Bittium

Annual Report

2023

3Bittium in 2023

Bittium Annual Report 2023

Contents

Bittium’s Business and

Operating Environment 2023 9

Shares and Shareholders 27

Corporate Governance Statement

Reporting Period Jan. 1–Dec. 31, 2023 33

Sustainability at Bittium in 2023 49

Report by the Board of Directors

and Financial Statements 2023 97

Bittium in 2023

Tactical

Communications

Bittium specializes

in military radio and

communication solutions

by providing advanced

products and services

for wireless and wire line

tactical communications.

Secure

Communications

& Connectivity

Bittium provides highly

secure communications

and connectivity solutions

for public safety & security,

defense, and other

professionals’ markets.

Medical

Technologies

Bittium offers medical

technology for monitoring

biosignals in the areas

of cardiology and

neurophysiology.

R&D

Services

Bittium offers profes-

sional R&D engineering

services and technology

expertise in the areas of

wireless devices, network

infrastructure, and IoT

solutions.

Personnel

526

in total

4 Bittium in 2023

Bittium Annual Report 2023

Products

45.8

MEUR

Cash and Other

Liquid Assets

8.3

MEUR

Net Sales

75.2

MEUR

Services

29.5

MEUR

Operating Result

-4.3

MEUR

Equity Ratio

69.9

Earnings per Share

-0.153

EUR

Order Book

27.6

MEUR

Net Gearing

13.2

Services-based Net Sales

Engineering Services 1 7. 0 MEUR

Product-based Net Sales

Medical 21.8 MEUR

Defense & Security 24.0 MEUR

Bittium in 2023

Bittium Annual Report 2023

6 Bittium in 2023

Bittium Annual Report 2023

CEO’s Review

The year 2023 was a year of changes at

Bittium. There were changes in the Compa-

ny’s Management Group, we updated our

strategy, and started a large-scale process

with the aim of turning the company onto

the path of profitable growth.

The updated strategy focuses on the years

2024 and 2025 and has three very essen-

tial priorities: 1. change from R&D organi-

zation to a customer- and growth-oriented

operating model through segment orga-

nizations, 2. focusing on current products

and increasing their market shares, and

3. increasing efficiency and lightening the

cost structure, which is expected to im-

prove the company’s profitability and cash

flow significantly.

In accordance with the updated strategy,

Bittium has three Business Segments: De-

fense & Security, Medical, and Engineering

Services. We reorganized our operations

to optimize the operations of the indepen-

dent Business Segments and went through

change negotiations in the Finnish subsid-

iaries. In addition, previously centralized

group functions are now largely divided into

Business Segments, meeting the needs

of each Segment best. As a result of the

reorganization and change negotiations,

the number of personnel in group opera-

tions dropped from approximately 130 to

50. In connection with the transition to the

new reporting structure, we decided to sep-

arate the remaining group functions into

own Segment in order to further improve

transparency into the development of the

company’s Business Segments. Financial

reporting based on these - altogether four

segments - will start this year.

The net sales and operating result in 2023

decreased from previous year. The fourth

quarter was the strongest, as typical, but

also there the net sales remained low-

er than in the corresponding period the

year before. There were also non-recur-

ring costs of EUR 0.7 million resulting from

the change negotiations and a non-recur-

ring write-down of EUR 2.5 million due to

the impairment of inventory both sched-

uled for the fourth quarter. With non-recur-

ring costs the operating result of the fourth

quarter was EUR 1.0 million positive. The

annual cost savings of EUR 6.0 million, re-

sulting from the change negotiations, will

fully affect the 2024 figures.

The net sales of 2023 decreased by 8.8

percent. The financial development was

affected by Medical business’ delays in

product deliveries in the beginning of the

year, caused by the component shortage,

and slower than estimated sales develop-

ment outside of US markets, as well as by

the slowness of medical device regulatory

approvals. Also, the slower-than-estimat-

ed progress of multi-year projects in the

Defense business last year, and thus the

timing of the product orders affected the

2023 net sales.

In the Defense & Security business, pilot

projects with our customers abroad pro-

gressed well, but slower than expected.

With the Finnish Defense Forces we re-

newed a significant framework agreement

regarding the tactical communication sys-

tem and products. This cooperation is very

important for Bittium in terms of the devel-

opment of the entire tactical communica-

tion product portfolio, and this framework

agreement confirms the continuation of

the cooperation in the coming years. The

deployment of Bittium Tough SDR™ soft-

ware-defined radios has progressed ac-

cording to the plans of the Defence Forces,

with the aim of ensuring the performance

of the equipment during 2024 to start a

wider deployment of the radios. NATO ad-

opted the ESSOR waveform developed by

the a4ESSOR consortium as a standard for

tactical communications, which enables

faster and more secure data transmission

of NATO member countries in both national

and coalition force operations. Our Tough

SDR radios also use the ESSOR waveform.

The importance of secure communication

has emphasized, and the interest, espe-

cially among authorities, increased. We

delivered secure Bittium Tough Mobile™

phones and secure software solutions to

several European countries. We applied for

a NATO information security listing for the

Bittium Tough Mobile 2 C solution last year,

and according to the feedback we received,

the solution meets all the necessary re-

quirements, but the listings are delayed

due to the work backlog of authorities.

In medical technology products, we con-

tinued our good cooperation with our key

customer Boston Scientific regarding ECG

measuring devices. In the beginning of the

year, we joined forces to solve the challeng-

es related to the availability of components

of the devices and were able to deliver all

product deliveries planned for this year. We

signed a distributor agreement for Bittium

Respiro™, a home sleep apnea test and

analysis solution, with ResMed, a leading

provider of innovative medical devices and

7Bittium in 2023

Bittium Annual Report 2023

solutions to improve respiratory health and

well-being. The piloting of Respiro solution

in Europe has progressed well, and recent

clinical studies have shown positive feed-

back on the solution’s technical properties,

analysis quality, and ease of use. We have

an ongoing process for medical device

sales license from the FDA (Food and Drug

Administration) needed for the US market.

The regulatory requirements have tight-

ened and increased during the last couple

of years. The duration of these new studies

is estimated to be at least one year. We ex-

pect the good development of the remote

diagnostics market to continue, positively

affecting the development of Bittium’s net

sales and profitability during 2024.

Despite the prevailing cost-saving needs

in the markets among our customers, the

sales of Bittium’s R&D services grew during

2023. The growth was driven by the accel-

erating digitization in various industries in-

creasing the need for design services in

several industries, as well as the increase

of European companies’ product design

work in Europe. We were able to win new

customers, and I am particularly pleased

with the work we have done in the past year

to increase sales, especially in the interna-

tional markets.

Bittium’s goal is to be a major international

supplier of secure and reliable communi-

cation solutions for the defense and secu-

rity markets, a leading supplier of industrial

connectivity solutions and R&D services,

and a major supplier of measurement and

remote diagnostics solutions for measur-

ing and analyzing biosignals.

In this context, I would like to thank our cus-

tomers and partners for the past year and

for the trust that prevails between our com-

panies. I thank our personnel for their good

work, commitment, and resilience, espe-

cially in the middle of all these changes. I

would also like to thank all our shareholders

for their trust and perseverance.

In 2024, we will focus on achieving the

goals set for us in the new segment orga-

nization model, along with new operating

methods and processes. We have pub-

lished our main strategic focus points for

the next two years to get the company on

a healthy profitable growth path. With sys-

tematic work and the right prioritizing, we

have every opportunity to achieve the goals

set for us.

Johan Westermarck

CEO

8 Bittium in 2023

Bittium Annual Report 2023

9Bittium in 2023

Bittium Annual Report 2023

Bittium’s Business

and Operating

Environment 2023

Contents

Business and Operating Environment 10

Bittium in Brief 10

Business Model 11

Updated Strategy 12

Long-term Financial Targets 13

Products and Services 14

Defense & Security Business Segment 15

Engineering Services Business Segment 20

Medical Business Segment 22

1010

Bittium Annual Report 2023

Business and Operating Environment

Bittium in Brief

Bittium is a Finnish technology company

specializing in the development of reliable,

secure communications and connectivity

solutions, and healthcare technology prod-

ucts and services measuring and monitor-

ing biosignals outside the hospital.

Bittium, formerly known as Elektrobit Ltd,

was founded in 1985. It changed its name to

Bittium after selling its Automotive business

and the rights to the brand name Elektrobit

on July 1, 2015. Bittium is a publicly listed

company on Nasdaq Helsinki as BITTI.

Bittium operates in Finland, Germany, and

the United States. The company decided at

the end of 2023 to close its offices in Mexico

and Singapore and continue operations in

these countries with partners. Bittium head-

quarters is located in Oulu, and the compa-

ny’s other Finnish offices are in Espoo, Ka-

jaani, Kuopio, and Tampere.

At the end of 2023, Bittium had 526 employ-

ees, of which the majority were R&D engi-

neers. In 2023, the Company did not un-

dergo any significant changes in relation to

its size, operating areas, ownership, distri-

bution of shares, income formation, or the

maintenance of operations.

At the beginning of 2022, Bittium start-

ed developing its operations towards in-

dependent business units. The renova-

tion was completed during 2023. With

the change, the company seeks a clear-

er focus for its operations, growth and im-

provement of the ability to generate results.

As part of this development, the compa-

ny changed its organizational structure

to serve its independent business units

more efficiently. The operations of the en-

tire group were reorganized by transferring,

among other things, the previously joint-

ly centralized group functions to a large

extent to individual business segments

according to the needs of the segment.

The company will start financial reporting

based on the new segment structure from

January 1, 2024. There are four reporting

segments in the new reporting model: the

company’s three business segments (De-

fense & Security, Medical and Engineering

Services) and the Group Functions seg-

ment. The goal of moving to a new report-

ing structure is to improve transparency

into the company’s business segments

and their development.

Business and

Operating Environment

Bittium operates globally. With regards to

sustainable business, Bittium’s products

and services comply with the statutory re-

quirements, directives, general standards,

and frameworks, such as SA 8000 (social

responsibility), ISO 14001 (environmen-

tal systems), RoHS I, II, III (hazardous sub-

stances), REACH (chemicals regulations),

WEEE recyclability of waste electrical and

electronic equipment), ETJ+ / ISO 50001

(energy efficiency), and GRI G4 (reporting

guideline for sustainable development). As

a global enterprise, the Company also takes

the special requirements of its international

customers into account.

Bittium’s Mission

Our mission is to utilize our world-class ex-

pertise and innovation to enable secure em-

bedded technology for the benefit of people

and societies.

Bittium’s Vision

Our vision is to become a global player in

building embedded secure technology solu-

tions within complex environments.

Bittium Annual Report 2023

11Business and Operating Environment

Bittium Annual Report 2023

Business Model

Key Resources

• Experts

• Own products

• IPR

• Partners

• Strong balance sheet

• Efficient processes

• Quality and

environmental systems

Key Focus Areas

• Personnel

• R&D

• Sales and marketing

• Way of working

• Digitalization

Expertise

• Wireless technologies

• Software

• Mechanics and software

solution integrations,

testing, and verification

• Extensive expertise in

systems and specialist areas

• Information security

• Measurement of biosignals

• Way of working

Channels

• Own sales

• Retailers

• System sales

• Integrators

• Webshop

Enablers

Megatrends and

Their Phenomenons

Customer Groups

Companies of different sizes, OEMs, system integrators, defense forces and governments,

hospitals and hospital districts, other public administration and organizations,

research institutes, universities

Geopolitical Uncertainty, Internet of Things (IoT) and continuously evolving technology,

aging population, growth of remote diagnostics, information security

Effects on the Customer

• Reliable Finnish partner

• Products and solutions that

represent the latest technology

• High product performance and

long lifecycle

• Scalable product platforms

• Short customization times and

fast market entry of solutions

• Lower costs and risks in customer’s

own R&D projects

Products, Services and Solutions

• Products and services in tactical

communications

• Secure phones and the related

software and systems

• Information security software

• Design services for wireless

communications

• IoT and digitalization services

• Biosignal measuring and

monitoring equipment in the

areas of cardiology and neurology

Effects on Bittium

• Long-term projects and

customer relationships

build stability

• Service projects enable applying

new technologies that strengthen

the expertise of both the company

and its customers

• Extensive understanding of

commercial technologies and

the customized communications

systems used by authorities

• Integrated expertise in mobile

and online technologies

• Good growth opportunities

Income Streams

• Products and product platforms,

systems, and the services related

to these

• R&D services

• Maintenance fees

• Licenses

to utilize our world-class expertise and innovation to enable secure embedded technology

for the benefit of people and societies.

Bittium’s Mission

Bittium’s Vision

is to become a global player

in building embedded secure

technology solutions within

complex environments.

1212 Business and Operating Environment

Bittium Annual Report 2023

Updated Strategy

On October 30, 2023, Bittium announced

its updated strategy concerning the years

2024 and 2025. Bittium’s main goals are to

achieve an average annual net sales growth

of more than 10 percent and an operating

profit level of 10 percent. The updated strat-

egy will enable the achievement of the set

goals.

In accordance with the updated strategy,

the company has three Business Segments:

Medical, which focuses on measuring bio-

signals and remote monitoring, Defense &

Security, which offers products and services

to the defense and security markets, and

Engineering Services, which offers R&D ser-

vices. Group operations that were previously

centralized are now also largely divided into

the company’s three Business Segments,

best meeting the needs of each segment.

This was an essential change to optimize the

operation of more independent businesses.

The company’s updated strategy has three

main focus areas. The first one is a change

from a product development organiza-

tion to a customer-centric, growth-orient-

ed operating model through its segment

organizations. Secondly, the company fo-

cuses strongly on its current products and

increasing their market shares. The R&D

work is mainly concentrated on further im-

proving the competitiveness and productiv-

ity of these products. Thirdly, the company

seeks to increase efficiency in its own oper-

ating methods and has streamlined its cost

structure, which is expected to significant-

ly improve the company’s profitability and

cash flow.

Between 2016 and 2023, the company’s

two Business Segments, Defense & Secu-

rity and Medical, have strongly invested in

the development of their own products. This

has maintained the company’s high aver-

age annual R&D investment level of around

EUR 20 million, corresponding to an average

of approximately 25 percent of the compa-

ny’s annual net sales. Both product-orient-

ed Business Segments will now focus on

continuous improvement of the competi-

tiveness of existing products and develop-

ment of their features. Continuous product

improvement is highly important to com-

petitiveness of both Business Segments.

In addition, the company will use develop-

ment cooperation with other companies

in its product development in the future. In

the R&D oriented operational model the cost

structure in the company has been heavy

due to the large R&D projects.

The Medical Business Segment consists of

three business areas, which are the mea-

surement and analysis of the electrical ac-

tivity of the heart (ECG), the measurement

and analysis of the electrical activity of the

brain (EEG), and the measurement and anal-

ysis of sleep apnea. In business, the focus is

specifically on further improving the com-

petitiveness, and productivity of the prod-

ucts, as well as on the efficiency of opera-

tions.

In the medical technology market, signifi-

cant development is taking place regarding

the treatment of patients, especially out-

side hospitals. Increasing efforts are being

made to prevent diseases and health prob-

lems with the help of early diagnostics. The

aim is to discharge patients at an even ear-

lier stage to reduce hospital and treatment

days. These significantly increase the ef-

ficiency of healthcare processes, reduce

costs, and improve the treatment experi-

ence. The prerequisite for the prevention of

health problems and early discharge is en-

abling accurate monitoring and measure-

ment in home conditions with the help of

remote monitoring.

The offering of the Medical Business Seg-

ment focuses on remote monitoring solu-

tions. Bittium has solid and proven world-

class biosignal processing technology

expertise. In the coming years, the compa-

ny will focus on its product business to also

increase the amount of recurring net sales,

both with the help of software and various

multi- and single-use products. In the med-

ical business, the focus will be on coopera-

tion with existing international key custom-

ers to increase market shares together, and

on acquiring new customers.

The Defense & Security Business Segment

consists of three business areas that are de-

fense industry products (Defense Products),

defense industry product development ser-

vices (Defense Services), and secure prod-

ucts and services (Security). Bittium’s busi-

ness consists of tactical communication

solutions aimed at the defense market and

high security communication solutions

aimed at authorities and the professional

user market.

Russia’s war of aggression against Ukraine

has increased the defense budgets of var-

ious countries and increased the states’

interest to modernize their tactical com-

munication systems. The defense forces

of different countries and other authorities

need networks for tactical data transmis-

sion, where increasingly mobile network

users can reliably and securely transfer

growing amounts of data. Finland’s NATO

membership is also expected to have a pos-

itive effect on the demand for Bittium’s de-

fense and secure products, especially in

NATO countries. Bittium has superior wave-

form quality and secure wireless technolo-

gy integrated with hardware and software

intended for defense and authorities’ use.

Over the past years, the company has made

significant investments to expand its prod-

uct portfolio. The products and systems are

now at an internationally very competitive

level, both in terms of coverage and techni-

cal characteristics. In the future, the com-

pany will focus on the continuous improve-

ment of the competitiveness of existing

products and the development of features

to ensure the preservation of competitive-

ness. The company will put emphasize

strongly in its key customers and invest in

international sales and marketing to pur-

sue new customers. The company’s goal is

to grow significantly the international prod-

uct business and achieve an internationally

significant position as a provider of tactical

communication and high security commu-

nication solutions.

Bittium Annual Report 2023

Business and Operating Environment

In the Engineering Services Business Seg-

ment, Bittium offers its customers R&D ser-

vices and wireless connectivity solutions

for the development of innovative products

in a secure and evolving wireless environ-

ment. The company has focused its R&D

service offering around radio technologies

and embedded devices. Bittium has world-

class expertise in wireless technologies

and comprehensive product development

throughout the whole product life cycle.

In the mobile telecommunications, invest-

ments in the development of new features

continue, and the importance of software

development regarding the development

of 5G networks is strengthened. Along with

digitization, secure IoT (Internet of Things)

is a significant development area in almost

all industries, where the demand is created

by the growing need of companies to digi-

tize their operations, collect data wirelessly

and transfer data to cloud services, as well

as monitor and control devices and systems

remotely. Also, the goal of western compa-

nies to shift the focus of R&D to an increas-

ing extent, e.g., to Europe, creates more de-

mand for companies offering R&D services

and wireless connectivity solutions.

In the coming years, Bittium will continue to

grow its international customer base, espe-

cially in the Industry IoT market segment.

The company will also invest in developing

strategic partnerships with its current cus-

tomers.

Long-term

Financial Targets

Bittium aims for an average annual net sales

growth of more than 10 percent and an op-

erating profit level of 10 percent.

Bittium Tough SDR™

Products

and Services

Bittium Annual Report 2023

Business and Operating Environment

Bittium Annual Report 2023

15Business and Operating Environment

Bittium Annual Report 2023

In the Defense & Security business segment,

Bittium offers globally leading products, ser-

vices, and systems for its customers in the

defense, security, and public safety markets.

Bittium’s competitiveness in these markets

is based on trust and reliability, high-quality

and performance of its products, and ser-

vices, as well as on advanced technology

and security know-how developed within the

company for more than 35 years.

Bittium Tough Mobile™ Product Family

At the core of the information security fea-

tures of the Bittium Tough Mobile smart-

phones lies their multilayered security

structure, which is based on a hardened

Android™ operating system, unique de-

vice-based solutions, the information se-

curity features, and software integrated

into the source code. The phones are fully

designed and manufactured in Finland and

Bittium ensures supervised and secure

manufacturing and supply of the smart-

phones to customers. Bittium Tough Mobile

smartphones together with Bittium Secure

Suite device management and encryption

software product can be certified for secure

use by different national government au-

thorities. Bittium Tough Mobile 2 C smart-

phone together with Bittium Secure Suite

back-end system form a smartphone-based

communication solution that has been cer-

tified for CONFIDENTIAL security level (NC-

SA-FI). As the smartphones have been de-

signed for use by authorities, they have a

significantly longer availability and lifespan

and better availability of security updates

compared to conventional smartphones.

Bittium Tough Mobile™ 2 Tactical is a com-

plete solution that enables soldier mobile

communications. The solution is based on

the secure and rugged Bittium Tough Mo-

bile 2 smartphone that is connected with

either Bittium Tough SDR Handheld radio

or third-party tactical radios. The solution

is compatible with different battle manage-

ment systems, which enables real-time and

efficient sharing of situational awareness in

tactical networks.

Bittium Secure Suite™ is a device man-

agement and encryption software prod-

uct that complements the Bittium Tough

Mobile smartphone with a scalable set of

new software services for remote manage-

ment, remote attestation, and securing the

network connections of the device. Bittium

Tough Mobile smartphone and Bittium Se-

cure Suite form a unique, complete, reliable

system for processing and transferring sen-

sitive and classified material and securing

critical communication.

Bittium Secure Call™ is a communication

application for public authorities and busi-

nesses with security for end-to-end en-

crypted voice and video calls, group calls,

messages with attachments, group mes-

saging, push-to-talk voice messages, and

a message that is destroyed after a prede-

termined time. Authority-level security is

achieved when Bittium Secure Call is used

in conjunction with Bittium Tough Mobile

smartphones and the Bittium Secure Suite

background system.

Bittium SafeMove® Mobile VPN software

enables the utilization of all IP-based appli-

cations and networks by securing the con-

nections between the workstation or mo-

bile device and corporate services im-

mediately from the startup of the phone.

With Bittium SafeMove, for instance,

home care workers are allowed to have

full access to the same systems and ap-

plications they would have on a hospital

desktop, enabling safe and real-time access

to patient records. The Windows version of

the SafeMove Mobile VPN product is ap-

proved for national security class TL IV data

encryption.

Bittium SafeMove® Analytics is an ad-

vanced monitoring and reporting module

that helps organizations to monitor network

connectivity and performance to improve

productivity and user experience. The ana-

lytics tool continuously gathers connectivi-

ty data such as connectivity status, speed,

throughput and bytes transferred, network

type, and Wi-Fi network information. It is

also easy to enhance the tool with position-

ing information if GPS data is available. In

addition, the security features enable imme-

diate report of possible security deviations in

the mobile phones used by the employees.

This enables reacting to the cyber threats

without any delay, for example, by discon-

necting a device that reported the deviation

from the company network for the time of

clearance of the situation.

Defense & Security

Business Segment

Tactical and Secure Communication Systems

Android is a trademark of Google LLC.

16 Business and Operating Environment

Bittium Annual Report 2023

also enables the use of legacy Combat Net

Radios (CNR) as part of the IP-based tac-

tical communications system (Radio over

IP, RoIP).

Bittium Tough VoIP Field Phone™ 2 is a

next-generation VoIP phone, which, thanks

to its features, accessories, and powering

options, is the optimal solution for battle-

fields, vehicles, and command posts. To-

gether with the distributed and survivable

Bittium Tough VoIP Service™, calls between

the Field Phone 2 users are enabled regard-

less of where and how the users have been

connected to the network.

Bittium Tough VoIP Service™ is a software

product, which can be used to connect both

fixed data network users and wireless tac-

tical data network users to the same voice

service network. It is a flexible and decen-

tralized solution which can be installed on

routing elements of the network, such as

the Bittium TAC WIN Tactical Router, the Bit-

tium Tough Comnode device, or the Bittium

Tough SDR radios.

Bittium Tough VoIP Softphone™ is a VoIP ap-

plication designed especially for computer

users. It can be used for VoIP calls, instant

messaging, and conference calls in the Bit-

tium Tough VoIP Service network.

Bittium Tactical Power Pack™ is specifically

designed for tactical data transfer as an ac-

cessory to the Bittium Tough SDR Handheld

radio and the Bittium Tough Comnode de-

vice, for example, but can also be easily used

with standard tablets and smartphones via

USB. The Tactical Power Pack enables un-

interrupted field operation for the devices.

Bittium Tactical Device Management™ is

an advanced system that enables secure

deployment and operative use for tactical

communication devices. With the system,

different defense forces can maintain sov-

ereign, centralized, and efficient control

over Bittium’s tactical devices. The system

enables the preparation of the devices for

operative use and management of the de-

vices during operative use, including com-

missioning, software updates, and key man-

agement.

Bittium Tactical Network Management™ is

an easy-to-use and visual system for man-

aging Bittium’s tactical communication net-

works and network nodes, including Bittium

Tactical Wireless IP Network, Bittium Tough

SDR, and Bittium Tough Comnode. Different

defense forces can use the system’s tools

for planning the locations of the networks

and their nodes so that optimal network per-

formance can be achieved. When the net-

works are in operative use, the system pro-

vides a real-time and reliable status view of

network operation and node configurations.

The data collected from the networks and

nodes during operative use is recorded and

can be easily analyzed. This enables opti-

mizing the network performance for upcom-

ing operations.

Bittium Tactical Wireless IP Network™ (TAC

WIN) is a Software-Defined Radio based

wireless broadband network system intend-

ed for military and public safety use. With

the system MANET (mobile ad hoc network),

link and connection networks can be formed

into one logical IP network quickly, no matter

what the location is. Bittium TAC WIN is an

excellent data transfer solution for defense

forces’ troops, or for example, weapon sys-

tems and unmanned vehicle platforms due

to its mobility, low latency, and high data

transfer capacity features.

Bittium Tough SDR™ product family con-

sists of Bittium Tough SDR Handheld, tac-

tical radio for dismounted soldiers, and Bit-

tium Tough SDR Vehicular, two-channel

tactical radio for vehicle installations. The

uniquely wide range of frequency bands of

the radios improves combat survivability,

and using several waveforms, even simulta-

neously, improves compatibility and enables

operations on different levels and missions.

Bittium Tough VoIP™ product family’s prod-

ucts enable tactical IP calls and broadband

data transfer even in demanding conditions.

Products are easily integrated into existing

IP infrastructure. The product family consists

of a range of tactical IP-based communica-

tion products, including Bittium Tough Com-

node device and Bittium Tough VoIP Field

Phone 2 as well as Bittium Tough VoIP Ser-

vice and Bittium Tough VoIP Softphone soft-

ware products.

Bittium Tough Comnode™ is a versatile de-

vice, which fulfills the data transfer needs of

mobile troops by functioning, for example,

as a VoIP phone, an IP router, and an SHDSL

repeater. Additionally, the Comnode device

1717

Bittium Tough SDR Handheld™

Bittium Tough SDR Vehicular™

Bittium Annual Report 2023

Business and Operating Environment

Year 2023

The world’s political situation changed sig-

nificantly in February 2022 as Russia at-

tacked Ukraine. The outbreak of war caused

several countries to increase their defense

budgets, which has had an increasing effect

on the demand for defense sector products

and services. The interest in modernizing the

states’ tactical communication systems to

meet the needs of modern warfare has also

grown.

Interest in Bittium’s tactical communication

solutions has remained on a high level, and

the ongoing international customer pilots

have progressed well. Bittium is involved in

several tenders regarding tactical commu-

nication products and systems, which may

take several years, depending on the scope

of each project. The feedback on Bittium’s

products in the field tests has been posi-

tive, and we expect the results of the ongo-

ing tenders during the current year.

Close cooperation with the Finnish Defense

Forces continued. Bittium’s tactical back-

bone network and the related products and

radios are used by all defense branches of

the Defense Forces, supporting the mod-

ern way of fighting, where the mobility and

management of the forces on the move and

effective communication are essential. In

2023, product delivery volumes remained

low compared to the corresponding time of

the previous year caused by the slow prog-

ress in several customer projects during last

year. This is typical in multi-year customer

projects, where the annual delivery quan-

tities vary between the different phases of

the project.

On November 14, 2023, Bittium and Finn-

ish Defense Forces signed a new framework

agreement for the purchase of products in-

tended for tactical communication. The con-

tract concerns the purchase of Bittium Tacti-

cal Wireless IP Network™ (TAC WIN) software

radio system products and Bittium Tough

Comnode™ communication equipment and

related accessories during the years 2023–

2028. The Framework Agreement has a

maximum value of EUR 51.6 million, and

based on the Agreement, the Finnish De-

fence Forces will issue separate purchase

orders in several batches during the valid-

ity period of the Agreement. The first order

based on this Framework Agreement was

placed on December 21, 2023, with a value

of EUR 3.7 million. The delivery of the ordered

products started in 2023.

The deployment of Bittium Tough SDR™ soft-

ware-defined radios has progressed accord-

ing to the plans of the Defence Forces, with

the aim of ensuring the performance of the

equipment during 2024 to start a wider de-

ployment of the radios. The waveform devel-

opment of the radios and the development

of new functionalities for the customer con-

tinued as planned.

In December, the Finnish Defense Forces or-

dered development work from Bittium for

a new software-based router intended for

18 Business and Operating Environment

Bittium Annual Report 2023

tactical communication. The software rout-

er enables the formation of even larger net-

work entities for the tactical communica-

tion needs of the mobile forces. The value of

the order was approximately EUR 4.4 million

and the development work will be carried out

during the years 2024 and 2025.

In Austria, the deployment of Bittium’s tac-

tical communication systems by the local

army continued and the delivery of system

products and the integration and testing of

products and systems continued.

The discussions about cooperation with in-

ternational companies developing air de-

fense and sensor systems progressed.

In November, NATO approved the ESSOR

High Data Rate Waveform, developed by

the a4ESSOR consortium, as a standard

for tactical communication interoperabili-

ty (STANAG 5651). Bittium has been one of

the partners of the industrial a4ESSOR con-

sortium since its foundation. With the rati-

fication of the standard, the waveform will

be available to all NATO member countries,

thus enabling faster and more secure data

transfer in both national and coalition forces’

operations. Bittium provides the waveform

to its customers together with Bittium Tough

SDR™ product family radios.

With Finland’s NATO membership, interest

in Bittium’s products has increased, and the

membership is expected to strengthen the

company’s competitive position, especial-

ly in tenders for NATO countries. The mem-

bership also enables Bittium to implement

NATO waveforms and encryption solutions,

if necessary, and offers the opportunity to

participate in the research programs of

NATO countries.

Bittium has applied for a NATO information

security listing for its secure Bittium Tough

Mobile™ 2 C solution. The solution meets the

criteria required for information security list-

ing, but the listing is delayed due to the work

backlog of the authorities updating the list-

ing. Bittium has currently no information on

the progress of the list update. Entering the

list of NATO-approved devices is expected

to have a positive effect on the sales of the

solution.

Interest in secure Bittium Tough Mobile™ mo-

bile phones and information security-relat-

ed software has increased due to numerous

data security attacks. The sales volume of

the devices increased during 2023. Phones,

their background systems and software

were delivered to several European countries

for authorities’ usage. The Bittium Tough Mo-

bile™ 2 Tactical solution developed for mili-

tary use has also aroused interest among

the defense administration authorities of dif-

ferent countries, and several system pilots

started during 2023.

Market Outlook

Defense and

Public Safety Market

In the defense market’s tactical communi-

cations sector, the governments’ defense

forces and other authorities need networks

that troops, who are more and more con-

stantly on the move, can use and transfer

growing amounts of data securely. This cre-

ates demand for Bittium Tactical Wireless

IP Network™ (TAC WIN) broadband network,

Bittium Tough SDR™ handheld and vehicu-

lar radios, and for other Bittium’s IP-based

(Internet Protocol) tactical communication

solutions that fulfill the needs of data trans-

fer of moving troops and individual soldiers.

Russia’s war of aggression against Ukraine

has also increased the defense budgets of

various countries and has had a favorable

effect on demand in the defense market. In

the first phase, the increased defense appro-

priations have been allocated mainly to con-

sumables. In the future, the increased bud-

gets will also be aimed at the modernization

and development projects of the defense

forces of different countries, which may have

a positive effect on the demand for Bittium’s

tactical communication solutions.

Finland’s NATO membership is expected to

have a positive effect on the demand for Bit-

tium’s defense and official products, espe-

cially among NATO member countries.

Bittium continues its efforts to export tac-

tical communications’ products to interna-

tional markets and aims to get new interna-

tional customers during 2024. The long sales

cycles of the defense industry affect sales

development and forecasting.

The use of LTE technology, smartphones,

and applications continue to increase in

special verticals, such as public safety, cre-

ating demand for Bittium Tough Mobile™

secure smartphone and other customized

special terminals based on Bittium’s own

product platform, as well as for secure soft-

ware solutions. The awareness of mobile se-

curity risks is growing, and the interest in se-

cure mobile devices and software solution

is increasing. The sales of secure terminal

products are expected to develop moder-

ately according to the nature of public safe-

ty markets.

19Business and Operating Environment

Bittium Annual Report 2023

Bittium Tough Mobile™ 2

Bittium Secure Call™

2020

Bittium Annual Report 2023

Business and Operating Environment

In the Engineering Services business seg-

ment (previously Connectivity Solutions)

Bittium provides product development

services in the areas of wireless communi-

cations, medical technologies, connected

vehicles, and manufacturing. Outsourcing

R&D either entirely or partly results in cost

savings, and enables the scaling of custom-

ers’ product development volumes accord-

ing to their prevailing needs.

Bittium has long experience in wireless con-

nectivity, information security, and differ-

ent communications technologies such as

5G. The understanding of industry-specif-

ic requirements and strong competence in

R&D services, wireless devices, digitaliza-

tion, and information security, as well as the

ISO 13485:2016 quality certificate for medi-

cal devices and equipment, enable Bittium

to create solutions that bring clear added

value to customers and partners.

Year 2023

Despite the prevailing cost-saving pressure

in the markets among our customers, Bit-

tium’s R&D services sales grew during 2023.

The accelerating digitalization in various in-

dustries increased the need for design ser-

vices. Especially in the Industrial IoT tech-

nology market, the growing need for cloud

communication creates a need for com-

panies to add wireless connectivity to their

products. The increase of European com-

panies focusing their R&D geographically

on Europe, has also had a positive effect on

the sales growth of Bittium’s R&D services,

especially of the device design.

Cooperation with customers continued well.

Several customer projects were successful-

ly completed, and the company’s customer

portfolio expanded during the past year with

several new customers in the transport, traf-

fic, and professional tool markets, among

others. Customer projects include, for ex-

ample, the designing of a remotely con-

trolled system and its connectivity solution,

designing of connectivity parts for a traffic

control system, and designing of measuring

devices and their connectivity solutions in-

tended for professional use.

Market Outlook

Telecommunication

and Digitalization

In mobile telecommunications, the imple-

mentation of 5G is accelerating. There is

a wide range of frequencies allocated for

the 5G technology, thus creating the need

to develop multiple products to cover the

market and creating demand for R&D ser-

vices for the development of product vari-

ants. Different needs for satellite commu-

nication solutions increase the demand for

Bittium’s product development know-how

with the addition of new players to the tra-

Engineering Services

Business Segment

R&D Services

2121

Bittium Annual Report 2023

Business and Operating Environment

ditional supplier network. The demand for

Bittium’s R&D services is also increased by

the need to develop new devices utilizing

5G technology.

As digitalization evolves, secure IoT (Inter-

net of Things) has become a significant

development area in almost every indus-

try. The increasing need for companies

to digitalize their operations, collect data

wirelessly, and transfer it to the internet and

cloud services generate a need for Bittium’s

services and customized solutions. To this

end, the market needs secure devices, for

both demanding industrial and leisure ap-

plications, which collect information from

the sensors used by the device and create

a reliable wireless connection to the inter-

net and cloud services. The deployment of

5G and IoT radio technologies are expand-

ing, and the number of digitalized devices

increases continuously. The devices will also

feature new and more advanced features

that will create demand for design services.

Therefore, the integration of different sys-

tems and technologies plays an important

role in enabling complete digitalization ser-

vices. There are several learning systems

and devices under development that use

different kinds of artificial intelligence (AI)

technologies to ease and speed up the pro-

cessing of large data amounts.

Focusing the R&D work of western compa-

nies to Europe, can be seen as an increase

in demand for Bittium’s R&D services, es-

pecially in terms of device design.

Demand for R&D services is affected by

customers’ cost-saving pressures in vari-

ous industry segments.

22 Business and Operating Environment

Bittium Annual Report 2023

Medical Business Segment

Products and Services for Biosignal Measuring

In the Medical business segment, Bittium

offers its customers medical technology

products and services for biosignal mea-

suring in the areas of cardiology, neurology,

and sports medicine. Combining medical

technologies with Bittium´s long-term ex-

perience and competence in wireless and

security technologies gives Bittium an ex-

cellent basis to serve its customers in the

medical sector.

Bittium Faros™ is a versatile waterproof ECG

device that is used for early detection of car-

diac abnormalities in everyday life. Bittium

Faros is ultra-small and lightweight, which

enables precise full disclosure ECG mea-

surements for long-term holtering, cardiac

event monitoring, mobile cardiac teleme-

try and assessing the autonomic nervous

system functions. Bittium Faros outpatient

monitoring solutions include several soft-

ware options for cardiac monitoring. The

built-in arrhythmia detection algorithms on

the Bittium Faros device are used for event

recording and cardiac event monitoring. Bit-

tium’s solutions enable the earlier discharge

of patients and the ability to react to detect-

ed arrhythmias faster.

Bittium OmegaSnap™ Product Family

Bittium OmegaSnap™ 1-CH ECG Electrode is

the most cost-effective, patient compliant

and reliable patch electrode for long-term

ECG measurements. It is also suitable for

HRV applications and heart monitoring for

stroke patients.

