770 782 -1.5 % 7,604
period
Attributable to:
Equity holders of the parent 770 782 -1.5 % 7,604

STATEMENT OF COMPREHENSIVE INCOME 1-6/ 1-6/ Change % 1-12/
(tEUR) 2014 2013 2013
Net Sales 92,945 92,254 0.7 % 192,775
Other operating income 503 458 9.8 % 840
Materials and services -46,263 -43,601 6.1 % -94,456
Personnel expenses -29,348 -28,890 1.6 % -56,949
Other operating expenses -13,139 -13,369 -1.7 % -26,536
Depreciation -2,025 -2,512 -19.4 % -4,628
Operating profit 2,673 4,340 -38.4 % 11,047
Financial income and expenses -217 -185 17.5 % -386
Profit after financial items 2,456 4,155 -40.9 % 10,660
Profit before taxes 2,456 4,155 -40.9 % 10,660
Taxes -632 -1,097 -42.4 % -2,513
Net profit 1,824 3,058 -40.4 % 8,147
Attributable to:
Equity holders of the parent 1,824 3,058 -40.4 % 8,147
Earnings per share for result of the year attributable to the equity holders of
the parent
(expressed in € per share)
Basic 0.10 0.18 -40.4 % 0.47
Diluted 0.10 0.17 -40.4 % 0.46
Total comprehensive income for the
period (tEUR)
Net profit 1,824 3,058 -40.4 % 8,147
Possible items with future net
profit effect
Translation differences -49 -471 -89.6 % -559
Fair value reserve 1 51 -98.0 % 16
Total comprehensive income for the 1,776 2,638 -32.7 % 7,604
period
Attributable to:
Equity holders of the parent 1,776 2,638 -32.7 % 7,604

STATEMENT OF FINANCIAL POSITION 30.06.2014 30.06.2013 Change % 31.12.2013
(tEUR)
Non-current assets
Property,plant,equipment 10,333 10,637 -2.9 % 10,499
Goodwill 33,250 33,301 -0.2 % 33,252
Other intangible assets 4,191 4,567 -8.2 % 4,448
Deferred tax assets 1,900 2,079 -8.6 % 2,002
Available-for-sale investments 422 286 47.6 % 294
50,096 50,870 -1.5 % 50,494
Current assets
Inventories 20,115 20,295 -0.9 % 19,762
Trade and other receivables 41,381 38,546 7.4 % 38,844
Cash and cash equivalents 12,242 14,570 -16.0 % 15,229
73,738 73,411 0.4 % 73,835
Total assets 123,833 124,280 -0.4 % 124,329
Shareholder's equity and
liabilities
Share capital 6,967 6,967 0.0 % 6,967
Other equity 56,906 52,840 7.7 % 58,160
Non-controlling interest 488 425 14.8 % 425
64,361 60,232 6.9 % 65,552
Non-current liabilities
Provisions 596 968 -38.4 % 634
Deferred tax liabilities 1,171 1,794 -34.7 % 1,293
Non interest bearing 2,509 2,342 7.1 % 2,414
liabilities
Interest bearing liabilities 360 1,102 -67.3 % 470
4,636 6,206 -25.3 % 4,810
Current liabilities
Trade payables and other 29,800 30,142 -1.1 % 28,130
liabilities
Current tax payable 423 245 72.7 % 1,206
Provisions 837 848 -1.3 % 832
Interest bearing liabilities 23,776 26,607 -10.6 % 23,799
54,836 57,842 -5.2 % 53,967
Total shareholder's equity and 123,833 124,280 -0.4 % 124,329
liabilities

CONSOLIDATED CASH FLOW STATEMENT (tEUR) 1-6/ 1-6/ Change 1-12/
2014 2013 % 2013
Cash flows from operating activities
Profit for the period 1,824 3,058 -40.4 % 8,147
Adjustments 2,874 3,794 -24.2 % 7,608
Interest and other financial expenses and -217 -185 17.5 % -403
incomes
Paid Taxes -1,415 -2,927 -51.7 % -3,402
Change in working capital -1,296 588 n/a -1,989
Cash flow from operating activities 1,770 4,328 -59.1 % 9,961
Cash flow from investing activities
A conditional supplementary contract price 0 -2,576 n/a -2,585
for prior subsidiary acquisitions
Purchases of property, plant and equipment -816 -400 104.0 % -1,180
(PPE)
Purchases of intangible assets -614 -586 4.8 % -1,442
Acquisition of subsidiary, net of cash 0 -965 n/a -965
acquired
Acquisition of assets available for sale -136 0 n/a 0
Net cash used in investing activities -1,566 -4,527 -65.4 % -6,172
Cash flow from financing activities
Proceeds from borrowings 0 5,000 n/a 5,000
Payments of borrowings -177 -821 -78.4 % -4,178
Dividends paid -3,462 -2,962 16.9 % -2,962
Proceeds from issuance of ordinary shares 497 0 n/a 270
Net cash used in financing activities -3,142 1,217 n/a -1,870
Change in cash
Cash in the beginning 15,229 13,880 9.7 % 13,880
Change in cash during period -2,938 1,018 n/a 1,919
Effect of currency changes -49 -328 -85.1 % -571
Cash at the end 12,242 14,570 -16.0 % 15,229

