2016-11-03 07:00:12 CET
2016-11-03 07:00:12 CET
REGULATED INFORMATION
Bittium Oyj - Interim report (Q1 and Q3)
Bittium Corporation Interim Report January-September 2016
Stock exchange release
Free for publication on November 3, 2016 at 8.00 a.m. (CET+1)
Bittium Corporation Interim Report January-September 2016
Services business continued its positive development in January-September 2016,
but product-based net sales were lower compared to last year
Summary July-September 2016
·
The net sales were EUR 14.1 million (EUR 11.1 million, 3Q 2015), representing an
increase of 26.2 percent year-on-year.
·
The share of the product-based net sales was EUR 2.2 million (EUR 2.5 million,
3Q 2015) and the share of the services-based net sales was EUR 11.8 million (EUR
8.6 million, 3Q 2015).
·
Operating profit was EUR 0.9 million (EUR 0.0 million, 3Q 2015).
·
Net cash flow was EUR -1.8 million (EUR 575.5 million, 3Q 2015, including the
cash flow resulted from the sale of the Automotive business and the cash flow of
the cancelled demerger process).
·
Earnings per share were EUR 0.032 (EUR 0.001, 3Q 2015).
GROUP (MEUR) 7-9/2016 7-9/2015
3 months 3 months
NET SALES 14.1 11.1
Change of net sales, % 26.2 % 11.7 %
OPERATING PROFIT / LOSS 0.9 0.0
Operating profit / loss, % of net sales 6.5 % 0.2 %
EBITDA 1.6 0.7
CASH AND OTHER LIQUID ASSETS 105.9 617.5
EQUITY RATIO (%) 90.1 % 97.9 %
EARNINGS PER SHARE (EUR) 0.032 0.001
Summary January-September 2016
·
The net sales grew to EUR 45.2 million (EUR 41.6 million, 1-9 2015),
representing an increase of 8.7 percent year-on-year.
·
The share of the product-based net sales was EUR 7.5 million (EUR 11.3 million,
1-9 2015) and the share of the services-based net sales was EUR 37.4 million
(EUR 30.1 million, 1-9 2015).
·
Operating profit was EUR 1.6 million (EUR 1.5 million, 1-9 2015).
·
Net cash flow was EUR -16.9 million (EUR 574.2 million, 1-9 2015, including the
cash flow resulted from the sale of the Automotive business and the cash flow of
the cancelled demerger process).
·
Earnings per share were EUR 0.058 (EUR 0.009, 1-9 2015).
GROUP (MEUR) 1-9/2016 1-9/2015 2015
9 months 9 months 12 months
NET SALES 45.2 41.6 56.8
Change of net sales, % 8.7 % 13.7 % 7.8 %
OPERATING PROFIT / LOSS 1.6 1.5 2.3
Operating profit / loss, % of net sales 3.5 % 3.6 % 4.1 %
EBITDA 3.7 3.2 4.8
CASH AND OTHER LIQUID ASSETS 105.9 617.5 122.8
EQUITY RATIO (%) 90.1 % 97.9 % 90.5 %
EARNINGS PER SHARE (EUR) 0.058 0.009 0.020
Bittium’s CEO Hannu Huttunen
The net sales of the third quarter in 2016 grew to EUR 14.1 million,
representing an increase of 26.2 percent year-on-year. The share of the product
-based net sales was EUR 2.2 million, which was slightly lower than in the
corresponding period last year. The share of the services-based net sales was
EUR 11.8 million. The service business developed positively thanks to the
increased demand in R&D services for special terminal products. Operating result
in the third quarter was EUR 0.9 million. Cash flow was EUR -1.8 million, mainly
due to the investments made into our new office building in Oulu, Finland.
Net sales in January-September 2016 were EUR 45.2 million, representing a growth
of 8.7 percent year-on-year. The share of the product-based net sales was EUR
7.5 million (16.5 percent of net sales). The decline in the product-based net
sales was caused by the ending of product deliveries of a special terminal
project for a US-based customer during the corresponding period. The share of
the services-based net sales grew to EUR 37.4 million due to the increased
demand for special terminal products’ R&D services. Operating profit January
-September 2016 grew year-on-year and was EUR 1.6 million.
In the beginning of October Bittium received information according to which
significant customer cooperation with a global network equipment manufacturer
will reduce during 2017. In case the planned actions of the customer will
materialize in full, these actions might have a negative effect to Bittium’s net
sales and operating result in 2017. Despite this bad news, the demand for
Bittium’s R&D services has developed positively during the third quarter. The
product development project for the Mexican Ministry of Communication and
Transportation to develop Android-based mobile devices that use both terrestrial
and satellite connection for their MEXSAT system has continued according to
plans, and demand for R&D services at IoT markets has developed positively.
In the third quarter we continued the R&D investments in our products and
product platforms aiming for growth especially in the international defense,
mobile security and public safety markets. The investments still focused mainly
on products targeted for mobile security and public safety markets. The
development of the Bittium Tough Mobile™ secure LTE smartphone and the pilot
deliveries of the products were continued during the third quarter. R&D
investments were also continued in the Bittium SafeMove® product family and
these remote access solutions were presented at the healthcare exhibition HETT
Show in London. The development of the tactical communication system Bittium
Tactical Wireless IP Network™ (TAC WIN), used by the Finnish Defence Forces,
continued. Also product deliveries related to that system were continued during
the third quarter. The development in the public safety and mobile security
markets has been slightly slower than estimated.