Bittium MiniSnap™ Sensitive 1-CH ECG Elec-

trode is the most suitable one-channel elec-

trode for 24h ECG measurements on small

adults and children.

Bittium OmegaSnap™ 2-CH ECG Electrode

is a two-channel electrode which is the best

choice when more than one-channel mea-

surement is needed for more comprehen-

sive arrhythmia analysis while maximizing

patient compliance.

Bittium OmegaSnap™ 3-CH ECG Electrode

is a three-channel electrode, which is the

most patient-compliant way to perform tra-

ditional three-channel measurements.

Bittium OmegaSnap™ 1-CH Adapter and

Bittium OmegaSnap™ Multi-CH Adapter

– Bittium OmegaSnap ECG electrode and

Bittium Faros ECG device are connected

to each other through the lightweight and

discreet Bittium OmegaSnap Adapter. The

adapter also allows the Faros device to be

temporarily detached from the patch elec-

trode when charging, for example. In the

case of remote heart monitoring, such as

the Bittium HolterPlus solution, it signifi-

cantly enhances the long-term use of the

same electrode, thus ensuring that the skin

contacts of the attached electrode remain

optimal for the measurement to continue.

There are two adapter versions available:

Bittium OmegaSnap 1-CH Adapter is de-

signed for one-channel electrodes, and

Bittium OmegaSnap Multi-CH Adapter is

designed for two- and three-channel elec-

trodes.

Bittium Cardiac Navigator™ is a completely

new software solution for analyzing clinical

Holter ECG recordings. Its user-friendly and

informative way of presenting data and intu-

itive analysis tools make it easier and more

efficient to analyze ECG measurements

lasting several days. Bittium Cardiac Nav-

igator is designed to efficiently go through

longer measurements in a short time and

thus speed up the final diagnosis.

Bittium HolterPlus™ is a web-based remote

cardiac monitoring solution, consisting of a

Bittium Faros ECG device and Bittium Med-

icalSuite mobile application integrated into

a secure smart device and Medical Suite re-

mote service platform. Bittium HolterPlus

enables remote monitoring and earlier dis-

charge of the patient, and allows the ECG

measurement data of the remotely mon-

itored patient to be wirelessly transferred

securely from the monitoring device to the

Bittium MedicalSuite remote diagnostics

service platform. From the platform the ECG

recording can be downloaded to a cardiol-

ogist for the diagnosis, and the diagnosis

will be uploaded for the treating physician

for further patient care.

Bittium MedicalSuite™ is an advanced re-

mote monitoring service platform that uti-

lizes wireless data transfer. Bittium Medical

Suite is mainly aimed at service providers

to facilitate secure information sharing

and workflow management between ser-

vice providers, clinics, and specialists. The

Bittium MedicalSuite platform allows spe-

cialists to perform remote consultations re-

gardless of location. The Service is a combi-

nation of intelligent analysis, wireless data

transfer, reporting, and management mod-

ules that you can optimize according to your

needs. The easy-to-use web user interface

allows dashboard customization for differ-

ent user groups, which ensures effortless

workflow and improves efficiency. Current-

ly, the system supports cardiac monitoring

services, but the same technology can be

applied to any biosignal measurements,

such as brain monitoring and home sleep

apnea testing services.

Bittium Annual Report 2023

Business and Operating Environment

Bittium Annual Report 2023

Bittium Faros™

Bittium OmegaSnap™

3-CH ECG Electrode

24 Business and Operating Environment

Bittium Annual Report 2023

Bittium BrainStatus™ is a wireless compact

EEG amplifier, which is used together with a

disposable, easy and quick-to-wear Bittium

BrainStatus electrode headband, for exam-

ple, to diagnose epileptic seizures and brain

stroke. Bittium BrainStatus enables quick

measurement in field conditions as well

as in hospitals, thus making the treatment

process of the patient faster. Bittium Brain

Status can be used for wireless real-time

remote EEG monitoring, or data can be re-

corded to the device memory.

Bittium BrainStatus™ with Cerenion

C-Trend® is the world’s first practical

method for measuring the brain function of

intensive care patients. Bittium BrainStatus

measures and monitors the electrical activ-

ity in the brain, and with the help of Cereni-

on C-Trend analysis tool, the brain’s state

is displayed as a straight-forward and sim-

ple-to-interpret numeric value by making

use of machine learning algorithms and ar-

tificial intelligence.

Bittium NeurOne™ is one of the quickest and

most accurate EEG measuring devices in

the world designed for clinical and research

use. Bittium NeurOne system enables fully

synchronized group measuring of up to 30

persons simultaneously, for example, in dif-

ferent types of psychological studies. The

solution is optimized for use with transcrani-

al magnetic stimulators (TMS-EEG), with an

optional possibility to use it during magnetic

resonance imaging procedures (fMRI-EEG).

Bittium Respiro™ is a modern home sleep

apnea test and analysis solution for ser-

vice providers, hospitals, clinics, and health

centers. It is focused on Home Sleep Ap-

nea Testing (HSAT) and intended to record

standard PG level data and analyze typical

sleep-related breathing disorders, such

as obstructive sleep apnea, central sleep

apnea, mixed sleep apnea, hypopnea and

Cheyne-Stokes breathing.

Bittium Respiro Analyst™ software provides

a web-based intuitive user interface which

utilizes artificial intelligence to accelerate

analysis work. The software pre-analyses

the massive amount of measurement data

and converts it to a more visual and infor-

mative format. This makes it easier and

quicker for healthcare personnel to perform

further analysis and diagnosis. Bittium Med-

icalSuite provides the same cloud backend

system for all Bittium medical products and

services, and enables fast and location-in-

dependent data analysis.

Year 2023

A component shortage significantly slowed

down the manufacturing and deliveries of

medical technology products at the begin-

ning of the year, and the production of Bit-

tium Faros™ ECG devices was very limited

for several months. In April-May, production

volumes were increased, and the manufac-

turing of products continued with better ca-

pacity in May-June. The deliveries contin-

ued in the second quarter as planned, and

the shortage of components eased towards

the end of the year, as expected. In the sec-

ond half of the year, the sales of medical

technology devices outside of the US mar-

ket developed slower than estimated. The

development of sales is affected by the in-

surance policies related to treatment reim-

bursement, which vary between different

countries affecting the development pave

of remote diagnostics market. In addition,

entering new markets is affected by obtain-

ing the medical device regulatory approv-

als, that may take up to more than a year

depending on the approval.

Most product deliveries of Faros ECG de-

vices were still made to the US customer

Boston Scientific Cardiac Diagnostics (CDx)

(previously known as Preventice). CDx is one

of the leading providers of ECG measure-

ment services in the US.

In the neurophysiology market, the piloting

of Bittium BrainStatus™ EEG measuring

devices in intensive care units continued

in Finland and abroad. The change in rec-

ommendations for intensive care regard-

ing EEG measurement is expected to have

a positive effect on the demand for Brain-

Status.

Product deliveries of the home sleep ap-

nea test and measurement solution Bit-

tium Respiro™ continued in Europe, and

the feedback from our customers’ clinical

trials has been positive. Respiro’s sales are

expected to strengthen during the current

year and form one significant growth driv-

er in the Medical Business Segment in the

future. In November, Bittium and ResMed

started a collaboration regarding the dis-

tribution of Bittium Respiro to hospitals and

treatment centers. The signed distributor

agreement concerns the Bittium Respiro™

measuring device and its accessories as

well as the Bittium Respiro Analyst™ anal-

ysis software and service platform, giving

ResMed the right to resell them. The agree-

ment does not include exclusive rights and

it covers the right to resell the solution in

Great Britain, Ireland, Switzerland, Finland,

Norway, and Sweden. ResMed is a leading

provider of cloud-based medical devices

whose solutions are transforming the care

of people with sleep apnea, COPD, and other

chronic respiratory diseases.

Bittium BrainStatus™

Cerenion C-Trend®

Bittium Annual Report 2023

Business and Operating Environment

Bittium is applying for a sales license for

Respiro for the US market from the Food

and Drug Administration (FDA). The current

estimate of the amount of work and the time

needed for it is at least one year. The require-

ments of the FDA authority have grown and

become stricter in recent years. The overall

duration of the sales license process is af-

fected by the authority’s further interpreta-

tion of possible additional material needs.

Bittium is undergoing regulatory approval

processes for its medical devices in several

different countries. As necessary, the com-

pany will apply for a new European medi-

cal device approval (MDR) for its medical

technology products already in production,

which are approved according to the current

standard (MDD). Decisions on applying for

MDR approvals for existing products will be

made on a business basis or if significant

changes are made to the products that re-

quire a new approval process.

Market Outlook

Medical ECG, EEG,

and Sleep Apnea

Remote Monitoring Market

The medical technology market is undergo-

ing significant development in patient care,

especially outside hospitals. There is an in-

creasing focus on the prevention of diseas-

es and health problems through early diag-

nosis and the discharge of patients at an

earlier stage to reduce hospital and treat-

ment days. These actions significantly in-

crease efficiency in health care processes

and lower costs.

A prerequisite for early hospital discharge

is the enabling of accurate and precise fol-

low-up and measurement opportunities in

home conditions, which would be enabled

through remote monitoring. Remote moni-

toring and remote diagnostics also enable

specialists’ diagnoses regardless of time

and place. Also, evolving artificial intelli-

gence-based algorithms become more

common in supporting physicians in mak-

ing diagnoses. Remote monitoring and

remote diagnostics make it possible and

faster to obtain more accurate diagnoses,

which, in turn, speeds up the start of the

right kind of treatment. The market change

will enable several new providers to join the

overall care service chain, without compro-

mising the quality of specialist services.

For measuring biosignals, as well as re-

mote monitoring and diagnostics, Bittium

provides its Bittium Faros™ product family

for remote ECG monitoring, Bittium Brain-

Status™ for measuring the electrical activity

of the brain, home sleep apnea test solution

Bittium Respiro™, and different kinds of di-

agnostics software offered by Bittium.

26 Business and Operating Environment

Bittium Annual Report 2023Bittium Annual Report 2023

Regulation by the authorities has a strong

role in bringing medical devices to the

market. The requirements vary for different

countries and the processes are long-term.

Bittium has several regulatory approvals for

its medical devices in progress in different

countries. The company has achieved med-

ical device approval of the new MDR stan-

dard level in the EU region for the Bittium

Respiro™ product family that measures

sleep apnea. Bittium has also applied for

a medical device sales license for the Res-

piro product family from the US Food and

Drug Administration (FDA). The schedule is

affected by additional clinical studies deter-

mined by the FDA authority. The estimated

duration of the additional work is at least

one year.

Bittium Respiro™

27Bittium in 2023

Bittium Annual Report 2023

Contents

Shares 29

Information to Shareholders 30

Bittium Corporation’s Annual General Meeting 2024 31

Shares and

Shareholders

Bittium Annual Report 2023

Shares and Shareholders

Shares and

Shareholders

29Shares and Shareholders

Bittium Annual Report 2023

The shares of Bittium Corporation are quot-

ed on Nasdaq Helsinki. The Company has

one series of shares. All shares entitle their

holders to dividends of equal value. Each

share has one vote. The share does not

have a nominal value. The Company’s shares

have been entered into the Euroclear Finland

Ltd.’s book-entry system.

At the end of the financial period, the ful-

ly paid share capital of the Company en-

tered into the Finnish Trade Register was

EUR 12,941,269.00 and the total number of

shares was 35,702,264. The accounting par

value of the Company’s share is EUR 0.10.

Trading volume

(EUR/month)

Average share

price (EUR)

8.00

7. 0 0

6.00

5.00

4.00

3.00

2.00

1.00

20,000,000

18,000,000

16,000,000

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

2019 2020 2021 2022 2023

Trading Volume and Average Share Price 2019–2023

Bittium Corporation

OMX Helsinki PI

OMX Helsinki

Technology PI

100 %

80 %

60 %

40 %

20 %

0 %

-20 %

-40 %

-60 %

-80 %

-100 %

2019 2020 2021 2022 2023

Share Price Development in Nasdaq Helsinki 2019–2023

Share Buy-Back Program

The Board of Directors of Bittium Corpora-

tion has decided on May 17, 2023, to launch

a share buy-back program concerning Bit-

tium’s own shares based on the authoriza-

tion to repurchase own shares granted by

the Annual General Meeting held on April

12, 2023.

Acquisitions of own shares started on May

19, 2023, and ended on October 3, 2023.

The repurchases of the own shares began

on May 19, 2023, and ended on October 3,

2023. During that period, Bittium repur-

chased 240,000 of its own shares for the

total value of EUR 980,112.00 and an average

price per share EUR 4.0838. The shares were

acquired at the market price quoted at the

time of acquisition in trading organized by

Nasdaq Helsinki Ltd on a regulated market.

The shares acquired through the buy-back

program are intended to be used for meet-

ing obligations arising from share-based re-

wards to the Company’s management under

the Company’s current and possible future

incentive arrangements.

On December 31, 2023, Bittium held 216,146

treasury shares, which corresponds to

around 0.61 percent of all the shares in the

Company.

Share Price and

Share Trading in 2023

The closing price of Bittium Corporation’s

share was EUR 4.81 at the end of 2023; the

share reached a high of EUR 5.20 and a low

of EUR 3.31. During the year, a total of 4.0

million shares with the value of EUR 17.0 mil-

lion changed hands on the Nasdaq Helsin-

30 Shares and Shareholders

Bittium Annual Report 2023

ki. This is 11.3 percent of the share capital.

Bittium Corporation’s market capitalization

on December 31, 2023, was EUR 170.7 mil-

lion.

Dividend and Dividend Policy

Bittium Corporation follows a dividend poli-

cy that takes into account the Corporation’s

net income, financial status, need for capital,

and financing of growth.

Dividend from 2022

In accordance with the proposal of the Board

of Directors, the Annual General Meeting

held on April 6, 2022, decided that, based

on the balance sheet for the financial year

January 1, 2021–December 31, 2022, a div-

idend of EUR 0.05 per share will be distrib-

uted. The dividend was paid to sharehold-

ers who on the dividend record date of April

14, 2023, were registered in the company´s

shareholders´ register held by Euroclear Fin-

land Oy. The dividend was paid on April 21,

2023. All the shares in the company were

entitled to the dividend with the exception

of shares possibly held by the company on

the dividend record date.

Proposal by the Board of Directors

on the Use of the Profit Shown

on the Balance Sheet and

the Payment of the Dividend

On December 31, 2023, the parent com-

pany’s distributable funds were EUR

116,314,733.29, of which the profit for the fi-

nancial year is EUR 880,995.75. The Board

of Directors proposes to the Annual Gen-

eral Meeting to be held on April 10, 2024,

that a dividend of EUR 0.03 per share be

paid based on the balance sheet to be ad-

opted for the financial year ended Decem-

ber 31, 2023. The dividend will be paid to a

shareholder who, on the record date for the

dividend payment, on April 12, 2024, is reg-

istered in the shareholders’ register main-

tained by Euroclear Finland Ltd. The Board

of Directors proposes that the dividend pay-

ment date be April 19, 2024.

The Board of Directors furthermore propos-

es that the Annual General Meeting would

authorize the Board of Directors to decide,

at its discretion, on the payment of an ex-

traordinary dividend of EUR 0.03 per share,

by October 31, 2024. The Board of Directors

expects that this discretionary extraordinary

dividend will be paid, unless there is a signif-

icant deterioration in the business environ-

ment during 2024. The company will publish

any possible decisions on dividend payment

by the Board of Directors separately, and si-

multaneously confirm the dividend record

and payment dates.

Trading Codes

Bittium Corporation has been listed on Nas-

daq Helsinki since 1998. Bittium Corpora-

tion´s company code and trading code in the

Nasdaq Helsinki INET system is BITTI and

the trading code BITTI.

Trading codes are:

Nasdaq Helsinki Oy BITTI

Reuters BITTI.HE

Bloomberg BITTIFH

Shareholders

At the end of 2023, Bittium Corporation had

22,030 shareholders. The ten largest share-

holders owned 29.6 percent of the shares.

Private ownership was 69.6 percent. The per-

centage of foreign and nominee-registered

shareholders was 4.0 percent.

Shareholding of the Board

of Directors and the CEO

At the end of 2023, the shareholding of the

Board of Directors, CEO and the companies

controlled by them was 1,956,322 shares,

corresponding to 5.5 percent of all shares.

Information to

Shareholders

Press releases, reports, earnings estimates,

share price ticker, contact details of ana-

lysts and other current investor material

are available on the Company’s website at

www.bittium.com/investors. An email-

based subscription service for press re-

leases and publications can be found on

the Company’s website as well.

Financial Reports in 2024

Bittium Corporation will publish financial re-

ports for half a year and the entire financial

year and business reviews for the reporting

periods January-March and January-Sep-

tember. The structure of the business re-

views is lighter than the structure of finan-

cial reports. The reports are published both in

Finnish and in English at the company web-

site www.bittium.com/investors.

In 2024 the Financial Reports

are published as follows:

• Financial Statement Bulletin 2023:

February 9, 2024, at 8.00 am (CET+1)

• Half Year Financial Report January–

June 2024: August 9, 2024, at 8.00 am

(CEST+1)

In 2024 the Business Reviews

are published as follows:

• Business Review January–March 2024:

April 26, 2024, at 8.00 am (CET+1)

• Business Review January–September

2024: October 18, 2024, at 8.00 am

(CET+1)

Silent Period

Bittium Corporation observes a three week

silent period prior to announcing its finan-

cial reports. In 2024, the silent periods are as

follows:

• January 19–February 9, 2024

• April 5–April 26, 2024

• July 19–August 9, 2024

• September 27–October 18, 2024

31Shares and Shareholders

Bittium Annual Report 2023

Notice is given to the shareholders of Bit-

tium Corporation to the Annual General

Meeting to be held on Wednesday, April 10,

2024, at 1:00 p.m. at the University of Oulu,

at the address Saalastinsali, Pentti Kaiteran

katu 1, 90570 Oulu. The reception of persons

who have registered for the meeting and the

distribution of voting tickets will commence

at 12:30 p.m.

Shareholders may also exercise their right

to vote by voting in advance. Instructions for

advance voting are presented in Section C

of this notice to the Annual General Meeting.

Instructions for the

Participants in the Annual

General Meeting

1. Shareholders registered in the

shareholders’ register

A shareholder who is registered in the share-

holders’ register of the company maintained

by Euroclear Finland Ltd on the record date

of the Annual General Meeting, March 27,

2024, has the right to participate in the An-

nual General Meeting. A shareholder, whose

shares are registered on their personal Finn-

ish book-entry account or equity savings

account, is registered in the shareholders’

Registration for the Annual General Meet-

ing will begin on February 19, 2024 at 10:00

a.m. A shareholder registered in the share-

holders’ register of the company who wishes

to participate in the Annual General Meet-

ing must register no later than by April 4,

2024 at 4:00 p.m. The registration must be

received before the end of the registration

period.

Registration for the Annual General Meeting

can be made:

a) on the company’s website at

www.bittium.com/agm, beginning from

10:00 a.m. on February 19, 2024;

For natural persons the electronic registra-

tion requires strong electronic authentica-

tion. When a shareholder logs in to the ser-

vice through the company’s website, he or

she is directed to an electronic authentica-

tion page. Electronic authentication works

with online banking credentials or a mobile

certificate.

For shareholders that are legal entities,

the electronic registration does not require

strong electronic authentication. However,

the shareholder is required to provide the

number of its Finnish book-entry account,

its business ID or corporate identification

number and other required information. If

a shareholder that is a legal entity uses the

electronic Suomi.fi authorization described

in section C.3 below, registration requires

strong electronic authentication from the

authorized person, which works with per-

sonal online banking credentials or a mo-

bile certificate.

b) by phone to +358 40 344 3322 on week-

days between 9:00 a.m. and 3:00 p.m.; or

c) by e-mail to yhtiokokous@bittium.com.

In connection with the registration, a share-

holder shall notify their name, date of birth/

personal identification number or business

ID, address, telephone number and e-mail

address, as well as the name of a possible

assistant, legal representative or proxy rep-

resentative and the date of birth/personal

identification number of the legal represen-

tative or proxy representative. The personal

data given by shareholders to Bittium Cor-

poration or Euroclear Finland Oy is used only

in connection with the Annual General Meet-

ing and for processing of related necessary

registrations.

A shareholder, their legal representative or

proxy representative shall, if necessary, be

able to prove their identity and/or right of

representation at the meeting venue.

2. Holders of nominee-registered shares

A holder of nominee registered shares has

the right to participate in the Annual Gen-

eral Meeting by virtue of such shares on the

basis of which he or she would be entitled

to be registered in the shareholders’ regis-

ter maintained by Euroclear Finland Ltd on

March 27, 2024. The right to participate re-

quires, in addition, that the shareholder has

been temporarily registered in the share-

holders’ register maintained by Euroclear

Finland Ltd on the basis of these shares no

later than on April 5, 2024, by 10:00 a.m.

(Finnish time). As regards nominee-regis-

tered shares, this constitutes due registra-

tion for the Annual General Meeting.

A holder of nominee registered shares is ad-

vised to request without delay necessary

instructions regarding the registration in

the temporary shareholders’ register of the

company, the issuing of proxy documents

and voting instructions and registration for

the Annual General Meeting from their cus-

todian bank. The account management or-

ganization of the custodian bank has to reg-

ister a holder of nominee registered shares,

that wants to participate in the Annual Gen-

eral Meeting, into the temporary sharehold-

ers’ register of the company at the latest by

the time stated above and, if necessary, ar-

range advance voting on behalf of a nomi-

nee-registered shareholder before the end

of the registration period for nominee-reg-

istered shareholders.

Further information on the Annual General

Meeting and participation in it is available

on the company’s website at

www.bittium.com/agm.

3. Proxy representative and

powers of attorney

A shareholder may participate in the Annu-

al General Meeting and exercise their rights

at the meeting by way of proxy represen-

tation. A proxy representative of a share-

holder may also, if they so wish, vote in ad-

vance in accordance with the instructions

given in this notice. A proxy representative

shall produce a dated proxy document or

otherwise in a reliable manner demonstrate

their right to represent the shareholder at

the General Meeting. If a shareholder par-

ticipates in the Annual General Meeting by

means of several proxy representatives rep-

resenting the shareholder with shares at dif-

ferent securities accounts, the shares by

which each proxy representative represents

the shareholder shall be identified in con-

nection with the registration for the Annual

General Meeting.

Bittium Corporation’s

Annual General Meeting 2024

32 Shares and Shareholders

Bittium Annual Report 2023

Possible proxy documents should be deliv-

ered by mail to the address Bittium Corpo-

ration, Annual General Meeting, Ritaharjun-

tie 1, 90590 Oulu, Finland, or by e-mail to

yhtiokok[email protected] before the last

date for registration. The proxy document

may also be required to be presented at the

General Meeting.

Shareholders that are legal entities can

also use the electronic Suomi.fi autho-

rization service to authorize their repre-

sentative. In this case, the sharehold-

er authorizes the proxy representative it

has appointed in the Suomi.fi service at

www.suomi.fi/e-authorizations using the

authorization item ”Representation at the

General Meeting”. The proxy representa-

tive must identify themself with strong

electronic authentication when register-

ing in the General Meeting service, and

after that the electronic authorization is

automatically verified. Strong electron-

ic identification works with Finnish online

banking credentials or a Finnish mobile

certificate. More information is available at

www.suomi.fi/e-authorizations.

4. Advance voting

Shareholders who have a Finnish book-en-

try account or equity savings account may

vote in advance between February 19, 2024

10:00 a.m. (CET +1) and April 4, 2024 4:00

p.m. (CEST +1) on certain items on the agen-

da of the Annual General Meeting.

For nominee-registered shareholders, ad-

vance voting takes place through the ac-

count manager of the custodian bank. The

account manager may vote in advance on

behalf of the nominee-registered share-

holders it represents in accordance with

their voting instructions during the registra-

tion period set for holders of nominee-reg-

istered shares.

A shareholder who has voted in advance

may exercise their right to request infor-

mation under the Finnish Limited Liability

Companies Act, request a vote at the An-

nual General Meeting or vote on a possible

counterproposal only if they are present at

the Annual General Meeting in person or by

proxy representation.

Advance voting can take place in the fol-

lowing ways:

a) on the company’s website at

www.bittium.com/agm

For natural persons, electronic advance vot-

ing requires strong electronic authentica-

tion. A shareholder can register and vote in

advance by logging in with their own Finn-

ish online banking credentials or a mobile

certificate.

For shareholders that are legal entities,

electronic advance voting does not require

strong electronic authentication. However,

the shareholder shall provide the number of

its Finnish book-entry account and other in-

formation required. If a shareholder that is a

legal entity uses the electronic Suomi.fi au-

thorization service further described above,

the registration requires strong electronic

authentication, which works with personal

Finnish online banking credentials or a mo-

bile certificate.

b) by e-mail or mail;

A shareholder may submit the advance

voting form available on the compa-

ny’s website or corresponding informa-

tion to Euroclear Finland Oy by e-mail to

yhtiokokous@euroclear.com, or by mail to

Euroclear Finland Oy, Yhtiökokous / Bittium

Corporation, P.O. Box 1110, FI-00101 Helsin-

ki, Finland. The advance voting form will be

available on the company’s website no lat-

er than at 10:00 a.m. on 19 February 2024.

When submitting the advance voting form,

the statutory representative or authorized

proxy representative of a shareholder shall

produce a dated proxy document or oth-

erwise in a reliable manner demonstrate

their right to represent the shareholder at

the General Meeting.

If a shareholder participates in the Annual

General Meeting by voting in advance, the

submission of votes before the end of the

registration and advance voting period con-

stitutes due registration for the Annual Gen-

eral Meeting, provided that the above-men-

tioned information required for registration

is provided. Advance votes must be received

by the end of registration and advance vot-

ing.

A proposal that is subject to advance vot-

ing shall be deemed to have been presented

without amendments at the General Meet-

ing.

Instructions on electronic advance voting

are also available on the company’s website

at www.bittium.com/agm from 10:00 a.m.

on February 19, 2024 at the latest.

5. Other information

The language of the Annual General Meeting

is Finnish. Pursuant to Chapter 5, Section

25 of the Finnish Limited Liability Compa-

nies Act, a shareholder who is present at

the Annual General Meeting has the right

to request information on the matters to be

considered at the meeting.

Changes in shareholdings after the record

date of the Annual General Meeting do not

affect the right to participate in the Annu-

al General Meeting or the number of votes

of the shareholder at the General Meeting.

On the date of this notice, Bittium Corpo-

ration has a total of 35,702,264 shares and

votes. On the date of this notice, the com-

pany holds 216,146 treasury shares that do

not entitle to participation in the General

Meeting.

The information concerning the Annual

General Meeting required under the Finnish

Limited Liability Companies Act and the Se-

curities Markets Act is available on the com-

pany’s website at www.bittium.com/agm.

Documents of the

Annual General Meeting

The resolution proposals for the matters on

the agenda of the Annual General Meeting

as well as this notice are available on Bit-

tium Corporation’s website at

www.bittium.com/agm.

Bittium Corporation’s Remuneration Re-

port and Annual Report, which includes

the Company’s Financial Statements, the

Report of the Board of Directors and the

Auditor’s Report as well as the Corporate

Governance Statement, are available on the

above-mentioned website no later than on

March 20, 2024. The resolution proposals

and the other documents will also be avail-

able at the Annual General Meeting. The

minutes of the Annual General Meeting will

be available on the above-mentioned web-

site no later than on April 24, 2024.

Corporate

Governance Statement

Reporting Period

Jan. 1–Dec. 31, 2023

Contents

Corporate Governance 34

The Board of Directors 35

Description of Activities 35

Diversity Principles of the Board of Directors 36

The Board Committees 39

Chief Executive Officer 40

Management Group 42

Election and Remuneration of the Auditor 45

Main Features of Internal Control and

Risk Management Processes Related to

Financial Reporting Processes 45

Insider Guidelines 46

Related Party Transcations 46

3434 Corporate Governance Statement

Bittium Annual Report 2023

Corporate

Governance

Bittium Annual Report 2023

Corporate Governance Statement

The governance of Bittium Corporation

(hereinafter “Company”) is determined by

the Company’s Articles of Association, the

laws of Finland (such as the Finnish Limit-

ed Liability Companies Act and Securities

Market Act) and the Company’s Corporate

Governance Code. The Company follows the

Finnish Corporate Governance Code 2020

prepared by the Finnish Securities Market

Association and entered into force on Jan-

uary 1, 2020. The Governance Code may be

viewed, inter alia, at the Finnish Securities

Market Association website at

www.cgfinland.fi.

This Statement is made separately from

the Report by the Board. The Board’s Au-

dit Committee and the Company’s auditor

have reviewed this Statement. The statuto-

ry governing bodies of the Company are the

Shareholders’ meeting, Board of Directors,

Chief Executive Officer and the Auditor. The

Management Group supports the statutory

governing bodies of the Company. The Com-

pany’s domicile is Oulu.

This Statement is publicly available on the

Company’s website at www.bittium.com.

The Board of Directors

The Board of Directors is responsible for the

Company´s governance and proper orga-

nization of the operations. The Board of Di-

rectors comprises of three to seven (3–7)

members, and in addition it may have one

to three (1–3) deputy members. The Annual

General Meeting elects the members of the

Board of Directors for a term which expires

at the end of the following Annual General

Meeting. The number of terms for the mem-

bers of the Board of Directors is not limited.

The Board of Directors selects a Chairman

among its members.

The Board conducts an annual evaluation

of the independence of its members in ac-

cordance with the recommendation 10. A

member of the Board is required to submit

to the Company the information necessary

to conduct the evaluation of independence.

A Board member is also required to notify

the Company of any changes in information

relating to independence.

The Annual General Meeting held on April

12, 2023, decided that the Board of Direc-

tors shall comprise five (5) members. Mr.

Erkki Veikkolainen, Ms. Riitta Tiuraniemi,

Mr. Veli-Pekka Paloranta, Mr. Petri Toljamo,

and Mr. Pekka Kemppainen were re-elect-

ed as members of the Board of Directors

for a term of office expiring at the end of the

next Annual General Meeting. At its assem-

bly meeting held on April 12, 2023, the Board

of Directors elected Mr. Erkki Veikkolainen as

the Chairman of the Board of Directors. Fur-

ther, the Board has resolved to keep the Au-

dit Committee. Ms. Riitta Tiuraniemi (Chair-

man of the committee), Mr. Petri Toljamo,

and Mr. Veli-Pekka Paloranta were elected

as members of the Audit Committee.

Description

of Activities

The Board of Directors has defined a work-

ing order and evaluates its performance an-

nually. The Board of Directors shall imple-

ment the decisions of the General Meeting.

The Board of Directors supervises the oper-

ations and management. The Board of Di-

rectors makes decisions on the Company´s

guiding principles for operation, strategy

and budget. The Board of Directors decides

on mergers and acquisitions and other stra-

tegic alliances as well as significant invest-

ments and significant matters regarding

organization and finance. The Board of Di-

rectors supervises that the control of the

Group companies´ accounting and financial

affairs is duly organized. The Board of Direc-

tors appoints the CEO and possible Deputy

for him or her as well as approves the Com-

pany´s organizational structure.

The CEO, CFO, CDO and CLO (who acts as

secretary of the Board of Directors) attend

the meetings of the Board of Directors. Oth-

er management attends the meetings when

necessary or upon invitation by the Board of

Directors. The Chairman of the Board ap-

proves the agendas of the meetings of the

Board of Directors. The agendas are pre-

pared by the CEO and the CLO.

An annual clock, according to which the reg-

ular subjects to be handled are determined,

is applied in the Board´s work. In addition

to the regular subjects of the annual clock,

the most important subjects of the Board

during the year were the change of CEO,

updating the strategy, lightening the cost

structure and reforming the organization.

The Annual General Meeting decides on the

compensation of the members of the Board

of Directors and the compensations can be

publicly reviewed on the Company’s website

at www.bittium.com.

In 2023 the Board convened 15 times.

The Board members attended the meetings as follows:

January 1–December 31, 2023 Board Audit committee

Erkki Veikkolainen 15/15

Veli-Pekka Paloranta 14/15 6/6

Riitta Tiuraniemi 15/15 6/6

Pekka Kemppainen 15/15

Petri Toljamo 14/15 6/6

36 Corporate Governance Statement

Bittium Annual Report 2023

Diversity Principles

of the Board of

Directors

In the Company, diversity is seen as an es-

sential part of corporate responsibility and

as a factor in success, that enables achieve-

ment of strategic targets and continuous

improvement of customer intimacy.

In planning the composition of the Board

of Directors, the requirements of the Com-

pany´s business operations, the phases of

development and the competence require-

ments of the Board committees are taken

into account. In appointing members of the

Board, the target is to ensure that the Board

as a whole supports the development of the

Company´s current and future business op-

erations. Diversity plays a part in supporting

this goal, so the Company aims to reach a

situation where the facts supporting diver-

sity are taken into account as significant

criteria in planning the composition of the

Board of Directors.

Diversity of the Board is considered from

different perspectives. From the Compa-

ny´s point of view it is important to have

Board members with diverse backgrounds

in terms of competence, training, and ex-

perience of differing business operations,

of varying stages of business development,

and of leadership as well as diverse personal

characteristics. Experience of international

business environments and different cul-

tures in addition to consideration of age

and gender will support the diversity of the

Board. The objective is that both genders are

represented in the Board and the Company

Bittium Annual Report 2023

Corporate Governance Statement

FS: Financial Statement HYR: Half Year Reports BR: Business Review

JM: Joint Meeting with management team

Board of Directors’ Annual Clock 2023

Key topics covered during the year

OVK

12 1

11 2

HYR

H1H2

DECEMBER

• Monthly Business Review

• Business Plan and Budget Approval for the Next Year

including Headcount/Recruitment Plan Approval

for the Next Year

• Board Self-Assessment and Action Plan

• Personnel Survey Results and Actions

NOVEMBER

• Monthly Business Review

• Next Year Budget Snapshot for Comments

• Compensation Policy and Structure Review

including Incentive and Reward System

Structure Review

OCTOBER

• Monthly Business Review

• Quarterly Business Review (3Q)

• Next Year Budget and Operational

Target Setting

• Risk Management Assessment and

Plan Review

• Management Successor Plan Review

SEPTEMBER

• Monthly Business Review

• Strategy Theme 4

AUGUST II

• Monthly Business Review

• Discussion about Next Year Targets

• Investor Relation Strategy Review

• Bittium Values Review

AUGUST I

• H1 Half Year Financial Report Approval

aims to maintain a good and balanced dis-

tribution of genders.

To fulfill the diversity principles, the diversity

principles are taken into account in the pro-

cess to find and assess member candidates

and representatives of both genders are

looked for to the process. The status of di-

versity and progress of the goal mentioned

above are monitored in the self-assessment

discussions of the Board. A person elected

as a Board member of the Company must

have the competence required for the po-

sition and be able to devote a sufficient

amount of time for the duties required. In

forming the composition of the Board long-

term needs and successor planning will be

taken into account.

According to the Articles of Association of

the Company, the Board of Directors com-

prises three to seven (3–7) members and in

addition it may have one to three (1–3) dep-

uty members. The composition of the Board

and the number of members shall be such

that they enable the Board to perform its

duties efficiently. The members of the Board

are appointed annually at the Company´s

Annual General Meeting.

During the financial period ending on De-

cember 31, 2023, the Board of Directors has

comprised five members. Four of the mem-

bers have been males and one female. The

self-assessment discussions of the Board

have concluded that the members of the

Board are so different in their special skills,

backgrounds and age and gender that the

Board as a whole has therefore been able

to effectively support the business of the

Company and its development.

JANUARY

• Monthly Business Review

• Meeting with Auditors

• Financial Statement Review and Proposals to Shareholders’

Meeting

• CEO’s Last Year Performance Review

• CEO’s Target Setting for The Next Year

• Strategy Health Check and Kick-Off for Strategy Planning

FEBRUARY I

• Financial Statement Approval

FEBRUARY II

• Monthly Business Review

• Corporate Governance Statement

Review

• Sustainability Review

• • Compliance Review

MARCH

• Monthly Business Review

• Strategy Workshop

APRIL I

• Board of Directors’ Assembly Meeting

APRIL II

• Monthly Business Review

• Quarterly Business Review (3Q)

• Customer Satisfaction Survey Results

and Action Plans

• Strategy Theme 1

MAY

• Monthly Business Review

• Next Year Annual Calendar & Annual Clock Approval

• Strategy Theme 2

JUNE

• Monthly Business Review

• Strategy Theme 3

Bittium Annual Report 2023

Corporate Governance Statement

Veli-Pekka Paloranta

b. 1972, M.Sc, (Econ.)

Full-time occupation:

Lehto Group Oyj, Chief Financial Officer

Positions of trust:

• Bittium Corporation,

Member of the Board and

Member of the Audit Committee 2020–.

Previous work history:

• Bittium Corporation

(former Elektrobit Corporation),

Chief Financial Officer, 2010–2015.

• Elektrobit Corporation,

Director, Finance, 2008–2010.

• JOT Automation Ltd,

Chief Financial Officer, 2007–2008.

• Elektrobit Group Corporation,

Business Controller, 2000–2007.

Holdings Dec. 31, 2023:

Holds 8,562 Bittium Corporation shares.

