2014-04-24 07:30:00 CEST

2014-04-24 07:30:06 CEST


REGULATED INFORMATION

Finnish English
Teleste - Interim report (Q1 and Q3)

TELESTE CORPORATION INTERIM REPORT 1 JAN TO 31 MAR 2014


Turku, Finland, 2014-04-24 07:30 CEST (GLOBE NEWSWIRE) -- TELESTE CORPORATION  
INTERIM REPORT  24.4.2014  AT 08:30 



TELESTE CORPORATION INTERIM REPORT 1 JAN TO 31 MAR 2014



ORDERS RECEIVED INCREASED. NET SALES AND OPERATING PROFIT EXPECTEDLY BELOW THE
COMPARABLE PERIOD, OUTLOOK UNCHANGED. 



First quarter of 2014

- Net sales amounted to EUR 43.5 (45.8) million, a decrease of 4.9%
- Operating profit stood at EUR 1.3 (2.6) million, a decrease of 50.4%
- Undiluted earnings per share were EUR 0.05 (0.10) per share, a decrease of
49.1% 
- Orders received totalled EUR 46.9 (43.4) million, an increase of 8.3%
- Cash flow from operations was EUR 1.5 (0.2) million, an increase of 627%



Outlook for 2014

We estimate net sales and operating profit for the first half of 2014 to fall
clearly from the comparative period. Due to this, we estimate that net sales
and operating profit for the full year of 2014 will not reach the 2013 level. 



Comments on the first quarter of 2014 by CEO Jukka Rinnevaara:"Net sales and operating profit for the first quarter fell from the comparative
period, as expected. 

Demand for products by Video and Broadband Solutions increased after very quiet
January. Orders received developed well towards the end of the first quarter
and rose above the level of the comparative period. Orders for the optical
access network products developed particularly well in the European market.
However, this favourable development in net sales towards the end of the
quarter was not enough to compensate for the quiet start of the year and,
therefore, we fell expectedly from the net sales and operating profit of the
reference period. 

As for Network Services, we were able to improve the operating profit over the
comparative period, even if the result was burdened by investments to expand
the business in the UK. Improvement on the operating profit was particularly
successful in Germany on account of good resource management and successful
project deliveries."



Teleste Group in January-March 2014

Key figures (EUR million)    1-3/2014  1-3/2013  Change %  1-12/2013
--------------------------------------------------------------------
--------------------------------------------------------------------
Orders received                  46.9      43.4     +8.3%      188.9
--------------------------------------------------------------------
Net sales                        43.5      45.8     -4.9%      192.8
--------------------------------------------------------------------
EBIT                              1.3       2.6    -50.4%       11.0
--------------------------------------------------------------------
EBIT %                           3.0%      5.7%                 5.7%
--------------------------------------------------------------------
Profit for the period             0.9       1.8    -48.5%        8.1
--------------------------------------------------------------------
--------------------------------------------------------------------
Other important key figures                                         
--------------------------------------------------------------------
Earnings per share, EUR          0.05      0.10    -49.1%       0.47
--------------------------------------------------------------------
Cash flow from operations         1.5       0.2   +626.9%       10.0
--------------------------------------------------------------------
Net gearing, %                  12.3%     17.8%                13.8%
--------------------------------------------------------------------
Equity ratio, %                 53.7%     52.2%                52.7%
--------------------------------------------------------------------
Personnel at period-end         1,260     1,342     -6.1%      1,261
--------------------------------------------------------------------

The Group's first-quarter orders received totalled EUR 46.9 (43.4) million, up
8.3% from the comparable period last year. Order backlog grew by 13% to EUR
16.5 (14.6) million. 