We will continue to look for inorganic growth opportunities according to our
strategic guidelines and our focus in this year will be on the
internationalization and enabling growth. The growing need for wireless
connectivity, increasingly growing amount of data transfer and the need for
secure data transfer create demand for Bittium’s competence, products and
product platforms. Despite of the reduction of the customer cooperation in the
network equipment markets, Bittium still has good conditions to continue to grow
in the future in a long term.
Significant events after the review period
On October 5th, Bittium announced to have received information according to
which significant customer cooperation with a global network equipment
manufacturer will reduce during 2017. According to the information received, if
the planned actions of the customer will materialize in full, these actions
might have a negative effect on Bittium’s net sales and operating result in
2017.
The reduction of the cooperation will not have an effect on the Bittium’s
outlook for the year 2016. Bittium will publish the outlook for the year 2017 in
connection with the financial statement bulletin January-December 2016.
As part of the strategy work, Bittium will evaluate the effects of the reduction
of the cooperation on the financial targets given on July 1, 2015 in connection
with company’s strategic guidelines. These financial targets published were as
follows: The target during 2015 - 2017 is to grow the net sales at least 10
percent annually and reach EBIT level 10 percent of net sales at the latest in
2017. Bittium targets, by the year 2017, to clearly increase the share of net
sales generated from own products and product platforms, from the 26.7 percent
level of net sales in 2014.
Outlook for 2016
Bittium expects that the net sales in 2016 will grow from the previous year (EUR
56.8 million, in 2015). The operating profit is expected to be at the same level
as in the previous year (EUR 2.3 million, in 2015). The company has not given
operating profit guidance for 2016 prior to this.
More information about Bittium’s market outlook is presented in the section
“Market outlook” in this Interim Report.
More information about other uncertainties regarding the outlook is presented in
this Interim Report in the section "Risks and uncertainties" and on the
company's internet pages at www.bittium.com.
Invitation to a press conference
Bittium will hold a press conference on the Interim Report January-September
2016 for media, analysts and institutional investors in Restaurant Savoy,
Eteläesplanadi 14, Helsinki, Finland, on Thursday November 3, 2016 at 9.30 am
(CET+1). The press conference will be held in Finnish.
Bittium will also hold a telephone conference on the same day at 10.30 am. The
dial-in number for the conference call is +44 203 059 8125. The confirmation
code is "Bittium". The conference can also be followed live as an audiocast,
accessible at www.bittium.com/investors. The conference call will be held in
English. A recording of the audiocast and the presentation will be available
after the conference on Bittium's website at www.bittium.com/investors.
Bittium
Bittium specializes in the development of reliable, secure communications and
connectivity solutions leveraging its 30 years legacy of expertise in advanced
radio communication technologies. Bittium provides innovative products and
customized solutions based on its product platforms and R&D services
complementing its communications and connectivity solutions. Bittium offers
proven information security solutions for mobile devices and portable computers.
Net sales of continuing operations in 2015 were EUR 56.8 million and operating
profit was EUR 2.3 million. Bittium is listed on Nasdaq Helsinki.
www.bittium.com
Bittium Corporation’s Interim Report January-September 2016
Financial performance in January-September 2016
Bittium’s net sales during January-September 2016 increased by 8.7 percent year
-on-year to EUR 45.2 million (EUR 41.6 million, in 1-9 2015).
The share of the product-based net sales was EUR 7.5 million (EUR 11.3 million,
in 1-9 2015), which resulted mainly from the product deliveries of the tactical
communication system to the Finnish Defence Forces, product deliveries of
Bittium Tough Mobile LTE smartphones, and from the delivery of other terminal
products for authorities use. The product-based net sales decreased year-on-year
mainly because of the ending of product deliveries of a special terminal project
for a US-based customer during the corresponding period.
The share of the services-based net sales was EUR 37.4 million (EUR 30.1
million, in 1-9 2015). Despite the decrease in the demand for the services
business in the network equipment market, the services-based net sales increased
year-on-year due to the increased demand for the R&D services related to the
special terminal products.
Operating result was EUR 1.6 million (EUR 1.5 million, in 1-9 2015).
CONSOLIDATED STATEMENT OF 1-9/2016 1-9/2015 2015
COMPREHENSIVE INCOME, MEUR
9 months 9 months 12 months
Net sales 45.2 41.6 56.8
Operating profit / loss 1.6 1.5 2.3
Financial income and 0.5 -0.3 -0.2
expenses
Result before tax 2.1 1.2 2.1
RESULT FOR THE PERIOD FROM 2.1 1.2 2.3
CONTINUING OPERATIONS
RESULT FOR THE PERIOD FROM 538.4 539.0
DISCONTINUING OPERATIONS
RESULT FOR THE PERIOD 2.1 539.6 541.3
TOTAL COMPREHENSIVE INCOME 2.0 539.7 541.5
FOR THE PERIOD
Result for the period
attributable to:
Equity holders of the 2.1 539.6 541.3
parent
Total comprehensive income
for the period attributable
to:
Equity holders of the 2.0 539.7 541.5
parent
Earnings per share from 0.058 0.009 0.020
continuing operations, EUR
·
Cash flow from operating activities was EUR 1.1 million (EUR 1.8 million, in 1-9
2015, including both continuing and discontinuing operations).
·
Net cash flow was EUR -16.9 million, including the dividend payment million in
April and the investments made into the company’s new office building in Oulu,
Finland (EUR 574.2 million, in 1-9 2015, including the cash flow resulted from
the sale of the Automotive business and the cash flow of the cancelled demerger
process).
