2022-08-11 07:30:00 CEST

2022-08-11 07:30:17 CEST


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Teleste Oyj - Half Year financial report

Teleste corporation half year financial report 1 january to 30 june 2022: Strong demand continued, but the result declined due to component supply shortages


TELESTE CORPORATION   HALF YEAR FINANCIAL REPORT    11 AUGUST 2022 AT 8:30 EET

TELESTE CORPORATION HALF YEAR FINANCIAL REPORT 1 JANUARY TO 30 JUNE 2022

STRONG DEMAND CONTINUED, BUT THE RESULT DECLINED DUE TO COMPONENT SUPPLY
SHORTAGES

April-June 2022

- Net sales amounted to EUR 38.4 (35.8) million, an increase of 7.2%

- The adjusted operating result was EUR 0.3 (1.1) million, a decrease of 70.2%

- The operating result was EUR 0.2 (1.1) million, a decrease of 83.0%

- Adjusted earnings per share were EUR -0.07 (0.04), a decrease of 261.5%

- Earnings per share were EUR -0.08 (0.04), a decrease of 279.6%

- Cash flow from operations was EUR 4.1 (9.6) million, a decrease of 57.2%

- Orders received totalled EUR 46.8 (43.9) million, an increase of 6.7%

- The order backlog at period-end totalled EUR 139.1 (84.2) million, an increase
of 65.2%

January-June 2022

- Net sales amounted to EUR 76.3 (72.8) million, an increase of 4.8%

- The adjusted operating result was EUR 0.4 (2.6) million, a decrease of 83.3%

- The operating result was EUR 0.3 (5.8) million, a decrease of 95.0%

- Adjusted earnings per share were EUR -0.06 (0.07), a decrease of 186.0%

- Earnings per share were EUR -0.07 (0.25), a decrease of 128.8%

- Cash flow from operations was EUR -0.7 (12.2) million, a decrease of 105.3%

- Orders received totalled EUR 106.7 (79.9) million, an increase of 33.6%

Outlook for 2022

Teleste estimates that net sales in 2022 will reach the level of net sales of
2021 and that the adjusted operating result in 2022 will remain significantly
below the adjusted operating result of 2021. Net sales in 2021 were EUR 144.0
million, and the adjusted operating result was EUR 5.5 million.

Worsened component shortage, increasing costs and strengthened USD exchange rate
have a significant adverse effect on company's operations and results.

Comments by CEO Esa Harju:

“Orders received and net sales in the second quarter increased year-on-year, but
the adjusted operating result was significantly lower than in the comparison
period.

Our operating environment became even more challenging during the second
quarter, especially due to the effects of the component crisis. Our delivery
volumes and particularly the profitability of our operations have been affected
by the longer delivery times of materials and components, the logistics problems
in Asia, the increased uncertainty in the availability of components, delivery
changes requested by customers, and the still-rising prices of components. We
have managed to avoid production shutdowns partly through expensive broker
purchases and by significantly increasing our buffer stocks. High inflation is
also increasing all operating expenses.

Demand has remained strong in all of our operating areas in spite of the
challenging operating environment.

Investments in broadband networks are continuing at a good level in Europe, and
we received new orders from broadband network operators in several European
countries in various product groups. We are working continuously to pass the
increased material costs on to customer prices, but there is an inevitable delay
before the effects of these efforts become evident. In North America, Teleste's
next-generation amplifiers were successfully demonstrated at CableLabs DOCSIS ®
4.0 Extended Spectrum DOCSIS (ESD) technology event.

In video security and public transport information solutions, we received new
orders especially from rolling stock manufacturers. Many public transport
projects are fixed-price projects, as is typical of the industry, and as
material costs increase, this weakens the profitability of the business. All new
longer-term project agreements will include the option of adjusting prices when
costs increase. We are also in negotiations concerning amendments to the pricing
and terms of delivery of previously signed project agreements.

We lowered our financial guidance for the full year 2022 by issuing a release on
16 June with regard to net sales and, in particular, the adjusted operating
result. We expect volatility to continue in the markets, and we do not expect
the challenging supply chain situation to return to normal in the near future.
We have launched a number of measures to improve profitability. The measures are
focused particularly on improving delivery reliability and delivery volumes,
passing rising material costs to customer prices timely and with determination,
and adjusting project delivery costs and all fixed costs. The company has also
launched a programme to sharpen its strategy and improve profitability. With
these measures, we are laying the groundwork for the year 2023 and thereafter.

Our business has a strong foundation.  In spite of the difficult operating
environment, our order backlog and our focus on performance provide a robust
foundation for future success.”

Group Operations April-June 2022

+--------------------------------------+--------+--------+-------+
|Key figures                           |4-6/2022|4-6/2021|Change |
+--------------------------------------+--------+--------+-------+
|Net sales, EUR million                |38.4    |35.8    |7.2%   |
+--------------------------------------+--------+--------+-------+
|Adjusted EBIT, EUR million 1)         |0.3     |1.1     |-70.2% |
+--------------------------------------+--------+--------+-------+
|Adjusted EBIT, % 1)                   |0.9%    |3.2%    |       |
+--------------------------------------+--------+--------+-------+
|EBIT, EUR million                     |0.2     |1.1     |-83.0% |
+--------------------------------------+--------+--------+-------+
|EBIT, %                               |0.5%    |3.2%    |       |
+--------------------------------------+--------+--------+-------+
|Result for the period, EUR million    |-1.5    |0.8     |-288.4%|
+--------------------------------------+--------+--------+-------+
|Adjusted earnings per share, EUR 1)   |-0.07   |0.04    |-261.5%|
+--------------------------------------+--------+--------+-------+
|Earnings per share, EUR               |-0.08   |0.04    |-279.6%|
+--------------------------------------+--------+--------+-------+
|Cash flow from operations, EUR million|4.1     |9.6     |-57.2% |
+--------------------------------------+--------+--------+-------+
|Orders received, EUR million          |46.8    |43.9    |6.7%   |
+--------------------------------------+--------+--------+-------+
|Order backlog, EUR million            |139.1   |84.2    |65.2%  |
+--------------------------------------+--------+--------+-------+

1) An alternative performance measure defined in the tables section of the
report.