Independent as regards both the Company

and its significant shareholders.

Erkki Veikkolainen

b. 1952, M.Sc. (EE), eMBA

Full-time occupation:

Mevita Invest Oy, CEO

Positions of trust:

• Bittium Corporation

(prev. Elektrobit Corporation),

Member of the Board 2008–2015,

Chairman of the Board 2015–.

• KoskiRent Ltd,

Member of the Board 2020–.

• Lumous lighting Ltd,

Member of the Board 2019–.

• Elcoflex (Suzhou) Co. Ltd,

Member of the Board 2007–.

• Elcoflex Ltd,

Member of the Board 2015–,

Chairman of the Board 2006–2015.

• Maustaja Ltd,

Member of the Board 2006–.

Previous work history:

• Bittium Technologies Ltd

(prev. Elektrobit Technologies Ltd.),

Member of the Board 2011–2015.

• Elektrobit Corporation, Executive

Vice President, Contract R&D and

Test Business Units 2002–2003.

• Elektrobit Technologies Ltd.,

Managing Director 2001–2003.

• Elektrobit Ltd., Vice President,

Business Development 1998–2001.

• Nokia Mobile Phones, various positions

1985–1998, latest Vice President.

Holdings Dec. 31, 2023:

Holds 1,822,112 Bittium Corporation shares.

Independent as regards both the Company

and its significant shareholders.

Bittium Corporation

The Board of Directors

Pekka Kemppainen

b. 1954, Lic.Sc. (Tech.)

Full-time occupation:

Professional Board Member

Positions of trust:

• Bittium Corporation,

Member of the Board 2019–.

• Valmet Corporation,

Member of the Board 2018–.

• Junttan Ltd,

Member of the Board 2018–.

Previous work history:

• Nestor Cables Ltd,

Member of the board, 2020,

Chairman of the Board 2021–2022.

• KONE Corporation,

Executive Vice President,

Service business 2010–2017.

• KONE Corporation, Executive

Vice President & Area Director

Asia Pacific, 2004–2010.

• KONE Corporation, Senior Vice

President, New Elevator and

Escalator Business, 1999–2004.

• KONE Corporation, various

positions 1984–1999, last R&D

and Technology Director.

Holdings Dec. 31, 2023:

Holds 8,326 Bittium Corporation shares.

Independent as regards both the Company

and its significant shareholders.

3939

Riitta Tiuraniemi

b. 1962, M.Sc, Electrical Engineering

Full-time occupation:

Professional Board Member

Positions of trust:

• Bittium Corporation,

Member of the Board 2018–, Member

of the Audit Committee 2018–2020,

Chairman of the Audit Committee 2020–.

• Skoggi Ltd, Member of the Board 2022–.

• Gratis Finland Ltd, Founder and

Chairman of the Board 2022–.

• Wamma Consultants Ltd,

Founder and Member of the Board 2021–.

Previous work history:

• Skoggi Ltd, Operational Director,

Founder and Chairman of the Board

2019–2022.

• HealthOperator Ltd., CEO, Founder

and Member of the Board 2014–2019.

• DNA Ltd, CEO 2009–2013.

• DNA Finland Ltd, CEO 2005–2008.

• DNA Networks Ltd, CEO 2004–2005.

• DNA Networks Ltd, CTO, Member of

Management Group 1999–2005.

• Omnitele Oy, Department Head,

Mobile Communications Consultancy,

Member of Management Group 1990–1999.

• Technology Development Centre,

TEKES Finland, Senior Technical Adviser,

Information Technology 1996–1997.

• Nokia Telecommunications,

System Designer,

Chief System Designer 1986–1990.

Holdings Dec. 31, 2023:

Holds 19,292 Bittium Corporation shares.

Independent as regards both the Company

and its significant shareholders.

Petri Toljamo

b. 1974, M.Sc, Radio Engineering, eMBA

Full-time occupation:

Professional Board Member

Positions of trust:

• Bittium Corporation,

Member of the Board,

Member of the Audit Committee, 2021–.

• Bittium Corporation,

Member of the Board, 2018–2020.

• Greowave Oy, Chairman of the Board, 2023–.

• HT Growth Partners Oy, Founder, CEO, and

Chairman of the Board, 2022–.

• Moontalk Oy,

Member of the Board, 2020–2021,

Chairman of the Board 2021–.

• Manea Capital Oy, Chairman of the Board,

2016–2023, Member of the Board, 2023–.

Previous work history:

• Keysight Technologies Inc., NEMO Wireless

Network Testing, Vice President and Keysight

Technologies Finland Oy, Managing Director

and Chairman of the Board, 2017–2022.

• Anite Finland Oy,

Managing Director and Anite Network

Testing Business Unit, Managing Director,

2013–2017.

• Pulse Electronics,

Mobile Division Director and Pulse Finland,

Managing Director 2011–2013.

• Elektrobit Wireless Communications Ltd,

Vice President, Device and Network Solutions

Business Area, 2010.

• Elektrobit Wireless Communications Ltd,

Vice President, Mobile Device Solutions

Business Area, 2008–2009.

• Elektrobit Wireless Communications Ltd,

Cellular Terminal Solutions Business Area,

Director, 2007–2008.

• Elektrobit Wireless Communications Ltd,

Platform R&D and Head of Terminal

Programs, Director, 2005–2006.

• Elektrobit GmbH, Business Development,

Director, 2004–2005.

• Elektrobit Ltd, various product development,

project management and business posi

tions, 1996–2004.

Holdings Dec. 31, 2023:

Holds 26,176 Bittium Corporation shares.

Independent as regards both the Company

and its significant shareholders.

The Board

Committees

The proper function of the corporate gov-

ernance of a company requires that Board

work is organized as efficiently as possible.

For this reason, the Company has estab-

lished an Audit Committee.

The Directors on the Committee can con-

centrate on the matters delegated to the

Committee more extensively than the entire

Board of Directors. The purpose of the Com-

mittee is to enhance the efficient prepara-

tion of matters within the competence of

the Board, increase transparency and en-

sure the quality and efficiency of the deci-

sion-making of the Board.

The Committee assists the Board by prepar-

ing matters falling within the competence

of the Board. The Board remains respon-

sible for the duties assigned to the Com-

mittee. The Committee has no autonomous

decision-making power, and thus the Board

makes the decisions within its competence

collectively.

The Committee shall regularly report on its

work to the Board. The reports shall include

at least a summary of the matters, address-

es and measures taken by the Committee.

The central duties and operating principles

of the Audit Committee are described in the

next chapter. The Annual General Meeting

decides on the compensation of the mem-

bers of the Board Committee and such

compensations can be publicly viewed on

the Company´s website at

www.bittium.com.

Bittium Annual Report 2023

Corporate Governance Statement

4040

Bittium Annual Report 2023

Corporate Governance Statement

Chief Executive

Officer (CEO)

The CEO is in charge of the operative man-

agement of the Company in accordance

with the Finnish Limited Liability Compa-

nies Act, the Articles of Association as well

as the instructions and orders given by the

Board of Directors. The CEO is responsi-

ble for the preparation of the Board meet-

ings and implementation of any decisions

made therein. Further, the CEO is respon-

sible for ensuring that the Company´s ac-

counting methods comply with the appli-

cable law and that the financial matters

are being handled in a reliable manner. The

CEO prepares strategy, long-term planning,

investments, mergers and acquisitions, fi-

nancing and makes decisions thereof to the

extent that such decisions are not tasks of

the Board of the Directors. The CEO is re-

sponsible for financial planning, the Group´s

communications and investor relations.

Lic.Sc. (Econ.), M.Sc (Tech.) Johan Wester-

marck is the Company’s CEO. He has served

the Company since April 1, 2023.

The Board of Directors defines and approves

the essential terms of the service of the

CEO, including the CEO´s remuneration, in

the form of a written agreement. The CEO´s

service contract is effective until further no-

tice and can be terminated by the Company

with twelve (12) and by the CEO with six (6)

months´ written notice.

The pension security of CEO is statutory,

and he does not have supplementary pen-

sion. According to the pension legislation,

the lowest limit of the pension age for CEO

is 65 years and 1 month at the moment.

Audit Committee

The Audit Committee has the following du-

ties:

• to monitor and assess the reporting pro-

cess of financial statements;

• to monitor and assess the financing re-

porting system;

• to supervise the financial reporting pro-

cess and risk management process;

• to monitor and assess the efficiency of

the Company´s internal control, internal

audit, if applicable, and risk management

systems;

• to monitor and assess how agreements

and other legal acts between the Compa-

ny and its related parties meet the require-

ments of the ordinary course of business

and arm´s -length terms;

• to handle the Company´s corporate gover-

nance statement and nonfinancial report;

• to monitor the Company´s auditing;

• to monitor and evaluate the independence

of the auditor and, in particular, the offer-

ing of services other than auditing ser-

vices by the auditor; and

• to prepare the appointment of the Com-

pany´s auditor.

The Chairman and the members of the Au-

dit Committee are appointed by the Board

of Directors of the Company. At least one

member of the audit committee must

have expertise in accounting or auditing.

The Board of Directors elected in the An-

nual General Meeting held on April 12, 2023

decided in its assembly meeting held on

the same day to elect Ms. Riitta Tiuraniemi

(Chairman of the Committee), Mr. Petri Tol-

jamo and Mr. Veli-Pekka Paloranta as mem-

bers of the Audit Committee. All members

of the Committee are independent from im-

mediate interest of both the Company and

its significant shareholders and they have

long term experience in business manage-

ment.

In addition to Committee members, oth-

er regular participants to the Committee

meetings are CEO, CFO and CLO who acts

as the Committee´s secretary and option-

ally auditors. Further, the Committee mem-

bers may meet the auditors without the op-

erative management being present in such

meetings. In 2023, the Audit Committee

convened 6 times. The Committee has eval-

uated, prepared and reviewed, inter alia, the

following subject matters during the finan-

cial period of January 1, 2023–December

31, 2023:

• Financial Statements of 2022;

• Business Reviews and Half Year Financial

Reports of 2023;

• Annual audit plan for 2023;

• Observations based on auditing during the

financial period;

• Preparing the appointment of the Com-

pany´s auditor;

• Observations by the internal control;

• Cash flow monitoring and evaluation of

sufficiency of financing;

• M&A related issues and their effects on the

result, balance sheet and financing status

of the Group;

• Group legal structure related questions;

and

• Impairment testing of the subsidiary

shares and goodwill.

During 2024 the Committee´s focus areas

are:

• Near future changes in sustainability re-

porting;

• Cashflow forecasting process; and

• Development of working capital.

4141

Bittium Annual Report 2023

Johan Westermarck

Chief Executive Officer, 2023–.

b. 1965, Lic.Sc. (Econ), M.Sc. (Eng).

Positions of trust:

• Consti Oyj,

Member of the Board, 2020–.

Previous work history:

• Citec Group Oy Ab,

CEO, 2017–2022.

• Maintpartner Group Oy,

CEO, 2012–2017.

• Maintpartner Oy,

CEO, 2010–2012.

• Maintpartner Ab,

CEO, 2009–2010.

• Eltel Group Oy,

VP, Business Development,

2007–2008.

• Eltel Networks GmbH,

CEO, 2006–2007.

• Eltel Group Oy,

VP, Business Development,

2004–2006.

• Elcoteq Oyj,

VP, Sales and Marketing,

2001–2004.

• Ahlstrom Machinery Oy:

Regional Director, Service Business

1997–2001,

Manager, Marketing Development

1995–1997,

Project Engineer,

1992–1995.

Holdings Dec. 31, 2023:

Holds 71,854 shares in

Bittium Corporation.

Bittium Annual Report 2023

Corporate Governance Statement

4242 Corporate Governance Statement

Bittium Annual Report 2023

Antti Keränen

Chief Financial Officer, 2023–.

b. 1979, M.Sc. (Econ.)

Previous work history:

• Sentica Partners Oy,

Investment Director, 2014–2023.

• Sentica Partners Oy,

Investment Manager, 2010–2014.

• Sentica Partners Oy,

Analyst 2008–2009.

• Kaupthing Bank h.f, Finnish Branch,

Corporate Finance Associate, 2007–2008.

• Kaupthing Bank h.f., Finnish Branch,

Corporate Finance Analyst, 2005–2007.

Holdings Dec. 31, 2023:

Corporation controlled by Keränen holds

1,500 Bittium Corporation shares.

Management Group

The management group supports the CEO in his tasks and consists of the

CEO as the chairman, CFO, CLO, CDO (since June 1, 2023), Vice President,

Communications and Sustainability, and Vice Presidents responsible for

Business Segments. Until May 31, 2023, the management group also in-

cluded Vice President responsible for Engineering.

The management group supports the CEO in operative management, im-

plementation and follow-up of the CEO´s competence area, in particular

as regards the operative business, the management and development of

the business portfolio, asset management and taxation, internal audit,

Corporate Governance of the Company, investor and marketing commu-

nications, sustainability and risk management.

Corporate Governance Statement

4343

Bittium Annual Report 2023

Corporate Governance Statement

Kari Jokela

Chief Legal Officer, 2014–.

b. 1969, LL.M., trained on the bench,

Mag.Iur. (Saarbrücken), M.Sc. (Econ.)

Previous work history:

• Elektrobit Technologies Ltd.,

Senior Legal Counsel, 2012–2014.

• Elektrobit Corporation,

Senior Legal Counsel, 2010–2012.

• Elektrobit Automotive GmbH,

Senior Legal Counsel, 2008–2010.

• Elektrobit Corporation,

Senior Legal Counsel, 2008.

• Polar Electro Ltd.,

Group Legal Counsel, 2000–2007.

• Asianajotoimisto Gilbert, Segall and

Young Oy, Attorneys at Law Helsinki,

attorney, 1998–2000.

Holdings Dec. 31, 2023:

Holds 2,420 Bittium Corporation shares.

Karoliina Malmi

Vice President, Communications

and Sustainability, 2023–.

b. 1977, M.A. International Business

Communications

Previous work history:

• Bittium Corporation, Vice President,

Communications & Marketing,

2015–2023.

• Elektrobit Corporation, Corporate

Communications Manager, 2015.

• Elektrobit Automotive GmbH, Corporate

Communications Manager, 2013–2015.

• Elektrobit Corporation, Corporate

Communications Manager, 2009–2013.

• Elektrobit Corporation, Internal

Communications, 2006–2008.

• Elektrobit Group Plc,

Communications, 2002–2006.

• JOT Automation Group Plc,

Investor Relations and Communications,

2001–2002.

Holdings Dec. 31, 2023:

Holds 2,920 Bittium Corporation shares.

Laura Kauppinen

Chief Development Officer, 2023–.

b. 1971, PhD. Psychology

Positions of Trust:

• Endev, Member of the Board,

2022–.

Previous work history:

• Citec Group, Chief Development Officer,

2020–2023.

• Citec Group, VP, Corporate &

Business Development and Administration,

2019–2020.

• Maintpartner Group, Executive Vice President,

Corporate Development and Administration

2017–2019.

• Maintpartner Group, Executive Vice President,

Corporate Development, 2014–2017.

• Maintpartner Group, Vice President,

Corporate Development, 2012–2014.

• Maintpartner Group, Head of Corporate

Development, 2009–2012.

• Eltel, Vice president, HR &

Communications, 2008–2009.

• Eltel, Vice president, HR, 2004–2009.

• IBM, Consultant, 2003–2004.

• PwC Consulting Finland,

Consultant, 2001–2002.

Holdings Dec. 31, 2023:

Holds 500 Bittium Corporation shares.

4444

Bittium Annual Report 2023

Corporate Governance Statement

Jari Inget

Vice President, Engineering Services, 2023–.

b. 1976, MSc., Electrical Engineering

Previous work history:

• Bittium Wireless Ltd, Director, Delivery,

Connectivity Solutions Product and

Service Area, 2016–2023.

• Bittium Wireless Ltd, Product Manager,

IoT Solutions Product and Service Area,

2015–2016.

• Elektrobit Wireless Communications Ltd,

Senior Project Manager, Wireless Business

Segment, 2007–2015.

• Elektrobit Ltd, Technology Manager,

HW (cellular) platforms, 2004–2006.

• Elektrobit Ltd, RF Designer and

RF Chief Engineer, 1999–2003.

Holdings Dec. 31, 2023:

Does not hold any shares in

Bittium Corporation.

Antti Näykki

Senior Vice President, Medical, 2022–

b. 1976, B.Eng. Embedded Systems

Previous work history:

• Bittium Corporation, Director,

Medical Product Management, 2020–2022.

• Bittium Corporation, Director, Corporate

Business Development, 2019–2020.

• Jutel Oy, Chief Executive Officer, 2015–2019.

• Polystar AB, Director of Sales, 2012–2013.

• EXFO Inc., Director of Sales EMEA,

Wireless, 2010–2013.

• EXFO Inc./NetHawk Oyj,

Global Key Account Manager, 2007–2010.

• NetHawk Oyj, Area Sales Manager MEA,

2004–2007.

• NetHawk Oyj, Technical Support, 2002–2003.

Holdings Dec. 31, 2023:

Does not hold any shares in

Bittium Corporation.

Tommi Kangas

Senior Vice President,

Defense & Security, 2023–.

b. 1971, Master of Engineering,

Machine Automation

Previous work history:

• Bittium Corporation, Senior Vice President,

Connectivity Solutions, 2019-2023.

• Bittium Wireless Ltd, Sales Director, Connec

tivity Solutions Product and Service Area

and Sales, 2015–2019.

• Elektrobit Wireless Communications Ltd,

Senior Account Manager, Wireless Solutions

Business Segment, 2010–2014.

• Elektrobit Wireless Communications Ltd,

Key Account and Business Line Manager,

Mobile Infra Solutions Business Area,

2009–2010.

• Elektrobit Wireless Communications Ltd,

Business Line Manager, Radio Network

Solutions Business Unit, 2006–2008.

• Elektrobit Ltd, Project Manager, Radio

Network base station project, 2004–2005.

• Elektrobit Ltd, Mechanical Chief Designer

and Specialist, 2000–2004.

• Elektrobit Ltd, Mechanical Designer, 1998–

2000.

Holdings Dec. 31, 2023:

Holds 2,741 Bittium Corporation shares.

Bittium Annual Report 2023

Corporate Governance Statement

Election and

Remuneration

of the Auditor

The Company shall have one (1) auditor that

has qualified as Certified Public Accountant

and if the auditor is not an auditing compa-

ny as defined by the law, one (1) deputy au-

ditor shall be elected. The term of office of

the auditor expires at the end of the follow-

ing Annual General Meeting.

The General Meeting 2023 re-elected Ernst

& Young Oy as auditor of the Company for a

term of office ending at the end of the next

Annual General Meeting. Mr. Jari Karppinen,

APA, has been acting as responsible auditor.

It was decided that the remuneration to the

auditor shall be paid against the auditor’s

reasonable invoice.

The auditor´s fees in 2023 amounted to

EUR 111,000 (EUR 102,000 in 2022). Of the

aggregate fees, EUR 87,000 was attribut-

able to auditing (EUR 91,000 in 2022), EUR

10,000 to tax advice (EUR 7,000 in 2022) and

EUR 14,000 to other services (EUR 4,000

in 2022).

Main Features

of Internal Control

and Risk Management

Processes Related to

Financial Reporting

Processes

Risk Management

The purpose of risk management is to se-

cure positive development of earnings of

the Company and the continuation of the

business by implementing risk manage-

ment cost-effectively and systematical-

ly throughout the different Business Seg-

ments and Enabling Functions.

Risk management is part of the Company´s

strategic and operative planning, daily de-

cision-making process and internal con-

trol system. Business objectives, risks and

risk management operations are combined

through risk management as one chain of

events.

Main Principles of Organizing

Risk Management

Company adheres to the risk management

policy approved by the Board.

Risk management contains all actions,

which are connected to setting up targets,

identification of risks, measurement, review,

handling, reporting, follow-up, monitoring

and reacting to risks.

The Aim of Risk Management

of the Company is to:

• systematically and thoroughly iden-

tify and assess all major risks, which

threaten the achievement of objectives,

including risks related to business oper-

ations, property, agreements, compe-

tence, security, currencies, financing

and strategy;

• optimize business opportunities and se-

cure continuation of business;

• recognize and identify uncertainties and

subsequently develop the prediction of

risks and measures needed to manage

risks;

• take only calculated and assessed risks

with respect to e.g. expanding the busi-

ness, increasing market share and cre-

ating new businesses;

• avoid or minimize liability risks;

• ensure the safety of products, solutions

and services;

• establish a safe working environment for

the employees;

• minimize possibilities for unhealthy oc-

currences, crimes or misconduct by op-

erating procedures, control and super-

vision;

• inform interest groups of risks and risk

management; and

• be cost-effective in risk management.

The Aim of Risk Management is not to:

• exclude all risks in their entirety;

• adopt unnecessary control and

management procedures; or

• take bureaucratic processes and

procedures into use.

Main Principles of the Risk

Management Process

In connection with the strategy process and

annual planning the CEO reviews business

risks which could endanger the achievement

of strategic or financial targets. The risk as-

sessments of the strategy process are pro-

duced in accordance with the group’s risk

management process. Strategic and oper-

ative risks are monitored through monthly

reporting by businesses in the Board of the

Company. According to the risk manage-

ment process, the Business Segments and

Enabling Functions must produce assess-

ments of risks in their designated areas of

responsibilities and provide action plans to

manage risks as well as to report on mea-

sures taken including the stage and effec-

tiveness of such measures. These assess-

ments and action plans are consolidated

at the group level. The Company’s CLO is

responsible for the risk management pro-

cess and coordinates its appropriateness

and compliance.

General Description

of Internal Control and

Operational Procedures

Internal control is a process applied by the

Board of Directors, management and all lev-

els of personnel in the Company to ensure

that management has reasonable assur-

ance that:

1. operations are effective, efficient,

and aligned with strategy;

2. financial reporting and management

information is reliable, complete

and timely made; and

3. the Company is in compliance with

applicable laws and regulations as well

as the Company´s internal policies and

ethical values including sustainability.

Bittium Annual Report 2023

Core Business Processes

of Businesses and Enabling

Functions

Risk management procedures of the Busi-

nesses and Enabling Functions are in place

for business processes in the form of de-

fined control points:

• relevant process risks are identified;

• common control points / Company´s min-

imum requirement control points are iden-

tified;

• common control points are implemented

in processes; and

• additional control points can be deter-

mined as needed at business or func-

tional levels.

Control activities are the policies and pro-

cedures that help ensure that management

directives are carried out. They help ensure

that necessary actions are taken to address

risks to achievement of the Company´s ob-

jectives. Control activities are set through-

out the organization, at all levels and in all

functions. They include various range of ac-

tivities including but not limited to approv-

als, authorizations, verifications, reviews of

operating performance, securing of assets

and segregation of duties.

Internal Controls

of Financial Reporting

The Company´s external financial reporting

process, internal control and risk manage-

ment systems are briefly described in this

section. The main focus is on financial ac-

counting and related controls.

Financial Reporting Organization

The financial management of the Company

is responsible for organizing the accounting,

money transactions and other daily finan-

cial operations of the companies belonging

to it as well as organizing the internal report-

ing that supports the business.

The tasks of the Company´s financial ad-

ministration consist of, inter alia, monthly

consolidation of the Group entity, prepara-

tion of quarterly financial reports and con-

solidated financial statements, manage-

ment and investment of monetary assets

of the Group, management of liabilities, pro-

tection against exchange risk, and transfer

pricing. The finance function of the Compa-

ny implements operative supervision under

the CFO who reports any supervisory find-

ings to the Audit Committee. The tasks and

responsibilities of the accounting function

of the parent company and each subsidiary

are included in the job descriptions of the

teams and employees.

Financial Reporting Systems

Consolidated financial statements are pre-

pared by using the chosen consolidation

tool. The accounting of the Group´s subsid-

iaries is done by using the local accounting

systems from which the actual figures are

reported either manually or by automatic

transfer to the group consolidation system.

The accounting system in use includes gen-

eral ledger accounting, accounts payables

and accounts receivables. Current assets

and payroll accounting is organized through

various programs or purchased as an out-

sourced service. Purchase invoices are cir-

culated through electronic invoice process-

ing system. Global forecasts and budgets

are prepared by using the forecast and re-

porting program.

Internal Controls

The Company´s internal control mecha-

nisms are based on policies, instructions,

limited process descriptions, authorization

matrix, financial reporting review meetings,

and segregation of key accounting duties.

Compliance Procedures

Compliance processes are in place at all lev-

els of the organization to ensure that all ap-

plicable laws, regulations, internal policies

and ethical values, including environment

sustainability, are adhered to. The manage-

ment and businesses are responsible for fol-

lowing up developments in legislation and

regulations in their respective areas and

communicating them to the organization.

The members of the Management Group are

responsible for setting up adequate com-

pliance controls and compliance related

training in their units. CLO of the Company

Corporate Governance Statement

The first category addresses the basic busi-

ness objectives, including performance and

profitability goals, strategy, implementation

of objectives and actions and safeguarding

resources. The second category relates to

the preparation of reliable published finan-

cial statements, including half year finan-

cial reports and Business Reviews, as well

as condensed financial statements and

selected financial data derived from such

statements, such as earnings releases, re-

ported publicly. The third category deals

with complying with those laws and regu-

lations to which the Company is subject to.

Internal Control Framework

of the Company

Bittium’s internal control framework con-

sists of:

• the internal control, risk management and

corporate governance policies and prin-

ciples set by the Company´s Board of Di-

rectors;

• management overseeing the implemen-

tation and application of the policies and

principles;

• finance function and business controllers

monitoring the efficiency and effective-

ness of the operations and reliability of

the financial and management reporting;

• enterprise risk management process

identifying, assessing and mitigating risks

threatening the realization of the Compa-

ny´s objectives;

• monitoring possible agreements and oth-

er legal acts between the Company and its

related parties;

• compliance procedures making sure that

all applicable laws, regulations, internal

policies and ethical values (including sus-

tainability) are adhered to;

• effective control environment at all orga-

nizational levels including control activ-

ities tailored for defined processes and

creating group minimum requirements

for product and service areas as well as

for geographical areas;

• shared ethical values and strong internal

control culture among all employees; and

• internal audit assignments reviewing the

effectiveness of the internal controls as

needed.

Bittium Annual Report 2023

Corporate Governance Statement

coordinates the appropriateness and com-

pliance of the compliance processes.

Roles and Responsibilities

Regarding Risk Management

and Internal Control

The key roles and responsibilities regard-

ing the Company´s internal control and risk

management are defined as follows:

Board of Directors

The Board of Directors is ultimately respon-

sible for the administration and the proper

organization of the operations of the Com-

pany. According to good corporate gov-

ernance, the Board also ensures that the

Company has duly endorsed the corporate

values applied to its operations. The Board

approves the internal control, risk manage-

ment and corporate governance policies.

The Board establishes the risk-taking level

and risk bearing capacity of the Company

and re-evaluates them on a regular basis as

part of the strategy and goal setting of the

Company. The Board reports to the share-

holders of the Company.

Audit Committee

Audit Committee is responsible for the fol-

lowing internal control related duties:

• to monitor the reporting process of finan-

cial statements;

• to supervise the financial reporting pro-

cess;

• to monitor the efficiency of the compa-

ny´s internal control, internal audit, if ap-

plicable, and risk management systems;

• to review the description of the main fea-

tures of the internal control and risk man-

agement systems pertaining to the finan-

cial reporting process, which is included

in the company´s corporate governance

statement; and

• to monitor the statutory audit of the finan-

cial statements and consolidated finan-

cial statements.

More detailed descriptions how the Audit

Committee is fulfilling its monitoring role

are defined in the Committee´s annual plan.

The Audit Committee reports to the Board

of Directors of the Company.

Chief Executive Officer

The CEO is in charge of the day-to-day

management of the Company in accor-

dance with the instructions and orders giv-

en by the Board. The CEO sets the ground

for the internal control environment by

providing leadership and direction to se-

nior managers and reviewing the way they

are controlling the business. The CEO is in

charge of the allocation of resources to the

risk management work, review of risk man-

agement policies as well as defining the

principles of operation and overall process.

The CEO reports to the Board on risk man-

agement according to the Annual Clock.

Management Group

The members of the Management Group

are responsible for internal control imple-

mentation in their responsibility areas.

More specific internal control policies and

procedures are established within the prin-

ciples set by the Board and CEO. Addition-

ally, the management of the subgroup and

the Group Management are responsible for

implementing risk management practices

in planning cycle and daily operations, and

ensure the adherence of:

• laws;

• regulations;

• internal policies; and

• ethical values

in their designated responsibility areas.

The CFO:

• ensures a setup of adequate control ac-

tivities for Business Segments in coop-

eration with the Business Segment man-

agement;

• follows the adequacy and effectiveness of

control activities; and

• ensures that external reporting is correct,

timely and in compliance with regulations.

Finance function does not have a sepa-

rate internal control function. CFO reports

any supervisory findings to the Audit Com-

mittee.

The CLO ensures that the Group´s corpo-

rate governance practices comply with the

law and that legal matters of the Group

are handled appropriately, in particular the

contractual risks relating to business op-

erations.

The CLO is in charge of the Company’s risk

management process and its continuous

development. The CLO reports to the CEO

and management group on risk manage-

ment as part of the monthly reporting.

Internal Audit

The Company has no specific internal au-

dit organization. This is taken into account

in the content and scope of the annual au-

dit plan. On the one hand, external auditing

focuses on specific areas in turn to be au-

dited, and on the other hand, on separately

agreed priority areas.

Insider Guidelines

The Company adheres to the Insider Guide-

lines for Listed Companies prepared by Nas-

daq Helsinki Ltd (previously NASDAQ OMX

Helsinki Ltd, OMX Nordic Exchange Helsinki

Ltd and Helsinki Stock Exchange), the Cen-

tral Chamber of Commerce and the Confed-

eration of Finnish Industries. The Compa-

ny has complemented the Guidelines by its

internal insider guidelines. The insider and

trading guidelines approved by the Com-

pany include regulations on insiders, publi-

cation and postponement of publication of

inside information, prohibited use of inside

information, insider registers, duty of noti-

fication of managers´ and their closely as-

sociated persons´ transactions, and per-

sonnel´s own trading with the Company´s

financial instruments. The purpose of the

guideline is to explain the content of the

guideline published by Nasdaq Helsinki Ltd

and other regulations and restrictions relat-

ing to the matter, and to unify and coordi-

nate the processing of insider and trading

matters within the Company.

The managers of the Company must com-

ply with the EU Market Abuse Regulation´s

prohibition on dealing in the Company´s fi-

nancial instruments (closed period). In ac-

cordance with the Company´s Board of

Directors´ decision, the Company has in

addition determined certain time periods

4848

Bittium Annual Report 2023

Corporate Governance Statement

during which persons taking part in the

preparations of the Company´s financial re-

porting and other persons who have access

to information pertaining to the Company´s

financial status are prohibited to trade the

Company´s financial instruments. The pur-

pose of the trade restrictions is to control

trading of the Company´s financial instru-

ments, and thereby increase trust to the

Company and the operation of the secu-

rities market. Trading with the Company´s

financial instruments is completely prohib-

ited for the aforementioned persons for a

period of 30 days before the publication of

earnings information of the Company. The

most common publications are the release

of business review and half year report as

well as release of the Company´s financial

statements. The restriction is applicable

also to any possible preliminary informa-

tion regarding the financial statements, and

business review and half year report.

Persons included in a project-specific in-

sider register are prohibited from all trading

and business transactions until the project

has expired or has been publicly announced.

If the project falls upon another listed com-

pany or may affect the price of the finan-

cial instruments of another listed company,

the project-specific insiders have no right

to trade with such company´s financial in-

struments.

The Company voluntarily maintains on its

website a list of the financial instruments

owned by the Company´s managers or by

the institutions operating under the author-

ity of the managers. The list is updated on

the last day of each month.

Related Party

Transactions

The purpose of Company’s Guidelines on

Related Party Transactions is to ensure that

any business transactions involving per-

sons belonging to the Company’s related

parties are made independently and based

on market terms. This also applies to busi-

ness transactions that otherwise may raise

suspicions on whether the transaction was

made on market terms. The Company as-

sesses and monitors that any related party

transactions promote the purpose and in-

terests of the Company and are commer-

cially justified and overall in the best inter-

ests of the Company and that any conflicts

of interest are duly taken into account when

making decisions on related party transac-

tions.

According to the definition in the Limited Li-

ability Companies Act, a related party trans-

action is not part of the company’s ordinary

course of business or is made in deviation

from customary commercial terms. This

kind of related party transactions are un-

customary in the company’s business. In

addition to the general monitoring concern-

ing related party transactions, the Company

prepares a special report on transactions

that are not part of the Company’s ordinary

course of business or are made in deviation

from customary commercial terms.

The Company has defined its related par-

ties according to the IAS 24.9 standard and

maintains an up-to-date register of major

business transactions between the Com-

pany and its related parties, the parties, and

the key terms of such transactions. The in-

formation about the related parties is col-

lected annually from the persons belonging

to the Company’s related parties and serv-

ing the Company. The Company monitors

possible related party transactions as a part

of its internal control. Roles and responsibil-

ities regarding internal control are described

on the Company’s internet site. In addition,

the above-mentioned persons are obliged

to notify the Company’s related party ad-

ministration of any related party transac-

tions which have come to their knowledge.

Such notification must be made without

delay after receiving such information. The

transactions are considered major if their

total amount exceeds € 20,000 during the

financial period.

The Company’s related party register is not

public, and any information entered in it will

not be disclosed to third parties, with the

exception of any authorities and the audi-

tor entitled to receive such information. Any

major transactions to be performed with

the Company’s management and its relat-

ed parties shall be approved by the Board

of Directors.

The Company discloses the related party

transactions relevant to the shareholders

at the latest when the transaction is bind-

ing on the Company. The principles of the

Guidelines on Related Party Transactions

are observed throughout the Bittium Group

and in the decision-making concerning all

of the Group companies.

Sustainability at

Bittium in 2023

Contents

Sustainability Highlights in 2023 50

The CEO’s Statement on Sustainability 52

Bittium in Brief 54

Description of Operations 54

Updated Strategy 54

Value Creation Model 56

Megatrends Affecting Bittium’s Business 57

Sustainability Management 58

Sustainability Organization and Risk Management 58

Bittium’s Ethical Principles and Code of Conduct 59

Stakeholder Cooperation 59

Sustainability at Bittium 61

Economic Impact 61

Sustainability Program 2022–2025 64

Materiality Analysis 64

Alignment with the UN’s Sustainable Development Goals 65

Innovative and Developing People 66

Confidential Customer Relationships and Secure Products 72

Corporate Citizenship and Sustainable Business Practices 76

Environment 82

Reporting 88

Reporting Basics and Principles 88

GRI Content Index 89

Sustainability at Bittium in 2023

Bittium Annual Report 2023Bittium Annual Report 2023

Sustainability at Bittium in 2023

Sustainability

Highlights

in 2023

5151Sustainability at Bittium in 2023

Bittium Annual Report 2023

Competence

Development

Days of training (average)

days / employee / year

5.2

Waste Recycling Ratio

Highest Month: Solar Power

Monthly average of 5.6 %

of the energy requirements

at the Oulu office

Total Carbon Footprint

1,049 kg CO

e / person / year

Electricity

Consumption

from last year

Customer Project

Satisfaction Survey

NPS

Customer

Satisfaction Survey

NPS

Employee

Survey

Response Rate

+2.6

620 tCO

52 50

14.0

99.9

5252 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Sustainability at Bittium in 2023

53Sustainability at Bittium in 2023

Bittium Annual Report 2023

The CEO’s

Statement on

Sustainability

The year 2023 was a period of major chang-

es for Bittium. We updated our strategy and

are moving on to a new stage as a compa-

ny, with the goal being profitable growth.

Our business operations must be profitable

and sustainable so that we can provide work

and well-being for our personnel while also

taking into consideration our customers, in-

vestors and other stakeholders. From this

perspective, the focus areas of our sustain-

ability program are still highly relevant to us.

Success can only be achieved with com-

petent personnel. Nevertheless, we had to

make painful decisions regarding our per-

sonnel in the fall when we reorganized our

business operations. The changes and the

uncertainty they brought were also reflected

in the results of our employee survey we con-

ducted in January. For example, the employ-

ee commitment index decreased slightly.

Our position as a pioneer of technology re-

quires that our personnel actively maintain

and develop their own expertise in the con-

tinuously changing operating environment.

We focus on keeping abreast of the latest

technologies, tools, legislation, and other

regulations. As a trailblazer, we also need

to have insight into technological trends

and the development of the operating en-

vironment.

The prevailing uncertainty around the world

has also reflected our operations. Trust,

which is one of our core values, takes on even

greater importance in times like these. It is

one of the pillars of our “Customers and In-

formation Security” focus area, and we mea-

sure it annually in connection with our cus-

tomer satisfaction survey. Our customers

must be able to trust us and our products

and expertise in a world where the signifi-

cance of information security, for example,

is higher than ever before. We must stay on

the leading edge of developments, which is

why we actively participate in information

security development projects in Finland

and internationally.

The quality of our work and the satisfaction

of our customers are a high priority for us.