·
Equity ratio was 90.1 percent (97.9 percent, September 30, 2015).
·
Net gearing was -80.9 percent (-97.9 percent, September 30, 2015).
Quarterly figures
GROUP’S NET SALES AND OPERATING RESULT, MEUR 3Q/16 2Q/16 1Q/16 4Q/15 3Q/15
Net sales 14.1 16.4 14.7 15.2 11.1
Operating profit (loss) 0.9 0.8 -0.1 0.8 0.0
Result before taxes 1.1 1.0 -0.1 0.9 0.1
Result for the period 1.1 1.0 -0.1 1.1 0.1
DISTRIBUTION OF NET 3Q/16 2Q/16 1Q/16 4Q/15 3Q/15
SALES BY MARKET
AREAS,
MEUR AND %
Asia 0.0 0.4 0.0 0.0 0.1
0.1 % 2.7 % 0.2 % 0.0 % 0.6 %
Americas 2.9 3.2 2.3 2.9 1.0
20.7 % 19.8 % 15.3 % 19.2. % 9.1 %
Europe 11.2 12.7 12.5 12.3 10.1
79.3 % 77.5 % 84.5 % 80.7 % 90.4 %
Research and development
Bittium continued its R&D investments in products and product platforms targeted
for the defense, mobile security and public safety markets. R&D investments
mainly focused on developing the Bittium Tough Mobile secure LTE smartphone
targeted mainly for the demanding mobile security and public safety use. A
significant part of these capitalized R&D investments is related to the further
development of the Bittium Tough Mobile and the related security software.
R&D INVESTMENTS, MEUR 1-9/2016 1-9/2015 2015
9 months 9 months 12 months
Total R&D investments 5.0 5.4 7.3
Capitalized R&D investments -0.8 -2.7 -3.4
Depreciations and impairment of R&D investments 0.2 0.1 0.2
Cost impact on income statement 4.4 2.8 4.2
R&D investments, % of net sales 11.0 % 13.0 % 12.9 %
CAPITALIZED R&D 1-9/2016 1-9/2015 2015
INVESTMENTS IN BALANCE
SHEET, MEUR
9 months 9 months 12 months
Balance sheet value in 5.6 2.2 2.2
the beginning of the
period
Additions during the 0.8 2.7 3.4
period
Acquisitions of the 0.3 0.3
business
Depreciations and -0.2 -0.1 -0.2
impairment of R&D
investments
Balance sheet value at 6.2 5.1 5.6
the end of the period
Business development in July-September 2016
Bittium’s net sales during July-September 2016 grew to EUR 14.1 million (EUR
11.1 million, 3Q 2015), representing an increase of 26.2 percent year-on-year.
The share of the product-based net sales was EUR 2.2 million (EUR 2.5 million,
3Q 2015), which resulted mainly from the product deliveries of the tactical
communication system to the Finnish Defence Forces and from the product
deliveries of Bittium Tough Mobile LTE smartphones. The share of the services
-based net sales was EUR 11.8 million (EUR 8.6 million, 3Q 2015). The services
-based net sales increased during the quarter due to the increased demand for
the R&D services related to the special terminal products. Operating profit was
EUR 0.9 million (EUR 0.0 million, 3Q 2015).
Despite the decrease in the demand for R&D services for the mobile network
manufacturers, the demand for Bittium’s R&D services has developed positively
during the third quarter of 2016. In May 2015 started product development
project for the Mexican Ministry of Communication and Transportation, where
Bittium to develops Android-based mobile devices that use both terrestrial and
satellite connection for their MEXSAT system, has continued according to plans.
Also the demand for R&D services in the IoT markets developed positively.
During the third quarter Bittium continued the R&D investments in its own
products and product platforms aiming for growth especially in the international
defense, mobile security and public safety markets. The investments focused
mainly in the products for the mobile security and public safety markets. The
development of the Bittium Tough Mobile secure LTE smartphone was continued as
well as the pilot deliveries of the product during the third quarter. Bittium
continued R&D investments also in Bittium SafeMove® product family and presented
these remote access solutions at a healthcare HETT Show in London. The
development of the tactical communication system Bittium Tactical Wireless IP
Network™ (TAC WIN), used by the Finnish Defence Forces, continued and the
product deliveries for this communication system were also continued during the
third quarter. The development of the public safety and mobile security markets
has been somewhat slower than expected.
Significant events during the reporting period
A total of 55,498 new shares in Bittium Corporation were subscribed for between
December 1, 2015 and March 31, 2016 by virtue of the option rights 2008C. The
share subscription price, EUR 30,523.90 was recorded in the company's invested
non-restricted equity fund. The corresponding increases in the number of the
company's shares were entered into the Finnish Trade Register on February 10,
2016 and April 14, 2016. Shareholder rights by virtue of the new shares
commenced as of the abovementioned registration entry date. Trading with the
newly registered shares started on February 11, 2016 and April 15, 2016 as an
additional lot of Bittium Corporation's shares in Nasdaq Helsinki Ltd. After the
registration of the new shares, the number of shares in Bittium Corporation's
totaled to 35,693,166. The share subscription period for stock options 2008C
ended on March 31, 2016.
The Board of Directors of Bittium Corporation decided on March 22, 2016 on a
directed share issue without consideration as reward payments to the key persons
of the company. In the share issue a maximum of 58,000 new shares was issued
without consideration to the key persons entitled to share rewards according to
the terms and conditions relating to the share rewards. A total of 9 people
belonging to the management and personnel of the company were in the target
group of the payment. Of the maximum of 58,000 shares offered in the share
issue, 37,500 shares were subscribed. The 37,500 shares issued in the share
issue were registered with the Trade Register and registered on the book-entry
accounts of the recipients of the shares on March 24, 2016 and became subject to
trading on the trading list of Nasdaq Helsinki on March 29, 2016.