KEY FIGURES 1-6/ 1-6/ Change % 1-12/
2014 2013 2013
Earnings per share, EUR 0.10 0.18 -40.4 % 0.47
Earnings per share fully diluted, EUR 0.10 0.17 -40.4 % 0.46
Shareholders' equity per share, EUR 3.59 3.43 4.7 % 3.73
Return on equity 5.6 % 10.1 % -44.7 % 12.9 %
Return on capital employed 6.0 % 10.4 % -42.0 % 13.0 %
Equity ratio 52.0 % 48.5 % 7.3 % 52.7 %
Gearing 18.2 % 21.8 % -16.5 % 13.8 %
Investments, tEUR 1,549 4,637 -66.6 % 6,313
Investments % of net sales 1.7 % 5.0 % 3.3 %
Order backlog, tEUR 17,402 12,331 41.1 % 13,100
Personnel, average 1,275 1,336 -4.6 % 1,306
Average number of shares (thousands) 18,897 18,729 0.9 % 18,744
including own shares
Highest share price, EUR 4.86 4.47 8.7 % 4.47
Lowest share price, EUR 4.25 3.78 12.4 % 3.78
Average share price, EUR 4.52 4.14 9.3 % 4.17
Turnover, in million shares 1.3 1.3 -1.5 % 2.2
Turnover, in MEUR 5.9 5.6 5.6 % 9.2
Treasury shares
Number % of % of
of shares shares votes
Possession of company's own shares 1,189,654 6.27 % 6.27 %
30.6.2014
Contingent liabilities and pledged assets (tEUR)
Leasing and rent liabilities 5,711 7,194 -20.6 % 6,748
Derivative instruments (tEUR)
Value of underlying forward contracts 6,748 8,288 -18.6 % 7,633
Market value of forward contracts -159 158 n/a -209
Interest rate swap 11,000 11,000 0.0 % 11,000
Market value of interest swap -5 29 n/a -6
Taxes are computed on the basis of the tax on the profit for the period.

OPERATING SEGMENTS (tEUR) 1-6/ 1-6/ Change % 1-12/
2014 2013 2013
Video and Broadband Solutions
Orders received 52,794 44,769 17.9 % 97,815
Net sales 48,492 49,438 -1.9 % 101,716
EBIT 2,635 4,744 -44.5 % 9,460
EBIT% 5.4 % 9.6 % 9.3 %
Network Services
Orders received 44,453 42,816 3.8 % 91,060
Net sales 44,453 42,816 3.8 % 91,060
EBIT 38 -404 n/a 1,587
EBIT% 0.1 % -0.9 % 1.7 %
Total
Orders received 97,247 87,585 11.0 % 188,875
Net sales 92,945 92,254 0.7 % 192,776
EBIT 2,673 4,340 -38.4 % 11,047
EBIT% 2.9 % 4.7 % 5.7 %
Financial items -217 -185 17.5 % -386
Operating segments net profit before taxes 2,456 4,155 -40.9 % 10,660

Information per quarter 4-6/14 1-3/14 10-12/13 7-9/13 4-6/13 7/2013-
(tEUR) 6/2014
Video and Broadband Solutions
Orders received 27,898 24,896 24,127 28,919 23,350 105,840
Net sales 27,007 21,485 28,020 24,258 25,625 100,770
EBIT 1,835 801 2,354 2,362 2,308 7,352
EBIT % 6.8 % 3.7 % 8.4 % 9.7 % 9.0 % 7.3 %
Network Services
Orders received 22,405 22,048 26,024 22,220 20,870 92,697
Net sales 22,405 22,048 26,024 22,220 20,870 92,697
EBIT -452 490 1,168 823 -570 2,029
EBIT % -2.0 % 2.2 % 4.5 % 3.7 % -2.7 % 2.2 %
Total
Orders received 50,303 46,944 50,151 51,139 44,220 198,537
Net sales 49,412 43,533 54,044 46,478 46,495 193,467
EBIT 1,383 1,291 3,522 3,185 1,738 9,381
EBIT % 2.8 % 3.0 % 6.5 % 6.9 % 3.7 % 4.8 %