Net sales amounted to EUR 43.5 (45.8) million, which is 4.9% below the
comparable period. Compared to the same period in the previous year, operating
profit decreased by 50.4% standing at EUR 1.3 (2.6) million, which is 3.0%
(5.7%) of net sales. Personnel expenses amounted to EUR 14.0 (14.4) million.
Undiluted earnings per share was EUR 0.05 (0.10). Operating cash flow stood at
EUR 1.5 (0.2) million. The decrease in trade receivables improved operating
cash flow from the comparable period in last year. 



Video and Broadband Solutions in January-March 2014

Key figures (EUR 1,000)  1-3/2014  1-3/2013  Change %  1-12/2013
----------------------------------------------------------------
----------------------------------------------------------------
Orders received            24,896    21,419    +16.2%     97,815
----------------------------------------------------------------
Net sales                  21,485    23,813     -9.8%    101,716
----------------------------------------------------------------
EBIT                          801     2,436    -67.1%      9,460
----------------------------------------------------------------
EBIT %                       3.7%     10.2%                9.3 %
----------------------------------------------------------------

Net sales decreased by 9.8% to EUR 21.5 (23.8) million. This decrease in net
sales was brought about by the exceptionally low level of demand in January and
the particularly good project sales in video surveillance solutions in the
comparable period. The demand for products returned to normal in the second
half of the quarter. In spite of the exceptionally quiet January, orders
received in the quarter increased by 16.2% over the previous year and amounted
to EUR 24.9 (21.4) million. Order backlog strengthened to EUR 16.5 (14.6)
million. Operating profit stood at EUR 0.8 (2.4) million making 3.7% (10.2%) of
net sales. This weakening of the operating profit percentage was mainly due to
the decline in sales of the video surveillance solutions and the lower margin
of access network products in comparison with the same period in the previous
year. 

R&D expenses were 2.6 (2.4) million, i.e. 12.1% (10.1%) of the business area's
net sales. Capitalized R&D expenses amounted to EUR 0.3 (0.3) million. The most
significant R&D investments included further development of product families in
production and customer-specific projects. Depreciation on capitalized R&D
expenses amounted to EUR 0.3 (0.7) million. 



Network Services in January-March 2014

Key figures (EUR 1,000)  1-3/2014  1-3/2013  Change %  1-12/2013
----------------------------------------------------------------
----------------------------------------------------------------
Orders received            22,048    21,946     +0.5%     91,060
----------------------------------------------------------------
Net sales                  22,048    21,946     +0.5%     91,060
----------------------------------------------------------------
EBIT                          490       166   +195.9%      1,587
----------------------------------------------------------------
EBIT %                       2.2%      0.8%                 1.7%
----------------------------------------------------------------

Net sales for the first quarter totalled EUR 22.0 (21.9) million, which was
0.5% higher than in the period of comparison. Operating profit stood at EUR 0.5
(0.2) million, a year-on-year increase of 196% (-60%). Operating profit
equalled 2.2% (0.8%) of net sales. This growth in the operating profit was
particularly affected by higher profitability in Germany over the comparative
period. The most significant improvement was achieved in installation services
of broadband connections and in successful project deliveries. The operating
profit was weakened by preparations made for the expansion of services business
in the UK. New business premises and personnel recruitment will allow for an
expansion in operations in the second half of the year. 

Personnel and Organization in January-March 2014

In the period under review, the Group had an average of 1,262 people
(1,335/2013, 1,316/2012), of whom 554 (536) were employed by Video and
Broadband Solutions, and 708 (799) by Network Services. At the end of the
review period, the Group had 1,260 (1,342/2013, 1,321/2012) people, of whom 71%
(73%/2013, 72%/2012) were working outside Finland. Approximately 3% of the
Group's employees were working outside Europe. 

In January, temporary layoffs were initiated involving the Operations unit
personnel in Finland. Average length of these layoffs was three weeks, and they
were implemented before the end of the first quarter. These temporary layoffs
were launched within the framework of the adjustment program agreed earlier in
the co-determination negotiations. As a result of the recovery in demand for
the products, the third layoff week could be cancelled. 