Orders received by the Group in the second quarter totalled EUR 46.8 (43.9)
million, representing a year-on-year increase of 6.7%. Orders received increased
for access network products. The order backlog grew by 65.2% to a record-high
level of EUR 139.1 million. Net sales increased by 7.2% to EUR 38.4 (35.8)
million. Net sales increased in public transport information solutions, video
security solutions and access network products.

Material costs and expenses for manufacturing services came to EUR 20.0 (16.4)
million, an increase of 22.2%. Personnel expenses amounted to EUR 11.4 (12.2)
million, a decrease of 7.0%. The decrease in personnel expenses was attributable
to performance-based bonuses, which were not paid for January-June 2022. Other
operating expenses amounted to EUR 5.1 (4.6) million, an increase of 10.4%.
Depreciation amounted to EUR 1.9 (1.8) million, an increase of 5.0%. The
adjusted operating result decreased by 70.2% to EUR 0.3 (1.1) million,
representing 0.9% (3.2%) of net sales. The operating result was EUR 0.2 (1.1)
million, down by 83.0%. The operating result decreased due to higher material
expenses and other operating expenses. Net financial income totalled EUR 0.1 (
-0.1) million. Net tax items of EUR 1.7 million related to a tax reassessment
decision received in Belgium weighed down on the result for the period. The
company has petitioned for the tax reassessment decision to be rescinded. The
settlement procedure concerning the appeal is expected to begin later this year.
The result for the period came to EUR -1.5 (0.8) million. Adjusted earnings per
share were EUR -0.07 (0.04) and earnings per share were EUR -0.08 (0.04).

Cash flow from operations was EUR 4.1 (9.6) million. Cash flow from operations
declined due to the operating result. Cash flow from operations was
exceptionally high in the comparison period due to working capital released from
inventories and trade receivables, as well as advance payments invoiced for
project deliveries.

R&D expenses amounted to EUR 4.3 (3.6) million, representing 11.3% (10.1%) of
consolidated net sales. Product development projects focused on distributed
access architecture and next-generation amplifiers, including solutions designed
for the US market, situational awareness and video security solutions, passenger
information systems and customer-specific projects. Capitalised R&D expenses
amounted to EUR 2.2 (1.2) million. Depreciation on capitalised R&D expenses was
EUR 1.1 (0.9) million.

Group Operations, January-June 2022

+--------------------------------------+--------+--------+-------+---------+
|Key figures                           |1-6/2022|1-6/2021|Change |1-12/2021|
+--------------------------------------+--------+--------+-------+---------+
|Net sales, EUR million                |76.3    |72.8    |4.8%   |144.0    |
+--------------------------------------+--------+--------+-------+---------+
|Adjusted EBIT, EUR million 1)         |0.4     |2.6     |-83.3% |5.5      |
+--------------------------------------+--------+--------+-------+---------+
|Adjusted EBIT, % 1)                   |0.6%    |3.6%    |       |3.8%     |
+--------------------------------------+--------+--------+-------+---------+
|EBIT, EUR million                     |0.3     |5.8     |-95.0% |8.7      |
+--------------------------------------+--------+--------+-------+---------+
|EBIT, %                               |0.4%    |8.0%    |       |6.1%     |
+--------------------------------------+--------+--------+-------+---------+
|Result for the period, EUR million    |-1.4    |4.5     |-131.2%|6.9      |
+--------------------------------------+--------+--------+-------+---------+
|Adjusted earnings per share, EUR 1)   |-0.06   |0.07    |-186.0%|0.21     |
+--------------------------------------+--------+--------+-------+---------+
|Earnings per share, EUR               |-0.07   |0.25    |-128.8%|0.39     |
+--------------------------------------+--------+--------+-------+---------+
|Cash flow from operations, EUR million|-0.7    |12.2    |-105.3%|13.5     |
+--------------------------------------+--------+--------+-------+---------+
|Net gearing, %                        |38.8%   |13.9%   |       |20.2%    |
+--------------------------------------+--------+--------+-------+---------+
|Equity ratio, %                       |46.2%   |51.0%   |       |53.3%    |
+--------------------------------------+--------+--------+-------+---------+
|Orders received, EUR million          |106.7   |79.9    |33.6%  |175.5    |
+--------------------------------------+--------+--------+-------+---------+
|Order backlog, EUR million            |139.1   |84.2    |65.2%  |108.6    |
+--------------------------------------+--------+--------+-------+---------+
|Personnel at period-end               |897     |884     |1.5%   |847      |
+--------------------------------------+--------+--------+-------+---------+

1) An alternative performance measure defined in the tables section of the
report.

Orders received by the Group increased by 33.6% to EUR 106.7 (79.9) million.
Orders received increased in access network products, public transport
information solutions and video security solutions. Net sales increased by 4.8%
to EUR 76.3 (72.8) million. Net sales increased in public transport information
solutions and video security solutions.