Attributable to equity holders of the parent (tEUR)
A Share capital
B Share premium
C Translation differences
D Retained earnings
E Invested free capital
F Other funds
G Total
H Share of non-controlling interest
I Total equity
A B C D E F G H I
Shareholder's 6,967 1,504 126 53,079 3,457 -6 65,127 425 65,552
equity 1.1.2014
Total -49 1,824 1 1,776 1,776
comprehensive
income for the
period
Used options 497 497 497
Paid dividend -3,564 -3,564 102 -3,462
Interest, non 39 39 -39 0
controll party
Equity-settled 0 0 0 0 0 0
share-based
payments
Shareholder's 6,967 1,504 77 51,378 3,954 -5 63,875 488 64,361
equity 30.6.2014
Shareholder's 6,967 1,504 685 48,007 2,737 -22 59,878 678 60,557
equity 1.1.2013
Total -471 3,058 51 2,638 0 2,638
comprehensive
income for the
period
Paid dividend -3,119 -3,119 157 -2,962
Interest, non 34 34 -34 0
controll party
Equity-settled 376 376 -376 0
share-based
payments
Shareholder's 6,967 1,504 214 47,980 3,113 29 59,807 425 60,232
equity 30.6.2013

CALCULATION OF KEY FIGURES

Return on Profit/loss for the financial period
equity: ------------------------------ * 100
Shareholders' equity (average)
Return on Profit/loss for the period after financial items + financing
capital charges
employed: ------------------------------ * 100
Total assets - non-interest-bearing
liabilities (average)
Equity ratio: Shareholders' equity
----------------------------- * 100
Total assets - advances received
Gearing: Interest bearing liabilities - cash in hand and in bank -
interest bearing assets
----------------------------- * 100
Shareholders' equity
Earnings per Profit for the period attributable to equity holder of the
share: parent
----------------------------------------------
Weighted average number of ordinary shares outstanding during
the period
Earnings per Profit for the period attributable to equity holder of the
share, parent (diluted)
diluted: ----------------------------------------------- Average number
of shares - own shares + number of options at the period-end

Major shareholders 30.6.2014 Number of shares % of share capital
EM Group Oy 4,409,712 23.23
Mandatum Life Insurance Company Limited 1,679,200 8.84
Ilmarinen Mutual Pension Insurance Company 953,854 5.02
Kaleva Mutual Insurance Company 824,641 4.34
Teleste Oyj 647,654 3.41
OP-Finland Small Firms Fund 630,712 3.32
Teleste Management II Oy 542,000 2.85
Varma Mutual Pension Insurance Company 521,150 2.74
The State Pension Fund 500,000 2.63
FIM Fenno Sijoitusrahasto 271,288 1.43

Shareholders by sector Number of % of Number of Number of
30.6.2014 shareholders Owners shares shares %
Households 4,694 92.91 4,643,053 24.5
Public sector 4 0.08 1,990,004 10.5
institutions
Financial and insurance 18 0.36 3,831,929 20.2
institutions
Corporations 268 5.30 7,234,769 38.1
Non-profit institutions 30 0.59 372,171 2.0
Foreign and nominee 38 0.75 913,662 4.8
registered owners
Total 5,052 100.00 18,985,588 100.0

Number of shares Number of % of Number of % of
30.6.2014 shareholders shareholders shares shares
1 - 100 1,104 21.9 74,892 0.4
101 - 500 2,192 43.4 594,056 3.1
501 - 1,000 800 15.8 661,296 3.5
1,001 - 5,000 768 15.2 1,692,602 8.9
5,001 - 10,000 89 1.8 637,271 3.4
10,001 - 50,000 72 1.4 1,412,603 7.4
50,001 - 100,000 4 0.1 360,131 1.9
100,001 - 500,000 15 0.3 3,343,814 17.6
500,001 - 8 0.2 10,208,923 53.8
Total 5,052 100 18,985,588 100
of which nominee 770,312 4.1
registered

ADDITIONAL INFORMATION:
CEO Jukka Rinnevaara, phone +358 2 2605 866 or +358 400 747 488

DISTRIBUTION:
NASDAQ OMX Helsinki
Main Media
www.teleste.com

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