Wages, salaries and social expenses decreased by 3.1% over the previous year
and amounted to EUR 14.0 (14.4/2013, 15.1/2012) million. This reduction in
personnel costs was achieved by adjustment measures in both Video and Broadband
Solutions and Network Services. 

Investments and Product Development in January-March 2014

Investments by the Group for the period under review totalled EUR 0.9 (0.6)
million accounting for 2.1% (1.3%) of net sales. Investments in product
development equalled EUR 0.3 (0.3) million. Investments of EUR 0.1 (0.1)
million were made under financial lease arrangements. 

Financing and Capital Structure in January-March 2014

Operating cash flow stood at EUR 1.5 (0.2) million. The decrease in trade
receivables improved operating cash flow from the comparable period in last
year. At the end of the period under review, the amount of unused binding
stand-by credits amounted to EUR 17.0 (19.0) million. Credit limits are valid
until August 2015. 

The Group's equity ratio equalled 53.7% (52.2%) and net gearing 12.3% (17.8%).
Interest bearing debt on 31 March 2014 stood at EUR 24.2 (22.0) million. 

Key Risks Faced by the Business Areas

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

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

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

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

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

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

Group Structure

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

Shares and Changes in Share Capital

On 31 March 2014, EM Group Oy was the largest single shareholder with a holding
of 23.4%. 

In the period under review, the lowest company share price was EUR 4.25 (3.88)
and the highest was EUR 4.86 (4.47). Closing price on 31 March 2014 stood at
EUR 4.53 (3.92). According to Euroclear Finland Ltd the number of shareholders
at the end of the period under review was 5,073 (5,245). Foreign ownership
accounted for 4.8% (5.9%). From 1 January to 31 March 2014, trading with
Teleste share at NASDAQ OMX Helsinki amounted to EUR 3.6 (3.5) million. In the
period under review, 0.8 (0.8) million Teleste shares were traded on the stock
exchange. 

At the end of March 2014, the Group held 1,189,654 of its own shares, of which
the parent company Teleste Corporation had 647,654 shares and the controlled
companies had 542,000 shares, respectively. At the end of the period, the
Group's holding of the total amount of shares amounted to 6.30% (6.96%). 

On 31 March 2014, the registered share capital of Teleste stood at EUR
6,966,932.80 divided in 18,873,742 shares. 

Trading with stock options 2007C began on the NASDAQ OMX Helsinki Ltd on 2
April 2012. These options allow subscription for a maximum of 560,000 shares in
the company. 

Valid authorizations at the end of the review period:
- Authorization to purchase treasury shares: 1,400,000
- Disposal of own shares: 1,779,985, valid until the 2014 Annual General Meeting
- Issue of new shares: 5,000,000, valid until the 2014 Annual General Meeting
- Pursuant to the special rights granted by the company, the maximum number of
shares is 2,500,000; these special rights are included in the authorization to
issue 5,000,000 new shares. 

Events after the End of the Period

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

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

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

On 1 April 2014, the Annual General Meeting decided on the following
authorizations of the Board of Directors: 
- Purchases of own shares: maximum of 1,200,000 shares. This authorization is
valid for 18 months from the date of the decision. 
- Issue of new shares: a maximum of 4,000,000 shares, valid for three years
from the date of the decision. 
- Disposal of own shares held: a maximum of 1,800,000 shares, valid for three
years from the date of the decision. 
- By virtue of the special rights granted by the Company, the number of shares
to be subscribed may not exceed 2,500,000 shares; the special rights are
included in the above orders concerning the maximum number new shares and own
shares held by the Group. This authorization is valid for three years from the
date of the decision. 

Outlook for 2014

Video and Broadband Solutions aim at maintaining a strong market position in
Europe and expand into selected new markets. Network capacity will continue to
increase driven by the new broadband and video services provided by the
operators. Limited product offering of the new Docsis 3.1 communications
standard may delay the network investments in the beginning of the year. Price
erosion in the market continues. The positive trend in the video surveillance
market will continue, but the public sector decisions to start projects may be
delayed in the current economic climate. We estimate the market conditions of
Video and Broadband Solutions to fluctuate greatly during the year. 