On April 27, 2016 Bittium appointed M.Sc. Sami Kotkajuuri (b. 1967) as Vice
President, Business Development as of May 1, 2016. Mr. Kotkajuuri has been
working for Bittium since 2009. M.Sc. Klaus Mäntysaari (b. 1966) was appointed
as Vice President, Connectivity Solutions as of May 1, 2016. Mr. Mäntysaari has
been working for Bittium since 2004. In the Connectivity Solutions product and
service area Bittium offers R&D services and customized solutions for the
wireless communications market as well as for other companies needing wireless
connectivity in their devices.
Significant events after the reporting period
On October 5th, Bittium announced to have received information according to
which significant customer cooperation with a global network equipment
manufacturer will reduce during 2017. According to the information received, if
the planned actions of the customer will materialize in full, these actions
might have a negative effect to Bittium’s net sales and operating result in
2017.
The reduction of the cooperation will not have an effect on the Bittium’s
outlook for the year 2016. Bittium will publish the outlook for the year 2017 in
connection with the financial statement bulletin January-December 2016.
As part of the strategy work, Bittium will evaluate the effects of the reduction
of the cooperation on the financial targets given on July 1, 2015 in connection
with company’s strategic guidelines. These financial targets published were as
follows: The target during 2015 - 2017 is to grow the net sales at least 10
percent annually and reach EBIT level 10 percent of net sales at the latest in
2017. Bittium targets, by the year 2017, to clearly increase the share of net
sales generated from own products and product platforms, from the 26.7 percent
level of net sales in 2014.
Outlook for 2016
Bittium expects that the net sales in 2016 will grow from the previous year (EUR
56.8 million, in 2015). The operating profit is expected to be at the same level
as in the previous year (EUR 2.3 million, in 2015). The company has not given
operating profit guidance for 2016 prior to this.
More information about Bittium’s market outlook is presented in the section
“Market outlook” in this Interim Report.
More information about other uncertainties regarding the outlook is presented in
this Interim Report in the section "Risks and uncertainties" and on the
company's internet pages at www.bittium.com.
Market outlook
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 speed, higher
quality and secure data transfer. Due to the technology competence accrued over
time and long history in developing mobile communication solutions, Bittium is
in a good position to offer customized solutions for its customers.
The following factors are expected to create demand for Bittium's products and
services in 2016 and beyond:
·
In the mobile telecommunications, the 4G technology development work has
decreased significantly affecting declining to the mobile network markets in the
near future. The development of 5G technology has started very well creating
demand for Bittium’s R&D services increasingly. However, the development of 5G
technology has just begun, and it will not replace the amount of the 4G
development work within the next few years. Therefore in future the demand for
R&D service for the network equipment manufacturers is expected to be
significantly lower than in previous years.
·
The use of LTE technology, smartphones and applications is expected to continue
increasing 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. However, the development of the public safety and mobile security
markets has been somewhat slower than expected. The sale of the secure terminal
products is expected to develop moderately according to the nature of public
safety markets.
·
Secure IoT (Internet of Things) has become a significant development area in
many industries. The increasing need of companies to bring connected devices to
consumers and demanding industrial usage generates need for Bittium’s IoT
services and customized solutions. Such devices collect information through its
sensors and connect the devices securely to the internet and cloud services. One
of the growing application areas in the IoT segment is healthcare technology,
where i.e. the monitoring of patients tends increasingly use wireless solutions.
·
In the defense sector’s tactical communication market the governments’ defense
forces and other authorities need networks that troops, who are increasingly
constantly on the move, can use for transferring growing amounts of data
securely. This creates demand for Bittium Tactical Wireless IP Network (TAC WIN)
broadband network and for other Bittium’s IP-based (Internet Protocol) tactical
communications solutions. Due to the long sales cycles driven by purchasing
programs of national governments, it takes years to receive significant purchase
orders. Bittium continues its efforts to bring its defense market targeted
products and services also to the international defense markets and aims at
pilot deliveries of its tactical communication system for customers abroad
during 2016.
·
Using public network connections in portable devices is increasing also in
demanding professional use, such as in the public sector. This creates
requirements for network connections to be easy to use and secure. The products
in the Bittium SafeMove product family enable the ease of use of the devices and
security in demanding use.
Risks and uncertainties
Bittium has identified a number of business, market and finance related risk
factors and uncertainties that can affect the level of sales and profits.
Market risks
In the ongoing financial period, 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.
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, the company is exposed to market changes in these
industries.
In October 2016, Bittium has received information according to which significant
customer cooperation with a global mobile network equipment manufacturer will
reduce during the year 2017. A significant part of Bittium´s net sales has
accumulated from selling R&D services to this mobile communications equipment
manufacturer. The reduction of the cooperation will not have an effect on
Bittium’s outlook for the year 2016, but if the planned actions of the customer
will materialize in full, these actions might have a negative effect on
Bittium’s net sales and operating result in 2017. A significant part of
Bittium´s net sales still 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 the 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
interim 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
result also significant deviations in the company's outlook. The information
received by Bittium about the reduction of significant customer cooperation with
a global mobile network equipment manufacturer during 2017 may have a negative
effect on Bittium’s net sales and operating result in 2017, but it will not have
an effect on the Bittium’s outlook for the year 2016. 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 in order 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 be also 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. Currently Bittium has a committed overdraft credit facility
agreement of EUR 10.0 million with Nordea Bank Finland Plc and a committed
overdraft credit facility agreement of EUR 10.0 million with Pohjola Bank Plc.