We measure this regularly with customer

satisfaction surveys. Despite the fact that

2023 was a year of major changes, we suc-

ceeded to serve our customers well, and

our customer satisfaction result improved

compared to the previous year. We humbly

accept this feedback and continue the sys-

tematic work to serve our customers in the

best possible way.

Due to the nature of our business and the

fact that our customers operate in critical

sectors of society, ethical principles and re-

sponsible business practices are vital for

us. We observe a very wide range of require-

ments issued by the authorities and ensure

compliance and strict adherence to dead-

lines.

In 2023, we began preparing for the intro-

duction of digital product passports by pro-

actively collecting data into our product in-

formation management system. The digital

product passport is part of the new circular

economy package published by the Europe-

an Commission.

At Bittium, environmentally sustainable

operations mean responsibility for mitigat-

ing the climate change and developing re-

source-efficient solutions. The most notable

environmental impacts of Bittium’s prod-

ucts occur during the last stage of the life

cycle, that is, recycling. We apply the rules

laid out in the EU’s Ecodesign Regulation in

our product design and development. Our

secure smartphone, Bittium Tough Mobile

2, fulfills the requirements of the Regulation,

which entered into force in 2023.

We are actively committed to combating cli-

mate change. We strive to invest in renew-

able energy, reduce travelling, recycle waste

efficiently and strive to maximize the benefi-

cial use of waste. We have been calculating

our carbon footprint since 2018. In 2023, our

carbon footprint was lower than ever before.

Our long-term sustainability efforts were

recognized last year with a silver medal in

the EcoVadis sustainability ratings. We were

ranked in the top 25 percent globally among

the assessed companies.

Sustainability is an integral part of Bittium’s

operations. We want to develop our opera-

tions and processes and do our part in build-

ing a better future.

Johan Westermarck

CEO

Bittium Annual Report 2023

Bittium

in Brief

Operating

Result

Net Sales

Cash and

short-term deposits

-4.3

MEUR

Net Gearing

13.2

R&D

investments,

% of net sales

26.9

75.2

MEUR

8.3

MEUR

Description of

Operations

Bittium is a Finnish technology company

specializing in the development of reliable,

secure communications and connectivity

solutions, and the development of products

and services for measuring and monitoring

biosignals outside of hospitals. Bittium has

an over 35-year legacy of deep expertise in

various technologies. Bittium provides its

customers with innovative products and

services, customized solutions based on

its product platforms, and product devel-

opment services.

Sustainability is essential part of daily work

and management that basis on the compa-

ny’s strategy and values.

Sustainability is present in Bittium’s opera-

tions throughout the life cycle of our prod-

ucts, in our procurement chains, and in the

way we create value for the surrounding so-

ciety.

Updated Strategy

On October 30, 2023, Bittium announced

its updated strategy concerning the years

2024 and 2025. Bittium’s main goals are to

achieve an average annual net sales growth

of more than 10 percent and an operating

profit level of 10 percent. The updated strat-

egy will enable the achievement of the set

goals.

In accordance with the updated strategy,

the company has three Business Segments:

Medical, which focuses on measuring bio-

signals and remote monitoring, Defense &

Security, which offers products and services

to the defense and security markets, and En-

gineering Services, which offers R&D ser-

vices. Group operations that were previously

centralized are now also largely divided into

the company’s three Business Segments,

best meeting the needs of each segment.

This was an essential change to optimize the

operation of more independent businesses.

The company’s updated strategy has three

main focus areas. The first one is a change

from a product development organiza-

tion to a customer-centric, growth-orient-

ed operating model through its segment

organizations. Secondly, the company fo-

cuses strongly on its current products and

increasing their market shares. The R&D

work is mainly concentrated on further im-

proving the competitiveness and productiv-

ity of these products. Thirdly, the company

seeks to increase efficiency in its own oper-

ating methods and has streamlined its cost

structure, which is expected to significant-

ly improve the company’s profitability and

cash flow.

Between 2016 and 2023, the company’s

two Business Segments, Defense & Secu-

rity and Medical, have strongly invested in

the development of their own products. This

has maintained the company’s high aver-

age annual R&D investment level of around

Sustainability at Bittium in 202354

5555Sustainability at Bittium in 2023

Bittium Annual Report 2023

Sustainability at Bittium in 2023

Bittium Annual Report 2023

EUR 20 million, corresponding to an average

of approximately 25 percent of the compa-

ny’s annual net sales. Both product-orient-

ed Business Segments will now focus on

continuous improvement of the competi-

tiveness of existing products and develop-

ment of their features. Continuous product

improvement is highly important to com-

petitiveness of both Business Segments.

In addition, the company will use develop-

ment cooperation with other companies

in its product development in the future. In

the R&D oriented operational model the cost

structure in the company has been heavy

due to the large R&D projects.

Medical Business Segment

The Medical Business Segment consists of

three business areas, which are the mea-

surement and analysis of the electrical ac-

tivity of the heart (ECG), the measurement

and analysis of the electrical activity of the

brain (EEG), and the measurement and anal-

ysis of sleep apnea. In business, the focus is

specifically on further improving the com-

petitiveness, and productivity of the prod-

ucts, as well as on the efficiency of opera-

tions.

In the medical technology market, signifi-

cant development is taking place regard-

ing the treatment of patients, especial-

ly outside hospitals. Increasing efforts are

being made to prevent diseases and health

problems with the help of early diagnostics.

The aim is to discharge patients at an even

earlier stage to reduce hospital and treat-

ment days. These significantly increase the

efficiency of healthcare processes, reduce

costs, and improve the treatment experi-

ence. The prerequisite for the prevention of

health problems and early discharge is en-

abling accurate monitoring and measure-

ment in home conditions with the help of

remote monitoring.

The offering of the Medical Business Seg-

ment focuses on remote monitoring solu-

tions. Bittium has solid and proven world-

class biosignal processing technology

expertise. In the coming years, the compa-

ny will focus on its product business to also

increase the amount of recurring net sales,

both with the help of software and various

multi- and single-use products. In the med-

ical business, the focus will be on coopera-

tion with existing international key custom-

ers to increase market shares together, and

on acquiring new customers.

Defense & Security Business Segment

The Defense & Security Business Segment

consists of three business areas that are de-

fense industry products (Defense Products),

defense industry product development ser-

vices (Defense Services) and secure prod-

ucts and services (Security). Bittium’s busi-

ness consists of tactical communication

solutions aimed at the defense market and

high security communication solutions

aimed at authorities and the professional

user market.

Russia’s war of aggression against Ukraine

has increased the defense budgets of vari-

ous countries and increased the states’ in-

terest to modernize their tactical commu-

nication systems. The defense forces of

different countries and other authorities

need networks for tactical data transmis-

sion, where increasingly mobile network

users can reliably and securely transfer

growing amounts of data. Finland’s NATO

membership is also expected to have a pos-

itive effect on the demand for Bittium’s de-

fense and secure products, especially in

NATO countries. Bittium has superior wave-

form quality and secure wireless technolo-

gy integrated with hardware and software

intended for defense and authorities’ use.

Over the past years, the company has made

significant investments to expand its prod-

uct portfolio. The products and systems are

now at an internationally very competitive

level, both in terms of coverage and techni-

cal characteristics. In the future, the compa-

ny will focus on the continuous improvement

of the competitiveness of existing products

and the development of features to ensure

the preservation of competitiveness. The

company will put emphasize strongly in its

key customers and invest in international

sales and marketing to pursue new custom-

ers. The company’s goal is to grow signifi-

cantly the international product business

and achieve an internationally significant

position as a provider of tactical commu-

nication and high security communication

solutions.

Engineering Services Business Segment

In the Engineering Services Business Seg-

ment, Bittium offers its customers R&D ser-

vices and wireless connectivity solutions

for the development of innovative products

in a secure and evolving wireless environ-

ment. The company has focused its R&D

service offering around radio technologies

and embedded devices. Bittium has world-

class expertise in wireless technologies

and comprehensive product development

throughout the whole product life cycle.

In the mobile telecommunications, invest-

ments in the development of new features

continue, and the importance of software

development regarding the development

of 5G networks is strengthened. Along with

digitization, secure IoT (Internet of Things)

is a significant development area in almost

all industries, where the demand is created

by the growing need of companies to digi-

tize their operations, collect data wirelessly

and transfer data to cloud services, as well

as monitor and control devices and systems

remotely. Also, the goal of western compa-

nies to shift the focus of R&D to an increas-

ing extent, e.g., to Europe, creates more de-

mand for companies offering R&D services

and wireless connectivity solutions.

In the coming years, Bittium will continue to

grow its international customer base, espe-

cially in the Industry IoT market segment.

The company will also invest in developing

strategic partnerships with its current cus-

tomers.

56 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Our Mission

Our mission is to utilize our world-class expertise and innovation

to enable secure embedded technology for the benefit

of people and societies.

Our Value Creation Model

Our Key

Resources

People

• Over 500 specialists

• Investments in employee well-being

and competence development

Customer Relationships

• A wide customer base in

the public and private sector

R&D and materials

• A corporate culture that

supports innovation

• Investments in product development

• IPR management

• Sustainable materials purchasing

Profitable and Responsible Business

• Strong balance sheet

• Investments

• Sustainable approach to business

• Comprehensive quality,

environment and safety systems

• Sustainable use of natural

resources (energy and water)

• Compliance processes

Stakeholders

• R&D cooperation

• Cooperation with stakeholders

and the authorities

• Trust-based partnerships

Our product and service areas deliver solutions

that enable our customers to respond to the changes and

opportunities created in the operating environment by new technologies.

Our Values

Trust. Courage. Innovation.

5757Sustainability at Bittium in 2023

Bittium Annual Report 2023

Outputs

and Impacts

Customers, Products, and Services

• Customer relationships based on trust

• Long-term partnerships

• Secure products with long life cycles

featuring state-of-the-art technology

• Secure communication and

connectivity solutions

• Reliable and advanced solutions for

remote monitoring in healthcare

• Minimizing product life cycle impacts

• Quality, productivity, and information security

Society and the Environment

• Taxes, salaries, and wages

• Active role in the partner network

• Added value created by R&D

• High-end technology solutions to meet

the growing needs of society

• Optimizing energy and water consumption

in our operations and in all stages of

the life cycle of our products

• Enabling cost savings in healthcare

through technology solutions

Innovative Experts

• Innovative experts with a high level

of well-being

• Continuous competence development

• Meaningful work and a supportive

working environment

Investors

• A profitable and stable investment

Megatrends Affecting

Bittium’s Business

One megatrend that has a huge effect on Bittium’s op-

erations is digitalization, which has affected all areas

for several years already, and the different manifesta-

tions of which create both business threats and busi-

ness opportunities. The digital transformation in society

will continue with increased investments in networks

formed by smart devices, people, and processes. Dig-

italization increases efficiency and enables better allo-

cation of resources.

The Internet of Things (IoT)

The growing importance of IoT requires the integration of

operating processes and secure IoT solutions to achieve

efficiency advantages. The tools and approaches we use

in developing our operations include robotic process-

es and testing automation as well as data visualization.

The company develops challenging IoT solutions with

high information security requirements for its customers.

Digitalization and the ageing population

The ageing of the population and population growth

make the digitalization of health care crucial for main-

taining the productivity and coverage of services. Re-

mote monitoring, wireless solutions, new home-based

care methods as well as faster and more efficient health

data analysis are among the technological solutions Bit-

tium has developed for its customers.

Information security

The progress of digitalization and technologies brings

with it an increase in information security threats. Cy-

ber security breaches are among the most significant

threats associated with digitalization. Stricter informa-

tion security and regulatory requirements are reflected in

the operations of the company and its customers. The re-

quirements are also expanding to cover new sectors and

applications, and the importance of information security

certification is growing. Bittium recognizes these rapidly

increasing sector-specific requirements and keeps itself

on the leading edge of the industry in responding to them.

Geopolitical uncertainty

The world’s geopolitical situation creates uncertainty

in the market outlook. States have increased their de-

fense budgets, and interest in modernizing tactical com-

munication systems to meet the needs of modern war-

fare has grown. Bittium’s products support the modern

way of fighting, where the mobility and management of

troops from the movement as well as effective commu-

nication are the key.

Sustainability at Bittium in 2023

Bittium Annual Report 2023

5858 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Sustainability

Management

THE SUSTAINABILITY WORKING GROUP

THE BOARD OF DIRECTORS

Discusses sustainability issues on the basis of the Management Group’s proposals

and accepts the annual sustainability report

THE AUDIT COMMITTEE

Discusses and prepares sustainability-related matters

CEO AND THE MANAGEMENT GROUP

Assesses and monitors the risks

Assesses and reports the

impact of operations

Set the targets and monitor the results

Implement the sustainability plans

and actions

Sustainability Management at Bittium

Sustainability

Organization and

Risk Management

Bittium has a separate sustainability work-

ing group, which develops, monitors, and as-

sesses key sustainability indicators and the

achievement of targets. The working group is

tasked with the management and scanning

of sustainability risks as well as sustainabil-

ity reporting in the company.

The sustainability working group is led by

the Vice President, Communications and

Sustainability. The group has six (6) mem-

bers: the CEO; Vice President, Communica-

tions and Sustainability; Chief Legal Officer;

CFO; Director, Human Resources; and Head

of Quality and the Environment. The sustain-

ability working group holds quarterly meet-

ings and prepares the sustainability report.

Bittium’s management and the Board of Di-

rectors review the sustainability report an-

nually (management review).

Bittium’s Management Group discusses

sustainability issues, monitors the effec-

tiveness of sustainability measures, and

sets sustainability targets in its twice-year-

ly management review. The Management

Group is also responsible for implementing

sustainability plans and actions in day-to-

day operations.

The Audit Committee of Bittium Corpora-

tion’s Board of Directors discusses sus-

tainability issues on a regular basis and as

needed. The Audit Committee oversees the

company’s preparations for the introduction

of the new Corporate Sustainability Report-

ing Directive. The Committee monitors the

company’s sustainability reporting and the

assurance thereof.

The Board of Directors of Bittium Corpora-

tion discusses sustainability issues on the

basis of the Management Group’s proposals

5959Sustainability at Bittium in 2023

Bittium Annual Report 2023

and approves the company’s annual sus-

tainability report.

The management of risks related to the

company’s operations and the operating en-

vironment, as well as the relevant processes,

are described in Bittium’s Corporate Gover-

nance Statement.

Bittium’s Ethical

Principles and

Code of Conduct

Bittium’s ethical principles comprise the fol-

lowing areas of sustainability:

1) Anti-corruption measures

The nature of Bittium’s market area and

business sector makes corruption one of

the main risks related to social sustainabil-

ity and human rights. Bittium does not con-

done any forms of bribery or corruption in its

operations or those of its partners. Bittium

updated its internal and external anti-cor-

ruption guidelines in 2017. The employees

receive training on the guidelines.

Bittium expects its partners to comply with

these guidelines. The company uses a moni-

toring tool for detecting corruption and other

irregularities in the operations of its partners.

The company’s external and internal stake-

holders have access to a channel for report-

ing violations of anti-corruption rules. There

were no cases of corruption reported to Bit-

tium in 2023.

2) Information security and protection

Bittium’s information security and data pro-

tection policies specify the methods em-

ployed in the classification, storage and dis-

closure of information.

3) Fair business, advertising

and competition

Bittium follows the rules on fair business, ad-

vertising and competition. The company has

access to different methods of securing our

customers’ information in accordance with

information security procedures.

4) Corporate citizenship

The company supports community involve-

ment in order to promote social and eco-

nomic development.

5) Protection of intellectual

property rights

Bittium respects intellectual property rights

and applies its IPR strategy and guidelines

to all of its operations.

Sustainable purchasing is also an essen-

tial part of our sustainable business opera-

tions. The principles of sustainable purchas-

ing have been described in greater detail in

Confidential customer relationships and se-

cure products.

Stakeholder

Cooperation

Bittium’s operations affect a wide range of

stakeholders. Understanding their views and

expectations is important for the company’s

operations and success. Open dialogue with

the stakeholders helps to develop Bittium’s

operations, products and solutions as well

as a goal-driven approach to finding solu-

tions to social challenges.

Bittium works in cooperation with national

as well as international stakeholders. The

major stakeholders include Bittium’s em-

ployees, customers, various suppliers, coop-

eration partners, authorities and other par-

ties regulating the operations, shareholders

and investors, students and educational in-

stitutions as well as various communities.

The company’s stakeholder-related activi-

ties are guided by good governance and the

Code of Conduct.

Personnel

Bittium arranges several different staff

events each year where employees get the

opportunity to ask questions and give feed-

back. The opportunity to have open dialog

and present questions directly to the man-

agement has formed a key part of commu-

nication. During the COVID-19 pandemic, all

staff events were held online to safeguard

the employees’ health and business con-

tinuity. In these events, the dialog between

the management and employees was even

more active than in on-site events, and the

possibility to participate regardless of loca-

tion significantly increased the number of

participants. This is why it was decided that

the events will be online events even after

the COVID-19 pandemic subdued.

In 2023, the company underwent major

changes in its operating practices and pro-

cesses. Staff events and briefings related to

the changes were arranged more frequently

than usual to support the communication

and implementation of the changes.

60 Sustainability at Bittium in 2023

Bittium Annual Report 2023

In addition to staff events, Bittium’s employ-

ees can give feedback through the annual

anonymous employee survey. Equal treat-

ment and open interaction are important to

our employees. Employees expect us to offer

interesting and meaningful work, and oppor-

tunities for professional growth. In addition

to the annual employee surveys, the com-

pany obtains information on the well-being

of employees through quarterly pulse sur-

veys, which allows for any issues to be ad-

dressed more rapidly. The results of all sur-

veys are available to the employees in the

company intranet.

Customers

Customers feedback is received on a contin-

uous basis, primarily by means of frequent

communication and through various annu-

al surveys. In 2023, surveys were carried

out both by means of interviews and online.

Feedback is collected from various levels of

customer organizations, ranging from proj-

ect personnel to senior management. The

customer feedback collection method has

proved to be effective and it will be contin-

ued in 2024.

The Scrum and Agile methods we use and

the supporting online systems (as real-time

as possible) allow ongoing monitoring and

open dialog. This enables us to quickly react

to potential problems.

Our customers value competitive and reli-

able products and services as well as our

sustainable and real-time approach to our

operations. Our major customers are lead-

ing international companies. Although the

COVID-19 pandemic taught flexible cooper-

ation via the internet, face-to-face meetings

are perceived as delivering higher engage-

ment and commitment. Product and project

inspections and approvals, in particular, are

easier to carry out face-to-face.

Suppliers and partners

When it comes to our suppliers and other

partners, we have often worked with them

in close cooperation for a long time follow-

ing established rules and ways of working.

Constant communication enables open di-

alog. Suppliers and partners expect fair and

sustainable operations and long-term co-

operation from Bittium. For its part, Bittium

expects that the business operations of its

suppliers and partners are sustainable, and

this is monitored on a regular basis.

Authorities

Bittium maintains a regular line of commu-

nication with the authorities, for example,

with regard to export control and informa-

tion security issues. The company regularly

monitors compliance with laws and regula-

tions. Applying them to the company’s busi-

ness operations requires open and ongoing

interaction with the authorities.

Local cooperation

As part of sustainable corporate citizen-

ship, Bittium actively cooperates with var-

ious communities. The expectations of dif-

ferent communities are met in a variety of

ways. The company regularly supports ed-

ucational institutions and schools to intro-

duce young students to working life – and

not forgetting the teachers. Thanks to this

collaboration, Bittium is also able to recruit

new and enthusiastic graduates.

Research and development cooperation

with companies and research institutions

broadens Bittium’s expertise and makes it

possible to mutually promote development.

Shareholders and investors

Shareholders, investors and analysts ex-

pect that Bittium provides long-term value

and acts in a sustainable manner. Analysts

who follow the company are met on a reg-

ular basis, and the company participates in

events organized for institutional investors.

The Annual General Meeting, which takes

place once a year, provides the sharehold-

ers with the opportunity to meet and discuss

with the company’s management and Board

of Directors.

In 2021, the company engaged in discus-

sions taking place in a moderated discus-

sion forum aimed at investors in order to in-

crease and improve communication with

investors. In 2023, this work was contin-

ued with the aim of improving understand-

ing of the company’s strategy and business

through open and transparent discussion.

In connection with updating its strategy,

the company organized a Capital Markets

Day for analysts and investors in 2023. The

event was organized as an in-person event

in the Helsinki metropolitan area. Following

presentations, investors had the opportuni-

ty to meet representatives of the company’s

management and largest shareholders, and

learn more about the company’s products

and services. Attending the event virtually

was also possible. A total of 40 people at-

tended the event in person, and 374 people

watched the event online. The recording of

the event had been viewed 786 times by the

end of 2023.

61Sustainability at Bittium in 2023

Bittium Annual Report 2023

Sustainability

at Bittium

Economic

Impact

Bittium’s goal is to operate cost-efficient-

ly and profitably in the long term. This cre-

ates added value for the company’s various

stakeholders and the surrounding society.

Profitable operations create economic ben-

efits for shareholders, employees, partners,

subcontractors, distributors, customers,

municipalities, and the state.

Legal compliance is the basic premise of

economic responsibility. However, in many

respects, Bittium’s sustainability and im-

pact exceed the legal requirements. Eco-

nomic responsibility also includes the com-

pany’s anti-corruption practices, according

to which we require our personnel and part-

ners to commit to our anti-corruption oper-

ating guidelines.

Bittium invests in the development of cus-

tomer relationships and the company’s ex-

pertise in order to provide reliable products

and services to customers. Bittium’s co-

operation with the company’s supplier and

subcontractor network is based on profes-

sionalism and a long-term approach. Part-

ners are selected carefully and required to

operate in accordance with the Supplier

Code of Conduct.

Creating Added Value

for Stakeholders

With respect to Bittium’s economic impact,

the local dimension is what matters most.

Local added value is generated especially

through Bittium’s direct and indirect em-

ployment impact. On a larger scale, Bit-

tium’s impact extends via tax payments,

dividends and business impacts into the

countries in which the company operates

around the world. Bittium’s dividend policy

takes into account the Group’s result, finan-

cial position, capital needs and the financ-

ing required for growth.

Bittium is present in Europe, the Americas

and Asia. The majority of the company’s

employees work in Finland, more than half

of them in the city of Oulu.

Ensuring added value means securing long-

term growth and financial stability, com-

prehensive risk management and a long-

term commitment to the development of

society and local communities. In addition

to financial risks, risk management must

take into consideration other risks related

to the valuation of the company, such as

reputational risks.

62 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Tax Footprint

Taxes are part of Bittium’s business process,

and tax management supports the compa-

ny’s strategy.

Bittium’s tax strategy is to support busi-

ness decisions and ensure their proper ex-

ecution also from the perspective of taxes.

Tax planning supports business efficien-

cy and productivity, creating added value

for shareholders and ensuring regulatory

compliance. Bittium’s tax planning is not

aggressive and it is always based on actu-

al business needs, instead of artificial ar-

rangements.

Bittium’s tax strategy aims at making sure

that the company calculates, reports, and

pays taxes correctly to the authorities, in

compliance with the regulations in effect.

As Bittium operates in five countries, the

starting point is to comply with the local

legislation and meet the local obligations.

The company’s guiding principle is to be

open and transparent with the tax authori-

ties in all the countries in which it is present.

In Finland, Bittium works in close coopera-

tion with the Tax Administration.

R&D Investments

Bittium operates in a sector that creates

products and services for the future through

continuous development, innovations and

cross-sector cooperation. The company

plays an important role at the leading edge

of technological development, and active

cooperation with academic researchers in-

creases understanding of significant new

technologies and promotes the digitali-

zation of society. Bittium has a close and

long-established cooperation relationship

with the University of Oulu.

In 2023, Bittium was involved in the role

of funding provider and research partner

Tax Footprint in 2023

MEUR

Taxes collected 2023 2022

Value added taxes (VAT) -0.3 -4.0

Payroll taxes -10.2 -10.0

Total -10.5 -14.1

Taxes borne

Employer’s contributions -0.6 -0.6

Taxes on property -0.1 -0.1

Total -0.8 -0.7

Taxes total -11.3 -14.8

in several EU cooperation projects. Exam-

ples of these include ITEA4 (software-in-

tensive systems), Horizon2020 (Horizon

2020 framework program), CELTIC – Next

(Eureka cluster for next-generation commu-

nications for a secured, trusted, and sus-

tainable digital society), EDF (European De-

fense Fund), and national projects financed

by Business Finland.

The focus areas of these cooperation proj-

ects included technologies that are high-

ly relevant to Bittium’s future product and

service business, such as various commu-

nications solutions for the defense indus-

try and authorities, information security

solutions related to products, the develop-

ment of AI and machine learning methods in

fields such as health care, the digitalization

of product development and, for example,

simulation methods for different areas of

product development, and methods and op-

erating practices related to regulatory soft-

ware development. Research projects were

89.9

5.7

Taxes on property

Employer’s contributions

Payroll taxes

Value added taxes (VAT)

0.5

Other

2.7

1.2

63Sustainability at Bittium in 2023

Bittium Annual Report 2023

also established in 2023 in the focus areas

under Bittium’s Leading Company program.

In 2023, the R&D investments were 26.9

percent of the net sales (27.0 percent). The

investments focused mainly on develop-

ing medical technology products, devel-

oping tactical communication system and

its products for the defense industry, and

special terminal products and their related

security software targeted for authorities.

On October 30, 2023, Bittium announced

its updated strategy concerning years 2024

and 2025. In the strategy the company is

seeking a change from a R&D organization

to a customer-oriented, growth-oriented

operating model through its segment orga-

nizations. Between 2016 and 2023, the com-

pany’s two Business Segments, Defense &

Security and Medical, have invested strong-

ly in the development of their own prod-

ucts. This has maintained the company’s

high average annual R&D investment lev-

el of around EUR 20 million, corresponding

to an average of approximately 25 percent

of the company’s annual net sales. In both

product-oriented Business Segments the

large product development projects have

proceeded into commercial phase. During

the next two years period, these segments

will now focus on continuous improvement

of the competitiveness of existing prod-

ucts and development of features, which is

the highly important to competitiveness in

both Business Segments. In addition, the

company will use development cooperation

with other companies in its product devel-

opment in the future.

Customers

Net sales

75.2

MEUR

Suppliers

Business

-34.4

MEUR

Employees

Salaries and wages

-39.1

MEUR

Creditors

Cost of borrowed

capital

-1.0

MEUR

Share price

development

+18.6

Net gearing

13.2

Operating

result

-5.7

Equity ratio

69.6

Tax footprint

11.3

MEUR

Shareholders

Dividend

1.8

MEUR

Product

development

investments,

% of net sales

26.9

Stakeholders

and Economic

Impact in 2023

Share Price Average 2022–2023

8.00

6.00

4.00

2.00

2022 2023

EUR

64 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Sustainability Program

2022–2025

Bittium

Employees

The Environment

Customers

and Information

Security

Ethical principles and sustainable business practices

In accordance with the new sustainability

program for 2022–2025, Bittium has four

focus areas: innovative and developing peo-

ple; confidential customer relationships and

secure products; corporate citizenship and

sustainable business practices; and envi-

ronmental sustainability.

Bittium monitors the progress of each fo-

cus area using selected indicators in accor-

dance with its sustainability program and

continuously develops its operations and

performance.

The most important resources of Bittium’s

business are highly competent people, a

diverse work community free of discrimina-

tion, and taking care of employee well-be-

ing and competence. Bittium provides its

employees with challenging and motivat-

ing jobs, and is committed to supporting

their development and investing in their

well-being.

Bittium is a reliable operator for all of its

stakeholders. Stakeholder engagement is

guided by good corporate governance as

well as the company’s ethical principles

and Code of Conduct. In customer relation-

ships, sustainability is reflected in the way of

working, the quality of products and the trust

that characterizes the company’s customer

relationships. Trust is the starting point for

Bittium’s operations.

Sustainable business practices are a corner-

stone of Bittium’s operations. It provides a

solid foundation for risk management and

represents a core value as well as a competi-

tive advantage. Sustainability helps the com-

pany with long-term value creation.

Responsibility for the environment, the mit-

igation of climate change and resource-ef-

ficient solutions are key aspects of Bittium’s

operations and their development. By max-

imizing the service life and recyclability of

products, their total life cycle impact can be

influenced. The company also strives to min-

imize the environmental impacts of its oper-

ations. The company’s performance is mon-

itored through the environmental program.

Materiality Analysis

Bittium conducted a materiality analysis on

sustainability in 2019. The aim of the anal-

ysis was to establish an understanding of

the stakeholders’ views regarding the pre-

viously selected focus areas in sustainabil-

ity. To support the materiality analysis, we

carried out a stakeholder survey in the form

of an online questionnaire for customers,

partners, investors, employees, the man-

agement, and other stakeholders. A total of

125 people completed the survey.

The survey assessed the significance of

Bittium selected sustainability focus areas

for the company’s business and evaluated

the content of each focus area to assess

the company’s performance in taking each

focus area into consideration. In addition, it

was assessed whether there were any other

areas of sustainability that were previous-

ly not included in Bittium’s selected focus

areas, and that the company should take

into consideration in its operations.

To increase the understanding of the stake-

holders’ perceptions of Bittium’s sustain-

ability, the respondents were asked to com-

pare Bittium with other companies from the

perspective of sustainability. Bittium’s aver-

age score was 8.3 on a scale of 1–10.

The participants were also asked to indicate

their willingness to recommend Bittium

as a sustainable company (Net Promot-

er Score, NPS). The stakeholders gave Bit-

tium’s sustainability an NPS of 37, which

can be considered to be a good score. NPS

scores range from -100 to +100, and all

scores above 0 are considered good.

After establishing the priorities of the iden-

tified material aspects, the final outcome of

656565Sustainability at Bittium in 2023

Bittium Annual Report 2023

Sustainability at Bittium in 2023

Bittium Annual Report 2023

The Focus Areas in Sustainability at Bittium are

#1 Innovative and developing people

• We promote an open, equal, and diverse working culture

• We take care of the well-being of our employees

• We invest in the development of competencies

and leadership skills

#2 Confidential customer relationships and secure products

• We meet the special sector-specific and technological

requirements of our customers (quality and security)

• We invest in innovative and agile product development

• We ensure the sustainability of our procurement chain

#3 Corporate citizenship and sustainable business practices

• We engage in open dialogue with our stakeholders and

support the local communities in which we operate

• We conform to sustainable business practices

• We create added value for our stakeholders through

profitable and sustainable business operations

#4 Environmental sustainability

• In accordance with the objectives set out in our

environmental program, we strive to minimize

the environmental impacts of our operations.

• We aim to optimize the service life and

recyclability of our products.

the analysis was a materiality matrix con-

firmed by the Management Group and the

Board of Directors. The matrix summarizes

the views of the company’s internal and ex-

ternal stakeholders regarding Bittium’s ma-

terial aspects of sustainability as well as the

company’s impacts and areas of develop-

ment. After the priorities had been deter-

mined, the materiality matrix was approved in

discussions held between Bittium’s Board of

Directors and the Board’s Audit Committee.

The materiality analysis conducted in 2019

was also used for the basis when updating

the sustainability program for the years 2022-

2025.

As part of the preparation for the entry into

force of the EU’s new sustainability direc-

tive, Bittium will implement a dual mate-

riality determination in 2024. The analysis

evaluates both external effects (the effects

of the different stages of Bittium’s value

chain on society and the environment) and

internal effects (risks and opportunities af-

fecting Bittium’s performance and business

that may affect the company’s value now

or in the future). Based on the definition of

materiality, the company will update its re-

sponsibility program.

Alignment with

the UN’s Sustainable

Development Goals

Bittium has evaluated the themes associat-

ed with the focus areas of its sustainability

program with the UN Sustainable Develop-

ment Goals, and identified the goals that it

has already taken into consideration and

promotes in its operations. Based on the se-

lected focus areas of sustainability, the fol-

lowing UN SDGs are of particular relevance

to the company:

3 Good health and well-being

8 Decent work and economic growth

9 Industry, innovation, and infrastructure

12 Responsible consumption and

production

16 Peace, justice, and strong institutions

17 Partnerships for the goals

66 Sustainability at Bittium in 2023

Bittium Annual Report 2023

FOCUS AREA #1

Innovative and

Developing People

Innovative people are the company’s most valuable resource,

with the well-being of employees being the foundation of its

success. At Bittium, we invest in the continuous development

of competence and supervisory skills. Every day, we strive to act

in accordance with our values – trust, courage, and innovation.

67Sustainability at Bittium in 2023

Bittium Annual Report 2023

The most important resources of Bittium’s

business are highly competent people, a di-

verse work community free of discrimina-

tion, and ensuring employee well-being and

competence. Bittium provides its employ-

ees with challenging and motivating jobs

and is committed to supporting their de-

velopment and investing in their well-being.

The year 2023 was a period of changes for

Bittium. The company updated its strategy

and adopted a segment-based organiza-

tional model. Giving the businesses more

autonomy enhances Bittium’s ability to

serve its customers on a more customer-

driven basis, and improves the speed of

decision-making in each business. At the

practical level, our strategic review covered

both processes and the operating practices

that ultimately influence our entire corpo-

rate culture. We commenced change nego-

tiations in August, which led to 61 dismiss-

als and 8 employees being temporarily laid

off until further notice. In 2023, we focused

heavily on implementing and supporting

these changes, which meant that certain

other considerations, such as strengthen-

ing the employer image, were assigned a

lower priority.

Objectives

and Sustainable

Development 2023

Bittium measures its development in the

Innovative and Developing People focus

area with regard to the following objec-

tives: employee satisfaction, maintenance

of employee competence and ensuring

special competence, strong employer im-

age, and diversity, inclusivity, equality and

equal treatment. The objectives and their

achievement are described in the follow-

ing sections.

Employee Well-being

and Engagement

Bittium’s target for the employee commit-

ment index for the period 2023–2025 is

4.0 (on a scale of 1–5), but this target was

not achieved in 2023. The Bittium Employ-

ee Survey (BES) on the year 2023 was car-

ried out right at the beginning of January

2024. As expected, the change negotiations

conducted in the latter part of 2023 had an

effect on the results of the survey. Of the

employees, 80% responded to the employ-

ee survey (77% at the end of 2022). The av-

erage score for the quantitative questions

was 3.7 (3.8 at the end of 2022). The score

for the survey section on supervisory work

remained excellent with an average of 4.2.

The employee commitment index came to

3.5, but the figures are not fully comparable

with the scores for 2022 due to differences

in the content of the survey.

The content of the survey was redesigned

to some degree. The statements and ques-

tions took the business segment perspec-

tive more into account than previously. New

statements were also added on sustainabil-

ity and environmental perspectives, for ex-

ample. In the section on supervisory work,

the new perspectives introduced in the re-

vised survey included looking after the at-

mosphere of the workplace community and

taking individual differences into consider-

ation in a positive manner.

The BES survey section on project work was

not included in the survey conducted in Jan-

uary 2024 because the most recent proj-

ect survey was carried out in spring 2023.

In the survey, we collected team-specific

feedback from employees who work in cus-

tomer and product development projects,

with project managers being a particular

target group. The results developed favor-

ably on the whole, and we received positive

feedback for improved communication in

particular.

We continued to work under the hybrid mod-

el introduced in 2022, with employees hav-

ing two in-office days per week. At the same

time, the recommendation throughout the

company has been to increase in-office

work, especially in light of the changes in

the organization, and because meeting col-

leagues and spending time at the office are

perceived to be important. The teams have

been empowered to decide on their prac-

tices concerning in-office work. Due to the

nature of the work, some employees cannot

work remotely at all. This includes people

working in production and laboratories as

well as employees whose job requires work-

ing in security-classified areas.

In addition to the employee satisfaction

survey, we conducted one pulse survey in

2023 with a focus on assessing work-relat-

ed mood and workload.

We help each other

We value each other’s work

We have a strong team spirit

My work is meaningful

Overall index for managerial work

Bittium Employee Survey 2023: highlights related to sustainability

Response rate: 80%. Scale: 1=poor, 5=excellent.

2023

2022

0 1 2 3 4 5

4.2

4.1

4.0

4.2

68 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Personnel

Development

and Training

Bittium’s objective is to maintain the com-

petence of its employees and ensure spe-

cial competence. Bittium’s position as a

pioneer of technology requires that the

personnel actively maintain and develop

their own expertise, both in terms of basic

skills and the related common ways of do-

ing things, as well as the latest technolo-

gies, tools, legislation and other regulations

of the rapidly changing operating environ-

ment, and that they have insight into the

trends in the development of technology

and the operating environment. In the de-

velopment of skills, the goal is continuous

development and learning while working.

The Bittium Leader training, which began

in 2021, continued in the first half of 2023

with two groups that started the program

in 2022. The groups participated in two

training modules focused on work ability

management and the participants’ role as

a leader. Bittium’s principles of good lead-

ership were drafted in connection with the

training program. A total of approximate-

ly 110 Bittium employees have participated

in the training program, which is aimed at

supervisors, project managers, and team

leaders.

Online training activities are an important

part of the maintenance of the Group’s com-

mon basic skills, and online training activi-

ties targeted at all employees are available

in relation to processes, methods of opera-

tion, systems and tools, among other things.