The business objective of Network Services is to develop the operational
efficiency and give up any unprofitable services activities during the year.
These measures will be taken to create conditions for better business
profitability over the reference year, but these will have a slight reducing
effect on net sales. We estimate the demand for comprehensive network services
in our key target markets to continue at par with the comparative year. 

We estimate net sales and operating profit for the first half of 2014 to fall
clearly from the comparative period. Due to this, we estimate that net sales
and operating profit for the full year of 2014 will not reach the 2013 level. 



23 April 2014

Teleste Corporation              Jukka Rinnevaara
Board of Directors               CEO







This interim report has been compiled in compliance with IAS 34, as it is
accepted within EU, using the recognition and valuation principles with those
used in the Annual Report.Teleste has prepared this interim report applying the
same accounting principles as those described in detail in its 2012
consolidated financial statements. The data stated in this report is unaudited.
The changes in IAS1, IFRS13 and IAS19 have been applied in this interim report
and they do not have any material impact on the financial reporting. 



STATEMENT OF COMPREHENSIVE INCOME     1-3/2014   1-3/2013   Change %   1-12/2013
 (tEUR)                                                                         
Net Sales                               43,533     45,759     -4.9 %     192,775
     Other operating income                185        458    -59.5 %         840
     Materials and services            -21,001    -21,604     -2.8 %     -94,456
     Personnel expenses                -13,985    -14,435     -3.1 %     -56,949
     Other operating expenses           -6,417     -6,225      3.1 %      -4,628
     Depreciation                       -1,024     -1,351    -24.2 %     -26,536
Operating profit                         1,291      2,602    -50.4 %      11,047
     Financial income and expenses         -93        -82     13.3 %        -386
Profit after financial items             1,198      2,520    -52.5 %      10,660
Profit before taxes                      1,198      2,520    -52.5 %      10,660
     Taxes                                -278       -733    -62.2 %      -2,513
Net profit                                 920      1,787    -48.5 %       8,147
Attributable to:                                                                
     Equity holders of the parent          920      1,787    -48.5 %       8,147
Earnings per share for result of the year attributable to the equity holders of 
 the parent                                                                     
(expressed in € per share)                                                      
     Basic                                0.05       0.10    -49.1 %        0.47
     Diluted                              0.05       0.10    -48.9 %        0.46
Total comprehensive income for the                                              
 period (tEUR)                                                                  
Net profit                                 920      1,787    -48.5 %       8,147
Possible items with future net profit effect                                    
Translation differences                     92         45    104.4 %        -559
Fair value reserve                          -7         24        n/a          16
Total comprehensive income for the       1,005      1,856    -45.8 %       7,604
 period                                                                         
Attributable to:                                                                
     Equity holders of the parent        1,005      1,856    -45.8 %       7,604