These agreements meant for general financing needs are valid until June 30,
2017. 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 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 September 30,
2016, are compared with the statement of the financial position of December 31,
2015 (MEUR).
30.9.2016 31.12.2015
Non-current assets 19.6 14.4
Current assets 125.0 145.0
Total assets 144.6 159.4
Share capital 12.9 12.9
Other capital 116.2 124.6
Total equity 129.1 137.6
Non-current liabilities 2.0 2.0
Current liabilities 13.5 19.8
Total equity and liabilities 144.6 159.4
Cash flow of the review period 1-9/2016 1-12/2015
:
+ profit of the period +/- 3.9 12.2
Adjustment of accrual basis
items
+/- Change in net working -3.3 -6.2
capital
- interest, taxes and 0.4 -3.9
dividends
= net cash from operating 1.1 2.1
activities
- net cash from investing -6.5 579.6
activities
- net cash from financing -11.4 -502.2
activities
= net change in cash and cash -16.9 79.5
equivalents
Net cash from operating activities in 2015 includes operative cash flows from
both continuing and discontinuing operations.
The amount of gross investments in the period under review was EUR 7.3 million.
Net investments for the review period totaled to EUR 7.3 million. The total
amount of depreciation during the period under review was EUR 2.1 million. The
amount of interest-bearing debt, including finance lease liabilities, was at the
end of the reporting period EUR 1.5 million (EUR 1.4 million on December 31,
2015). Bittium's equity ratio at the end of the period was 90.1 percent (90.5
percent on December 31, 2015).
Cash and other liquid assets at the end of the reporting period were EUR 105.9
million (EUR 122.8 million on December 31, 2015).
Bittium has a total of EUR 20.0 million credit facility agreements which are
valid until June 30, 2017. At the end of the review period, none of 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 on the basis of accounts receivable,
accounts payable, order book and budgeted net currency cash flow.
Personnel
The Bittium group employed an average of 553 people in between January and
September 2016. At the end of September, the company had 582 employees (510
employees at the end of September 2015). A significant part of Bittium's
personnel are R&D engineers.
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
August 11, 2016: Name of the person subject to the notification requirement:
Seppo Laine, other senior manager. Notification type: initial notification.
Nature of transaction: disposal. Executed under portfolio or asset management.
Transaction date: August 8, 2016 Aggregated transactions: volume 20 000 shares,
volume weighted average price: EUR 5.90100.
August 22, 2016: Name of the person subject to the notification requirement:
Jari Sankala, other senior manager. Notification type: initial notification.
Nature of transaction: Acquisition. Executed under portfolio or asset
management. Transaction date: August 17, 2016. Aggregated transactions: volume
2 408 shares, volume weighted average price: EUR 5.90000.
August 22, 2016: Name of the person subject to the notification requirement:
Jari Sankala, other senior manager. Notification type: initial notification.
Nature of transaction: Acquisition. Executed under portfolio or asset
management. Transaction date: August 19, 2016. Aggregated transactions: volume
15 092 shares, volume weighted average price: EUR 6.020000.
September 22, 2016: Name of the person subject to the notification requirement:
Erkki Veikkolainen, member of the Board of Directors. Notification type: initial
notification. Nature of transaction: Receipt of a Share-Based Incentive.
Transaction date: September 19, 2016. Aggregated transactions: volume 2 400
shares, volume weighted average price: EUR 6.79253.
September 22, 2016: Name of the person subject to the notification requirement:
Staffan Simberg, member of the Board of Directors. Notification type: initial
notification. Nature of transaction: Receipt of a Share-Based Incentive.
Transaction date: September 19, 2016. Aggregated transactions: volume 1 371
shares, volume weighted average price: EUR 6.79248.
September 22, 2016: Name of the person subject to the notification requirement:
Seppo Mäkinen, member of the Board of Directors. Notification type: initial
notification. Nature of transaction: Receipt of a Share-Based Incentive.
Transaction date: September 19, 2016. Aggregated transactions: volume 1 371
shares, volume weighted average price: EUR 6.79247.
September 22, 2016: Name of the person subject to the notification requirement:
Juha Putkiranta, member of the Board of Directors. Notification type: initial
notification. Nature of transaction: Receipt of a Share-Based Incentive.
Transaction date: September 19, 2016. Aggregated transactions: volume 1 371
shares, volume weighted average price: EUR 6.79243.
September 22, 2016: Name of the person subject to the notification requirement:
Kirsi Komi, member of the Board of Directors. Notification type: initial
notification. Nature of transaction: Receipt of a Share-Based Incentive.
Transaction date: September 19, 2016. Aggregated transactions: volume 1 371
shares, volume weighted average price: EUR 6.79238.
Oulu, November 3, 2016
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 – September
2016
(unaudited)
The Interim Financial Report has been prepared in accordance with IAS 34 Interim
Financial Reporting.