The company continued to use the Plural-

sight learning platform, where employees

can participate in high-quality mini webi-

nars, for instance. In the development of

skills, examples of the current themes in-

clude topics related to information security,

quality systems, programming languages,

working in a cloud environment, and em-

bedded systems.

In 2023, the average number of training

days was 5.2 per employee. This includes

both internal and external training as well as

orientation training and independent study.

Internal training may also involve on-the-job

learning and the sharing of expertise, and

external training may involve independent

study. Approximately 70% of the personnel

participated in training in 2023.

Bittium as an Employer

Bittium is perceived as a reliable Finnish

company that is is known especially for the

products it provides to the Finnish Defence

Forces. Awareness of the company’s health

care technology business has improved,

and the company is seen as a competent

specialist company in this sector.

Bittium canvasses the satisfaction of new

employees regarding the orientation train-

ing and company image before and after

the start of work through surveys. In 2023,

the company image score prior to start-

ing work was 7.7 (2022: 7.6), but the score

decreased after starting work and was 7.3

(2022: 8.1). The results reflect the fact that

project starts were delayed in the case of

some new employees, and exceptionally low

scores from a small number of respondents

significantly reduced the average. The com-

pany has sought to remedy the issues con-

cerning the employees in question.

Diversity, Inclusivity,

Equality and Equal

Treatment

Bittium wants to provide its employees

with equal working conditions regardless

of backgrounds, ethnicity, gender, age, and

other factors. In addition, Bittium maintains

and promotes an interactive and participa-

tive working culture.

All employees and job applicants are treat-

ed equally regardless of their gender, age,

ethnic background, political views, or other

background factors. Bittium’s equality plan

is based on the Finnish Non-discrimination

Act and the Act on Equality Between Men

and Women. The equality plan was updated

in 2023. The key measures under the updat-

ed equality plan are still focused on equal

pay and career opportunities, the openness

of recruitment, and systematically support-

ing the careers of ageing employees.

The actual situation concerning equality

at work is assessed in employee surveys

from the perspectives of pay, career devel-

opment, and recruitment. In 2023, Bittium

conducted an equality survey that was re-

sponded to by 53% of Bittium’s personnel in

Finland. Based on the results of the survey,

equality and non-discrimination are gen-

erally well-realized at Bittium. The score for

each theme in the survey was at least 5.0

on a scale of 1–6.

At Bittium, non-discrimination means equal

treatment and ensuring a working culture

that is free of discrimination. The compa-

ny respects its employees’ right to organize

and it has zero tolerance of discrimination

or harassment in any form. No discrimina-

tion cases emerged in 2023.

The principles concerning the diversity of

Bittium’s Board of Directors are defined in

the Corporate Governance Statement. Bit-

tium also wants to present the technology

industry as an attractive option for women,

who are still underrepresented in this field,

and to non-binary persons. For the second

consecutive year, Bittium participated in the

Shaking Up Tech event, where Bittium’s fe-

male employees talked to young people in

general upper secondary education about

their work as a product developer, test en-

gineer or UI/UX designer, for example. Par-

ticipating in the event supported Bittium’s

goal of staying on the minds of young people

as an interesting employer and to increase

awareness of the diverse nature of the tech-

nology industry. Several visits to educational

institutions were organized.

69Sustainability at Bittium in 2023

Bittium Annual Report 2023

cidents were reported in Bittium’s Finnish

companies in 2023. Nine of the reported in-

cidents were categorized as occupational

accidents, with one of them causing tem-

porary disability. Most of the reported acci-

dents occurred during commuting or travel.

Relevant Sustainable

Development Goals

by the UN

The measures related to the occupational

well-being and promotion of the work ability

of Bittium’s employees, safety and equali-

ty plans, and the offered employee bene-

fits promote sustainable development goal

no. 8 (decent work and economic growth).

The company’s investments in R&D activ-

ities and the competence development of

its employees promote sustainable devel-

opment goal no. 9 (industry, innovation and

infrastructure).

Managerial Work

and Performance

Reviews

Bittium has organized monthly Leadership

Coffee Sessions for supervisors. These ses-

sions have been continued as one meth-

od to support managerial work. In the latter

part of the year, the practice was changed to

support the ongoing changes in the compa-

ny so that Managers’ Meeting events were

held in approximately two-week intervals,

and the invitees included not only supervi-

sors but also project managers and other

individuals in leadership positions.

In 2023, team members and their super-

visors had quarterly discussions (Quarter

Chat) in accordance with the performance

review model. A key objective in superviso-

ry work has been to give due consideration

to individuality, support well-being at work,

and build trust in the relationships between

managers and employees. The employees

have also been offered the opportunity to

agree on having separate longer conversa-

tions, especially with regard to a long-term

competence development plan. From the

beginning of 2024, the company is tran-

sitioning to annual performance reviews.

In addition to these reviews, supervisors

and team members can meet one-on-one

during the year whenever necessary.

Well-being and

Occupational Safety

At Bittium, the majority of work involves R&D

and product (software) development. There-

fore, the most significant disability risks in-

clude musculoskeletal diseases, coping at

work and mental well-being. Project-based

work is prevalent, and the schedules and

workload may vary greatly depending on

the situation.

Bittium uses an early support model. The

model is considered to involve the entire

work community, and it helps increase

openness. From the perspective of work-re-

lated stress, it is important that one is al-

lowed and able to talk about coping, as

this enables a change towards a healthi-

er corporate culture. The topics of HR cof-

fee break events have included well-being

through nutrition, insomnia, diversity in

the workplace community, individual resil-

ience and the resilience of the workplace

community. A total of seven coffee break

events were held in 2023, and they attracted

a lot of interest among the personnel: over

a hundred Bittium employees participated

in each event.

Psychosocial stress and static work pos-

tures were highlighted as issues in a work-

place survey carried out by the occupation-

al health care provider. In response to the

results, attention was paid to ergonomics

in remote work and the rules of working in

an open-plan office, among other consid-

erations.

Employee well-being is supported by oc-

cupational health care services, which are

more extensive than required by law, as well

as by other employee benefits. The occu-

pational health care services also include

a digital clinic and the opportunities for re-

mote consultations. Employees also have

access to the services of an occupational

physiotherapist. Bittium supports its em-

ployees’ community spirit and activities

also outside working hours in the form of

various clubs, physical exercise and activ-

ities.

All Bittium offices have appropriate safety

plans in place. Some of the employees per-

form duties in which it is of particular impor-

tance to ensure electrical safety. The risks

associated with manufacturing and man-

ual work are a relatively small concern. The

Close Call reporting channel in Bittium’s in-

tranet enables employees to report poten-

tial safety and ‘close call’ concerns. No ob-

servations of close calls were reported via

the channel in 2023.

Bittium’s HR management and OHS func-

tion analyze occupational accidents at

regular intervals and whenever particular

risks emerge. A total of 11 occupational ac-

70 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Personnel in 2023

At the end of 2023, Bittium had 526 employees in

Finland, the United States, and Germany. Of the em-

ployees, 99 percent work in Finland. Most of the em-

ployees are R&D engineers.

AVERAGE AGE YEARS AT BITTIUM RETIRED

46 10.8 1

persons

700

600

500

400

2021 2022 2023

engineers

on average

at the end of

the year

526 601 85

71Sustainability at Bittium in 2023

Bittium Annual Report 2023

WOMEN

on the Board

of Directors

total

in the Management

Group

7 7. 2

2.1

2,214 5.2

TRAINING

DAYS OF TRAINING

Master’s

degree/

Bachelor’s

degree

Licentiate/

PhD

/person

total

as supervisors

72 Sustainability at Bittium in 2023

Bittium Annual Report 2023

FOCUS AREA #2

Confidential Customer Relationships

and Secure Products

Confidentiality and ensuring information security are an integral aspect of

Bittium’s sustainability. Bittium helps its customers prevent threats related

to information and national security. The company is known for its information

security expertise and secure products for the defense and security industry.

Information security is also part of ensuring confidentiality across the

company’s field of operations. For example, in product development service

projects carried out for customers, information security is a key consideration

right from the start of the design stage. In addition, Bittium’s health technology

products help its customers in the health care sector by providing them with

remote measurement solutions in response to the constantly increasing cost

pressures and efficiency requirements in the health care sector.

Bittium Annual Report 2023

73Sustainability at Bittium in 2023

Bittium Annual Report 2023

In Bittium’s operations, confidentiality is

an element of customer relationships, prod-

ucts, services, and working methods. Trust

and information security are key dimensions

of Bittium’s ability to produce reliable and

secure communications and connectivity

solutions as well as mobile information se-

curity solutions and provide health technol-

ogy products and solutions for the compa-

ny’s customers.

The changed global situation and the result-

ing changes in the operating environment

have been taken into account, and opera-

tions have been adapted and developed ac-

cording to the current conditions. Changes

in the threat environment and operating en-

vironment are monitored and taken into ac-

count in activities, methods and measures

related to Bittium’s information security and

overall security.

It is crucial to take information security

into consideration across the full life cycle

of products and services. Bittium’s Code of

Conduct is also an integral element of the

company’s secure and responsible way of

working with customers and other stake-

holders.

Bittium responds to the constantly grow-

ing and changing information security re-

quirements by training employees and by

participating in Finnish, European, and in-

ternational information security develop-

ment projects.

Information Security

Management

Information security and safety are integral

aspects of Bittium’s day-to-day operations.

The company’s operations are managed in

accordance with an information security

management system. Information securi-

ty objectives, responsibilities, and the allo-

cation of resources to activities are speci-

fied in the system.

The management system includes informa-

tion security-related policies, guidelines and

templates pursuant to the standards and

requirements (ISO 27001, Katakri and FSC)

as well as the requirements set by the cus-

tomers and law. They cover the information

security of all of the company’s functions

and areas of operation.

Bittium has various technical solutions,

methods and operating practices in place

with regard to information security. The

company’s employees have also been

trained to bear responsibility for information

security and report any information security

incidents or threats they observe. The em-

ployees receive regular training on operating

practices that ensure information security.

Product and life cycle risks are systemati-

cally assessed as part of the product devel-

opment process. With respect to products,

Bittium takes into account the safety and

information security of materials and com-

ponents as well as compliance with product

liability regulations in the company’s tar-

get markets.

Objectives

and Sustainable

Development 2023

In terms of customer relationships, the key

points related to the sustainability theme

Confidential customer relationships and se-

cure products concern cooperation, cus-

tomer understanding and project man-

agement, and product and service quality.

Customer and project satisfaction is mea-

sured through annual surveys, with sepa-

rate objectives set for each area.

As regards information security threats, the

principle of continuous development is ap-

plied to products and operations, but the

more detailed objectives are the following

four points:

1. Compliance of information security

certificates and the development of

operational security

2. Developing situational awareness

regarding security and the capacity

to recognize deviations and incidents

3. Developing business continuity

management.

4. Improving the information security

of own products and development

of new technology.

Information security is a competitive fac-

tor for Bittium. In this area, Bittium aims to

strengthen the company’s role in the recog-

nition of information security threats and in

the utilization of information together with

stakeholders, and the company also aims to

participate in the information security de-

velopment projects and key forums at the

EU level and otherwise.

Bittium is also involved in the Finnish Infor-

mation Security Cluster (FISC), which pro-

motes the utilization of cybersecurity exper-

tise in Finnish society, and the FISC-owned

Cyberlab Oy. The members of FISC consist

of nationally significant organizations that

provide information security and cyberse-

curity products and services. Bittium has

participated in the management of FISC

since 2023.

Customer and

Project Satisfaction

Bittium measures both customer and proj-

ect satisfaction on an annual basis using

the Net Promoter Score (NPS) as the indi-

cator. During the year under review, the NPS

target for both customer and project sat-

isfaction was 50. The target was achieved

in both surveys. The customer satisfaction

survey NPS improved and came to 52. The

project satisfaction survey NPS was 50, rep-

resenting a slight decrease from the previ-

ous year.

For customer satisfaction, the assessed ar-

eas are the smoothness of cooperation, Bit-

tium’s ability to understand the customer

and general satisfaction with the product

quality, whereas for project satisfaction, the

key areas are the success of project man-

agement, the functioning of technical solu-

tions, quality and the outcome of the proj-

ect. Both surveys provide information on

product and service quality, the measuring

criteria of which is the number of severe de-

fects in each business area. No severe qual-

ity defects were observed in 2023.

In the customer satisfaction survey, Bit-

tium also collects feedback on the com-

pany’s values, one of which is trust. In the

survey, trust was given a score of 4.4 on a

scale of 1–5.

74 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Information

Security Threats

Bittium’s information security manage-

ment system is based on the internation-

al ISO 27001 standard. Several audits were

also conducted by customers in 2023, and

Bittium’s audit results were excellent. In a

time of changes in the operating environ-

ment, our customers have worked with us

to verify the sustainability of our operating

practices.

The information security environment is

constantly changing and developing. During

the year under review, Bittium developed its

information security observation methods,

systems, and operating practices partly as

planned and partly in accordance with the

changed threat and information security

landscape. We also commission third-party

assessments and studies relating to meth-

ods and systems.

Bittium has not been targeted by cyber at-

tacks that would have affected the orga-

nization’s functions. Other information se-

curity incidents have been minor by nature

and they have had no significant effects on

Bittium’s operations.

In relation to information security, online

training has been organized for employees

on topics such as recognizing phishing at-

tempts.

We aim to continuously enhance informa-

tion security awareness by making guide-

lines and policies clearer, increasing com-

munication and providing regular training to

our personnel. Information security training

is provided both at a general level and on a

job-specific basis.

Information Security as

a Competitive Factor

Bittium aims to strengthen its role in the

recognition of information security threats

and in the utilization of information togeth-

er with the stakeholders, and the compa-

ny also aims to participate in the informa-

tion security development projects and key

forums of the EU and other parties. Each

year, Bittium participates in many import-

ant Finnish, European and international re-

search and development projects.

In spring 2023, Bittium received significant

funding from Business Finland, which was

used to launch the Seamless and Secure

Connectivity project. In the future, seam-

less and secure connectivity will require in-

teroperability between various networks in

the field of public, private, and related ap-

plications. The number of different termi-

nal devices in the network, such as sensors,

mobile devices and IoT devices, is growing

very quickly, and the importance of their

end-to-end information security is grow-

ing substantially. Seamlessness is enabled,

for example, by utilizing alternative connec-

tivity technologies and mobility solutions

at the same time, so that the secure con-

nection remains uninterrupted during the

entire communication. At the same time,

the development of medical remote diag-

nostics, from devices to services, promotes

cost-efficiency in the health care industry,

faster diagnosis of people’s health or relat-

ed problems, and significantly improves the

eco-efficiency of the environment as it be-

comes more common. More information on

the project is available on the company’s

website.

In 2023, Bittium again participated in

Locked Shields, the world’s largest live-fire

cyber defense exercise, hosted by the NATO

Cooperative Cyber Defence Centre of Ex-

cellence (CCDCOE). The exercise had over

3,000 participants from 38 countries. The

exercise involves protecting real computer

systems from real-time attacks, and simu-

lating tactical and strategic decision-mak-

ing in critical situations. Locked Shields is

a Red Team vs Blue Team training exercise

in which the Blue Teams are composed of

NATO CCDCOE member states and part-

ner nations. In addition to defending sys-

tems, teams must report incidents, execute

strategic decisions, and solve forensic, le-

gal, and media challenges. The plan for the

training exercise was created by 400 orga-

nizers who created over 5,500 virtual sys-

tems for the purpose.

The 5G Compad (EDF, European Defence

Fund) project that began in 2022 continued

in 2023. The aim of the project is to enable

secure tactical communication solutions

in the integration of defense infrastructure

and 5G networks.

Product Information

Management

Most of Bittium’s product information has

been migrated to the company’s new prod-

uct information management system, but

this work will still continue in 2024. Prod-

75Sustainability at Bittium in 2023

Bittium Annual Report 2023

CERTIFIED SYSTEMS

IN USE

Quality Systems

• ISO 9001, ISO 13485

and AQAP 2110

Environmental systems

• ISO 14001, ISO 50001

Information security systems

• ISO 27001, Katakri auditing

and various facility security

approvals

Of which observed in

sustainability efforts

• OHSAS 18001, SA8000, GRI G4,

Electronics Industry Citizenship

Coalition (EICC), Ethical Trade

Directive (ETI), Conflict Mineral

(USA, EU)

• SCIP, EU ROHS(I,II,III), Reach,

WEEE, Regulation on Waste,

ErP (Energy-related Product),

EU Taxonomy Regulation, Battery

Directive, Packaging Directives

STANDARDS AND

DIRECTIVES OBSERVED

494

uct information management supports

the reporting of compliance with existing

standards and preparations for future reg-

ulations, such as the digital product pass-

port, which will increase the transparency

of product information and promote the cir-

cular economy.

Systems and

Standards

Customers increasingly expect Bittium’s

products and working methods to be stan-

dardized and certified. Standardization also

makes it easier to promote global exports.

Bittium had six certified systems in use at

the end of 2023. All in all, more than 400 dif-

ferent standards are observed in Bittium’s

operations, approximately 120 of them on

a daily basis. All of Bittium’s certified man-

agement systems are audited by an exter-

nal party on an annual basis.

Bittium has certified quality management

systems for medical devices, such as a

quality management system for medical

devices that satisfies the requirements of

the Medical Devices Regulation (MDR) (EU)

2017/745 and is certified in accordance with

the Medical Device Single Audit Program

(MDSAP) and the ISO 13485 standard. In

late 2022, Bittium obtained MDR-compliant

certification for the Bittium Respiro home

sleep apnea test device and the Bittium

Respiro Analyst software used to analyze

the results. Bittium progressed according

to plan in MDR approval processes in 2023.

The products are tested, verified and ap-

proved as part of the R&D process by both

internal and external auditors. For example,

in Europe, the products are required to carry

the CE label and the related Declaration of

Conformity (DoC).

The company’s product development proj-

ects are also audited in accordance with

the PSSL (Product Safety, Security and Li-

ability) audit procedures as part of Bittium’s

End Product Process (EPP) requirements.

Employees receive PSSL product liability

training.

Relevant Sustainable

Development Goals

by the UN

Bittium’s medical technology products,

which improve modern healthcare and

provide safety, efficiency, and cost sav-

ings, support sustainable development goal

no. 3 (good health and well-being).

76 Sustainability at Bittium in 2023

Bittium Annual Report 2023Bittium Annual Report 2023

FOCUS AREA #3

Corporate Citizenship and

Sustainable Business Practices

Good governance and ethical business practices are the

foundation for all of Bittium’s activities. The company’s

businesses are subject to strict regulation. Trust is one of

Bittium’s values and a cornerstone of the company’s DNA.

Our customers can count on us to respect the confidentiality

of our customer relationships. For its broad network of

partners and stakeholders, Bittium wants to be a partner

with which dialog is easy and solution-oriented.

77Sustainability at Bittium in 2023

Bittium Annual Report 2023

At Bittium, sustainable corporate citizen-

ship means that sustainable business prac-

tices are strengthened throughout the val-

ue chain, with positive impact created in

society at both the local and global level.

Bittium is a reliable local partner and em-

ployer, which engages in active and open

dialogue with its stakeholders, acts in ac-

cordance with its harmonized operating

principles, creates added value for its share-

holders, and seeks working methods and

solutions that promote sustainable devel-

opment. Bittium develops its stakeholder

relationships in a fair and sustainable man-

ner, with the aim of being transparent in all

its communication.

Bittium participated in several research and

development projects in 2023. The most

significant of these was Seamless and Se-

cure Connectivity, which is a Leading Com-

pany project funded by Business Finland.

The four-year project led by Bittium will last

until 2026. Its goal is to enable trustworthy,

secure, and resilient end-to-end connec-

tivity architectures and products including

life-cycle services in various domains.

Since 2023, Bittium has been a Board mem-

ber of ITEA, which is part of the EU’s EU-

REKA framework. The ITEA cluster has an

industry-driven focus on software RD&I,

particularly in the areas of smart mobility,

health care, smart cities, energy, manufac-

turing, engineering, safety, and information

security.

In March 2023, Bittium deployed a whis-

tleblowing channel that satisfies the re-

quirements of the Whistleblowing Direc-

tive. The company has specific processes

for monitoring and handling whistleblow-

er reports to ensure that they are investi-

gated quickly and confidentially, protecting

the identity of the whistleblower. No reports

were received via the whistleblowing chan-

nel during the year.

Objectives and Their

Achievements in 2023

In 2023, the key perspectives in the focus

area of Corporate Citizenship and Sustain-

able Business Practices were reducing the

risk of unethical conduct, supply chain sus-

tainability, anti-corruption and the develop-

ment of stakeholder cooperation.

Bittium published its new strategy in the lat-

ter half of 2023. Consequently, the decision

was made to postpone the updating of the

Code of Conduct to 2024, at which time all

of the company’s policies will be reviewed in

relation to the new business model. The ex-

isting Code of Conduct is used in contract

negotiations with manufacturing partners

and component suppliers.

The company’s new employees are familiar-

ized with the Code of Conduct during their

first month with the company (target: 100%).

Self-study materials on the Code of Conduct

will be updated when the Code of Conduct

itself is updated in 2024.

The company’s anti-corruption training

package was updated in 2023 and will be

deployed in 2024.

Preparations were made for the implemen-

tation of a stakeholder survey in 2023, but

the decision was made to conduct the sur-

vey in 2024 as part of Bittium’s double ma-

teriality analysis. Stakeholder cooperation

measures are described in more detail be-

low.

Developing

Stakeholder

Cooperation

Bittium’s operations affect multiple stake-

holders, with the company’s key stakehold-

ers being shareholders, customers, employ-

ees, partners and other suppliers as well as

the public sector. Developing even more

open dialog between stakeholders sup-

ports the development of Bittium’s opera-

tions, products and solutions, while it helps

find solutions for societal challenges. In the

fall of 2023, Bittium organized a Capital Mar-

kets Day targeted at investors and analysts.

This coincided with the publication of the

company’s new strategy and business mod-

el. Approximately 40 people attended the

event in person, with another 374 in atten-

dance online. The recording of the event had

been viewed 786 times by the end of 2023.

Bittium organized a Partner Days event for

its partners in the Medical business seg-

ment. At the event, Bittium launched a

partner program aimed at increasing and

strengthening dialog with partners and en-

gaging the commitment of partners so that

they are even more integrated into Bittium’s

product distribution chain. The next Partner

Days event will be organized in early 2024 in

the Defense & Security business segment.

From the perspective of Bittium’s custom-

ers, export control constitutes an import-

78 Sustainability at Bittium in 2023

Bittium Annual Report 2023

ant part of operations and a precondition for

successful cooperation with the authorities

as well as customers. Bittium promotes the

sustainable export of Finnish technology by

closely monitoring the changing legislation

in the various market areas and by comply-

ing with legal provisions. The changed geo-

political situation has increased the number

of export license applications filed by Bit-

tium. Export control procedures have been

further specified in cooperation with the au-

thorities.

After the COVID-19 pandemic, Bittium has

been able to resume visits to educational

institutions, which are important to the com-

pany. The visits support the work of schools

and educational institutions and future

competence development.

Compliance with

Requirements, Good

Governance and Anti-

corruption Measures

Bittium has customers in both the public

and the private sector. The business envi-

ronment involves constant changes in leg-

islation and regulation, as well as increas-

ing requirements from the stakeholders

concerning sustainable operations and risk

management. Bittium is committed to act-

ing in accordance with legislation and reg-

ulations and adhering to ethical business

practices in all its operations. Bittium has

zero tolerance of bribery and corruption. The

company aims to ensure ethical business

practices and compliance with the corpo-

rate culture and increase awareness of sus-

tainable business practices through train-

ing. Bittium’s corporate culture is based on

openness and commitment to common

values.

The management of Bittium Corporation

is governed by the Articles of Association,

Finnish law, and Bittium’s governance guide-

lines. Bittium publishes on an annual basis

a corporate governance statement, as re-

quired by the Corporate Governance Code

for listed companies published by the Se-

curities Market Association. The statements

and further information on the company’s

governance are available on Bittium’s web-

site.

The key objectives and requirements relat-

ed to sustainable business practices, good

governance, internal control, and risk man-

agement are specified in the operating prin-

ciples and the Internal Control Framework,

which includes instructions, guidelines, and

principles for internal control and risk man-

agement, which are separately approved by

the Board of Directors. Compliance process-

es are in place at every organization level in

order to ensure compliance with the appli-

cable laws, regulations, internal guidelines,

ethical values, and sustainable business

practices. The company’s management

and businesses are responsible for moni-

toring the legislation and other regulation in

their own areas and for communicating any

changes to the organization. The members

of the Management Group are responsible

for arranging appropriate control and com-

pliance training in their units. The company’s

Chief Legal Officer coordinates the compli-

ance processes in terms of adequacy and

compliance.

Bittium expects that its employees and part-

ners are committed to the company’s anti-

corruption policy. Mandatory training on

anti-corruption measures is provided for

employees as part of the orientation train-

ing, with all new employees completing the

related online self-study module in 2023. No

irregularities were observed and no corrup-

tion cases were confirmed during the year.

Sustainable Purchasing

Bittium’s products contain a range of elec-

tronic, electromechanical and mechani-

cal components. The sustainability of the

purchasing chain is ensured, for instance,

through material and component supplier

requirements and material assessments.

The company’s service and product suppli-

ers are required to undertake to ensure sus-

tainable business practices and they must

comply with Bittium’s Code of Conduct,

Supplier Code of Conduct, and the Bittium

Supplier Manual. The latest versions of these

documents are available on Bittium’s web-

site. The guidelines include the key policies,

practices, and requirements for Bittium’s

supply chain. The requirements are related,

among other things, to business practic-

es, anti-corruption measures, environmen-

tal issues, occupational safety, and human

rights, including material-specific require-

ments. Compliance with the guidelines was

assessed in 2022 through supplier self-eval-

uation and audits of critical suppliers.

Ensuring that all employees are committed

to the principles of sustainable purchasing

is an important part of ensuring the sus-

tainability of the supply chain. Sustainable

79Sustainability at Bittium in 2023

Bittium Annual Report 2023

purchasing is a part of Bittium’s mandato-

ry environmental training, which employees

complete through self-study.

The vast majority of Bittium’s employees

work in countries with progressive human

rights legislation. The company’s approach

to human rights issues is described in the

Bittium Supplier Manual. During the year, no

violations or significant nonconformities re-

lated to the use of child labor, forced labor,

inappropriate disciplinary action, physical

punishment, or health-related discrimina-

tory practices were observed in Bittium’s or

its subcontractors’ operations.

Suppliers are audited according to pre-de-

fined criteria. Audits are carried out either

as a self-assessment based on the Bittium

Supplier Manual or as an audit conducted by

Bittium. In 2023, Bittium focused on deep-

ening its cooperation with critical manufac-

turing partners and component suppliers to

identify common development areas. Bit-

tium has worked on developing a supplier

management tool in connection with these

efforts.

Identifying the Origin

of Minerals

Bittium’s products are made using minerals

that may also come from countries that vi-

olate human rights or cause environmental

destruction by mining such minerals. Bit-

tium urges its suppliers to comply with the

legislation on conflict minerals and the rele-

vant recommended reporting practices. This

ensures that the minerals used in Bittium’s

products do not originate from conflict or

risk zones.

Bittium continuously monitors any noncon-

formities related to conflict minerals with the

help of updated requirements, external da-

tabases, and the product information man-

agement system. The company has also

further specified its Responsible Minerals

Policy. In 2023, Bittium did not receive any

reports on suspicions concerning minerals

from conflict areas.

Avoiding Counterfeit

Materials

Counterfeit materials are any materials

whose origin, age, composition, configu-

ration, certification data, certification sta-

tus or other feature is presented falsely and

with misleading markings on the material,

packaging, or container. Bittium is aware of

the risks associated with counterfeit ma-

terials, both when purchasing materials as

ready-to-use components and when using

the previously mentioned raw materials. Bit-

tium is committed to conducting the neces-

sary assessments to avoid using counter-

feit materials in its products. The purpose

of efficient supplier reporting systems is to

avoid the use of counterfeit materials. Sup-

plier reporting methods focus on monitor-

ing the various purchase process phases

starting from the initial supplier selection.

Bittium’s employees are trained to identi-

fy counterfeit materials. Regarding coun-

terfeit materials, Bittium’s customers also

expect that information is managed in real

time to the maximum extent possible. By

combining the data obtained through prod-

uct information management and materi-

al information databases, Bittium is able

to ensure for its customers up-to-date and

appropriate information management. The

relevant information is documented in the

Product Lifecycle Management (PLM) sys-

tem. No counterfeit materials were found in

Bittium’s products in 2023.

80 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Relevant Sustainable

Development Goals

by the UN

Bittium’s actions related to sustainable cor-

porate citizenship, good governance, and

anti-corruption measures promote, in par-

ticular, the sustainable development goals

no. 8 (economic growth and employment),

no. 12 (responsible consumption), no. 16

(peace and justice) and no. 17 (partnership).

Sustainable purchasing, avoiding minerals

from conflict areas, and counterfeit materi-

als support goal no. 8 (economic growth and

employment). Reporting on the planning,

implementation, and results of sustainabil-

ity actions in the annual sustainability report

and the systematic planning of sustainabil-

ity work and reliable reporting support the

objective to ensure the sustainability of con-

sumption and production methods.

Corporate governance, risk management and compliance at Bittium

CEO

Management framework (annual clock, decicion-making matrix etc.)

Corporate governance, oprating principles, risk management, compliance

Values, Code of Conduct, ethics and sustainability

Vision and strategy

Customer

Managment Group

The Board of Directors

Planning and monitoring

of strategy

Strategy execution

Operational efficiency

Process frameworks

and business processes

Financial reporting

Creation of

shareholder value

Group functions

Financial administration, legal department, communications and sustainability, HR, information

management and premises, business development and research, supply chains and quality

• business management

• product managment

• product development

• competence management

• sales and marketing

• production

• supply chain management

• business management

• solutions management

• technology management

• competence management

• sales and marketing

• business management

• product managment

• product development

• competence management

• sales and marketing

• production

• supply chain management

Defense & Security

Business

Medical

Business

Engineering Services

Business

81Sustainability at Bittium in 2023

Bittium Annual Report 2023

Sustainability at Bittium in 2023

Bittium Annual Report 2023Bittium Annual Report 2023

FOCUS AREA #4

Environment

Environmental sustainability is reflected in Bittium’s

small and big decisions in product planning and

assembly and on the company’s premises. In its

environmental actions, Bittium focuses on improving

the efficiency of its operations and on using lower-emission

energy sources. Bittium’s footprint is reduced by the longer

useful life of products and the development of recycling as

well as improvements in resource efficiency.

83Sustainability at Bittium in 2023

Bittium Annual Report 2023

Environmental sustainability at Bittium is

guided by the company’s environmental

policy, legislation on environmental protec-

tion and sustainable development, and var-

ious international principles and customer

requirements. At Bittium, environmentally

sustainable operations mean responsibil-

ity for curbing climate change and the de-

velopment of resource-efficient solutions.

The most notable environmental impacts of

Bittium’s products occur during the last

stage of the life cycle, that is, recycling.

In addition to reducing the environmental

impacts of its own operations, Bittium seeks

to actively reduce environmental impacts

throughout the value chain. In 2023, Bittium

continued to prepare for the introduction of

the digital product passport as regards Bit-

tium’s products. To this end, Bittium has in-

creasingly collected information on its prod-

ucts in the company’s product information

management system. The digital product

passport is part of the new circular econ-

omy package published by the European

Commission.

The EU’s Carbon Border Adjustment Mech-

anism (CBAM), which took effect in October

2023, is intended to prevent carbon leakage,

which refers to emission-causing activities

being moved outside of the EU. The mech-

anism applies to CBAM goods that are im-

ported into the EU, including iron, steel, and

aluminum products. Bittium has some prod-

ucts for which the company is required to

report in accordance with the CBAM disclo-

sure requirements on the year 2023.

Management of

Environmental

Sustainability

at Bittium

Bittium has a certified environmental man-

agement system, which applies the most

recent version of the ISO 14 001 standard.

The environmental management system

enables Bittium to improve the manage-

ment of its environmental impacts and the

level of environmental work. The following

viewpoints are the core of the management

of environmental work and environmental

sustainability at Bittium:

• Monitoring and observing amendments to

the laws and regulations concerning en-

vironmental protection and sustainable

development. The use of energy-efficient

solutions in R&D (ecological design) and at

business premises is also included.

• Minimizing the environmental impacts of

the production, use and disposal of prod-

ucts. The development of instructions and

practices related to ecological design sup-

ports these principles.

• Encouraging suppliers and partners to im-

plement environmental management sys-

tems. This practice supports the realiza-

tion of the principles aimed at limiting the

use of hazardous substances.

• Developing energy efficiency through con-

tinuous improvement. Two energy audi-

tors approved by the Energy Authority

conduct annual on-site audits.

Bittium operates in a strongly regulated

business environment. The company reg-

ularly monitors the international environ-

mental requirements that govern its prod-

ucts as well as the local regulations derived

from these, with all suppliers also required

to comply with them. The provisions of the

ROHS directives (I, II and III), the REACH reg-

ulation (on hazardous substances) as well

as the WEEE (recycling of waste electron-

ic and electrical equipment) directive have

been applied in Bittium’s product design

since 2002.

The provisions of the Ecodesign regulation

framework are applied in Bittium’s product

design and product development. The se-

cure Bittium Tough Mobile 2 smartphone

satisfies the requirements of the Regula-

tion, which entered into force in 2023. In its

product design, Bittium also takes into ac-

count the requirements of the Medical De-

vices Regulation (MDR).

Bittium aims to offer halogen-free products

whenever alternatives to halogen compo-

nents that meet the relevant functional re-

quirements are available. Bittium’s halo-

gen-free statement conforms to the IEC

(International Electrochemical Commis-

sion) definition of halogen-free materials

(IEC 61249-2-21).

84 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Environmental Objectives and

Sustainable Development 2023

Bittium monitors three environmental indicators measuring the

environmental effects of its operations, that is, the development of

the carbon dioxide equivalent (kgCO2e), the development of ener-

gy consumption (MWh) and the percentage share that renewable

energy accounts for of total energy consumption.

Environmental Sustainability Indicators

The company continuously monitors the level of environmental

protection. The following indicators have been selected as the key

environmental sustainability indicators.

- Travel (air and road transport)

- Premises (electricity consumption, heating and waste)

In 2023, the volume of waste remained unchanged from the previ-

ous year. Water consumption decreased by 8.4% and heating costs

by 16.7% year-on-year. At the same time, electricity consumption

increased slightly, by 2.6% from the previous year.

The total amount of travel increased during the year under review

because the scope of reporting was expanded to include train jour-

neys, which were not included in the previous year.

Bittium’s Environmental Sustainability Indicators in 2023,

Oulu Office

27.4 tons

WASTE

4.1 % less than in 2022

68 kg

/ employee

1,549 MWh

ELECTRICITY

3.8 MWh

/ employee

2.6% more than in 2022

289 MWh

HEATING

0.7 MWh

/ employee

16.7% less than in 2022

1,129 m

WATER

/ employee

2.8 m

8.4 % less than in 2022

THE GROUP’S

CARBON FOOTPRINT

tkg CO

620

1,049

kg CO

employee / year

Premises

/ Heating

Travel

/ Flying

Premises

/ Electricity

consumption

Travel

/ Road transport

Waste

Environmental Sustainability Indicators 2018–2023 (Trend),

Oulu Office

ELECTRICITY CONSUMPTION

1,549

MWh

WASTE VOLUME

27. 4

tons

2018 2019 2020 2021 2022 2023

3,000

2,000

1,000

2018 2019 2020 2021 2022 2023

85Sustainability at Bittium in 2023

Bittium Annual Report 2023

Maintaining the Waste

Recovery Rate at

Over 95 Percent

Most of the waste generated by Bittium is

packaging waste. There have been no signif-

icant changes in the volume of waste since

2018. Although production volumes have

increased, a larger proportion of the man-

ufactured components and partial assem-

blies are delivered directly to factories, which

reduces the amount of waste generated at

Bittium. The simplification of packaging

modules has also helped reduce waste.

There were no significant changes in the

amount of hazardous waste compared to

the previous years.

In addition to minimizing waste, Bittium

aims to forward all waste to be reused or re-

covered as appropriate. Design and materi-

al recycling are promoted in product design

and development in the spirit of the circular

economy, while innovating sustainable solu-

tions with partners. Bittium has implement-

ed waste recycling to the maximum extent

possible, with the waste recycling rate being

99.9% in 2023.

Developing the

Energy Efficiency

of Premises and

Increasing the Share

of Renewable Energy

The carbon footprint of Bittium’s premises

and facilities represents 67% of the total car-

bon footprint. Improving energy efficiency

is one of Bittium’s key objectives in terms

of the reduction of carbon footprint. District

heating from the local energy supplier is not

yet fully carbon neutral, but production utiliz-

es biofuels and recycled fuels sourced from

nearby areas. According to the electricity

supplier, the distribution of the production

methods for the purchased electrical en-

ergy is such that 38% comes from renew-

able sources, 24% is emission-free and 38%

comes from fossil sources.