STATEMENT OF FINANCIAL POSITION     31.03.2014  31.03.2013  Change %  31.12.2013
 (tEUR)                                                                         
Non-current assets                                                              
   Property,plant,equipment             10,485      10,283     2.0 %      10,499
   Goodwill                             33,289      31,421     5.9 %      33,252
   Other intangible assets               4,331       3,623    19.6 %       4,448
   Deferred tax assets                   1,828       2,126   -14.0 %         294
   Available-for-sale Investments          294         294     0.0 %       2,002
                                        50,227      47,747     5.2 %      50,494
Current assets                                                                  
   Inventories                          20,866      18,337    13.8 %      19,762
   Trade and other receivables          37,214      42,697   -12.8 %      38,844
   Cash and cash equivalents            16,008      10,862    47.4 %      15,229
                                        74,088      71,896     3.0 %      73,835
Total assets                           124,315     119,643     3.9 %     124,329
Shareholder's equity and                                                        
 liabilities                                                                    
   Share capital                         6,967       6,967     0.0 %       6,967
   Other equity                         59,381      54,785     8.4 %      58,160
   Non-controlling interest                386         661   -41.6 %         425
                                        66,734      62,413     6.9 %      65,552
Non-current liabilities                                                         
   Provisions                              598         503    18.9 %         634
   Deferred tax liabilities              1,203       1,297    -7.2 %       1,293
   Non interest bearing                  2,436           0       n/a       2,414
    liabilities                                                                 
   Interest bearing liabilities            434         683   -36.4 %         470
                                         4,671       2,483    88.1 %       4,810
Current liabilities                                                             
   Trade payables and other             28,031      30,632    -8.5 %      28,130
    liabilities                                                                 
   Current tax payable                     210       1,928   -89.1 %       1,206
   Provisions                              893         909    -1.8 %         832
   Interest bearing liabilities         23,776      21,278    11.7 %      23,799
                                        52,909      54,747    -3.4 %      53,967
Total shareholder's equity and         124,315     119,643     3.9 %     124,329
 liabilities                                                                    





CONSOLIDATED CASH FLOW STATEMENT (tEUR)            1-3/    1-3/   Change   1-12/
                                                   2014    2013        %    2013
Cash flows from operating activities                                            
   Profit for the period                            920   1,787  -48.5 %   8,147
   Adjustments                                    1,306   2,166  -39.7 %   4,711
   Interest and other financial expenses and        -93     -82   13.3 %     384
    incomes                                                                     
   Paid Taxes                                    -1,155    -880   31.2 %  -3,402
   Change in working capital                        482  -2,790      n/a     121
Cash flow from operating activities               1,461     201  626.9 %   9,961
Cash flow from investing activities                                             
   A conditional supplementary contract price         0  -2,586      n/a  -2,585
    for prior subsidiary acquisition                                            
   Purchases of property, plant and equipment      -426    -189  125.4 %  -1,180
    (PPE)                                                                       
   Purchases of intangible assets                  -372    -293   27.0 %  -1,442
   Acquisition of subsidiary, net of cash             0       0      n/a    -965
    acquired                                                                    
Net cash used in investing activities              -798  -3,068  -74.0 %  -6,172
Cash flow from financing activities                                             
   Proceeds from borrowings                           0       0      n/a   5,000
   Payments of borrowings                          -152    -197  -22.8 %  -4,178
   Dividends paid                                     0       0      n/a  -2,962
   Proceeds from issuance of ordinary shares        176       0      n/a     270
Net cash used in financing activities                24    -197      n/a  -1,870
Change in cash                                                                  
   Cash in the beginning                         15,229  13,880    9.7 %  13,880
   Effect of currency changes                        92      46  100.0 %    -571
   Change                                           687  -3,064      n/a   1,919
   Cash at the end                               16,008  10,862   47.4 %  15,229