Material costs and expenses for manufacturing services increased by 12.5% to EUR
38.6 (34.3) million. Personnel expenses amounted to EUR 23.6 (24.3) million, a
decrease of 2.9%. Other operating expenses totalled EUR 10.5 (8.8) million, an
increase of 19.2%. Depreciation amounted to EUR 3.6 (3.5) million, an increase
of 4.0%. The adjusted operating result was EUR 0.4 (2.6) million, a decrease of
83.3%. The adjusted operating result represented 0.6% (3.6%) of net sales. The
operating result was EUR 0.3 (5.8) million, or 0.4% (8.0%) of net sales. The
operating result for the comparison period included non-recurring insurance
compensation in the amount of EUR 3.2 million. Net financial income came to EUR
0.1 (0.1) million, and the Group's direct taxes amounted to EUR 1.8 (1.4)
million. Net tax items of EUR 1.7 million related to a tax reassessment decision
received in Belgium weighed down on the result for the period. The company has
petitioned for the tax reassessment decision to be rescinded. The settlement
procedure concerning the appeal is expected to begin later this year. The result
for the period came to EUR -1.4 (4.5) million. Adjusted earnings per share were
EUR -0.06 (0.07). Earnings per share were EUR -0.07 (0.25).

Cash flow from operations was EUR -0.7 (12.2) million. Cash flow from operations
declined due to the operating result and changes in working capital. Net working
capital increased by EUR 5.2 million due to forward-looking material purchases
and trade receivables. In the comparison period, EUR 4.8 million in net working
capital was released, and the cash flow from operations in the comparison period
included non-recurring insurance compensation in the amount of EUR 3.2 million.

R&D expenses amounted to EUR 8.2 (7.1) million, representing 10.7% (9.8%) of
consolidated net sales. Capitalised R&D expenses amounted to EUR 3.6 (2.4)
million. Depreciation on capitalised R&D expenses was EUR 2.1 (1.9) million.

Personnel and organisation January-June 2022

The Group employed 867 (865) people on average during the period under review.
At the end of the review period, the Group employed 897 (884) people, of whom
43% (45%) worked abroad. Approximately 3% (3%) of the Group's employees were
working outside Europe.

Personnel expenses amounted to EUR 23.6 (24.3) million, a decrease of 2.9%. The
decrease in personnel expenses was attributable to performance-based bonuses,
which were not paid for January-June 2022.

Investments and product development January-June 2022

Investments by the Group totalled EUR 7.8 (4.8) million, representing 10.3%
(6.7%) of net sales. Investments in product development amounted to EUR 3.6
(2.4) million, and other investments totalled EUR 4.3 (2.4) million. The other
investments include EUR 1.9 million related to the expansion of the production
facility in Littoinen, Finland, and new and extended lease agreements
capitalised in accordance with IFRS 16, totalling EUR 1.4 million.

Product development projects focused on distributed access architecture and next
-generation amplifiers (including solutions designed for the US market),
situational awareness and video security solutions, public transport information
solutions and customer-specific projects.

Financing and capital structure January-June 2022

The company signed new financing agreements on 29 March 2022. The new financing
agreements include a bank loan of EUR 20.0 million and a binding credit facility
of EUR 15.0 million. The bank loan of EUR 20.0 million will fall due in March
2026 and includes a one-year extension option. The loan will be amortised twice
a year in instalments of EUR 1.25 million. The credit facility of EUR 15.0
million will run until the end of March 2025. The old financing agreements
include a loan of EUR 3.75 million, which is amortised twice a year in
instalments of EUR 0.75 million until August 2024.

At the end of the period under review, the amount of unused binding credit
facilities was EUR 10.2 (20.0) million.

At the end of the period, the Group's interest-bearing debt stood at EUR 34.6
(31.2) million. The Group's equity ratio was 46.2% (51.0%), and the net gearing
ratio was 38.8% (13.9%).

Key risks related to business operations

The most significant changes to the risks presented in the Report of the Board
of Directors and the financial statements for 2021 are related to the worsening
shortage of components and materials, the war started by Russia in Ukraine, the
pandemic situation and shutdowns in China, general geopolitical instability and
accelerating inflation.

At the end of February, the company decided to suspend deliveries to Russia and
Belarus. While the direct impacts of the war in Ukraine on Teleste's business
have thus far been limited, the war will have a significant impact on the
availability of certain materials, logistics costs and the delivery times of
materials. The pandemic situation in China may lead to further closures of
component manufacturers' factories and cargo ports. In addition, the elevated
geopolitical tensions between China and Taiwan may lead to new supply chain
disruptions. Accelerating inflation increases operating costs across the board.

Shortages of materials and components caused delays in deliveries and additional
expenses during the first half of the year. The problems associated with the
availability of materials are expected to remain significant, leading to
delivery risks in spite of the forward-looking purchasing of materials for the
company's inventory. Disruptions in the availability of materials and higher
purchasing prices have increased inventories and the risk of write-downs of
inventories. The increase in working capital has reduced the financial reserves
available to the company. The rise in purchasing prices is expected to continue
during the rest of the year. The duration of the problems associated with the
availability of materials is very difficult to estimate.

Some project deliveries involve delays in deliveries, which may lead to
contractual penalties or credit losses. The company negotiates the effects of
contractual terms concerning delays in project deliveries separately for each
project.

Teleste's Belgian subsidiary has received a tax reassessment decision for the
tax year 2019, and the company has appealed the decision. The company has
recognised the tax effect of the tax reassessment decision, totalling EUR 1.7
million, in its result for the second quarter. If the appeal is not approved,
the tax reassessment decision would lead to a tax payment of EUR 2.1 million,
which would affect the company's cash flow at the time of payment.