CONSOLIDATED STATEMENT OF 1-9/2016 1-9/2015 1-12/2015
COMPREHENSIVE INCOME (MEUR)
Continuing operations 9 months 9 months 12 months
NET SALES 45.2 41.6 56.8
Other operating income 1.3 1.0 1.4
Change in work in progress and
finished goods
Work performed by the undertaking 0.2 0.1 0.2
for its own purpose and capitalized
Raw materials -3.3 -4.6 -5.5
Personnel expenses -25.4 -21.9 -30.3
Depreciation -2.1 -1.7 -2.5
Other operating expenses -14.3 -13.0 -17.8
OPERATING PROFIT (LOSS) 1.6 1.5 2.3
Financial income and expenses 0.5 -0.3 -0.2
PROFIT BEFORE TAX 2.1 1.2 2.1
Income tax 0.0 -0.0 0.2
PROFIT FOR THE PERIOD FROM 2.1 1.2 2.3
CONTINUING OPERATIONS
Discontinued operations
Profit for the year from 538.4 539.0
discontinued operations
PROFIT FOR THE PERIOD 2.1 539.6 541.3
Other comprehensive income:
Items that may be reclassified
subsequently to the statement of
income
Exchange differences on -0.1 0.1 0.1
translating foreign operations
Other comprehensive income for the -0.1 0.1 0.1
period total
TOTAL COMPREHENSIVE INCOME FOR THE 2.0 539.7 541.5
PERIOD
Profit for the year attributable to
Equity holders of the parent 2.1 539.6 541.3
Total comprehensive income for the
period attributable to
Equity holders of the parent 2.0 539.7 541.5
Earnings per share from continuing
operations, EUR
Basic earnings per share 0.058 0.009 0.020
Diluted earnings per share 0.009 0.020
Earnings per share from
discontinued operations, EUR
Basic earnings per share 4.075 4.687
Diluted earnings per share 4.069 4.685
Earnings per share from continuing
and discontinued operations, EUR
Basic earnings per share 0.058 4.084 4.708
Diluted earnings per share 4.078 4.706
Average number of shares, 1000 pcs 35 662 132 121 114 983
Average number of shares, diluted, 132 322 115 037
1000 pcs
CONSOLIDATED STATEMENT OF Sep. 30, 2016 Sep. 30, 2015 Dec. 31, 2015
FINANCIAL POSITION (MEUR)
ASSETS
Non-current assets
Property, plant and 8.9 3.8 4.1
equipment
Goodwill 1.4 1.4 1.4
Intangible assets 8.0 7.2 7.6
Other financial assets 0.1 0.1 0.1
Deferred tax assets 1.2 0.9 1.2
Non-current assets total 19.6 13.5 14.4
Current assets
Inventories 3.0 1.4 2.2
Trade and other receivables 16.1 15.1 20.0
Financial assets at fair 66.8 65.8 66.1
value through profit or loss
Cash and short term deposits 39.2 551.7 56.8
Current assets total 125.0 634.0 145.0
TOTAL ASSETS 144.6 647.5 159.4
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent
Share capital 12.9 12.9 12.9
Invested non-restricted 26.0 25.9 25.9
equity fund
Translation difference 1.1 1.2 1.2
Retained earnings 89.1 589.3 97.5
Total equity 129.1 629.3 137.6
Non-current liabilities
Deferred tax liabilities 0.1 0.1 0.1
Provisions 1.1 1.2 1.1
Interest-bearing liabilities 0.7 0.7 0.7
Non-current liabilities total 2.0 2.0 2.0
Current liabilities
Trade and other payables 11.4 13.5 17.9
Financial liabilities at
fair value through profit or
loss
Provisions 1.3 2.0 1.2
Interest-bearing loans and 0.8 0.7 0.7
borrowings
Current liabilities total 13.5 16.2 19.8
Total liabilities 15.5 18.2 21.8
TOTAL EQUITY AND LIABILITIES 144.6 647.5 159.4
CONSOLIDATED STATEMENT OF 1-9/2016 1-9/2015 1-12/2015
CASH FLOWS (MEUR)
9 months 9 months 12 months
CASH FLOW FROM OPERATING
ACTIVITIES
Profit for the year from 2.1 1.2 2.3
continuing operations
Profit for the year from 538.4 539.0
discontinued operations
Adjustment of accrual 1.9 -528.8 -529.1
basis items
Change in net working -3.3 -4.8 -6.2
capital
Interest paid on operating -0.3 -1.3 -1.6
activities
Interest received from 0.7 0.3 0.9
operating activities
Other financial income and 0.0 0.0 0.0
expenses, net received
Income taxes paid 0.0 -3.2 -3.2
NET CASH FROM OPERATING 1.1 1.8 2.1
ACTIVITIES
CASH FLOW FROM INVESTING
ACTIVITIES
Proceeds from sale of 588.2 588.2
business unit, net of cash
sold
Acquisition of business -1.0 -1.8 -1.8
unit, net of cash acquired
Purchase of property, -4.6 -2.0 -2.5
plant and equipment
Purchase of intangible -1.0 -3.7 -4.3
assets
Sale of property, plant 0.0 0.0
and equipment
Sale of intangible assets 0.1 0.1
NET CASH FROM INVESTING -6.5 580.8 579.6
ACTIVITIES
CASH FLOW FROM FINANCING
ACTIVITIES
Share-option plans 0.0 0.8 0.8
exercised
Proceeds from borrowing 14.6 14.6
Repayment of borrowing -0.1 -17.5 -17.5