KEY FIGURES                                       1-3/    1-3/  Change %   1-12/
                                                  2014    2013              2013
   Earnings per share, EUR                        0.05    0.10   -48.5 %    0.47
   Earnings per share fully diluted, EUR          0.05    0.10   -50.4 %    0.46
   Shareholders' equity per share, EUR            3.75    3.58     4.7 %    3.73
   Return on equity                              5.6 %  11.6 %   -51.8 %  12.9 %
   Return on capital employed                    5.9 %  12.6 %   -53.2 %  13.0 %
   Equity ratio                                 53.7 %  52.2 %     2.8 %  52.7 %
   Gearing                                      12.3 %  17.8 %   -30.8 %  13.8 %
   Investments, tEUR                               912     579    57.5 %   6,313
   Investments % of net sales                    2.1 %   1.3 %    65.6 %   3.3 %
   Order backlog, tEUR                          16,511  14,606    13.0 %  13,100
   Personnel, average                            1,262   1,335    -5.5 %   1,306
   Number of shares (thousands)                 18,874  18,729     0.8 %  18,744
   including own shares                                       
   Highest share price, EUR                       4.86    4.47     8.7 %    4.47
   Lowest share price, EUR                        4.25    3.88     9.5 %    3.78
   Average share price, EUR                       4.48    4.21     6.4 %    4.17
   Turnover, in million shares                     0.8     0.8    -4.8 %     2.2
   Turnover, in MEUR                               3.6     3.5     1.7 %     9.2
Treasury shares                                                                 
                                                Number            % of     % of 
                                             of shares           shares    votes
   Possession of company's own shares        1,189,654            6.30 %  6.30 %
    31.3.2014                                                                   
Contingent liabilities and pledged assets                                       
 (tEUR)                                                                         
Leasing and rent liabilities                     6,133   7,782   -21.2 %   6,748
Derivative instruments (tEUR)                                                   
   Value of underlying forward contracts         6,518   8,107   -19.6 %   7,633
   Market value of forward contracts              -139     296       n/a    -209
   Interest rate swap                           11,000  11,000     0.0 %  11,000
   Market value of interest swap                   -13       2       n/a      -6
Taxes are computed on the basis of the tax on the profit for the period.        





OPERATING SEGMENTS (tEUR)                1-3/2014  1-3/2013  Change %  1-12/2013
Video and Broadband Solutions                                                   
   Orders received                         24,896    21,419    16.2 %     97,815
   Net sales                               21,485    23,813    -9.8 %    101,716
   EBIT                                       801     2,436   -67.1 %      9,460
   EBIT%                                    3.7 %    10.2 %                9.3 %
Network Services                                                                
   Orders received                         22,048    21,946     0.5 %     91,060
   Net sales                               22,048    21,946     0.5 %     91,060
   EBIT                                       490       166   195.9 %      1,587
   EBIT%                                    2.2 %     0.8 %                1.7 %
Total                                                                           
   Orders received                         46,944    43,365     8.3 %    188,875
   Net sales                               43,533    45,759    -4.9 %    192,775
   EBIT                                     1,291     2,602   -50.4 %     11,047
   EBIT%                                    3.0 %     5.7 %                5.7 %
   Financial items                            -93       -82    13.3 %       -386
   Operating segments net profit before     1,198     2,520   -52.5 %     10,660
    taxes                                                                       





Information per quarter        1-3/14  10-12/13  7-9/13  4-6/13  1-3/13  4/2013-
 (tEUR)                                                                  3/2014 
Video and Broadband Solutions                                                   
         Orders received       24,896    24,127  28,919  23,350  21,419  101,292
         Net sales             21,485    28,020  24,258  25,625  23,813   99,388
         EBIT                     801     2,354   2,362   2,308   2,436    7,825
         EBIT %                 3.7 %     8.4 %   9.7 %   9.0 %  10.2 %    7.9 %
Network Services                                                                
         Orders received       22,048    26,024  22,220  20,870  21,946   91,162
         Net sales             22,048    26,024  22,220  20,870  21,946   91,162
         EBIT                     490     1,168     823    -570     166    1,911
         EBIT %                 2.2 %     4.5 %   3.7 %  -2.7 %   0.8 %    2.1 %
Total                                                                           
         Orders received       46,944    50,151  51,139  44,220  43,365  192,454
         Net sales             43,533    54,043  46,478  46,495  45,759  190,549
         EBIT                   1,291     3,521   3,185   1,738   2,602    9,735
         EBIT %                 3.0 %     6.5 %   6.9 %   3.7 %   5.7 %    5.1 %





