Bittium Corporation Half-Year Financial Report January-June 2021

Summary April-June 2021

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

Outlook for 2021

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

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

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

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

Bittium’s CEO Hannu Huttunen

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

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

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

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

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

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

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

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

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