Payment of finance -0.6 -1.1 -1.3
liabilities
Dividend paid and -10.7 -5.3 -5.3
repayment of capital
Purchase of own shares -493.5
incl. transaction costs
NET CASH FROM FINANCING -11.4 -8.4 -502.2
ACTIVITIES
NET CHANGE IN CASH AND -16.9 574.2 79.5
CASH EQUIVALENTS
Cash and cash equivalents 122.8 43.3 43.3
at beginning of period
Cash and cash equivalents 105.9 617.5 122.8
at end of period
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 25.1 1.5 53.8 93.4
1, 2015
Comprehensive income for the
period
Profit for the period 539.6 539.6
Exchange differences on 0.1 0.1
translating foreign
operations
Total comprehensive income 0.1 539.6 539.7
for the period
Transactions between the
shareholders
Distribution of dividends -5.3 -5.3
Share option plans 0.8 0.8
exercised
Share-based payment awards 0.1 0.1
Total transactions between 0.8 -5.2 -4.4
the shareholders
Other changes -0.5 1.1 0.6
Shareholders equity on Sept. 12.9 25.9 1.2 589.3 629.3
30, 2015
A B C D E F
Shareholders equity on Jan. 12.9 25.9 1.2 97.5 137.6
1, 2016
Comprehensive income for the
period
Profit for the period 2.1 2.1
Exchange differences on -0.1 -0.1
translating foreign
operations
Total comprehensive income -0.1 2.1 2.0
for the period
Transactions between the
shareholders
Distribution of dividends -10.7 -10.7
Share option plans 0.0 0.0
exercised
Share-based payment awards 0.2 0.2
Total transactions between 0.0 -10.5 -10.4
the shareholders
Other changes -0.0 -0.0
Shareholders equity on Sept. 12.9 26.0 1.1 89.1 129.1
30, 2016
NOTES TO THE INTERIM FINANCIAL REPORTING
ACCOUNTING PRINCIPLES FOR THE INTERIM FINANCIAL REPORTING:
The Interim 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 Interim Report as in its Financial
Statements for 2015, except for the adoption of new standards and
interpretations effective during 2016. The changes did not have material impact
on the Interim Report.
SEGMENT-INFORMATION (MEUR)
Bittium Corporation does not have segments that require reporting according to
IFRS 8 standard.
NET SALES OF GEOGRAPHICAL AREAS (MEUR) 1-9/2016 1-9/2015 1-12/2015
9 months 9 months 12 months
Net sales
Europe 36.3 36.0 48.3
Americas 8.4 5.4 8.3
Asia 0.5 0.2 0.2
Net sales total 45.2 41.6 56.8
RELATED PARTY TRANSACTIONS 1-9/2016 1-9/2015 1-12/2015
9 months 9 months 12 months
Employee benefits for key management and stock 1.0 1.3 1.6
options expenses total, continuing operations
CONSOLIDATED STATEMENT OF 7-9/201 4-6/201 1-3/201 10 7-9/2015
COMPREHENSIVE INCOME BY QUARTER 6 6 6 -12/201
(MEUR) 5
Continuing operations 3 month 3 month 3 month 3 month 3 months
s s s s
NET SALES 14.1 16.4 14.7 15.2 11.1
Other operating income 0.4 0.5 0.4 0.4 0.3
Change in work in progress and 0.0 0.0 0.0 0.0 0.0
finished goods
Work performed by the undertaking 0.1 0.1 0.1 0.1 0.0
for its own purpose and
capitalized
Raw materials -0.9 -1.5 -0.9 -0.9 -0.8
Personnel expenses -7.7 -8.8 -8.9 -8.4 -6.5
Depreciation -0.7 -0.7 -0.7 -0.8 -0.6
Other operating expenses -4.3 -5.2 -4.8 -4.8 -3.6
OPERATING PROFIT (LOSS) 0.9 0.8 -0.1 0.8 0.0
Financial income and expenses 0.2 0.2 0.0 0.1 0.1
PROFIT BEFORE TAX 1.1 1.0 -0.1 0.9 0.1
Income tax 0.0 0.0 0.0 0.2 0.0
PROFIT FOR THE PERIOD FROM 1.1 1.0 -0.1 1.1 0.1
CONTINUING OPERATIONS
Discontinued operations
Profit for the period from 0.6 534.6
discontinued operations
PROFIT FOR THE PERIOD 1.1 1.0 -0.1 1.7 534.7
Other comprehensive income -0.0 -0.0 -0.1 0.0 -0.7
TOTAL COMPREHENSIVE INCOME FOR THE 1.1 1.0 -0.2 1.7 534.0
PERIOD
Profit for the period attributable
to:
Equity holders of the parent 1.1 1.0 -0.1 1.7 534.7
Total comprehensive income for the
period attributable to:
Equity holders of the parent 1.1 1.0 -0.2 1.7 534.0
CONSOLIDATED STATEMENT OF Sep. Jun. Mar. Dec. Sep. 30, 2015
FINANCIAL POSITION (MEUR) 30, 30, 31, 31,
2016 2016 2016 2015
ASSETS
Non-current assets
Property, plant and 8.9 6.9 5.2 4.1 3.8
equipment
Goodwill 1.4 1.4 1.4 1.4 1.4
Intangible assets 8.0 8.0 7.7 7.6 7.2
Other financial assets 0.1 0.1 0.1 0.1 0.1
Deferred tax assets 1.2 1.2 1.2 1.2 0.9
Non-current assets total 19.6 17.6 15.6 14.4 13.5
Current assets
Inventories 3.0 2.3 1.9 2.2 1.4
Trade and other receivables 16.1 19.4 13.4 20.0 15.1
Financial assets at fair 66.8 66.5 66.2 66.1 65.8
value through profit or loss