Attributable to equity holders of the parent (tEUR)                             
A           Share capital                                                       
B           Share premium                                                       
C           Translation differences                                             
D           Retained earnings                                                   
E           Invested free capital                                               
F           Other funds                                                         
G           Total                                                               
H           Share of non-controlling interest                                   
I           Total equity                                                        
                        A      B     C      D      E     F      G    H       I  
Shareholder's equity  6,967  1,504  126  53,079  3,457   -6  65,127  425  65,553
 1.1.2014                                                                       
Total comprehensive                  92     920          -7   1,005    0   1,005
 income for the                                                                 
 period                                                                         
Used options                                       176          176    0     176
Interest, non                                39                  39  -39       0
 controll party                                                                 
Equity-settled                                       0    0       0            0
 share-based                                                                    
 payments                                                                       
Shareholder's equity  6,967  1,504  218  54,038  3,633  -13  66,347  386  66,734
 31.3.2014                                                                      
'                                                                               
Shareholder's equity  6,967  1,504  685  48,007  2,737  -22  59,878  678  60,557
 1.1.2013                                                                       
Total comprehensive                  45   1,787          24   1,856    0   1,856
 income for the                                                                 
 period                                                                         
Interest, non                                17                  17  -17       0
 controll party                                                                 
Shareholder's equity  6,967  1,504  730  49,811  2,737    2  61,751  661  62,413
 31.3.2013                                                                      



CALCULATION OF KEY FIGURES



Return on equity:      Profit/loss for the financial period                     
                       ------------------------------   * 100                   
                       Shareholders' equity (average)                           
Return on capital      Profit/loss for the period after financial items +       
 employed:              financing charges                                       
                       ------------------------------   * 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 share:    Profit for the period attributable to equity holder of   
                        the parent                                              
                       ----------------------------------------------           
                       Weighted average number of ordinary shares outstanding   
                        during the period                                       
Earnings per share,    Profit for the period attributable to equity holder of   
 diluted:               the parent (diluted)                                    
                       -----------------------------------------------          
                       Average number of shares - own shares + number of options
                        at the period-end                                       





Major shareholders 31.3.2014                Number of shares  % of share capital
EM Group Oy                                        4,409,712               23.36
Mandatum Life Insurance Company Limited            1,679,200                8.90
Ilmarinen Mutual Pension Insurance Company           953,854                5.05
Kaleva Mutual Insurance Company                      824,641                4.37
Teleste Oyj                                          647,654                3.43
OP-Finland Small Firms Fund                          630,712                3.34
Teleste Management II Oy                             542,000                2.87
Varma Mutual Pension Insurance Company               521,150                2.76
The State Pension Fund                               500,000                2.65
FIM Fenno Equity fund                                271,288                1.44





Shareholders by sector          Number of      % of     Number of      Number of
 31.3.2014                   shareholders    Owners        shares       shares %
Households                          4,722     93.08     4,595,577           24.3
Public sector                           4      0.08     1,990,004           10.5
 institutions                                                                   
Financial and insurance                16      0.32     3,690,710           19.6
 institutions                                                                   
Corporations                          262      5.16     7,311,250           38.7
Non-profit institutions                32      0.63       376,113            2.0
Foreign and nominee                    37      0.73       910,088            4.8
 registered owners                                                              
Total                               5,073    100.00    18,873,742          100.0





Number of shares              Number of           % of      Number of       % of
 31.3.2014                 shareholders   shareholders         shares     shares
             1 - 100              1,120           22.1         76,185        0.4
           101 - 500              2,197           43.3        598,629        3.2
         501 - 1,000                800           15.8        660,990        3.5
       1,001 - 5,000                771           15.2      1,709,445        9.1
      5,001 - 10,000                 87            1.7        624,035        3.3
     10,001 - 50,000                 70            1.4      1,368,778        7.3
    50,001 - 100,000                  5            0.1        411,663        2.2
   100,001 - 500,000                 15            0.3      3,215,094       17.0
           500,001 -                  8            0.2     10,208,923       54.1
Total                             5,073          100.0     18,873,742      100.0
of which nominee                                              771,879        4.1
 registered                                                                     



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


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