The Board of Directors annually reviews essential business risks and their
management. Risk management constitutes an integral part of the strategic and
operational activities of the business areas. Risks are reported to the Audit
Committee and the Board of Directors on a regular basis.

Aside from the tax reassessment decision issued in Belgium, there were no other
legal proceedings or judicial procedures pending during the period under review
that would have had any essential significance for the Group's operations.

Group structure

The parent company has a branch office in the Netherlands and subsidiaries in 14
countries outside Finland. Teleste Information Solutions Oy acquired the Italian
technology company Ermetris S.r.l. in January. Ermetris strengthens Teleste's
position as a supplier in the Italian market.

Shares and changes in share capital

Pursuant to the authorisation issued by the Annual General Meeting, Teleste
Corporation's Board of Directors decided, on 9 March 2022, on a directed share
issue without consideration, relating to the reward payment for the performance
period 2019-2021 of Teleste Group's share-based incentive plan 2018. In the
share issue, 10,512 Teleste Corporation shares held by the company were conveyed
without consideration to the key employees participating in the share-based
incentive plan, in accordance with the terms and conditions of the plan on 18
March 2022.

On 30 June 2022, Tianta Oy was the largest single shareholder, with a holding of
25.1% (25.0%).

In the period under review, the lowest price of the company's share was EUR 3.75
(4.47) and the highest price was EUR 5.76 (6.66). The closing price on 30 June
2022 was EUR 3.80 (6.22). According to Euroclear Finland Ltd, the number of
shareholders at the end of the period under review was 5,387 (5,744). Foreign
and nominee-registered holdings accounted for 4.4% (4.3%) of the share capital.
The value of Teleste shares traded on Nasdaq Helsinki from 1 January to 30 June
2022 was EUR 4.2 (9.8) million. In the period under review, 0.9 (1.8) million
Teleste shares were traded on the stock exchange.

At the end of June, the Group held 757,682 (768,194) of its own shares, all held
by the parent company Teleste Corporation. At the end of the review period, the
Group's holding of the total number of shares amounted to 4.0% (4.0%).

On 30 June 2022, the company's registered share capital stood at EUR
6,966,932.80, divided into 18,985,588 shares.

Valid authorisations at the end of the review period:

-The Board of Directors may acquire 1,200,000 of the company's own shares
otherwise than in proportion to the holdings of the shareholders with
unrestricted equity through trading on the regulated market organised by Nasdaq
Helsinki at the market price of the time of the purchase.

-The Board of Directors may decide on issuing new shares and/or transferring the
company's own shares held by the company, so that the maximum total number of
shares issued and/or transferred is 2,000,000.

- The total number of new shares to be subscribed for under the special rights
granted by the company and the company's own shares held by the company to be
transferred may not exceed 1,000,000 shares, which number is included in the
above maximum number concerning new shares and the Group's own shares held by
the company.

-These authorisations are valid until 5 October 2023.

Decisions by the Annual General Meeting

The Annual General Meeting (AGM) of Teleste Corporation held on 6 April 2022
adopted the financial statements and consolidated financial statements for 2021
and discharged the members of the Board of Directors and the CEO from liability
for the financial period 2021. In accordance with the proposal of the Board of
Directors, the AGM resolved that, based on the adopted balance sheet, a dividend
of EUR 0.14 per share be paid for the financial period that ended on 31 December
2021 for shares other than those held by the Company. The dividend record date
was 8 April 2022, and the dividend was paid out on 19 April 2022.

The AGM decided that the Board of Directors shall consist of six members. Jussi
Himanen, Vesa Korpimies, Mirel Leino-Haltia, Timo Luukkainen, Heikki Mäkijärvi
and Kai Telanne were elected as members of Teleste Corporation's Board of
Directors. In its organisational meeting held after the AGM on 6 April 2022, the
Board of Directors elected Timo Luukkainen as its Chairman. Mirel Leino-Haltia
was elected Chair of the Audit Committee, with Jussi Himanen and Vesa Korpimies
as members.

It was decided that the annual remuneration of the members of the Board of
Directors will remain unchanged: EUR 66,000 per year for the chairman and EUR
33,000 per year for each member. The annual remuneration of the Board member who
acts as the Chair of the Audit Committee is to be EUR 49,000 per year. Of the
annual remuneration to be paid to the Board members, 40% of the total gross
remuneration amount will be used to purchase Teleste Corporation's shares for
the Board members through trading on a regulated market organised by Nasdaq
Helsinki Ltd, and the rest will be paid in cash. However, a separate meeting fee
shall not be paid to the members of the Board of Directors nor to the Chair of
the Audit Committee. The members of the Board's Audit Committee are paid a
meeting fee of EUR 400 for the meetings of the Audit Committee they attend.

The AGM decided to choose one auditor for Teleste Corporation. The audit firm
PricewaterhouseCoopers Oy was chosen as the company's auditor. The audit firm
appointed Markku Launis, APA, as the auditor in charge. It was decided that the
auditor's fees will be paid according to the invoice approved by the Company.

The AGM approved the company's Remuneration Report for 2021.

The AGM decided to authorise the Board of Directors to decide on the purchase of
the company's own shares in accordance with the proposal of the Board. According
to the authorisation, the Board of Directors may acquire 1,200,000 of the
company's own shares otherwise than in proportion to the holdings of the
shareholders with unrestricted equity through trading on regulated market
organised by Nasdaq Helsinki Ltd at the market price of the time of the
purchase.