Cash and short term deposits 39.2 41.2 59.8 56.8 551.7
Current assets total 125.0 129.4 141.3 145.0 634.0
TOTAL ASSETS 144.6 147.0 156.9 159.4 647.5
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent
Share capital 12.9 12.9 12.9 12.9 12.9
Invested non-restricted 26.0 26.0 26.0 25.9 25.9
equity fund
Translation difference 1.1 1.1 1.1 1.2 1.2
Retained earnings 89.1 88.0 97.7 97.5 589.3
Non-controlling interests
Total equity 129.1 128.0 137.7 137.6 629.3
Non-current liabilities
Deferred tax liabilities 0.1 0.1 0.1 0.1 0.1
Provisions 1.1 1.1 1.1 1.1 1.2
Interest-bearing liabilities 0.7 0.8 0.8 0.7 0.7
Other non-current 0.1 0.1 0.0
liabilities, non-interest
-bearing
Non-current liabilities total 2.0 2.1 2.0 2.0 2.0
Current liabilities
Trade and other payables 11.4 15.0 15.4 17.9 13.5
Financial liabilities at 0.0 0.0
fair value through profit or
loss
Provisions 1.3 1.1 1.0 1.2 2.0
Interest-bearing loans and 0.8 0.8 0.7 0.7 0.7
borrowings
Current liabilities total 13.5 16.9 17.1 19.8 16.2
Total liabilities 15.5 19.0 19.2 21.8 18.2
TOTAL EQUITY AND LIABILITIES 144.6 147.0 156.9 159.4 647.5
CONSOLIDATED STATEMENT 7-9/2016 4-6/2016 1-3/201 10-12/2015 7-9/2015
OF CASH FLOWS BY
QUARTER
3 months 3 months 3 months 3 months 3 months
Net cash from operating 1.0 -4.9 5.0 0.3 3.1
activities
Net cash from investing -2.6 -2.5 -1.5 -1.2 587.4
activities
Net cash from financing -0.2 -10.9 -0.2 -493.8 -14.9
activities
Net change in cash and -1.8 -18.3 3.2 -494.7 575.5
cash equivalents
FINANCIAL PERFORMANCE RELATED 1-9/2016 1-9/2015 1-12/2015
RATIOS
9 months 9 months 12 months
STATEMENT OF COMPREHENSIVE
INCOME (MEUR)
Net sales 45.2 41.6 56.8
Operating profit (loss) 1.6 1.5 2.3
Operating profit (loss), % of 3.5 3.6 4.1
net sales
Profit before taxes 2.1 1.2 2.1
Profit before taxes, % of net 4.5 2.9 3.7
sales
Profit for the period from 2.1 1.2 2.3
continuing operations
PROFITABILITY AND OTHER KEY
FIGURES
Interest-bearing net -104.4 -616.1 -121.4
liabilities, (MEUR)
Net gearing, -% -80.9 -97.9 -88.2
Equity ratio, % 90.1 97.9 90.5
Gross investments, (MEUR) 7.3 6.3 7.4
Average personnel during the 553 510 511
period, continuing operations
Personnel at the period end, 582 510 517
continuing operations
AMOUNT OF SHARE ISSUE Sep. 30, 2016 Sep. 30, 2015 Dec. 31, 2015
ADJUSTMENT (1,000 pcs)
At the end of period 35 693 132 818 35 600
Average for the period 35 662 132 121 114 983
Average for the period 132 322 115 037
diluted with stock
options
STOCK-RELATED FINANCIAL RATIOS 1-9/2016 1-9/2015 1-12/2015
(EUR)
9 months 9 months 12 months
Earnings per share from
continuing operations, EUR
Basic earnings per share 0.058 0.009 0.020
Diluted earnings per share 0.009 0.020
Earnings per share from
discontinued operations, EUR
Basic earnings per share 4.075 4.687
Diluted earnings per share 4.069 4.685
Earnings per share from
continuing and discontinued
operations, EUR
Basic earnings per share 0.058 4.084 4.708
Diluted earnings per share 4.078 4.706
Equity *) per share 3.62 4.74 3.86
*) Equity attributable to equity
holders of the parent
MARKET VALUES OF SHARES (EUR) 1-9/2016 1-9/2015 1-12/2015
9 months 9 months 12 months
Highest 7.40 5.30 7.80
Lowest 5.15 3.27 3.27
Average 6.09 4.52 4.92
At the end of period 6.79 5.02 7.01
Market value of the stock, (MEUR) 242.4 666.7 249.6
Trading value of shares, (MEUR) 102.6 281.0 837.1
Number of shares traded, (1,000 pcs) 16 837 62 218 169 993
Related to average number of shares % 47.2 47.1 147.8
SECURITIES AND Sept. 30, 2016 Sept. 30, 2015 Dec. 31, 2015
CONTINGENT LIABILITIES
(MEUR)
AGAINST OWN
LIABILITIES
Floating charges 3.0 3.0 3.0
Guarantees 3.7 3.6 3.7
Rental liabilities
Falling due in the 2.2 2.3 2.3
next year
Falling due after one 0.7 2.5 2.3
year
Other contractual
liabilities
Falling due in the 2.4 2.3 2.2
next year
Falling due after one 0.2 0.4 0.4
year
Mortgages are pledged 0.1 0.0 0.0
for liabilities
totaled
NOMINAL VALUE OF Sept. 30, 2016 Sept. 30, 2015 Dec. 31, 2015
CURRENCY DERIVATIVES
(MEUR)
Foreign exchange
forward contracts
Market value -0.0 0.0 0.1
Nominal value 3.0 0.0 2.5
Purchased currency
options
Market value 0.0
Nominal value 4.0
Sold currency options
Market value -0.1
Nominal value 8.0
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