Renewable energy sources accounted for

42% of heat energy and 36% of electrical en-

ergy. At its highest during the year, the share

of solar power of the electricity consumed at

the Oulu office was 14% (in 2022: 13%, 2021:

13%, 2020: 13%, 2019: 11.9%).

Reducing

Carbon Footprint

Bittium calculated the Group’s total car-

bon footprint for the sixth time. The carbon

footprint calculations are mainly based on

process data, which was obtained from

the databases of Bittium and its cooper-

ation partners (such as product suppliers

and the electricity supplier). The calculation

includes direct emissions and the indirect

emissions of purchased energy (Scope 2). In

addition to the above, the reported indirect

emissions include the indirect emissions of

business travel and electricity production

for the past year. With the carbon footprint

measurement, Bittium monitors, in partic-

ular, the efficiency of the shift to renewable

energy sources and the efficiency of solu-

tions that are more sustainable in terms of

climate.

Our carbon footprint target for 2023 was

<1,500 kg CO

e/employee. Our total carbon

footprint was 620 tCO

e, or 1,049 kgCO

employee (2022: 707 tCO

e, 1,119 kgCO

employee; 2021: 719 tCO

e, 1,096 kgCO

employee; 2020: 753 tCO

e, 1,130 kgCO

employee).

Bittium reviewed its travel policy in 2023 in

accordance with the company’s emission

reduction target. The scope of reporting on

travel was expanded during the year to in-

clude different forms of transport. For exam-

ple, train journeys are included in the report-

ing on the year under review. Consequently,

the emissions associated with travel are not

directly comparable between the year under

review and the preceding year.

Technologies supporting sustainable devel-

opment promote the reduction of custom-

ers’ carbon footprint and enable influence on

product life cycle emissions. For example,

Bittium’s solutions responding to the needs

for remote diagnostics enable emission re-

ductions throughout the value chain by re-

ducing the need to visit health care facili-

ties in person.

* When calculating carbon footprint, Bittium uses

the exact data on the properties owned by it and

the data available on properties leased by Bit-

tium. This applies, for example, to the available

waste figures. Bittium also takes into account

the coefficients published by Statistics Finland

concerning the average CO2 emissions of district

heating production in Finland, for which an aver-

age is calculated for the past three years. For this

reason, there may be minor variation in the car-

bon footprint comparison figures at the annual

level.

86 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Circular Economy as

the Starting Point for

Bittium’s Product

Design

Bittium’s business is mainly focused on

product design, sales and marketing, while

its manufacturing partners are responsible

for product assembly. The environmental ef-

fects of products emerge at various phases

of the product life cycle: procurement of raw

materials, product manufacturing, trans-

port, product use or product disposal. How-

ever, a significant part of the environmental

effects during a product’s life cycle can be

influenced through product design and de-

sign decisions. The inclusion of environmen-

tal aspects in the product design processes

creates a foundation for all product design

and development at Bittium.

Bittium’s approach involves an established

model of operation concerning product ma-

terials and their handling: more with less.

Environmental objectives are reached by

maximizing the service life and recyclabil-

ity of products, for example, by influencing

the amount of materials used in the manu-

facturing of products. Environmental effects

can be reduced through design decisions,

for example, by reducing the consumption

of raw materials, through the lengthening of

life cycles, by reducing the use of hazardous

materials and by ensuring that products can

be recycled. The transition towards a car-

bon-neutral circular economy requires co-

operation and innovation. In 2023, Bittium

engaged in discussions with its supply chain

partners on carbon footprint calculation and

recycling.

Bittium’s products are designed to have long

life cycles and to be repairable and recycla-

ble. For example, reliability, delivery reliabili-

ty and maintenance services, including ser-

vice and update work, must be guaranteed

for many defense industry products for de-

cades. Material cycles are created in rela-

tion to product repairs or returns related to

the product life cycle, for example. The in-

formation security risks associated with the

products must also be taken into account in

this context. Bittium disassembles decom-

missioned products, sorts the components

and recycles them appropriately.

The rapid development of regulation and

materials requires that Bittium is capable of

adjusting its product design in accordance

with the changes required by the busi-

ness environment. Bittium has responded

to the requirements, for example, with re-

design of products; the long service life of

products provides an opportunity to cre-

ate environmentally sustainable solutions

to replace product modules with outdat-

ed environmental attributes. When old and

new technology is combined, the old product

platforms are developed in a more environ-

mentally friendly direction, with the require-

ments of the most recent regulations taken

into account while making no compromises

on the service life.

Ecodesign Accelerates

Sustainable Product

Design

In early 2022, the EU’s Ecodesign Direc-

tive entered into force in the EU area, with

the Directive specifying the ecological de-

mands to be applied in the design and devel-

opment of products that use energy. The Di-

rective promotes sustainable development

by improving energy efficiency and the level

of environmental protection, while also im-

proving the security of energy supply. The

scope of the Directive’s application expand-

ed in 2023 to also include the effects of soft-

ware production so that they are taken into

account in the life cycle assessment con-

cerning the ecological footprint of products.

Bittium products meet the requirements of

the Directive.

The EU’s proposed regulation on the ecode-

sign of sustainable products also includes

a digital product passport, which would en-

able information to be collected of the var-

ious phases of value chains, such as prod-

uct use, maintenance and recycling. During

the year, Bittium documented a majority of

its product information to correspond to the

requirements of digital product passports.

The company aims to have all of its prod-

ucts entered in the Product Lifecycle Man-

agement (PLM) system by the end of the first

half of 2024.

Relevant Sustainable

Development Goals

by the UN

Bittium’s measures related to ecological

product design, sustainable consumption

and production methods and energy and re-

source efficiency promote, in particular, the

sustainable development goals no. 8 (de-

cent work and economic growth) and no. 12

(responsible consumption). Resource effi-

ciency is promoted in consumption and pro-

duction through operations that comply with

the environmental standard. Ecological de-

sign is the starting point of product develop-

ment and an important part of sustainability

work at Bittium. Special attention is paid to

the use of renewable energy, waste recovery

rate and the reduction of waste at our oper-

ating locations and the results are report-

ed as part of Bittium’s sustainability report.

87Sustainability at Bittium in 2023

Bittium Annual Report 2023

88 Sustainability at Bittium in 2023

Bittium Annual Report 2023

Reporting Basics

and Principles

Scope of Reporting

This sustainability report published as part of

the annual report is the sixth extensive report

on the management and implementation of

sustainability at Bittium. Bittium updated

its sustainability program in 2022. In accor-

dance with the updated program, Bittium

has implemented sustainability-related

themes by developing metrics and provid-

ing more extensive information on the im-

pacts of its operations. The sustainability

program is an updated version of the 2020–

2022 sustainability program, which was

based on a materiality analysis carried out

in 2019. The aim of the materiality analysis

was to establish an understanding of the

stakeholders’ views regarding Bittium’s pre-

viously selected focus areas in sustainabili-

ty. The focus area objectives and metrics of

the sustainability program were updated to

strengthen the company’s objectives relat-

ed to being a responsible corporate citizen

in society.

To enable comparison, Bittium’s sustain-

ability report is based on the Global Report-

ing Initiative (GRI) Standards framework.

The table at the end of the report contains

references to the relevant elements of the

GRI Standards framework.

The report covers Bittium’s four sustain-

ability focus areas and a description of fi-

nancial effectiveness. The financial data is

collected from Bittium’s financial informa-

tion systems, and the majority of person-

nel data is from HR management systems.

Environmental figures are collected from

the company’s own systems and from re-

ports provided by service providers, such

as the company’s travel agency and waste

Reporting

management provider. The reported finan-

cial figures are based on Bittium’s audited

financial statements from 2022 and 2023.

The reporting model was selected on the

basis of Bittium’s sustainability principles,

taking into account the GRI framework and

the focus areas of Bittium’s business: wire-

less, secure communications in B2B oper-

ations. Bittium has customers both in Fin-

land and in other countries. The operations

and most of the personnel are nevertheless

located in Finland.

The sustainability report will be published

online in electronic format in connection

with the Group’s annual report at

www.bittium.com and

https://annualreport.bittium.com.

Scope of the Report

The period covered by the sustainability re-

port is the same as the financial period, Jan-

uary 1–December 31, 2023.

The company reports the consumption of

electricity, heat and water for all of its owned

premises as well as those offices in Finland

where the company is on rent and the com-

pany only uses a part of the premises in the

office building. In addition, the company

separately reports environmental respon-

sibility metrics (waste, water, electricity,

heating) from the Oulu location. To calcu-

late the carbon footprint, the company uses,

in addition to all of the above-mentioned in-

formation, emissions from travel, which the

company calculates from its own systems,

as well as from emission reports obtained

through the travel agency.

The report does not cover all suppliers or

service providers. In other respects, the re-

port covers all the operations of Bittium Cor-

poration and its subsidiaries.

Reporting Principles

and Guidance

Financial reports are governed by the In-

ternational Financial Reporting Standards

(IFRS), and governance reports comply with

the legislation on listed companies and the

Finnish Corporate Governance Code that

applies to listed companies. The reported

financial data is based on audited financial

statements.

Principles and Practices

for External Verification

The GRI Standards were applied in the

preparation of the 2023 report. The sustain-

ability report has not been verified by an in-

dependent third party. The figures present-

ed in the “Financial effectiveness” section

are based on the Group’s audited financial

statements.

In 2023, Bittium began preparing for re-

porting in compliance with the EU Corpo-

rate Sustainability Reporting Directive, and

these preparations will continue in 2024.

The company will conduct a double mate-

riality analysis and update its sustainabili-

ty program in accordance with the results

of the analysis.

Bittium’s Sustainability

Contact Person:

Karoliina Malmi,

Vice President,

Communications and Sustainability

kar[email protected]

GRI Content Index

Bittium’s Annual Report 2023 has been pre-

pared with reference to the GRI Universal

Standards 2021. The sustainability report-

ing covers the selected General Disclosures

as well as the Topic Standards Bittium has

deemed material and which reflects best its

economic, social, and environmental im-

pacts in the topics. The GRI 1: Foundation

2021 Standard’s key concepts for defining

report content have been taken into account

in the preparation of sustainability informa-

tion. The topic standards are the year 2016

versions unless otherwise stated next to the

standard number.

Statement of use: Bittium Oyj has report-

ed the information cited in this GRI con-

tent index for the period January 1, 2023 to

December 31, 2023.

GRI used: GRI 1: Foundation 2021

Sustainability at Bittium in 2023

Bittium Annual Report 2023

GRI 2: General Disclosures

2-1 Organizational

details

Business and Operating Environment,

p. 10

Bittium is an international technology company that offers

socially useful technical innovations that improve communi-

cation connections, create security and promote healthcare.

The company's offices are located in Finland, Germany,and in

the USA. More information about

the offices is on the website: www.bittium.com/about-

bittium/facts-figures/bittium-locations

Bittium Corporation’s articles of association are available

on the website: www.bittium.com/investors/corporate-

governance/articles-of-association

2-2 Entities included in

the organization’s

sustainability

reporting

Sustainability at Bittium in 2023;

Reporting, p. 88

2-3 Reporting period,

frequency and

contact point

Sustainability at Bittium in 2023;

Reporting, p. 88

2-4 Restatements of

information

Sustainability at Bittium in 2023;

Reporting, p. 88

There are no restatements of sustainability information

in this report.

2-5 External assurance Sustainability at Bittium in 2023;

Reporting, p. 88

2-6 Activities, value chain

and other business

relationships

Business and Operating Environment,

Products and Services p. 14;

Sustainability at Bittium in 2023;

Bittium's value creation model p. 56,

Sustainable Purchasing p. 78

All of Bittium’s products are manufactured in Finland by

manufacturing partners. The products consist of various

electronic and mechanical components, whose suppliers are

both foreign and Finnish significant players in their respective

regions. Bittium’s most significant partners in the distribution

network are Bittium’s partners operating in different product

and service areas, such as Tutus Data AB in Sweden for

Bittium Tough Mobile™ 2 smartphones in Sweden and Tech-

nomed Ltd for Bittium Faros™ devices in the United Kingdom.

2-7 Employees Sustainability at Bittium in 2023;

Innovative and Developing People, p.

66–71

The total number of employees at the end of 2023 was 526, of

which 74 (14%) were female and 452 (86%) were male. There

were 513 employees in permanent employment, of which 74

(14%) were female and 439 (86%) were male. The propor

tion of fixed-term employment contracts was 0.2% for wom-

en and 2% for men. The proportion of part-time employment

contracts was 4% for both women and men. The proportion

of full-time employment contracts was 96% for both wom

en and men. 2% of employees worked on zero-hour contracts

(2% female, 3% male). There was a decrease of 99 persons in

the number of employees during 2023, of which 61 were dis

missed as a result of the change negotiations.

2-9 Governance structure

and composition

Corporate Governance,

Corporate Governance, Bittium

Corporation, Board of Directors,

Board Committees p. 39;

Disclosure Reporting contents

Location in Bittium’s

annual reporting Additional information

90 Sustainability at Bittium in 2023

Bittium Annual Report 2023

GRI 2: General Disclosures

2-10 Nomination and

selection of the

highest governance

body

Corporate Governance,

Principles Concerning Board

Diversity, p. 36

The Annual General Meeting is the company's the highest

decision-making body, where the company's shareholders

participate in the control and management of the company by

using their right to speak and vote. The most important tasks

of the General Meeting include electing the Board members.

The Board chooses a Chairman among its members.

2-11 Chair of the highest

governance body

Corporate Governance,

Corporate Governance, Bittium

Corporation, Board of Directors, p. 35

The Chairman of the Board of Directors of the Bittium

Corporation is independent of both the Company

and its significant shareholders.

2-12 Role of the highest

governance body

in overseeing the

management of

impacts

Sustainability at Bittium in 2023;

Sustainability Management, p. 58,

Corporate Governance,

Annual Clock 2022, p. 37

Bittium has a separate sustainability working group that

develops, monitors, and evaluates issues related to sustain-

ability. The working group is responsible for sustainability

risk management and steering, as well as the company's

sustainability reporting. The Audit Committee of Bittium

Corporation's Board of Directors deals with sustainability

issues regularly and when necessary. Bittium Corporation's

Board of Directors deals with sustainability issues based on

the presentations of the management team and examines

sustainability effects as part of its supervisory role. The sus

tainability report describes the methods that ensure sufficient

care applied to the areas of sustainability. In addition, the

description of risk management and processes related to

the company's operation and operating environment is

defined as part of the Corporate Governance system report.

2-14 Role of the highest

governance body

in sustainability

reporting

Sustainability at Bittium in 2023,

Sustainability Management, p. 58

2-15 Conflicts of interest The Board of Directors of Bittium Corporation and the relevant

committee carefully evaluate the possible conflicts of interest

of each member of the board and/or the relevant committee

in the preparation and decision-making work. In a possible

conflict of interest situation, the relevant institution ensures

that the members in question do not participate in the

preparation or decision-making.

2-19 Remuneration

policies

Bittium Corporation's

Remuneration Report,

Remuneration Report from

the accounting period of 2023

Bittium Corporation's remuneration policy and remuneration

reports are available on the company's website:

www.bittium.com/investors/corporate-governance/

remuneration

2-20 Process to determine

remuneration

Bittium Corporation's

Remuneration Report

The Annual General Meeting decides on the remuneration of

the members of the Board of Directors. Remuneration of the

Board of Directors, the CEO, and any deputy CEO must be in

accordance with the Company's latest remuneration policy.

Shareholders discuss the Remuneration Policy at the

Annual General Meeting at least every four years and when-

ever substantial changes are made to it. In a possible conflict

of interest situation, the relevant institution ensures that the

members in question do not participate in the preparation

or decision-making. The same principles are followed in the

assessment of possible conflicts of interest as are followed

when assessing board members' conflicts of interest in con

nection with decision-making. The Board of Directors annually

evaluates the possible need for changes to the Remuneration

Policy. The company may use external experts when evaluat

ing and determining the compensation to be paid to the

Board of Directors and the CEO.

Bittium Corporation's remuneration policy and remuneration

reports are available on the company's website: www.bittium.

com/investors/corporate-governance/remuneration

Disclosure Reporting contents

Location in Bittium’s

annual reporting Additional information

91Sustainability at Bittium in 2023

Bittium Annual Report 2023

GRI 2: General Disclosures

2-22 Statement on

sustainable

development strategy

Sustainability at Bittium in 2023,

The CEO’s Statement on

Sustainability, p. 53

2-23 Policy commitments Corporate Governance,

Main Features of Internal Control

and Risk Management Processes

Related to the Financial Reporting

Processes, p. 45;

Sustainability at Bittium in 2023,

Corporate Citizenship and

Sustainable Business, p. 76,

Sustainability at Bittium, p. 61,

Bittium's Ethical Principles and

Code of Conduct, p. 59

Bittium follows a responsible business practices and requires

it from its suppliers as well. Bittium's ethical principles inclu

de aspects of anti-corruption, data protection and security,

fair business practices, advertising and competition, corpo

rate citizenship, and protection of intellectual property rights.

Collaborators must comply with Bittium's Code of Conduct

principles and supplier guidelines and requirements (Bittium

Supplier Requirements). The guidelines contain the most

important policies, operating methods, and requirements

for Bittium's supply chain. The set requirements are related

to business practices, anti-corruption, environmental issues,

occupational safety, and human rights, including material-

specific requirements. The guidelines and principles

mentioned above are available on the company's website:

www.bittium.com

Bittium has also mirrored the themes of the priority areas of

sustainability in the UN's Sustainable Development Goals and

identified goals that are already taken into account and whose

realization is promoted in the company's operations.

2-24 Embedding policy

commitments

Corporate Governance,

Main Features of Internal Control

and Risk Management Processes

Related to the Financial Reporting

Processes p. 45;

Sustainability at Bittium in 2023,

Corporate Citizenship and Sustainable

Business, p. 76,

Sustainability at Bittium, p. 61,

Bittium's Ethical Principles and

Code of Conduct, p. 59

Bittium takes into account the due diligence obligation in

its operations. Together with its supply chain partners and

other stakeholders, Bittium strives to identify both actual

and potential harm to the environment and people, including

human rights, in the entire value chain. As part of responsible

management and operations, the company prevents and

mitigates harm, monitoring the effectiveness of actions

related to the duty of care. Bittium's external and internal

stakeholders also use the Whistleblowing notification

procedure, which aims to reduce the risks that may be

faced by the company.

2-26 Mechanisms for

seeking advice and

raising concerns

Sustainability at Bittium in 2023,

Corporate Citizenship and

Sustainable Business, p. 76

Good governance and ethical operating methods are the

basis of Bittium's operations and a prerequisite for business.

The trust of customers and other stakeholders in Bittium,

product quality, and responsible development are of primary

importance to the company. The company has compliance

processes at every organizational level to ensure that

applicable laws, regulations, internal guidelines, responsible

business requirements, and ethical values are followed.

Bittium's personnel and external stakeholders use feedback

and reporting channels as well as a reporting channel for

detecting abuses. Personnel has been instructed on their

use of Bittium's intranet and in orientation training.

2-27 Compliance with

laws and regulations

Report by the Board of Directors;

Statement of Non-Financial

Information

Bittium Corporation has not incurred legal sanctions

for its activities during 2023.

2-28 Membership

associations

Teknologiateollisuus ry

2-29 Approach to stake

holder engagement

Sustainability at Bittium in 2023,

Sustainability Management, p. 58

Disclosure Reporting contents

Location in Bittium’s

annual reporting Additional information

92 Sustainability at Bittium in 2023

Bittium Annual Report 2023

GRI 3: Material topics

3-1 Process to determine

material topics

Bittium's sustainability program is based on a materiality

analysis carried out in 2019, on the basis of which the focus

areas of sustainability have been defined. The program is

built on the development goals and measures of focus areas

and the me

trics defined for them. The process of defining

Bittium's material topics, the materiality analysis, is described

on the compan

y's website: annualreport2019.bittium.com/

sustainability_report/focus_areas_in_sustainability

With the update of the sustainability program, the goals and

metrics of the focus areas were specified, and yearly sub-

goals were set for the themes. The goals and metrics of

the sustainability program for the years 2022–2025 are

described in the context of the sections dealing with each

focus area of the annual report.

-2 List of

material topics

Sus

tainability at Bittium in 2023,

Innovative and Developing People,

p. 66,

rust-based Customer Relationships

and Secure Products, p. 72,

Corpor

ate Citizenship and Sustainable

Business Practices, p. 76

Environment, p. 82

3 Management of

material topics

Sus

tainability at Bittium in 2023,

Outputs and effects, p. 57,

Innovative and Developing People,

p. 66,

rust-based Customer Relationships

and Secure Products, p. 72,

Corpor

ate Citizenship and Sustainable

Business Practices, p. 76

Environment, p. 82

The mos

t significant sustainability effects of Bittium's

essential sustainability topics, the management of essential

sus

tainability topics, and the measures related to their

management are described in the annual report, in the

sections dealing with Bittium's sustainability priority areas.

In the future, Bittium will develop reporting related to the

management of material topics in accordance with the

GRI 3: Material topics standard.

Disclosur

e Reporting contents

Location in Bittium’s

annual reporting A

dditional information

93Sustainability at Bittium in 2023

Bittium Annual Report 2023

GRI 201: Economic Performance

201-1 Direct economic

value generated

and distributed

Sustainability at Bittium in 2023,

Economic Impact, p. 61

201-4 Financial assistance

received from

government

Notes to the Consolidated Financial

Statements,

3. Other profits of the business

GRI 205: Anti-corruption

205-2 Communication

and training about

anti-corruption

policies and

procedures

Sustainability at Bittium in 2023,

Corporate Citizenship and

Sustainable Business, p. 76

Bittium requires its personnel and partners to commit to the

company's anti-corruption guidelines. Mandatory training on

anti-corruption activities is organized for personnel as part

of the induction program, and in 2023, 77 percent of new em-

ployees completed the electronic self-study module included

in the training by the end of 2023.

205-3 Confirmed incidents

of corruption and

actions taken

Sustainability at Bittium in 2023,

Corporate Citizenship and

Sustainable Business, p. 6

Bittium's personnel and external stakeholders use feedback

and reporting channels as well as a reporting channel for

detecting abuses. During 2023, Bittium Corporation did not

report any corruption suspicions or cases.

GRI 301: Materials

301-1 Materials used by

weight or volume

Sustainability at Bittium in 2023,

Environment, p. 82

Bittium does not use paper, cardboard or metal in the

production of its products. Bittium reports the amount

of material waste and recycling resulting from the use

of materials at the locations.

GRI 302: Energy

302-1 Energy consumption

within the

organization

Sustainability at Bittium in 2023,

Environment, p. 84

302-4 Reduction of energy

consumption

Sustainability at Bittium in 2023,

Environment, p. 84

GRI 303: Water and Effluents (2018)

303-1 Interactions with

water as a shared

resource

Sustainability at Bittium in 2023,

Environment, p. 84

Reported total water consumption and water consumption

per person for Bittium locations. No water is used in the

production of the products.

GRI 305: Emissions

305-1 Direct (Scope 1)

GHG emissions

Sustainability at Bittium in 2023,

Environment, p. 84;

Report by the Board of Directors 2023,

Statement of Non-Financial Informa

tion, p. 110

Reported carbon footprint.

In 2023, Scope 1 carbon dioxzide emissions (travel and waste)

of Bittium’s offices in Finland were 206.8 tCO

(204.0 tCO

2022) and Scope 2 emissions (heating and electricity) were

413.1 tCO

e (563 tCPO

e in 2022).

GRI 306: Waste (2020)

306-2 Management of

significant waste-

related impacts

Sustainability at Bittium in 2023;

Environment, p. 85

Disclosure Reporting contents

Location in Bittium’s

annual reporting Additional information

94 Sustainability at Bittium in 2023

Bittium Annual Report 2023

GRI 403: Occupational Health and Safety (2018)

403-1 Occupational

health and safety

management system

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

403-2 Hazard identification,

risk assessment, and

incident investigation

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

Bittium is constantly developing its occupational safety pro

cesses and risk management. More information regarding

subcontractors can be found in the Bittium Supplier Manual:

www.bittium.com/about-bittium/suppliers/supplier-manual

403-3 Occupational health

services

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

Healthcare services that are more extensive than required by

law cover 99% of the personnel. Occupational health services

as part of compliance with the Customer Liability Act is part

of Bittium's subcontracting process.

403-4 Worker participation,

consultation, and

communication on

occupational health

and safety

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

403-5 Worker training on

occupational health

and safety

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

All Bittium locations have appropriate safety plans, and

safety issues are taken into account in Bittium's personnel

orientation program. Occupational health matters are

communicated to the staff regularly.

Subcontracting companies are responsible for the occupa-

tional health and occupational safety training of their employ-

ees in accordance with their own principles. Bittium trains the

subcontractors working at Bittium's premises. Subcontractors

working at Bittium's customers' premises are trained by the

customer. In other respects, the subcontractors themselves

are responsible for the training of their employees.

403-6 Promotion of

worker health

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

403-7 Prevention and

mitigation of

occupational health

and safety impacts

directly linked by

business relation-

ships

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69,

Trust-based Customer Relationships

and Secure Products, p. 72

Corporate Citizenship and

Sustainable Business, p. 76,

More information regarding subcontractors can be found in

the Bittium Supplier Manual: www.bittium.com/about-bittium/

suppliers/supplier-manual

403-8 Workers covered by

an occupational

health and safety

management system

All Bittium employees are covered by the occupational

health and safety management system.

403-9 Work-related

injuries

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

In 2023, Bittium's Finnish companies did report 0 safety

and near-miss findings and 11 occupational accidents,one of

which resulted in the short, passing incapacity for work but no

liability for compensation according to the Occupational Acci

dents and Occupational Diseases Act.

403-10 Work-related

ill health

Sustainability at Bittium in 2023;

Innovative and Developing People,

p. 69

The sickness absence rate was 2.3% in 2023 (calculated

from the occupational health service provider's data per day/

person vs. theoretical regular working hours). Bittium does

not have information available regarding temporary labor.

The most significant workability risks are related to musculo-

skeletal diseases, coping at work, and mental well-being.

Disclosure Reporting contents

Location in Bittium’s

annual reporting Additional information

95Sustainability at Bittium in 2023

Bittium Annual Report 2023

GRI 404: Training and Education

404-1 Average hours of

training per year

per employee

Sustainability at Bittium in 2023,

Innovative and Developing People,

p. 71

Bittium reports the number of training days / person.

404-2 Programs for

upgrading employee

skills and transition

assistance programs

Sustainability at Bittium in 2023,

Innovative and Developing People,

p. 68

GRI 405: Diversity and Equal Opportunity

405-1 Diversity of

governance bodies

and employees

Corporate Governance Statement,

Diversity Principles of the Board

of Directors, p. 36;

Sustainability at Bittium in 2023,

Innovative and Developing People, p. 71

Disclosure Reporting contents

Location in Bittium’s

annual reporting Additional information

Sustainability at Bittium in 2023

Bittium Annual Report 2023Bittium Annual Report 2023

Report by the Board of Directors and Financial Statements96

Report by the

Board of Directors

and Financial

Statements 2023

Contents

The Bittium Group Financial Statements, IFRS

Report by the Board of Directors 98

Consolidated Statement of Comprehensive Income 122

Consolidated Statement of Financial Position 123

Consolidated Statement of Cash Flows 124

Consolidated Statement of Changes in Equity 125

Notes to the Consolidated Financial Statements

Accounting Principles for the Consolidated Accounts 126

1 Operating Segments 132

2 Net Sales 134

3 Other Operating Income 135

4 Other Operating Expenses 135

5 Depreciations and Impairments 136

6 Employee Benefit Expenses and Number of Personnel 136

7 Research and Development Expenses 137

8 Financial Expenses (Net) 137

9 Income Taxes 137

10 Earnings per Share 138

11 Property, Plant and Equipment 139

12 Intangible Assets 141

13 Acquisitions 144

14 Shares in Associated Companies 145

15 Other Financial Assets 146

16 Deferred Tax Liabilites and Assets 146

17 Inventories 148

18 Trade and Other Receivables (Current) 148

19 Financial Assets at Fair Value Through Profit or Loss 149

20 Cash and Short-Term Deposits 149

21 Issued Capital and Reserves 150

22 Share-Based Payment Plans 150

23 Provisions 153

24 Financial Liabilities 153

25 Changes in Liabilities Arising from Financing Activities 155

26 Trade and Other Payables 155

27 Financial Risk Management 156

28 Adjustments to Net Cash from Operating Activities 161

29 Operating Lease Agreements 161

30 Securities and Contingent Liabilities 162

31 Related Party Disclosures 162

32 Key Ratios 164

33 Shareholdings and Shares 167

The Parent Company Financial Statements, FAS

Income Statement, Parent 169

Balance Sheet, Parent 170

Cash Flow Statement, Parent 171

Accounting Principles for the Preparation

of Financial Statements, Parent 172

Notes to the Financial Statement of the Parent Company 173

Proposal by the Board of Directors

on the Use of the Profit Shown on the Balance Sheet

and the Payment of the Dividend 180

Auditor’s Report 181

9898 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Report by the

Board of Directors 2023

Year 2023 in Short

Net Sales and Operating

Profit in 2023 Decreased

Year-on-Year. Actions Taken

to Improve the Financial

Performance Will Be Effective

from 2024 onwards.

Bittium’s net sales in January-December

2023 decreased by 8,8 percent year-on-

year to EUR 75.2 million (EUR 82.5 million).

The share of product-based net sales was

EUR 45.8 million (EUR 57.4 million), repre-

senting 60.9 percent of the net sales. The

share of Medical products was EUR 21.8 mil-

lion (EUR 22.6 million), and the share of

Defense & Security products and systems

was EUR 24.0 million (EUR 34.8 million).

The decline in the product-based net sales

was mainly caused by the delays in Medical

technology product deliveries resulting from

the component shortage in the beginning

of the year, weaker than expected devel-

opment of product sales outside of the US,

and delays in regulatory approvals of medi-

Unless otherwise mentioned, the figures in brackets refer to the corresponding period in the previous year.

cal devices. In addition, the slower-than-es-

timated progress of multi-year projects in

the Defense business and thus the timing

of orders and product deliveries affected

negatively to the development of net sales.

The share of services-based net sales was

EUR 29.5 million (EUR 25.1 million), repre-

senting 39.1 percent of the net sales. The

share of Engineering Services’ R&D services

was EUR 17.0 million (EUR 15.2 million), re-

sulting from the progressing digitalization

in our customers’ businesses and the new

customers won last year.

R&D investments were EUR 20.2 million

(EUR 22.3 million), representing 26.9 per-

cent of net sales (27.0 percent), of which

EUR 7.2 million were capitalized in the bal-

ance sheet (EUR 6.6 million).

In the fourth quarter, there were non-recur-

ring items of EUR 3.2 million in total, includ-

ing non-recurring costs of EUR 0.7 million

due to changes negotiations and non-

recurring write-down of EUR 2.5 million

due to the impairment of inventory. The in-

ventory write-down was aimed, in accor-

dance with the principle of prudence, at

those components of the Defense & Secu-

rity and Medical Business Segments whose

minimum order quantity has been too large

compared to the current demand forecast

or the turnover rate has been very low.

EBITDA was EUR 5.2 million (EUR 11.0 mil-

lion), including above-mentioned EUR 3.2

million non-recurring costs.

The operating result was EUR -4.3 million

(EUR 0.3 million). In addition to the decline

in the net sales, the operating result was af-

fected by the above-mentioned non-recur-

ring costs of EUR 3.2 million.

Result for the period was EUR -5.4 million,

and earnings per share were EUR -0.153,

including above-mentioned non-recurring

items of EUR 3.2 million (result for the peri-

od EUR 0.3 million and earnings per share

EUR 0.007).

Resulting from the change negotiations

and other cost measures taken, Bittium

9999

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

will achieve approximately EUR 6.0 million

annual cost savings in total, from which

EUR 0.8 million realized during 2023. The

total cost savings the company estimates

to achieve in 2024 in full.

Cash flow from operating activities was

EUR 1.2 million (EUR 8.0 million). Net cash

flow during the period was EUR -10.7 mil-

lion, including EUR -4.3 million operating

loss, EUR 7.2 million R&D investments

into own products, EUR 3.0 million in-

crease in the net working capital, and

EUR 1.8 million dividend payment as the

most significant items weakening the

cash flow (EUR -3.0 million, including

EUR 6.6 million R&D investments into

own products, and EUR 1.4 million dividend

payment as the most significant items).

The equity ratio was 69.6 percent (69.7 per-

cent). Net gearing was 13.2 percent (3.0

percent).

The order backlog at the end of the year

was EUR 27.6 million (EUR 28.1 million).

CONSOLIDATED STATEMENT

OF COMPREHENSIVE INCOME, MEUR

2023

12 months

2022

12 months

Net sales 75.2 82.5

Operating profit / loss -4.3 0.3

Financial income and expenses -1.0 -0.8

Result before tax -5.3 -0.4

Result for the period -5.4 0.3

Total comprehensive income for the period -5.5 0.5

Result for the period attributable to:

Equity holders of the parent -5.4 0.3

Total comprehensive income for the period attributable to:

Equity holders of the parent -5.5 0.5

Earnings per share from continuing operations, EUR -0.153 0.007

Financial Performance

in January–December 2023

100 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

DISTRIBUTION OF SERVICES-BASED NET SALES, MEUR AND % 2H/23 1H/23 2H/22 1H/22

Engineering Services R&D services 8.1 8.9 7.2 8.0

53.2% 62.3% 64.0% 57.8%

Other service-based net sales 7.1 5.4 4.0 5.8

46.8% 3 7. 7 % 36.0% 42.2%

Half Year Figures

GROUP’S NET SALES AND OPERATING RESULT, MEUR 2H/23 1H/23 2H/22 1H/22

Net sales 39.6 35.6 41.4 41.0

Operating profit (loss) -1.1 -3.2 0.6 -0.2

Result before taxes -1.6 -3.6 0.2 -0.7

Result for the period -1.8 -3.6 0.9 -0.6

DISTRIBUTION OF NET SALES BY PRODUCT AND SERVICES, MEUR AND % 2H/23 1H/23 2H/22 1H/22

Product based net sales 24.4 21.4 30.2 2 7. 2

61.6% 60.0% 72.9% 66.3%

Services based net sales 15.2 14.2 11.2 13.8

38.4% 40.0% 2 7.1 % 33.7%

DISTRIBUTION OF PRODUCT-BASED NET SALES, MEUR AND % 2H/23 1H/23 2H/22 1H/22

Defense & Security products 13.8 10.2 18.9 15.9

56.4% 47.9 % 62.6% 58.5%

Medical products 10.7 11.1 11.3 11.3

43.6% 52.1% 37. 4 % 41.5%

DISTRIBUTION OF NET SALES BY MARKET AREAS, MEUR AND % 2H/23 1H/23 2H/22 1H/22

Asia 0.3 0.5 0.7 0.5

0.9% 1.4% 1.8% 1.3%

North and South America 10.7 10.2 12.9 10.4

2 7. 0 % 28.6% 31.1% 25.4%

Europe 28.6 24.9 2 7. 8 30.1

72.1% 70.0% 6 7.1 % 73.3%

101

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

GROUP’S NET SALES AND OPERATING RESULT, MEUR 4Q/23 3Q/23 2Q/23 1Q/23 4Q/22

Net sales 25.7 13.9 20.7 14.9 2 7. 6

Operating profit (loss) 1.0 -2.1 0.3 -3.5 3.0

Result before taxes 0.7 -2.4 0.1 -3.7 2.8

Result for the period 0.6 -2.4 0.1 -3.7 3.5

DISTRIBUTION OF NET SALES

BY PRODUCT AND SERVICES, MEUR AND % 4Q/23 3Q/23 2Q/23 1Q/23 4Q/22

Product based net sales 16.8 7. 6 13.3 8.0 20.9

65.3% 54.9% 64.5% 53.7% 75.8%

Services based net sales 8.9 6.3 7. 3 6.9 6.7

34.7% 45.1% 35.5% 46.3% 24.2%

Quarterly Figures

DISTRIBUTION OF NET SALES

BY MARKET AREAS, MEUR AND % 4Q/23 3Q/23 2Q/23 1Q/23 4Q/22

Asia 0.1 0.3 0.3 0.2 0.5

0.4% 1.8% 1.3% 1.5% 1.8%

North and South America 6.0 4.7 6.9 3.3 7. 6

23.5% 33.6% 33.2% 22.2% 2 7. 7 %

Europe 19.6 9.0 13.5 11.4 19.5

76.2% 64.6% 65.5% 76.2% 70.6%

DISTRIBUTION OF PRODUCT-BASED

NET SALES. MEUR AND % 4Q/23 3Q/23 2Q/23 1Q/23 4Q/22

Defense & Security products 11.4 2.3 5.8 4.5 15.8

68.2% 30.5% 43.2% 55.6% 75.5%

Medical products 5.3 5.3 7. 6 3.6 5.1

31.8% 69.5% 56.8% 44.4% 24.5%

DISTRIBUTION OF SERVICES-BASED

NET SALES, MEUR AND % 4Q/23 3Q/23 2Q/23 1Q/23 4Q/22

Engineering Services R&D services 4.3 3.8 4.3 4.6 4.2

48.2% 60.4% 59.1% 65.8% 62.4%

Other service-based net sales 4.6 2.5 3.0 2.4 2.5

51.8% 39.6% 40.9% 34.2% 3 7. 6 %

102 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Dec. 31,

2023

Dec. 31,

2022

Non-current assets 84.6 85.0

Current assets 73.1 84.6

Total assets 1 57.7 169.7

Share capital 12.9 12.9

Other capital 94.6 102.8

Total equity 1 0 7. 6 115.8

Non-current liabilities 1.8 21.7

Current liabilities 48.3 32.2

Total equity and liabilities 1 57.7 169.7

CASH FLOW OF THE REVIEW PERIOD 1–12/2023 1–12/2022

+ profit of the period +/- adjustment of accrual basis items 5.1 11.7

+/- change in net working capital -3.0 -2.9

- interest, taxes and dividends -0.9 -0.8

= net cash from operating activities 1.2 8.0

- net cash from investing activities -7. 7 -8.0

- net cash from financing activities -4.2 -3.0

= net change in cash and cash equivalents -10.7 -3.0

Statement of Financial Position and Financing

The figures presented in the statement of financial position of December 31, 2023,

are compared with the statement of the financial position of December 31, 2022

(MEUR).