The AGM decided to authorise the Board of Directors to decide on issuing new
shares and/or transferring the company's own shares held by the company and/or
granting special rights referred to in Chapter 10, Section 1 of the Limited
Liability Companies Act, in accordance with the Board's proposal.

The new shares may be issued and the company's own shares held by the company
may be conveyed either against payment or for free. New shares may be issued and
the company's own shares held by the company may be conveyed to the company's
shareholders in proportion to their current shareholdings in the company, or by
waiving the shareholder's pre-emption right, through a directed share issue if
the company has a weighty financial reason to do so. The new shares may also be
issued in a free share issue to the company itself.

Under the authorisation, the Board of Directors has the right to decide on
issuances of new shares and/or transferring the company's own shares held by the
company, so that the maximum total number of shares issued and/or transferred is
2,000,000.

The total number of new shares to be subscribed for under the special rights
granted by the company and the company's own shares held by the company to be
transferred may not exceed 1,000,000 shares, which number is included in the
above maximum number concerning new shares and the Group's own shares held by
the company.

The authorisations decided on by the AGM are valid for eighteen (18) months from
the resolution of the AGM. The authorisations override any previous
authorisations to decide on issuances of new shares and on granting stock option
rights or other special rights entitling to shares.

Operating environment in 2022

The demand for broadband services by broadband network operators continues to
grow. Broadband traffic has increased sharply during the COVID-19 pandemic due
to the growth of teleworking and online education and the higher consumption of
streaming services. It is presumed that part of the growth created by the
pandemic will remain a permanent phenomenon, which will maintain network
investments when the restrictions imposed due to the pandemic are lifted.
European cable operators have been able to respond competitively to the
increasing demand by investing in DOCSIS 3.1 standard-compliant 1.2 GHz
frequency range network upgrades during the past few years. Investments in HFC
network infrastructure are continuing.

We expect next-generation access network upgrades to expand in Europe in 2022.
DOCSIS 3.1-compliant distributed architecture product ranges and the integration
and testing activities by the most advanced operators have progressed to a point
where network upgrades can increasingly be implemented using these solutions.

The cable network industry has also created a roadmap pertaining to the next
-generation DOCSIS 4.0 standard. This next generation of technology will enable
households to access broadband connections with speeds up to 10 gigabytes using
existing coaxial cabling. DOCSIS 4.0 enables the competitiveness of the cable
network infrastructure compared to optical fibre for years to come. We presume
that North American operators, in particular, will invest heavily when DOCSIS
4.0 products enter the market starting from 2023, while European operators will
partially switch to fibre investments to maintain their lead over other fixed
network competitors.

Product development projects for Teleste's 1.8 GHz DOCSIS 4.0-compliant network
products are under way. The deployment of passive products can begin in 2022,
with the readiness to start amplifier upgrades to follow thereafter in 2023.

Growing urban environments and their safety, the increase of environmentally
friendly public transport services, and the increasing popularity of smart
digital systems for a smoother life provide a foundation for growing business in
video security and public transport information systems in the coming years.

Public transport operators and other authorities must ensure smooth operation of
services and infrastructure, as well as the safety of people. Public transport
information systems are continuously developing to be increasingly smart and
real-time. The intelligence of video security solutions is increasing, and
demand has emerged in the market for comprehensive situational awareness systems
that include management of other sensor-level data flows in addition to video
images, and automated operating processes in exceptional situations.

The development of the market for public transport information systems was
adversely affected in 2021 not only by the pandemic but also by the global
problems associated with the availability of components and materials. However,
the market is expected to return to growth in 2022, provided that growth is not
restricted by issues related to the availability of components and materials.
Ensuring competitiveness requires Teleste to continuously make R&D investments
in new intelligent solutions, and the share of software systems in these
solutions will continue to grow. Improving project management and operational
efficiency in business is essential. Component availability problems and the
pricing terms of new agreements will require special attention in 2022.

Outlook for 2022

Teleste estimates that net sales in 2022 will reach the level of net sales of
2021 and that the adjusted operating result in 2022 will remain significantly
below the adjusted operating result of 2021. Net sales in 2021 were EUR 144.0
million, and the adjusted operating result was EUR 5.5 million.

Worsened component shortage, increasing costs and strengthened USD exchange rate
have a significant adverse effect on company's operations and results.

10 August 2022

Teleste CorporationEsa Harju

Board of DirectorsPresident and CEO

This half year financial 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 report applying the
same accounting principles, as those described in detail in the consolidated
financial statements except for the adoption of new standards and amendments
effective as of January 1, 2022. The data stated in this report is unaudited.

STATEMENT OF              4-6/202  4-6/202  Change %  1-12/2021
COMPREHENSIVE             2        1
INCOME (tEUR)

Net Sales                 38,358   35,782   7.2 %     143,966
  Other operating income  186      365      -49.2 %   5,209
  Materials and services  -20,013  -16,384  22.2 %    -67,672

  Personnel expenses      -11,371  -12,233  -7.0 %    -46,825

  Depreciation            -1,852   -1,764   5.0 %     -7,566
  Other operating         -5,115   -4,632   10.4 %    -18,399
  expenses
Operating                 193      1,135    -83.0 %   8,714
profit

  Financial income        428      243      75.9 %    1,091
  Financial expenses      -368     -295     24.9 %    -767
Profit after              252      1,083    -76.7 %   9,037
financial
items

Profit before             252      1,083    -76.7 %   9,037
taxes

  Taxes                   -1,755   -286     514.3 %   -2,107

Net profit                -1,503   798      -288.4 %  6,930

Attributable
to:
  Equity holders of the   -1,444   804      -279.7 %  7,089
  parent
  Non-controlling         -58      -6       n/a       -159
  interests
                          -1,503   798      -288.4 %  6,930

Earnings per
share for
result of the
year
attributable
to the equity
holders of
the parent
(expressed in
euro per
share)
  Basic                   -0.08    0.04     -279.6 %  0.39
  Diluted                 -0.08    0.04     -279.7 %  0.39

Total
comprehensive
income for
the period
(tEUR)
Net profit                -1,503   798      -288.4 %  6,930
Possible
items with
future net
profit effect
Translation               -425     225      -289.0 %  620
differences
Cash flow                 672      0        n/a       1
hedges
Total                     -1,255   1,022    -222.8 %  7,552
comprehensive
income for
the period

Attributable
to:
  Equity holders of the   -1,206   1,032    -216.8 %  7,691
  parent
  Non-controlling         -50      -10      n/a       -140
  interests
                          -1,255   1,022    -222.8 %  7,552

Statement of              1-6/202  1-6/202  Change %  1-12/2021
comprehensive             2        1
income

Net Sales                 76,321   72,792   4.8 %     143,966
  Other operating income  279      3,955    -92.9 %   5,209
  Materials and services  -38,563  -34,289  12.5 %    -67,672

  Personnel expenses      -23,604  -24,321  -2.9 %    -46,825

  Depreciation            -3,644   -3,503   4.0 %     -7,566
  Other operating         -10,497  -8,804   19.2 %    -18,399
  expenses
Operating                 293      5,830    -95.0 %   8,714
profit

  Financial income        624      559      11.6 %    1,091
  Financial expenses      -536     -493     8.9 %     -767
Profit after              381      5,897    -93.5 %   9,037
financial
items

Profit before             381      5,897    -93.5 %   9,037
taxes

  Taxes                   -1,779   -1,423   25.1 %    -2,107

Net profit                -1,398   4,474    -131.2 %  6,930

Attributable
to:
  Equity holders of the   -1,316   4,560    -128.9 %  7,089
  parent
  Non-controlling         -82      -86      n/a       -159
  interests
                          -1,398   4,474    -131.2 %  6,930

Earnings per
share for
result of the
year
attributable
to the equity
holders of
the parent
(expressed in
euro per
share)
  Basic                   -0.07    0.25     -128.8 %  0.39
  Diluted                 -0.07    0.25     -128.8 %  0.39

Total
comprehensive
income for
the period
(tEUR)
Net profit                -1,398   4,474    -131.2 %  6,930
Possible
items with
future net
profit effect
Translation               -492     415      -218.5 %  620
differences
Cash flow                 929      0        n/a       1
hedges
Total                     -961     4,889    -119.7 %  7,552
comprehensive
income for
the period

Attributable
to:
  Equity holders of the   -891     4,966    -117.9 %  7,691
  parent
  Non-controlling         -70      -76      n/a       -140
  interests
                          -961     4,889    -119.7 %  7,552

STATEMENT OF            30.6.2022  30.6.2021  Change  31.12.2021
FINANCIAL                                     %
POSITION
(tEUR)

Non-current
assets
  Intangible assets     15,705     13,178     19.2 %  14,047
  Goodwill              30,802     30,642     0.5 %   30,707
  Property, plant,      13,722     10,145     35.3 %  11,284
  equipment
  Other non-current     458        749        -38.9   458
  financial assets                            %
  Deferred tax asset    2,716      1,797      51.2 %  1,700
                        63,403     56,511     12.2 %  58,195
Current
assets
  Inventories           35,983     25,720     39.9 %  29,177
  Trade and other       37,703     30,090     25.3 %  33,493
  receivables
  Tax Receivable,       350        350        -0.1 %  259
  income tax
  Cash and cash         9,137      21,987     -58.4   14,100
  equivalents                                 %
                        83,174     78,147     6.4 %   77,029

Total assets            146,577    134,658    8.9 %   135,224

Shareholder's
equity and
liabilities
  Share capital         6,967      6,967      0.0 %   6,967
  Other equity          58,648     58,802     -0.3 %  61,843
  Owners of the parent  65,615     65,769     -0.2 %  68,809
  company
  Non-controlling       110        244        -54.8   180
  interests                                   %
  EQUITY                65,725     66,013     -0.4 %  68,990

Non-current
liabilities
  Deferred tax          2,480      1,790      38.5 %  1,988
  liability
  Non-current           28,647     25,092     14.2 %  6,856
  liabilities,
  interest-bearing
  Non-current interest  190        781        -75.7   737
  -free liabilities                           %
  Non-current           400        392        1.9 %   370
  provisions
                        31,716     28,055     13.0 %  9,951
Current
liabilities
  Current interest      5,989      6,061      -1.2 %  21,193
  -bearing liabilities
  Trade Payables and    35,149     27,567     27.5 %  27,415
  Other Liabilities
  Advances received     4,191      5,289      -20.7   5,844
                                              %
  Tax liability,        728        661        10.2 %  868
  income tax
  Current provisions    3,078      1,012      204.0   962
                                              %
                        49,136     40,590     21.1 %  56,283

Total                   146,577    134,658    8.9 %   135,224
shareholder's
equity and
liabilities