The number of gross investments in the pe-

riod under review was EUR 9.4 million (EUR

9.5 million). Net investments for the review

period totaled to EUR 9.2 million (EUR 9.4

million). The total amount of depreciation

during the period under review was EUR 9.5

million (EUR 10.7 million). The amount of in-

terest-bearing debt, including finance lease

liabilities, was EUR 22.6 million at the end of

the reporting period (EUR 22.4 million). Bit-

tium’s equity ratio at the end of the period

was 69.6 percent (69.7 percent).

The group’s liquidity remained good despite

that the business developed weaker than

expected, and the cash flow was clearly

negative. Inventories and accounts receiv-

able were at a high level at the end of the

financial year. Securing cash flow has not

required special adjustment measures, and

no significant changes have been identified

in the credit risks of customer receivables.

Cash and other liquid assets at the end of

the reporting period were EUR 8.3 million

(EUR 19.0 million). Net cash flow during the

period was EUR -10.7 million. The net cash

flow resulted from EUR -4.3 million operat-

ing loss, EUR 7.2 million investments made

into own R&D, EUR 3.0 million increase in

net working capital, and EUR 1.8 million divi-

dend payment as the most significant items

weakening the cash flow (EUR -3.0 million

including EUR 6.6 million investments made

into own product development, and EUR 1.4

million dividend payment).

Bittium has a EUR 20.0 million senior loan

and a EUR 10.0 million committed overdraft

credit facility agreement with Nordea Bank

Finland Plc. The maturity date for the senior

loan is May 24, 2024, and the credit limit

agreement is valid until May 24, 2024. Bit-

tium has EUR 10.0 million committed over-

draft credit facility agreement with OP Cor-

porate Bank Plc, valid until September 30,

2025. At the end of the review period, no

limits from these facilities were in use. The

company has started negotiations to ar-

range refinancing for financial instruments

maturing on May 24, 2024.

Bittium follows a hedging strategy that has

the objective to ensure the business mar-

gins in changing market circumstances

by minimizing the influence of exchange

rates. According to the hedging strategy

principles, the net position in the curren-

cy is hedged when it exceeds the euro limit

defined in the hedging strategy. The net po-

sition is determined based on accounts re-

ceivable, accounts payable, order book, and

budgeted net currency cash flow.

103

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Research and Development

Bittium continued to make significant in-

vestments to develop its own products and

product platforms. In January-December

2023, the R&D investments were EUR 20.2

million (EUR 22.3 million), representing 26.9

percent of the net sales (27.0 percent).

The R&D investments focused mainly on

developing medical technology products,

developing tactical communication sys-

tem and its products for the defense in-

dustry, and special terminal products and

their related security software targeted for

authorities.

The capitalized R&D investments are relat-

ed to the investments in developing Bittium

Tough SDR™ software-defined radio-based

tactical radio product family, further devel-

opment of tactical communication net-

works, and development of medical tech-

nology products.

On October 30, 2023, Bittium announced

its updated strategy concerning years 2024

and 2025. In the strategy the company is

seeking a change from a R&D organization

to a customer-oriented, growth-oriented

operating model through its segment or-

ganizations.

Between 2016 and 2023, the company’s

two Business Segments, Defense & Se-

curity and Medical, have invested strong-

ly in the development of their own prod-

ucts. This has maintained the company’s

R&D INVESTMENTS, (MEUR) 1–12/2023 1–12/2022

Total R&D investments 20.2 22.3

Capitalized R&D investments -7. 2 -6.6

Depreciations and impairment of R&D investments 5.6 5.9

Cost impact on income statement 18.6 21.5

R&D investments, % of net sales 26.9 % 2 7. 0 %

CAPITALIZED R&D INVESTMENTS IN THE BALANCE SHEET, MEUR 1–12/2023 1–12/2022

Balance sheet value in the beginning of the period 48.8 48.1

Additions during the period 7. 2 6.6

Depreciations and impairment of R&D investments -5.6 -5.9

Balance sheet value at the end of the period 50.5 48.8

high average annual R&D investment lev-

el of around EUR 20 million, corresponding

to an average of approximately 25 percent

of the company’s annual net sales. In both

product-oriented Business Segments, the

large product development projects have

proceeded into commercial phase. During

the next two years period, these segments

will now focus on continuous improvement

of the competitiveness of existing prod-

ucts and development of features, which is

the highly important to competitiveness in

both Business Segments. In addition, the

company will use development cooperation

with other companies in its product devel-

opment in the future.

104 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Strategy

Implementation and

Other Significant

Events in 2023

At the beginning of 2022, Bittium started

developing its operations towards indepen-

dent business units with the aim of start-

ing business-specific segment reporting by

the beginning of 2024 at the latest. With the

change, the company seeks a clearer fo-

cus for its operations, growth, and improve-

ment of its ability to generate results. The

renewal was completed during 2023, and

the company will start segment reporting

based on the new structure from the be-

ginning of 2024.

The technological know-how needed in all

the company’s businesses is similar, but

the businesses, customers and market dy-

namics are very different. The stronger in-

dependence of the businesses strength-

ens Bittium’s ability to serve its customers

in a more customer-oriented manner and

improves the speed of decision-making in

each business, strengthening the compa-

ny’s position in each market. It also speeds

up the responsiveness of business opera-

tions to the surrounding market changes,

enabling the production of ever-increasing

added value for customers.

During 2023, the company continued to

work to strengthen its business functions to

enable the formation of independent busi-

nesses. As part of this development, the

company changed its organizational struc-

ture to serve its independent business units

more efficiently. The operations of the en-

tire group were reorganized by transferring,

among other things, the previously jointly

centralized group functions to a large extent

to the Business Segments in accordance

with the needs of each segment. This sig-

nificantly lightened the company’s cost

structure at the group level.

In the second half of the year, the company

went through significant change negotia-

tions due to production, financial and re-

organization related reasons. Change ne-

gotiations started on August 23, 2023, as

part of the company’s measures to improve

its profitability and develop its operations

towards independent business units. The

negotiations concerned all of the compa-

ny’s subsidiaries in Finland and included ap-

proximately 600 employees. As a result of

the negotiations, the company dismissed

61 employees and laid off 8 employees for

the time being.

As part of the company’s actions to im-

prove financial performance, all the com-

pany’s processes, operating methods, and

cost structure were reviewed and modified

to enable profitable growth. The company

also decided to close its offices in Mexico

and Singapore and terminate the activities

of its subsidiaries operating in these coun-

tries (Bittium Mexico S.A. de C.V. and Bittium

Singapore Pte. Ltd.). The closure of the of-

fices has not had an impact on the com-

pany’s ability to serve its customers or de-

liver its products to its customers in South

America or Asia.

Through dismissals and temporary layoffs

and other cost-saving measures, the com-

pany will achieve annual savings of approxi-

mately EUR 6.0 million in total, of which EUR

0.8 million were realized during 2023. The

company estimates to achieve the cost sav-

ings in full during 2024. As a result of the de-

cisions and measures taken, the company

recorded a total of EUR 0.7 million in non-re-

curring costs resulting from the changes in

its income statement for the fourth quar-

ter of 2023.

Profit Warning (announced

on September 15, 2023)

On September 15, 2023, Bittium Corpo-

ration lowered its financial outlook for the

year 2023. The company expected the net

sales in 2023 to be at the same level or lower

than in the previous year (EUR 82.5 million

in 2022), and the operating result to be low-

er than in the previous year (EUR 0.3 million

in 2022). Cash flow in 2023 was expected

to be negative.

The main reason for the decrease in net

sales and operating result was the delivery

volumes of tactical communication prod-

ucts and security solutions in the Defense

& Security business unit, which were realiz-

ing along the year at a slower pace and with

lower volumes than earlier expected. Due to

the decrease in the net sales and operating

result, the cash flow in 2023 was expected

to be negative.

Updated Strategy

– from R&D House towards

Profitable Growth Company

On October 30, 2023, Bittium announced

its updated strategy concerning the years

2024 and 2025. Bittium’s main goals are to

achieve an average annual net sales growth

of more than 10 percent and an operating

profit level of 10 percent. The updated strat-

egy will enable the achievement of the set

goals.

In accordance with the updated strategy,

the company has three Business Segments:

Medical, which focuses on measuring bio-

signals and remote monitoring, Defense &

Security, which offers products and services

to the defense and security markets, and

Engineering Services, which offers R&D ser-

vices. Group operations that were previously

centralized are now also largely divided into

the company’s three Business Segments,

best meeting the needs of each segment.

This was an essential change to optimize

the operation of more independent busi-

nesses.

The company’s updated strategy has three

main focus areas. The first one is a change

from a product development organization

to a customer-centric, growth-oriented

operating model through its segment or-

ganizations. Secondly, the company fo-

cuses strongly on its current products and

increasing their market shares. The R&D

work is mainly concentrated on further im-

proving the competitiveness and productiv-

ity of these products. Thirdly, the company

seeks to increase efficiency in its own op-

erating methods and has streamlined its

cost structure, which is expected to signifi-

cantly improve the company’s profitability

and cash flow.

Between 2016 and 2023, the company’s

two Business Segments, Defense & Secu-

rity and Medical, have strongly invested in

the development of their own products. This

has maintained the company’s high aver-

age annual R&D investment level of around

EUR 20 million, corresponding to an average

of approximately 25 percent of the compa-

ny’s annual net sales. Both product-orient-

ed Business Segments will now focus on

continuous improvement of the competi-

tiveness of existing products and develop-

ment of their features. Continuous product

105

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

improvement is highly important to com-

petitiveness of both Business Segments.

In addition, the company will use develop-

ment cooperation with other companies in

its product development in the future. In the

R&D oriented operational model the cost

structure in the company has been heavy

due to the large R&D projects.

Medical Business Segment

The Medical Business Segment consists of

three business areas, which are the mea-

surement and analysis of the electrical ac-

tivity of the heart (ECG), the measurement

and analysis of the electrical activity of the

brain (EEG), and the measurement and anal-

ysis of sleep apnea. In business, the focus is

specifically on further improving the com-

petitiveness, and productivity of the prod-

ucts, as well as on the efficiency of oper-

ations.

In the medical technology market, signifi-

cant development is taking place regarding

the treatment of patients, especially out-

side hospitals. Increasing efforts are being

made to prevent diseases and health prob-

lems with the help of early diagnostics. The

aim is to discharge patients at an even ear-

lier stage to reduce hospital and treatment

days. These significantly increase the ef-

ficiency of healthcare processes, reduce

costs, and improve the treatment experi-

ence. The prerequisite for the prevention of

health problems and early discharge is en-

abling accurate monitoring and measure-

ment in home conditions with the help of

remote monitoring.

The offering of the Medical Business Seg-

ment focuses on remote monitoring solu-

tions. Bittium has solid and proven world-

class biosignal processing technology

expertise. In the coming years, the compa-

ny will focus on its product business to also

increase the amount of recurring net sales,

both with the help of software and various

multi- and single-use products. In the med-

ical business, the focus will be on coopera-

tion with existing international key custom-

ers to increase market shares together, and

on acquiring new customers.

Defense & Security Business Segment

The Defense & Security Business Segment

consists of three business areas that are de-

fense industry products (Defense Products),

defense industry product development ser-

vices (Defense Services) and secure prod-

ucts and services (Security). Bittium’s busi-

ness consists of tactical communication

solutions aimed at the defense market and

high security communication solutions

aimed at authorities and the professional

user market.

Russia’s war of aggression against Ukraine

has increased the defense budgets of var-

ious countries and increased the states’

interest to modernize their tactical com-

munication systems. The defense forces

of different countries and other authorities

need networks for tactical data transmis-

sion, where increasingly mobile network

users can reliably and securely transfer

growing amounts of data. Finland’s NATO

membership is also expected to have a pos-

itive effect on the demand for Bittium’s de-

fense and secure products, especially in

NATO countries. Bittium has superior wave-

form quality and secure wireless technolo-

gy integrated with hardware and software

intended for defense and authorities’ use.

Over the past years, the company has made

significant investments to expand its prod-

uct portfolio. The products and systems are

now at an internationally very competitive

level, both in terms of coverage and techni-

cal characteristics. In the future, the com-

pany will focus on the continuous improve-

ment of the competitiveness of existing

products and the development of features

to ensure the preservation of competitive-

ness. The company will put emphasize

strongly in its key customers and invest in

international sales and marketing to pur-

sue new customers. The company’s goal is

to grow significantly the international prod-

uct business and achieve an internationally

significant position as a provider of tactical

communication and high security commu-

nication solutions.

Engineering Services Business Segment

In the Engineering Services Business Seg-

ment, Bittium offers its customers R&D ser-

vices and wireless connectivity solutions

for the development of innovative products

in a secure and evolving wireless environ-

ment. The company has focused its R&D

service offering around radio technologies

and embedded devices. Bittium has world-

class expertise in wireless technologies

and comprehensive product development

throughout the whole product life cycle.

In the mobile telecommunications, invest-

ments in the development of new features

continue, and the importance of software

development regarding the development

of 5G networks is strengthened. Along with

digitization, secure IoT (Internet of Things)

is a significant development area in almost

all industries, where the demand is created

by the growing need of companies to digi-

tize their operations, collect data wirelessly

and transfer data to cloud services, as well

as monitor and control devices and systems

remotely. Also, the goal of western compa-

nies to shift the focus of R&D to an increas-

ing extent, e.g., to Europe, creates more de-

mand for companies offering R&D services

and wireless connectivity solutions.

In the coming years, Bittium will continue to

grow its international customer base, espe-

cially in the Industry IoT market segment.

The company will also invest in developing

strategic partnerships with its current cus-

tomers.

Long-term financial goals

(as announced on October 30,

2023)

Bittium kept its long-term financial goals

unchanged. The company aims for an av-

erage annual net sales growth of more than

10 percent and an operating profit level of

10 percent and estimated to achieve these

goals in 2024.

Capital Markets Day 2023

Bittium organized a Capital Markets Day on

October 30, 2023, where the company’s up-

dated strategy was reviewed. A recording of

the event and the materials of the presenta-

tions are available on Bittium’s IR pages at:

https://www.bittium.com/investors.

Segment-based

Financial Reporting

In December 2023, the Board of Directors of

Bittium Corporation decided that the com-

pany will change its financial reporting to

be based on a new segment structure as of

January 1, 2024. The new segment reporting

is based on the updated strategy.

In the new reporting structure, there will be

four reporting segments: the three Busi-

ness Segments (Defense & Security, Med-

106 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

ical, and Engineering Services), and, in ad-

dition, the company decided to report the

Group Functions as a separate, fourth seg-

ment. The goal of adopting the new report-

ing structure is to improve the transparency

into the company’s Business Segments and

their development.

The new Group Functions segment in-

cludes group administration, strategic proj-

ects, and stock market listing related func-

tions, as well as renting premises owned

by the group. Group Functions charge rent

from Business Segments for the premis-

es. In addition to this, Group Functions

produces common services for the Busi-

ness Segments, which are reasonable to

be managed centrally. For these services,

the Business Segments pay a service fee in

proportion to the amount of each segments’

personnel. The CEO, CFO, CDO, Vice Presi-

dent, Communications and Sustainability,

and CLO are responsible for the Group Func-

tions. Altogether, there are approximately

50 employees in Group Functions.

The reportable financial indicators of the

new segments are net sales, EBITDA,

EBITDA % of net sales, operating result, op-

erating result % of net sales, R&D invest-

ments, capitalized R&D investments, new

orders and order backlog, and the amount

of personnel. The first financial report based

on these new segments will be Bittium Cor-

poration’s Business Review January–March

2024, to be published on April 26, 2024, at

8.00 am (CET+1). Adjusted comparative

segment information from 2023 will be pub-

lished in the same Business Review report.

Seamless and Secure

Connectivity Program

At the end of March, Bittium launched the

Seamless and Secure Connectivity pro-

gram, the purpose of which is to enable

end-to-end connections in various op-

erational areas with reliable, secure, and

fault-tolerant connectivity architectures

and products, including life-cycle services

for products and solutions. Business Fin-

land awarded development funding of EUR

10 million to the program in the challenger

competition of Veturi-companies, and EUR

20 million to the ecosystem companies and

research partners surrounding the program.

The four-year program led by Bittium will

last until 2026.

The Seamless and Secure Connectivity pro-

gram enables comprehensive development

of strategically important themes for Bit-

tium. These themes include, e.g., encryption

and information security technologies and

remote medical diagnostics (ECG, EEG, and

sleep apnea) including measuring of biosig-

nals, digitalization of services, increase in

wireless connectivity and data secure con-

nections.

In connection with the program, the first

two co-innovation projects were launched

during 2023: CISSAN, which is part of the

EU CELTIC-Next program, creating algo-

rithms to reduce IoT security threats, and

Photon-Wear, which aims to develop optical

detection methods for physical parameters

and biomarkers. In total, there have been

around 50 partner companies or research

institutes in the ecosystem discussions so

far, and several co-innovation projects are

expected to be launched from the projects

also during 2024.

Market Environment

and Business

Development

in January–December

2023

Defense & Security

Business

The world’s political situation changed sig-

nificantly in February 2022 as Russia at-

tacked Ukraine. The outbreak of war caused

several countries to increase their defense

budgets, which has had an increasing effect

on the demand for defense sector products

and services. The interest in modernizing

the states tactical communication systems

to meet the needs of modern warfare has

also grown.

Interest in Bittium’s tactical communication

solutions has remained on a high level, and

the ongoing international customer pilots

have progressed well. Bittium is involved in

several tenders regarding tactical commu-

nication products and systems, which may

take several years, depending on the scope

of each project. The feedback on Bittium’s

products in the field tests has been positive,

and we expect the results of the ongoing

tenders during the current year.

Close cooperation with the Finnish Defense

Forces continued. Bittium’s tactical back-

bone network and the related products and

radios are used by all defense branches of

the Defense Forces, supporting the mod-

ern way of fighting, where the mobility and

management of the forces on the move and

effective communication are essential. In

2023, product delivery volumes remained

low compared to the corresponding time of

the previous year caused by the slow prog-

ress in several customer projects during last

year. This is typical in multi-year customer

projects, where the annual delivery quan-

tities vary between the different phases of

the project.

On November 14, 2023, Bittium and Finn-

ish Defense Forces signed a new framework

agreement for the purchase of products

intended for tactical communication. The

contract concerns the purchase of Bittium

Tactical Wireless IP Network™ (TAC WIN)

software radio system products and Bittium

Tough Comnode™ communication equip-

ment and related accessories during the

years 2023–2028. The Framework Agree-

ment has a maximum value of EUR 51.6

million, and based on the Agreement, the

Finnish Defence Forces will issue separate

purchase orders in several batches during

the validity period of the Agreement. The

first order based on this Framework Agree-

ment was placed on December 21, 2023,

with a value of EUR 3.7 million. The deliv-

ery of the ordered products started in 2023.

The deployment of Bittium Tough SDR™

software-defined radios has progressed ac-

cording to the plans of the Defence Forces,

with the aim of ensuring the performance of

the equipment during 2024 to start a wid-

er deployment of the radios. The waveform

development of the radios and the develop-

ment of new functionalities for the customer

continued as planned.

In December, the Finnish Defense Forces

ordered development work from Bittium

for a new software-based router intended

for tactical communication. The software

router enables the formation of even larger

network entities for the tactical communi-

cation needs of the mobile forces. The val-

ue of the order was approximately EUR 4.4

107

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

million, and the development work will be

carried out during the years 2024 and 2025.

In Austria, the deployment of Bittium’s tac-

tical communication systems by the local

army continued and the delivery of system

products and the integration and testing of

products and systems continued.

The discussions about cooperation with in-

ternational companies developing air de-

fense and sensor systems progressed.

In November, NATO approved the ESSOR

High Data Rate Waveform, developed by

the a4ESSOR consortium, as a standard

for tactical communication interoperabil-

ity (STANAG 5651). Bittium has been one

of the partners of the industrial a4ESSOR

consortium since its foundation. With the

ratification of the standard, the waveform

will be available to all NATO member coun-

tries, thus enabling faster and more secure

data transfer in both national and coalition

forces’ operations. Bittium provides the

waveform to its customers together with

Bittium Tough SDR™ product family radios.

With Finland’s NATO membership, interest

in Bittium’s products has increased, and

the membership is expected to strength-

en the company’s competitive position, es-

pecially in tenders for NATO countries. The

membership also enables Bittium to imple-

ment NATO waveforms and encryption solu-

tions, if necessary, and offers the opportu-

nity to participate in the research programs

of NATO countries.

Bittium has applied for a NATO information

security listing for its secure Bittium Tough

Mobile™ 2 C solution. The solution meets the

criteria required for information security list-

ing, but the listing is delayed due to the work

backlog of the authorities updating the list-

ing. Bittium has currently no information on

the progress of the list update. Entering the

list of NATO-approved devices is expected

to have a positive effect on the sales of the

solution.

Interest in secure Bittium Tough Mobile™

mobile phones and information securi-

ty-related software has increased due to

numerous data security attacks. The sales

volume of the devices increased during

2023. Phones, their background systems,

and software were delivered to several Eu-

ropean countries for authorities’ usage. The

Bittium Tough Mobile™ 2 Tactical solution

developed for military use has also aroused

interest among the defense administration

authorities of different countries, and sever-

al system pilots started during 2023.

Medical Business

The A component shortage significantly

slowed down the manufacturing and deliv-

eries of medical technology products at the

beginning of the year, and the production of

Bittium Faros™ ECG devices was very lim-

ited for several months. In April–May, pro-

duction volumes were increased, and the

manufacturing of products continued with

better capacity in May–June. The deliveries

continued in the second quarter as planned,

and the shortage of components eased to-

wards the end of the year, as expected. In

the second half of the year, the sales of

medical technology devices outside of US

market developed slower than estimated.

The development of sales is affected by the

insurance policies related to treatment re-

imbursement, which vary between different

countries affecting the development pave

of remote diagnostics market. In addition,

entering new markets is affected by obtain-

ing the medical device regulatory approv-

als, that may take up to more than a year

depending on the approval.

Most product deliveries of Faros ECG de-

vices were still made to the US customer

Boston Scientific Cardiac Diagnostics (CDx)

(previously known as Preventice). CDx is one

of the leading providers of ECG measure-

ment services in the US.

In the neurophysiology market, the piloting

of Bittium BrainStatus™ EEG measuring

devices in intensive care units continued

in Finland and abroad. The change in rec-

ommendations for intensive care regard-

ing EEG measurement is expected to have

a positive effect on the demand for Brain-

Status.

Product deliveries of the home sleep ap-

nea test and measurement solution Bit-

tium Respiro™ continued in Europe, and

the feedback from our customers’ clinical

trials has been positive. Respiro’s sales are

expected to strengthen during the current

year and form one significant growth driv-

er in the Medical Business Segment in the

future. In November, Bittium and ResMed

started a collaboration regarding the dis-

tribution of Bittium Respiro to hospitals and

treatment centers. The signed distributor

agreement concerns the Bittium Respiro™

measuring device and its accessories as

well as the Bittium Respiro Analyst™ anal-

ysis software and service platform, giving

ResMed the right to resell them. The agree-

ment does not include exclusive rights and

it covers the right to resell the solution in

Great Britain, Ireland, Switzerland, Finland,

Norway, and Sweden. ResMed is a leading

provider of cloud-based medical devices

whose solutions are transforming the care

of people with sleep apnea, COPD, and other

chronic respiratory diseases.

Bittium is applying for a sales license for

Respiro for the US market from the Food

and Drug Administration (FDA). The current

estimate of the amount of work and the time

needed for it is at least one year. The require-

ments of the FDA authority have grown and

become stricter in recent years. The overall

duration of the sales license process is af-

fected by the authority’s further interpreta-

tion of possible additional material needs.

Bittium is undergoing regulatory approval

processes for its medical devices in several

different countries. As necessary, the com-

pany will apply for a new European medi-

cal device approval (MDR) for its medical

technology products already in production,

which are approved according to the current

standard (MDD). Decisions on applying for

MDR approvals for existing products will be

made on a business basis, or if significant

changes are made to the products that re-

quire a new approval process.

Engineering Services

Business (Previously

Connectivity Solutions)

Despite the prevailing cost-saving pressure

in the markets among our customers, Bit-

tium’s R&D services sales grew during 2023.

The accelerating digitalization in various in-

dustries increased the need for design ser-

vices. Especially in the Industrial IoT tech-

nology market, the growing need for cloud

communication creates a need for com-

panies to add wireless connectivity to their

products. The increase of European com-

panies focusing their R&D geographically

on Europe, has also had a positive effect on

108 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

the sales growth of Bittium’s R&D services,

especially of the device design.

Cooperation with customers continued well.

Several customer projects were successful-

ly completed, and the company’s custom-

er portfolio expanded during the past year

with several new customers in the trans-

port, traffic, and professional tool markets,

among others. Customer projects include,

for example, the designing of a remote-

ly controlled system and its connectivity

solution, designing of connectivity parts

for a traffic control system, and designing

of measuring devices and their connectiv-

ity solutions intended for professional use.

Significant Events after

the Reporting Period

On January 24, 2024, Antti Näykki, Senior

Vice President, Medical Business Segment,

Bittium Corporation (Engineer, Embedded

Systems) was appointed as Vice President,

Group Business Development as of Febru-

ary 1, 2024. He continues as a member of

Bittium Corporation’s management group.

In this role, Näykki focuses on building Bit-

tium’s long-term growth. He is also respon-

sible for the management of the group’s re-

search activities, supply chains and quality,

as well as human resources and information

management. Näykki reports to CEO Johan

Westermarck.

Laura Kauppinen, Bittium Corporation’s

Chief Development Officer (PhD, Psycholo-

gy) was appointed as Senior Vice President,

Medical Business Segment as of February

1, 2024. Kauppinen continues as a mem-

ber of Bittium Corporation’s management

group. Kauppinen focuses on implementing

the updated strategy to enable profitable

growth in the Medical business. Kauppinen

reports to CEO Johan Westermarck.

As of February 1, 2024, Bittium Corpora-

tion’s management group includes following

persons: CEO Johan Westermarck (Chair-

man), CFO Antti Keränen, CLO Kari Jokela,

Vice President Communications and Sus-

tainability Karoliina Malmi, Vice President

Group Business Development Antti Näykki,

and the heads of Business Segments: Tom-

mi Kangas, Senior Vice President, Defense

& Security Business Segment, Jari Inget,

Vice President, Engineering Services Busi-

ness Segment, and Laura Kauppinen, Senior

Vice President, Medical Business Segment.

On January 31, 2024, following the recom-

mendation of the Audit Committee, Bittium

Corporation’s Board of Directors proposes

to the Annual General Meeting to be held

on April 10, 2024, that, based on the com-

petitive tendering of the audit, the audit firm

PricewaterhouseCoopers Oy be appointed

as the Company’s auditor for the financial

year 2024. If PricewaterhouseCoopers Oy is

selected as the auditor of the Bittium Cor-

poration, Sami Posti, Authorized Public Ac-

countant, will act as the principal auditor, as

stated by the firm. PricewaterhouseCoopers

Oy will also serve as the assurance provider

for the Bittium Corporation’s sustainability

reporting for the financial year 2024.

Outlook for 2024

Bittium expects the net sales in 2024 to

be EUR 85–95 million (EUR 75.2 million in

2023) and the operating result to be EUR

7.0–9.5 million (operating loss of EUR -4.3

million in 2023).

More information about Bittium’s market

outlook is presented in this report in the sec-

tion “Market Outlook” as well as on the com-

pany’s internet pages at www.bittium.com.

Market Outlook

Bittium’s customers operate in various in-

dustries, each having its own industry-spe-

cific factors driving the demand. A common

factor creating demand among the whole

customer base is the growing need for high-

er quality and secure data transfer. Due to

the technology competencies accrued over

time and the long history of developing mo-

bile communication solutions, Bittium is in a

good position to offer customized connec-

tivity solutions to its customers. Over thirty

years of experience and extensive compe-

tence in measuring biosignals also act as

a basis for medical technology solutions.

The world’s geopolitical situation, problems

in logistics chains, inflation, and deteriorat-

ing economic development create uncer-

tainty in the market outlook.

The factors affecting the demand for Bit-

tium’s products and services are described

below:

Defense, Public Safety,

and Information Security

Markets

In the defense market’s tactical communi-

cations sector, the governments’ defense

forces and other authorities need networks

that troops, who are more and more con-

stantly on the move, can use and transfer

growing amounts of data securely. This cre-

ates demand for Bittium Tactical Wireless

IP Network™ (TAC WIN) broadband network,

Bittium Tough SDR™ handheld and vehicu-

lar radios, and for other Bittium’s IP-based

(Internet Protocol) tactical communication

solutions that fulfill the needs of data trans-

fer of moving troops and individual soldiers.

Russia’s war of aggression against Ukraine

has also increased the defense budgets of

various countries and has had a favorable

effect on demand in the defense market. In

the first phase, the increased defense ap-

propriations have been allocated mainly to

consumables. In the future, the increased

budgets will also be aimed at the modern-

ization and development projects of the de-

fense forces of different countries, which

may have a positive effect on the demand

for Bittium’s tactical communication solu-

tions.

Finland’s NATO membership is expected

to have a positive effect on the demand for

Bittium’s defense and official products, es-

pecially among NATO member countries.

Bittium continues its efforts to export tac-

tical communications’ products to interna-

tional markets and aims to get new inter-

national customers during 2024. The long

sales cycles of the defense industry affect

sales development and forecasting.

The use of LTE technology, smartphones,

and applications continue to increase in

special verticals, such as public safety,

creating demand for Bittium Tough Mobile™

secure smartphone and other customized

special terminals based on Bittium’s own

product platform, as well as for secure soft-

ware solutions. The awareness of mobile se-

curity risks is growing, and the interest in se-

cure mobile devices and software solution

109

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

is increasing. The sales of secure terminal

products are expected to develop moder-

ately according to the nature of public safe-

ty markets.

Telecommunication

and Digitalization

In mobile telecommunications, the imple-

mentation of 5G is accelerating. There is

a wide range of frequencies allocated for

the 5G technology, thus creating the need

to develop multiple products to cover the

market and creating demand for R&D ser-

vices for the development of product vari-

ants. Different needs for satellite commu-

nication solutions increase the demand for

Bittium’s product development know-how

with the addition of new players to the tra-

ditional supplier network. The demand for

Bittium’s R&D services is also increased by

the need to develop new devices utilizing

5G technology.

As digitalization evolves, secure IoT (Inter-

net of Things) has become a significant

development area in almost every indus-

try. The increasing need for companies

to digitalize their operations, collect data

wirelessly, and transfer it to the internet and

cloud services generate a need for Bittium’s

services and customized solutions. To this

end, the market needs secure devices, for

both demanding industrial and leisure ap-

plications, which collect information from

the sensors used by the device and create

a reliable wireless connection to the inter-

net and cloud services.

The deployment of 5G and IoT radio technol-

ogies are expanding, and the number of dig-

italized devices increases continuously. The

devices will also feature new and more ad-

vanced features that will create demand for

design services. Therefore, the integration of

different systems and technologies plays an

important role in enabling complete digita-

lization services. There are several learning

systems and devices under development

that use different kinds of artificial intelli-

gence (AI) technologies to ease and speed

up the processing of large data amounts.

Focusing the R&D work of western com-

panies to Europe, can be seen as an in-

crease in demand for Bittium’s R&D ser-

vices, especially in terms of device design

Demand for R&D services is affected by

customers’ cost-saving pressures in vari-

ous industry segments.

Medical ECG, EEG,

and Sleep Apnea

Remote Monitoring Market

The medical technology market is undergo-

ing significant development in patient care,

especially outside hospitals. There is an in-

creasing focus on the prevention of diseas-

es and health problems through early diag-

nosis and the discharge of patients at an

earlier stage to reduce hospital and treat-

ment days. These actions significantly in-

crease efficiency in health care processes

and lower costs.

A prerequisite for early hospital discharge

is the enabling of accurate and precise fol-

low-up and measurement opportunities in

home conditions, which would be enabled

through remote monitoring. Remote moni-

toring and remote diagnostics also enable

specialists’ diagnoses regardless of time

and place. Also, evolving artificial intelli-

gence-based algorithms become more

common in supporting physicians in mak-

ing diagnoses. Remote monitoring and

remote diagnostics make it possible and

faster to obtain more accurate diagnoses,

which, in turn, speeds up the start of the

right kind of treatment. The market change

will enable several new providers to join the

overall care service chain, without compro-

mising the quality of specialist services.

For measuring biosignals, as well as re-

mote monitoring and diagnostics, Bittium

provides its Bittium Faros™ product family

for remote ECG monitoring, Bittium Brain-

Status™ for measuring the electrical activity

of the brain, home sleep apnea test solution

Bittium Respiro™, and different kinds of di-

agnostics software offered by Bittium.

Regulation by the authorities has a strong

role in bringing medical devices to the

market. The requirements vary for different

countries and the processes are long-term.

Bittium has several regulatory approvals for

its medical devices in progress in different

countries. The company has achieved med-

ical device approval of the new MDR stan-

dard level in the EU region for the Bittium

Respiro™ product family that measures

sleep apnea. Bittium has also applied for

a medical device sales license for the Res-

piro product family from the US Food and

Drug Administration (FDA). The schedule is

affected by additional clinical studies deter-

mined by the FDA authority. The estimated

duration of the additional work is at least

one year.

Risks and

Uncertainties

Bittium has identified several business,

market, and finance-related risk factors

and uncertainties that can affect the level

of sales and profits.

Russia’s war of aggression against Ukraine

and the subsequent global geopolitical in-

stability combined with high inflation, in-

creased interest rates, challenges in supply

chains, and problems in the European en-

ergy market have caused various risks re-

lated to demand and supply and increased

uncertainty.

The global disruption in the availability of

electronic components and their price de-

velopment caused changes in the compa-

ny’s ability to deliver products to its cus-

tomers still in the beginning of 2023. The

company continues to monitor the devel-

opment of the situation and actively strives

to ensure the availability of components re-

quired for product deliveries.

Market Risks

The global economic uncertainty may af-

fect the demand for Bittium’s services, solu-

tions, and products and provide pressure

on, e.g., pricing. In the short term, such un-

certainty may affect, in particular, the utili-

zation and chargeability levels and average

hourly prices of R&D services. Growing po-

litical uncertainty may also affect the de-

mand for Bittium’s services, solutions, and

products and the price competitiveness in

the different geographical areas. Bittium is

also increasingly exposed to legal, econom-

ic, political, and regulatory risks related to

the countries in which its suppliers and oth-

er cooperation partners are located. Such

risks may result in delays in deliveries or in

situations where there will be no orders in

the forecast quantities, currency losses, ele-

vated costs, or litigations and related costs.

110 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

As Bittium’s customer base includes,

among others, companies operating in the

field of telecommunication, defense, and

other authorities, as well as companies de-

livering products to them and companies

operating in the healthcare sector, the com-

pany is exposed to market changes in these

industries.

A significant part of Bittium´s net sales ac-

cumulate from selling products and R&D

services to defense and other authorities,

as well as companies delivering products

to them. Deviation in anticipated business

development with such customer concen-

trations may translate as a significant de-

viation in Bittium’s outlook, both in terms of

net sales and operating result, during the

ongoing financial period and thereafter.

Bittium seeks to expand its customer base

in the longer term and reduce dependence

on individual companies, and hence the

company would thereby be mainly affect-

ed by the general business climate in the

industries of the companies belonging to

Bittium’s customer base instead of the de-

velopment of individual customer relation-

ships. The more specific market outlook has

been presented in this report in the “Market

outlook” section.