CONSOLIDATED                 1-6/2022  1-6/202  Change %  1-12/2021
CASH FLOW                              1
STATEMENT
(tEUR)
Cash flows
from
operating
activities
  Profit for the period      -1,398    4,474    -131.2 %  6,930
  Adjustments to cash flow   658       4,495    -85.4 %   7,567
  from operating activities
  Other finance items        854       -145     -687.4 %  164
  Paid interest and other    -209      -882     -76.3 %   -300
  finance expenses
  Received interests and     61        4,298    -98.6 %   76
  dividend payments
  Paid Taxes                 -621      0        n/a       -935
Cash flow                    -654      12,241   -105.3 %  13,502
from
operating
activities
Cash flow
from
investing
activities
  Purchase of tangible and   -5,714    -2,643   116.2 %   -6,988
  intangible assets
  Proceeds from sales of     31        39       -21.7 %   85
  PPE
  Divestment of              0         -3,749   -100.0 %  -3,749
  subsidiaries, net of cash
  acquired
  Acquisition of             -889      0        0.0 %     0
  subsidiaries, net of cash
  acquired
  Purchase of investments    0         0        n/a       -142
Net cash                     -6,573    -6,353   n/a       -10,795
used in
investing
activities
Cash flow
from
financing
activities
  Proceeds from borrowings   25,042    0        n/a       0
  Payments of borrowings     -19,337   -750     2478.3 %  -4,500
  Payment of leasing         -1,015    -1,067   -4.9 %    -2,120
  liabilities
  Dividends paid             -2,552    -2,330   9.5 %     -2,321
Net cash                     2,139     -4,147   n/a       -8,942
used in
financing
activities

Change in
cash
  Cash in the beginning      14,100    20,225   -30.3 %   20,224
  Effect of currency         127       22       485.4 %   109
  changes
  Change                     -5,089    1,741    -392.3 %  -6,234
  Cash at the end            9,137     21,987   -58.4 %   14,100

KEY FIGURES                  1-6/2022  1-6/202  Change %  1-12/2021
                                       1
  Operating profit           293       5,830    -95.0 %   8,714
  Earnings per share, EUR    -0.07     0.25     -128.8 %  0.39
  Earnings per share fully   -0.07     0.25     -128.8 %  0.39
  diluted, EUR
  Shareholders' equity per   3.46      3.48     -0.4 %    3.79
  share, EUR

  Return on equity           -4.2 %    13.9 %   -129.9 %  10.5 %
  Return on investment       1.7 %     13.3 %   -87.4 %   10.2 %
  Equity ratio               46.2 %    51.0 %   -9.5 %    53.3 %
  Net gearing                38.8 %    13.9 %   179.2 %   20.2 %

  Investments, tEUR          7,840     4,847    61.8 %    11,063
  Investments % of net       10.3 %    6.7 %    54.3 %    7.7 %
  sales
  Order backlog, tEUR        139,054   84,196   65.2 %    108,635
  Personnel, average         867       865      0.3 %     863

  Number of shares           18,986    18,986   0.0 %     18,986
  (thousands)
    including own shares
  Highest share price, EUR   5.76      6.66     -13.5 %   6.66
  Lowest share price, EUR    3.75      4.47     -16.1 %   4.47
  Average share price, EUR   4.85      5.46     -11.2 %   5.46

  Turnover, in million       0.9       1.8      -52.2 %   2.5
  shares
  Turnover, in MEUR          4.2       9.8      -57.6 %   13.8

ALTERNATIVE   4-6/202  4-6/202  Change  1-6/202  1-6/202  Change  1-12/2021
PERFORMANCE   2        1        %       2        1        %
MEASURES
Adjusted      339      1,135    -70.2   439      2,630    -83.3   5,514
operating                       %                         %
profit
Adjusted      -0.07    0.04     -261.5  -0.06    0.07     -186.0  0.21
earning                         %                         %
per share,
EUR

BRIDGE OF
CALCULATION
Operating     193      1,135    -83.0   293      5,830    -95.0   8,714
profit                          %                         %
Strategic     146      0        n/a     146      0        n/a     0
development
projects
Other non     0        0        n/a     0        -3,200   -100.0  -3,200
-recurring                                                %
items
Adjusted      339      1,135    -70.2   439      2,630    -83.3   5,514
operating                       %                         %
profit

Net           -1,444   804      -279.7  -1,316   4,560    -128.9  7,089
profit/loss                     %                         %
to
equity
holder
Outstanding   18,221   18,217   0.0 %   18,224   18,215   0.1 %   18,216
shares
during the
quarter
Earnings per  -0.08    0.04     -279.6  -0.07    0.25     -128.8  0.39
share, basic                    %                         %

Net           -1,444   804      -279.7  -1,316   4,560    -128.9  7,089
profit/loss                     %                         %
to
equity
holder
Strategic     146      0        n/a     146      0        n/a     0
development
projects
Other non     0        0        n/a     0        -3,200   -100.0  -3,200
-recurring                                                %
items
Outstanding   18,221   18,217   0.0 %   18,224   18,215   0.1 %   18,216
shares
during the
quarter
Adjusted      -0.07    0.04     -261.5  -0.06    0.07     -186.0  0.21
earnings                        %                         %
per share,
EUR

Treasury
shares
                           Number                % of    % of
                           of shares             shares  votes

  Possession of company's  757,682               3.99 %  3.99 %
  own shares 30.6.2022

Contingent                 30.6.2022  30.6.2021  Change  31.12.2021
liabilities                                      %
and pledged
assets
(tEUR)

Leasing and                922        927        -0.5 %  951
rent
liabilities

Derivative
instruments
(tEUR)
  Value of underlying      25,502     20,317     25.5 %  18,128
  forward contracts
  Market value of forward  932        211        342.6   360
  contracts                                      %
  Interest rate swap       15,000     0          n/a     0
  Market value of          309        0          n/a     0
  interest swap

Net sales                  1-6/2022   1-6/2021   Change  1-12/2021
by category                                      %
  Goods                    64,773     60,740     6.6 %   120,220
  Service                  11,548     12,052     -4.2 %  23,746
  Total                    76,321     72,792     4.8 %   143,966

                           30.6.2022  30.6.2021  Change  31.12.2021
                                                 %
Order                      139,054    84,196     65.2 %  108,635
backlog,
tEUR

Information  4-6/22  1-3/22  10      7-9/21  4-6/21  7/2021
per quarter                  -12/21                  -6/2022
(tEUR)

  Orders     46,804  59,936  51,480  44,137  43,861  202,357
  received
  Net sales  38,358  37,964  38,858  32,316  35,782  147,495
  EBIT       193     100     603     2,280   1,135   3,176
  EBIT%      0.5 %   0.3 %   1.6 %   7.1 %   3.2 %   2.2 %

Consolidated
statement of
changes
in
equity,1000
euros
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              Owners of
               the parent
               company
H              Non
               -controlling
               interests
I              Total
               equity
               A      B      C       D       E      F    G       H    I
Shareholder's  6,967  1,504  -1,392  58,588  3,140  2    68,809  180  68,990
equity
1.1.2022
Net result                           -1,316              -1,316  -82  -1,398
Other                        -236    -268           929  425     12   437
compherensive
items for the
period
Dividend                             -2,552              -2,552       -2,552
Equity                               248                 248          248
-settled
share
-based
payments
Shareholder's  6,967  1,504  -1,628  54,701  3,140  931  65,615  110  65,725
equity
30.6.2022

Shareholder's  6,967  1,504  -1,557  52,716  3,140  0    62,770  319  63,090
equity
1.1.2021
Net result                           4,560               4,560   -86  4,474
Other                        83      323                 406     9    415
compherensive
items for the
period
Dividend                             -2,186              -2,186       -2,186
Equity                               220                 220          220
-settled
share
-based
payments
Shareholder's  6,967  1,504  -1,474  55,633  3,140  0    65,770  243  66,013
equity
30.6.2021

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

ALTERNATIVE  PERFORMANCE MEASURES

Effective from the beginning of 2019. Teleste has started to report non-IFRS
alternative performance measures. The calculation of the alternative performance
measures does not take into account income or expense items affecting
comparability that are non-recurring or infrequently occurring and not part of
the ordinary course of business. The purpose of presenting the alternative
performance measures is to improve comparability, and they do not replace the
performance measures and key figures presented in accordance with IFRS. The
alternative performance measures reported by the Group are adjusted operating
result and adjusted earnings per share. Adjusted operating result and adjusted
earnings per share exclude material items affecting comparability that are not
part of the ordinary course of business. The adjusted items are recognised in
the income statement within the corresponding income or expense group.

Adjusted      Operating profit is adjusted with items
operating     which are non-recurring or infrequently.
profit
Adjusted      Adjusted Profit for the period
earnings per  attributable to equity holder of the
share:        parent
              ----------------------------------------
              ------
              Weighted average number of ordinary
              shares outstanding during the period

Major shareholders, as sorted by number of shares - June 30, 2022

                                            Number of shares  % of shares
Tianta Oy                                   4,768,298         25.1
Mandatum Life Insurance Company Limited     1,683,900         8.9
Ilmarinen Mutual Pension Insurance Company  899,475           4.7
Kaleva Mutual Insurance Company             824,641           4.3
Teleste Oyj                                 757,682           4.0
Mariatorp Oy                                750,000           4.0
Wipunen Varainhallinta Oy                   700,000           3.7
Varma Mutual Pension Insurance Company      521,150           2.7
The State Pension Fund                      500,000           2.6
OP-Finland Small Firms Fund                 240,408           1.3

Shareholders by   Nbr. of shareholders  % of Owners  Shares      % of shares
sector
June 30, 2022
Households        5,084                 94.4         4,834,405   25.5
Public sector     3                     0.1          1,920,625   10.1
institutions
Financial and     17                    0.3          3,450,673   18.2
insurance
institutions
Corporations      231                   4.3          8,487,787   44.7
Non-profit        21                    0.4          44,223      0.2
institutions
Foreign           31                    0.6          247,875     1.3

Total             5,387                 100.00       18,985,588  100.0
Of which nominee  9                     0.2          581,159     3.1
registered

Major
shareholders
by
distribution
of shares
June 30, 2022

Number of      Nbr. of       % of shareholders  Nbr. of shares  % of shares
shares         shareholders
1-100          1,626         30.2               85,829          0.5
101-500        2,155         40.0               565,962         3.0
501-1,000      704           13.1               570,076         3.0
1,001-5,000    698           13.0               1,532,237       8.1
5,001-10,000   97            1.8                677,185         3.6
10,001-50,000  79            1.5                1,615,743       8.5
50,001         8             0.1                503,202         2.7
-100,000
100,001        12            0.2                2,530,208       13.3
-500,000
500,001-&      8             0.1                10,905,146      57.4
above

Total          5,389         100.0              18,985,588      100.0
of which       9             0.2                576,926         3.0
nominee
registered

ADDITIONAL INFORMATION:
CEO Esa Harju. phone +358 2 2605 611

DISTRIBUTION:
Nasdaq Helsinki
Main Media
www.teleste.com



08108858.pdf