Business Related Risks

Bittium’s operative business risks are main-

ly related to the following items: uncertain-

ties and short visibility on customers’ prod-

uct program decisions, their make or buy

decisions and, on the other hand, their de-

cisions to continue, downsize or terminate

current product programs, execution and

management of large customer projects,

ramping up and down project resources,

availability of personnel in labor markets,

accessibility on commercially acceptable

terms and, on the other hand, successful

utilization of the most important technolo-

gies and components, competitive situation

and potential delays in the markets, timely

closing of customer and supplier contracts

with reasonable commercial terms, delays

in R&D projects, a realization of expected

return on capitalized R&D investments,

obsolescence of inventories and technol-

ogy risks in product development causing

higher than planned R&D costs, and risks

related to the ramp-up of product manu-

facturing. Revenues expected to come from

either existing or new products and custom-

ers include normal timing risks. Bittium has

certain significant customer projects, and

deviation in their expected continuation

could also result in significant deviations

in the company’s outlook. In addition, there

are typical industry warranty and liability

risks involved in selling Bittium´s services,

solutions, and products.

Bittium’s product delivery business mod-

el faces such risks as high dependency

on actual product volumes, timing risks,

and potential delays in the markets. The

above-mentioned risks may manifest them-

selves as lower amounts of products deliv-

ered or higher costs of production, and ul-

timately, as lower profit. Bringing Bittium’s

products to international defense and other

authorities’ markets may take longer than

anticipated because the projects are typ-

ically long, and the purchasing programs

are prepared in the lead of national govern-

ments and within the available financing.

Once a supplier has been selected, product

deliveries are typically executed over several

years. Access to the medical device market

requires and may be delayed due to required

regulatory approvals.

Some of Bittium’s businesses operate in in-

dustries that are heavily reliant on patent

protection and therefore face risks related

to the management of intellectual property

rights, on the one hand, related to accessi-

bility on commercially acceptable terms of

certain technologies in Bittium’s products

and services, and on the other hand, related

to an ability to protect technologies that Bit-

tium develops or licenses from others from

claims that third parties’ intellectual prop-

erty rights are infringed. Additionally, parties

outside of the industries operate actively

to protect and commercialize their patents

and therefore in their part increase the risks

related to the management of intellectual

property rights. At worst, claims that third

parties’ intellectual property rights are in-

fringed could lead to substantial liabilities

for damages. In addition, the progress of the

customer projects and delivery capability

may also be affected by potential challeng-

es in global accessibility of key technologies

and components on commercially accept-

able terms, as well as by the acceptance

of the necessary export licenses. The com-

pany changed its name to Bittium Corpo-

ration on July 1, 2015, and started using the

new trademark. The registration and the use

of the new trademark can include custom-

ary risks involved when taking a new trade-

mark into use.

Financing Risks

Global economic uncertainty may lead to

payment delays, increase the risk of cred-

it losses, and weaken the availability and

terms of financing, including increased in-

terest rates. To fund its operations, Bittium

relies mainly on income from its operative

business and may from time to time seek

additional financing from selected financial

institutions. Bittium has a EUR 20.0 million

senior loan and EUR 10.0 million commit-

ted overdraft credit facility agreement with

Nordea Bank Plc. The maturity date for the

senior loan is May 24, 2024, and the credit

limit agreement is valid until May 24, 2024.

Bittium has EUR 10.0 million committed

overdraft credit facility agreement with OP

Corporate Bank Plc valid until September

30, 2025. The company has started nego-

tiations to arrange refinancing for financial

instruments maturing on May 24, 2024.

These agreements include customary cov-

enants related to, among other things, equi-

ty ratio, transferring property, and pledging.

There is no assurance that additional fi-

nancing will not be needed in case of invest-

ments, networking capital needs, or clearly

weaker than expected development of Bit-

tium’s businesses. Customer dependency

in some parts of Bittium’s business may

translate as an accumulation of risk with

respect to outstanding receivables and ul-

timately with respect to credit losses.

Statement of Non-

Financial Information

Bittium is an international technology com-

pany that offers socially useful technical

innovations that improve communication

connections, create security and promote

healthcare.

The company is committed to responsible

and sustainable business through its sus-

tainability program. The sustainability pro-

gram is based on the company´s strate-

gy, values, stakeholders´ expectations and

megatrends in the operating environment,

111

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

which include digitization and the aging of

the population as well as information se-

curity.

Bittium´s new sustainability program is val-

id for the years 2022–2025. The compa-

ny´s sustainability work focuses on three

key themes: 1. personnel, 2. customers and

information security, and 3. environment.

Ethical principles and responsible business

practices are the basis of all activities.

Sustainability is part of Bittium´s organi-

zational culture and way of working. The

company identifies and manages liabili-

ty-related risks as part of the company´s

risk management, which emphasizes the

role of the company´s management group

and the Board of Directors in implementing

measures in daily operations.

During 2023 Bittium stated preparing for

the entry into force of the EU’s new sustain-

ability directive. As part of this, the compa-

ny will carry out a double materiality anal-

ysis, based on which the group will update

its sustainability program in 2024.

Key Operating Principles

Bittium’s operations are based on values,

ethical principles, and a Code of Conduct.

The code of conduct is part of the orienta-

tion program for new employees. Over the

next few years, Bittium aims to bind all its

partners and suppliers to the Code of Con-

duct through contracts. Bittium will up-

date its Code of Conduct and other politics

during 2024.

Bittium´s partners are expected to comply

with Bittium´s Code of Conduct principles

and the supplier manual (Bittium Supplier

Manual), which state, for example, Bittium´s

policies and requirements regarding the se-

lection of suppliers and quality control. Bit-

tium reviews the principles of sustainable

operation of suppliers and partners and au-

dits them according to the defined criteria.

In 2023, compliance with the guidelines has

been assessed based on suppliers’ self-as-

sessments and critical supplier audits.

Export control is an important part of the

company’s operations and a prerequisite for

cooperation between authorities and cus-

tomers. By closely monitoring the changing

legislation in different market areas and by

following the regulations, Bittium promotes

the responsible message of Finnish tech-

nology. During 2023, Bittium has specified

the export control procedures in coopera-

tion with the authorities.

Environmental Matters

Responsibility for the environment, climate

change mitigation and resource-efficient

solutions are an important part of Bittium´s

operations and development. In accordance

with its environmental policy, Bittium is

committed to minimizing the environmen-

tal impact in the production, use and dis-

posal of the products it designs. Bittium´s

products are designed to be long-lasting,

repairable, and recyclable. Since Bittium´s

business is mainly focused on the beginning

of the products´ life cycle, its environmen-

tal impact is very small. The biggest envi-

ronmental impact is caused by recycling

the product.

In the new responsibility program, Bittium

focuses on monitoring three environmental

indicators that measure the environmental

effects of operations: the development of

the carbon dioxide equivalent (CO

ekg), the

development of the energy used (Mwh) and

the percentage share of renewable energy

in the total energy use.

The most significant areas in reducing Bit-

tium´s carbon footprint are the recycling of

waste generated from operations, the uti-

lization of renewable energy sources, and

increasing the environmental awareness of

the personnel.

The Scope 1 carbon dioxide emissions

(travel and waste) of Bittium´s offices in

Finland were 206.8 tCO

in 2023 (204.0

tCO

in 2022) and the Scope 2 emissions

(heating and electricity) were 413.1 tCO

(563.5 tCO

e in 2022). Bittium´s total energy

consumption decreased by 13.1 percent and

was 3,331 MWh (3,827 MWh in 2022). Re-

garding the office space in Oulu, about 5.6

percent of the energy used was produced

with solar energy on an annual basis (goal

>5 percent). The share of renewable energy

in the energy used in Finnish offices was 38

percent (38 percent in 2022).

Bittium´s waste utilization rate was 99,9 per-

cent last year (goal > 95 percent).

Social Issues and Employees

Bittium does not allow discrimination or un-

equal treatment based on gender, age, ori-

gin, religion or belief, opinion, sexual orienta-

tion, disability, or any other reason related to

the person. The equality plan was updated

during 2023. Its most important measures

are paying attention to the equality of wag-

es and career development, the openness

of recruitment, and the systematic support

of the working careers of aging employees.

The key measure of the annual employee

survey was the staff engagement index, the

goal of which for the years 2023–2025 has

been set at 4.0 (scale 1–5), but for the year

2023 the goal was not reached. As expect-

ed, the result reflects the change negotia-

tions held at the end of 2023.

Bittium’s position as a technological pio-

neer requires that the personnel actively

maintain and develop their own expertise,

both in terms of basic skills and the related

common ways of doing things, as well as

the latest technologies, tools, legislation,

and other regulations of the rapidly chang-

ing operating environment, and that they

have a vision of the trends in the develop-

ment of technology and the operating en-

vironment. The goal in competence devel-

opment is continuous development and

learning while working.

The most typical work ability risks in the

field are musculoskeletal disorders as well

as coping at work and mental well-being.

Bittium invests in good work ergonomics

and occupational health care services that

support the well-being of the personnel, as

well as other personnel benefits. In 2023,

Bittium’s Finnish companies reported 11

workplace accidents, one of which result-

ed in a short, temporary incapacity for work.

Respect for Human Rights

and Fighting Corruption

and Bribery

Bittium respects human rights in all its busi-

ness operations, avoids violating human

rights and intervenes in possible negative

human rights impacts caused by its oper-

ations in accordance with the UN´s guiding

principles for companies and human rights.

At Bittium, monitoring the realization of hu-

man rights is mainly related to the activi-

112 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

ties of subcontractors and suppliers. Bit-

tium takes care of the responsibility of the

company´s supply chain, e.g., in terms of

supplier requirements and material reports

related to materials and components. Per-

sonnel training is part of ensuring responsi-

ble procurement. During 2023, Bittium has

not been notified of any suspicions related

to minerals in conflict areas.

Because of Bittium´s market and business

areas, corruption is one of the key risks re-

lated to social responsibility. Bittium does

not accept any form of bribery or corruption

in its own operations or those of its part-

ners. The company has internal and external

guidelines drawn up to prevent anti-corrup-

tion activities, and an electronic self-study

module on anti-corruption activities has

been implemented for new employees. The

company uses a monitoring tool to identi-

fy corruption or other ambiguities of part-

ners, and the company´s stakeholders have

a channel where they can anonymously re-

port violations of anti-corruption rules. In

2023, the company did not become aware

of any suspected corruption.

In the spring of 2023, Bittium implemented

a notification channel in accordance with

the whistleblowing directive. The compa-

ny has precise processes for following up

and handling notifications, and notifications

are investigated urgently and confidentially,

protecting the identity of the person making

the notification. The channel did not receive

any announcements during the year.

EU Taxonomy

Disclosure

The EU Taxonomy

To reach the goal of EU Green Deal and EU´s

climate and energy objectives for 2030, EU

Taxonomy Regulation was published to es-

tablish a classification scheme for econom-

ic activities based on their environmental

sustainability. It sets six environmental ob-

jectives and requires all companies falling

within the scope of the Non-Financial Re-

porting Directive to report certain indicators

detailing the extent to which their activities

are sustainable according to these objec-

tives and criteria.

Bittium’s Approach to

Taxonomy Alignment

and Taxonomy Eligibility

Bittium has determined the taxonomy-

eligible economic activities and aligned ac-

tivities by the following process:

• Identifying economic activities and pro-

cesses across the business of the Bittium

as per NACE classification (Classification

according to the Statistical Classification

of Economic Activities in the European

Community).

• Evaluating whether the identified eco-

nomic activities are suitable to the eco-

nomic activity descriptions included in the

Annex I and II of the Climate Delegated

Act. When suitable, such activities are de-

termined as taxonomy-eligible activities.

• Assessing whether the identified eligi-

ble activities meet the substantial contri-

bution criteria, “Do No Significant Harm´

(DNSH) criteria and determining compli-

ance with minimum safeguards.

Bittium has identified the following eco-

nomic activities in its business operations

as taxonomy-eligible:

• Environmental objective 1 (Climate change

mitigation): category 8.1 Data processing,

server space rental and related activities,

• Environmental objective 2 (Climate

change adaptation): category 8.1 Data pro-

cessing, server space rental and related

activities, and

• Environmental objective 4 (Circular econ-

omy): category 1.2 Manufacture of electri-

cal and electronic equipment, category 4.1.

Provision of IT/OT data-driven solutions,

and category 5.2 Sale of spare parts.

Bittium solutions that offer data process-

ing services and server space rental ser-

vices are carefully checked based on the

description of category 8.1 of environmen-

tal objective 1 (climate change mitigation).

Bittium interpreted the matter strictly and

stated that solutions using Bittium’s own

data center fit this description and are

therefore taxonomy-eligible. The company

was unable to confirm with sufficient evi-

dence the extent to which the current op-

eration meets the requirements defined in

the criteria for sufficient contribution. For

this reason, the company decided that its

operations are taxonomy-eligible, but not

taxonomy-aligned.

In addition to the design and development

of own products related to programming,

Bittium offers versatile IT expertise and

services. Such activities include, for exam-

ple, software development, development of

connectivity solutions, research, and con-

sulting services. In 2022, Bittium defined

these activities as taxonomy-eligible activi-

ties according to environmental objective 2

(climate change adaptation) in category 8.2

Software, consulting and related activities

and reported the related key figures accord-

ingly. In 2023, the EU Commission issued

the EU Commission note C/2023/305 on el-

igibility/alignment-related reporting, which

includes special instructions for reporting

the net sales of businesses falling under the

category 8.2. According to this instruction,

Bittium’s taxonomy report for 2023 does not

include net sales accumulated from the ac-

tivities related to category 8.2.

Bittium manufactures several of its own

electrical and electronic devices for mea-

suring biosignals and remote monitor-

ing as well as for the defense and security

markets. These functions include Bittium’s

own electrical and electronic devices, de-

sign, development, production, and mainte-

nance of accessories, as well as the main-

tenance of device software, in addition to

the maintenance of the device structure.

These business activities are aligned with

the description of Environmental objective

4 (Circular economy) category 1.2 Manufac-

ture of electrical and electronic equipment,

and therefore are taxonomy-eligible. Bittium

was unable to confirm with sufficient evi-

dence that any of these activities meet the

requirements defined in the criteria for sub-

stantial contribution. Therefore, the compa-

ny chose a conservative interpretation and

decided that the functions in question are

not taxonomy-aligned.

Bittium offers various software products

and solutions related to information tech-

nology. Such functions are checked based

on description of Environmental objective

4 (Circular economy) category 4.1. Provision

of IT/OT data-driven solutions. Activities in

which the following are manufactured, de-

veloped, installed, put into use, maintained

or repaired, or expert services are provided,

including technical consulting on the design

or monitoring of the following are defined

as taxonomy-eligible. Among Bittium’s ac-

113

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

tivities, production and delivery of its own

software products and solutions related to

information technology, maintenance, im-

plementation services for software prod-

ucts in the customer’s environments, cus-

tomer training related to implementation,

support services and expert services have

been defined as taxonomy-eligible. Bittium

cannot confirm with sufficient evidence

that any of these activities meet the require-

ments defined in the criteria for substantial

contribution. Therefore, the company chose

a conservative interpretation and decided

that the activities in question are not tax-

onomy-aligned.

As part of product sales, Bittium offers re-

pair services, which include the sale of spare

parts for certain products. The separately

identifiable spare part sales in question

have been defined as taxonomy-eligible

based on the description of Environmental

objective 4 (Circular Economy) category 5.2

Sale of spareparts. Bittium chose a conser-

vative interpretation and decided that repair

services that include component exchang-

es but are not identified as spare part sales

do not qualify as taxonomy-aligned activi-

ties. The company was unable to establish

with sufficient evidence that any of these

activities meet the requirements defined

in the criteria for substantial contribution.

Therefore, the company chose a conser-

vative interpretation and decided that the

activities in question are not taxonomy-

aligned.

Accounting Policy

for Financial KPIs

Bittium did not identify taxonomy-aligned

activities, so the taxonomy-aligned net

sales, capital expenditure, and operating

expenditure is 0%.

Net Sales

• Bittium has calculated the net sales (note

2 of the Financial Statements) in accor-

dance with the delegated act on the pro-

vision of information. The criteria corre-

spond to the principles regarding the

preparation of financial statements of the

IFRS 15 standard.

• With regards to environmental objective 1

(climate change mitigation) category 8.1

Data processing, server space rental and

related activities, Bittium has found eligi-

ble net sales, and it is reported in the ta-

ble on the next pages. Solutions using Bit-

tium’s own data center fit this description.

• Regarding the environmental objective

4 (Circular Economy) category 1.2 Manu-

facture of electrical and electronic equip-

ment, Bittium has found eligible net sales,

and it is reported in the tableon the next

pages. Bittium’s sales of electronic equip-

ment in both the Defense & Security and

Medical business segments fit this de-

scription.

• Regarding the environmental goal 4 (Cir-

cular economy) category 4.1 Provision of

IT/OT data-driven solutions, Bittium has

found eligible net sales, and the data is

reported in the table on the next pages .

Bittium’s information technology sector’s

own software product license sales and

maintenance-related net sales in both the

Defense & Security and Medical business

segments fit this description.

Capital Expenditure

• In this taxonomy report, the costs incurred

from the acquisition of tangible and intan-

gible assets and right-of-use assets are

counted as capital expenditures (note 11

of the financial statements).

• Bittium has calculated the capital expen-

diture in accordance with the delegated

act on the provision of information. At the

same time, it has defined the absolute

capital expenditures used in taxonomy

reporting as gross investments.

• According to Bittium, capital expenditures

allocated to its taxonomy-eligible net

sales, such as investments in measure-

ment devices and manufacturing equip-

ment, can be classified as taxonomy-eli-

gible capital expenditures.

• According to the guidelines of the EU Tax-

onomy Regulation, Bittium’s capital ex-

penditure was EUR 9.36 million in 2023.

• Bittium’s taxonomy-eligible capital ex-

penditures were EUR 0.28 million in 2023.

Operating Expenditure

• In this taxonomy report, direct expens-

es related to research and development,

product delivery and facility maintenance,

which have not been capitalized by the

company, are counted as operating ex-

penditures.

• Bittium has calculated the operating ex-

penses in accordance with the delegated

act on the provision of information and de-

termined that the operating expenses al-

located to the taxonomy-eligible net sales

can be classified as taxonomy-eligible op-

erating expenses.

• According to the guidelines of the EU Tax-

onomy Regulation, Bittium’s operating ex-

penses were EUR 73.45 million in 2023.

• Bittium’s taxonomy-eligible operating ex-

penses were EUR 43.29 million in 2023.

Bittium will continue to develop the taxon-

omy evaluation and reporting practice in

2024. Bittium aims to increase the share

of sustainable business practices. As the

field of application of the reporting prac-

tices expands and the practices become

clearer, the company expects that the pro-

portion of its taxonomy-eligible and taxon-

omy-aligned activities will increase in the

future.

114 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Sales revenue

Substantial

Contribution Criteria DNSH Criteria

Economic

activities

Codes

Absoolute turnover

Proportion of turnover

1.Climate change mitigation

2.Climate change adaptation

3. Water and marine resources

4. Circular economy

5. Pollution

6. Biodiversity and ecosystems

1.Climate change mitigation

2.Climate change adaptation

3. Water and marine resources

4. Circular economy

5. Pollution

6. Biodiversity and ecosystems

Minimum Safeguards

Proportion of Taxonomy aligned

(A.1.) or eligible (A.2.) turnover

Category Enabling activities

Category Transitional activities

M€ %

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y/N Y/ N Y/ N Y/N Y/ N Y/N Y/ N % E T

A. TAXONOMY-

ELIGIBLE

ACTIVITIES

A.1 Environmentally

sustainable activities

(taxonomy-aligned)

Not found

NA 0,00 0,0 NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA

Turnover of environmentally

sustainable activities

(taxonomy-aligned) (A.1) 0,00 0,0 % % % % % % 0%

of which enabling

0,00 0,0 % % % % % % %

of which transitional

0,00 0,0 % %

A.2 Taxonomy-eligible but

not environmentally sus-

tainable activities (not Tax-

onomy-aligned activities)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

Data processing, hosting

and related activities

CCM

8.1 0,23 0% EL 0%

Manufacture of electrical

and electronic equipment

1.2 36,38 48% EL 0%

Provision of IT/OT

data-driven solutions

4.1 11,75 16% EL 0%

Sale of spare parts CE 5.2 0,34 0% EL 0%

Turnover of Taxonomy-eligi-

ble but not environmentally

sustainable activities

(not Taxonomy-aligned

activities) (A.2) 48,70 65% 0.3% 29% 0% 71% 0% 0% 0%

Total (A1 + A2) 48,70 65% 0.3% 29% 0% 71% 0% 0% 0%

B. TAXONOMY-

NON-ELIGIBLE

ACTIVITIES

Turnover of Taxonomy-

non-eligible activities

26,55 35%

Total (A + B)

75,28 100%

115

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Capital expenditure

Substantial

Contribution Criteria DNSH Criteria

Economic

activities

Codes

Absoolute turnover

Proportion of turnover

1.Climate change mitigation

2.Climate change adaptation

3. Water and marine resources

4. Circular economy

5. Pollution

6. Biodiversity and ecosystems

1.Climate change mitigation

2.Climate change adaptation

3. Water and marine resources

4. Circular economy

5. Pollution

6. Biodiversity and ecosystems

Minimum Safeguards

Proportion of Taxonomy aligned

(A.1.) or eligible (A.2.) turnover

Category Enabling activities

Category Transitional activities

M€ %

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y/N Y/ N Y/ N Y/N Y/ N Y/N Y/ N % E T

A. TAXONOMY-

ELIGIBLE ACTIVITIES

A.1 Environmentally

sustainable activities

(taxonomy-aligned)

0,00 0,0 0 0 0 0 0 0 NA NA NA NA NA NA NA NA NA NA

CapEx of environmentally

sustainable activities

(taxonomy-aligned) (A.1) 0,00 0,0 0%

of which enabling

0,00 0,0 % % % % % % 0%

of which transitional

0,00 0,0 % 0%

A.2 Taxonomy-eligible

but not environmentally

sustainable activities

(not Taxonomy-aligned

activities)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

Computer programming,

consultancy and related

activities

CCA

8.2 0,03 0% EL 2%

Manufacture of electrical

and electronic equipment

1.2 0,25 3% EL 0%

CapEx of Taxonomy-

eligible but not environ-

mentally sustainable

activities (not Taxonomy-

aligned activities) (A.2) 0,28 3% 0% 11% 0% 89% 0% 0% 2%

Total (A1 + A2) 0,28 3% 0 % 11% 0% 89% 0% 0% 2%

B. TAXONOMY-

NON ELIGIBLE ACTIVITIES

CapEx of Taxonomy-

non-eligible activities 9,08 97%

Total (A + B) 9,36 100%

116 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Operational expenditure

Substantial

Contribution Criteria DNSH Criteria

Economic

activities

Codes

Absolute turnover

Proportion of turnover

1.Climate change mitigation

2.Climate change adaptation

3. Water and marine resources

4. Circular economy

5. Pollution

6. Biodiversity and ecosystems

1.Climate change mitigation

2.Climate change adaptation

3. Water and marine resources

4. Circular economy

5. Pollution

6. Biodiversity and ecosystems

Minimum Safeguards

Proportion of Taxonomy aligned

(A.1.) or eligible (A.2.) turnover

Category Enabling activities

Category Transitional activities

M€ %

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y; N;

N/EL

Y/N Y/ N Y/ N Y/N Y/ N Y/N Y/ N % E T

A. TAXONOMY-ELIGIBLE

ACTIVITIES

A.1 Environmentally

sustainable activities

(taxonomy-aligned)

Not found

0,00 0,0 0 0 0 0 0 0 NA NA NA NA NA NA NA NA NA NA

OpEx of environmentally

sustainable activities

(taxonomy-aligned) (A.1) 0,00 0,0 0%

of which enabling

0,00 0,0 % % % % % % 0%

of which transitional

0,00 0,0 % 0%

A.2 Taxonomy-eligible

but not environmentally

sustainable activities

(not Taxonomy-aligned

activities)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

EL;N/

EL(f)

Computer programming,

consultancy and related

activities

CCA

8.2 10,47 14 % EL 30%

Manufacture of electrical

and electronic equipment

1.2 24,60 33% EL 0%

Provision of IT/OT

data-driven solutions

4.1 8,23 11% EL 0%

OpEx of Taxonomy-eligible

but not environmentally

sustainable activities

(not Taxonomy-aligned

activities) (A.2) 43,29 59% 0% 24% 0% 75% 0% 0% 30%

Total (A1 + A2) 43,29 59% 0% 24% 0% 75% 0% 0% 30%

B. TAXONOMY-NON

ELIGIBLE ACTIVITIES

OpEx of Taxonomy-

non-eligible activities 30,16 41%

Total (A + B) 73,45 100%

117

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Personnel

The Bittium group employed an average

of 601 people in January–December 2023

(641 employees). At the end of December

2023, the company had 526 employees

(625 employees).

Changes in the

Company’s Management

Laura Kauppinen (PhD. Psychology) was

appointed as Chief Development Officer

(CDO) of Bittium Corporation and a mem-

ber of the management group as of June 1,

2023. In addition, her areas of responsibil-

ity include human resources, information

management, operations including pur-

chasing, logistics and production, as well

as quality and environmental functions, and

corporate technology services. She reports

to CEO Johan Westermarck. Laura Kaup-

pinen has previously worked as a Chief De-

velopment Officer at Citec and in several

group management positions for the past

20 years, e.g., Executive Vice President, Cor-

porate Development and Administration at

Maintpartner and Vice President, HR and

Communications at Eltel.

Antti Keränen (M.Sc. Econ) was appointed

as Chief Financial Officer (CFO) of Bittium

Corporation and a member of the manage-

ment group as of June 1, 2023. He reports to

CEO Johan Westermarck. Keränen joins Bit-

tium from the capital investment company

Sentica Partners, where he has worked for

almost 15 years and served as Investment

Director for the last 9 years. Before this, he

has worked in corporate finance positions

at Kaupthing Bank.

Pekka Kunnari, CFO of Bittium Corporation

and a member of the management team,

decided to leave the company and continue

his career outside Bittium. Jari-Pekka Inna-

nen, Vice President, Engineering Services of

Bittium Corporation, and a member of the

management group, continued at Bittium

in another assignment.

As of June 1, 2023, Bittium Corporation’s

management group included the following

persons: CEO Johan Westermarck (Chair-

man), CFO Antti Keränen, CLO Kari Joke-

la, Vice President, IR, Communications and

Marketing Karoliina Malmi, CDO Laura Kaup-

pinen, and the heads of business units: Jari

Sankala (Defense & Security), Tommi Kan-

gas (Connectivity Solutions) and Antti Näyk-

ki (Medical Technologies).

On August 14, 2023, Jari Sankala, Senior

Vice President, Defense & Security Business

Unit of Bittium Corporation, and member of

Bittium Corporation’s management group,

decided to leave the company and continue

his career outside of Bittium. Tommi Kan-

gas (Master of Engineering, machine auto-

mation), Senior Vice President, Connectivity

Solutions Business Unit and a member of

Bittium Corporation’s management group

took over to lead the Defense & Securi-

ty Business Unit for the time being. While

Kangas is focusing on the Defense & Secu-

rity Business Unit, Jari Inget (MSc. Electrical

Engineering) was appointed as the interim

Vice President, Connectivity Solutions Busi-

ness Unit. Inget represented the Connectiv-

ity Solutions Business Unit in Bittium Cor-

poration’s management group. Inget has a

long history in the Connectivity Solutions

Business Unit in various management po-

sitions, most recently as business director.

Both Tommi Kangas and Jari Inget report to

Johan Westermarck, CEO of Bittium Cor-

poration.

As of August 14, 2023, Bittium Corporation’s

management group included following per-

sons: CEO Johan Westermarck (Chairman),

CFO Antti Keränen, CLO Kari Jokela, Karolii-

na Malmi Vice President, Investor Relations,

Communications and Marketing, CDO Lau-

ra Kauppinen, and the heads of business

units: Antti Näykki, Senior Vice President,

Medical Technologies; Tommi Kangas, Se-

nior Vice President, Defense & Security (act-

ing); and Jari Inget, Vice President, Connec-

tivity Solutions (acting).

On December 21, 2023, the company an-

nounced that the nominations announced

on August 14, 2023, of Tommi Kangas as in-

terim Head of the Defense & Security Busi-

ness Segment and Jari Inget as interim

Head of the Engineering Services Business

Segment, are no longer temporary, as both

continue heading their respective Business

Segments and as members of Bittium Cor-

poration’s Management Group.

As of December 21, 2023, Bittium Corpo-

ration’s Management Group included CEO

Johan Westermarck, CFO Antti Keränen,

CLO Kari Jokela, Vice President, Commu-

nications and Sustainability Karoliina Mal-

mi, CDO Laura Kauppinen, and the heads of

the Business Segments: Antti Näykki, Se-

nior Vice President, Medical Business Seg-

ment, Tommi Kangas, Senior Vice President,

Defense & Security Business Segment, and

Jari Inget, Vice President, Engineering Ser-

vices Business Segment.

Changes in the Company’s

Management after the

Review Period

On January 24, 2024, Antti Näykki, Senior

Vice President, Medical Business Segment,

Bittium Corporation (Engineer, Embedded

Systems) was appointed as Vice President,

Group Business Development as of Febru-

ary 1, 2024. He continues as a member of

Bittium Corporation’s management group.

In this role, Näykki focuses on building Bit-

tium’s long-term growth. He is also respon-

sible for the management of the group’s re-

118 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

search activities, supply chains and quality,

as well as human resources and informa-

tion management. Näykki was responsible

for Bittium Corporation’s business develop-

ment during the years 2019–2021 and in his

new role continues to advance the compa-

ny’s profitable growth strategy. Näykki re-

ports to CEO Johan Westermarck.

On January 24, 2024, Laura Kauppinen, Bit-

tium Corporation’s Chief Development Of-

ficer (PhD, Psychology) was appointed as

Senior Vice President, Medical Business

Segment as of February 1, 2024. Kauppin-

en continues as a member of Bittium Cor-

poration’s management group. Kauppinen

started at Bittium in June 2023 as Chief De-

velopment Officer, leading the group’s strat-

egy update and a significant change pro-

cess with the target to turn Bittium into a

healthy company. In her new role, Kauppin-

en focuses on implementing the updated

strategy to enable profitable growth in the

Medical business. Kauppinen reports to CEO

Johan Westermarck.

As of February 1, 2024, Bittium Corporation’s

management group includes following per-

sons: CEO Johan Westermarck (Chairman),

CFO Antti Keränen, CLO Kari Jokela, Vice

President Communications and Sustain-

ability Karoliina Malmi, Vice President Group

Business Development Antti Näykki, and the

heads of Business Segments: Tommi Kan-

gas, Senior Vice President, Defense & Se-

curity Business Segment, Jari Inget, Vice

President, Engineering Services Business

Segment, and Laura Kauppinen, Senior Vice

President, Medical Business Segment.

Incentive Systems

Management Share-Based

Incentive Plan

On June 19, 2023, the Board of Directors of

Bittium Corporation decided on the estab-

lishment of a new share-based long-term

incentive scheme for the Company’s man-

agement. It comprises a Performance Share

Plan (“PSP”). The objectives of the PSP are

to align the interests of Bittium’s manage-

ment with those of the Company’s share-

holders and, thus, to promote shareholder

value creation in the long term, to commit

the management to achieving Bittium’s

strategic targets and the retention of Bit-

tium’s management.

The PSP consists of three annually com-

mencing three-year performance share

plans, PSP 2023–2025, PSP 2024–2026,

and PSP 2025–2027, each with a one-year

performance period, which is followed by

the payment of the share reward and a two-

year transfer restriction period. The com-

mencement of the following two plans, PSP

2024–2026, and PSP 2025–2027, is, how-

ever, subject to a separate Board decision.

Eligible to participate in the first plan, PSP

2023–2025, are the members of Bittium’s

Management Group. The performance mea-

sure based on which the potential share re-

ward under the first plan, PSP 2023–2025,

will be paid is the revenue growth of Bittium.

A precondition for the payment of the share

reward is, in addition, that the employment

relationship of the participant with Bittium

continues at the time the reward is paid. The

potential reward will be paid in shares of Bit-

tium and in cash.

The aggregate maximum number of shares

to be paid based on the whole PSP is

750,000 shares (gross before the withhold-

ing of the applicable taxes). The aggregate

gross value of the plan, estimated based on

the volume-weighted average quotation of

Bittium’s share during the year 2022, is ap-

proximately EUR 3.5 million.

More information about the share-based in-

centive system can be found on the compa-

ny’s website at https://www.bittium.com.

A One-Off Matching Share

Plan for the CEO of Bittium

Corporation

On April 27, 2023, the Board of Directors of

Bittium Corporation decided on the estab-

lishment of a one-off fixed Matching Share

Plan for the Chief Executive Officer (CEO) of

Bittium. The aim of the Plan is through share

ownership to align the interests of the CEO

with those of the company’s shareholders

and to promote shareholder value creation

in the long term as well as the retention of

the CEO with the company.

The fixed Matching Share Plan was a one-

off plan, in which the CEO was expected to

purchase shares of Bittium Corporation with

at least the value of 200,000 euros at a price

formed in public trading on Nasdaq Helsinki.

The shares were purchased after the pub-

lication date of Bittium Corporation’s Busi-

ness Review January-March 2023. Bittium

Corporation matched the share investment

by way of the CEO received matching shares

without consideration with a net value of

100,000 euros. The matching shares were

paid in listed shares of Bittium Corporation.

119

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

In addition to the matching shares, the com-

pany paid the payroll tax and other taxes

and tax-like charges payable in connection

with the Plan. Based on the current value

of the company’s share the estimated ag-

gregate number of matching shares to be

delivered under the Plan was approximate-

ly 25,000 shares. The matching shares re-

ceived by the CEO based on the Plan will be

subject to a transfer restriction (lock-up) of

three years.

On June 1, 2023, Bittium Corporation an-

nounced that it had transferred a total of

23,854 of its own shares held by the com-

pany free of charge as a share bonus to the

company’s CEO based on a fixed-amount

additional share program. The transfer of

own shares was carried out as a directed

free share issue decided by Bittium Cor-

poration’s Board of Directors. The Board’s

decision was based on the share issuance

authorization given by the annual general

meeting on April 12, 2023.

Other Incentive Systems

In addition, the company has a performance

bonus system, the reward of which is paid

based on the achievement of goals, as well

as a profit-sharing plan, which applies to all

personnel, excluding those covered by other

short-term bonus systems.

Authorizations of

the Board of Directors

at the End of the

Reporting Period

Authorizing the Board

of Directors to Decide

on the Repurchase of the

Company’s own Shares

The General Meeting authorized the Board

of Directors to decide on the repurchase of

the company’s own shares as follows.

The number of own shares to be repur-

chased shall not exceed 3,500,000 shares,

which corresponded to approximately 9.80

percent of all the shares in the company as

at the date of the General Meeting. Based

on the authorization, the company’s own

shares may only be repurchased with unre-

stricted equity. The company’s own shares

may be repurchased at a price formed in

public trading on the date of the repurchase

or otherwise at a price formed on the mar-

ket. The Board of Directors decides how the

shares will be repurchased. Among other

things, derivatives may be used in the ac-

quisition. Own shares may be repurchased

otherwise than in proportion to the share-

holdings of the shareholders (directed re-

purchase).

The authorization revokes the authorization

given by the Annual General Meeting on April

6, 2022, to decide on the repurchase of the

company’s own shares. The authorization

is valid until June 30, 2024.

Authorizing the Board of

Directors to Decide on the

Issuance of Shares as well as

the Issuance of Special Rights

Entitling to Shares

The General Meeting authorized the Board

of Directors to decide on the issuance of

shares and special rights entitling to shares

referred to in Chapter 10 Section 1 of the

Finnish Companies Act as follows.

The number of shares to be issued based

on the authorization shall not exceed

3,500,000 shares in total, which corre-

sponded to approximately 9.80 percent of

all the shares in the company as at the date

of the General Meeting. The Board of Direc-

tors decides on all the terms and conditions

of the issuance of shares and special rights

entitling to shares. The authorization con-

cerns both the issuance of new shares and

the transfer of the company’s own shares.

The issuance of shares and special rights

entitling to shares may be carried out in de-

viation from the shareholders’ pre-emptive

subscription rights (directed issue).

The authorization revokes the authorization

given by the Annual General Meeting on April

6, 2022, to decide on the issuance of shares

and the issuance of special rights entitling

to shares referred to in Chapter 10, Section

1 of the Finnish Companies Act. The autho-

rization is valid until June 30, 2024.

120 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

MARKET VALUES OF SHARES (EUR)

1–12/2023

12 months

1–12/2022

12 months

Highest 5.20 6.08

Lowest 3.31 3.47

Average 4.22 4.71

At the end of period 4.81 3.98

Market value of the stock (MEUR) 170.7 141.9

Trading value of shares (MEUR) 1 7. 0 44.0

Number of shares traded (1,000 pcs) 4,021 9,346

Related to average number of shares, % 11.3 26.2

Market Values of Shares

Shareholders

LARGEST SHAREHOLDERS, DECEMBER 29, 2023

Number

of shares

% of

1. Veikkolainen Erkki 1,822,112 5.1%

2. Ponato Oy 1,501,300 4.2%

3. Hulkko Juha 1,419,370 4.0%

4. Varma Mutual Pension Insurance Company 1,365,934 3.8%

5. Ilmarinen Mutual Pension Insurance Company 1,296,529 3.6%

6. Special Investment Fund Aktia Mikro Markka 700,000 2.0%

7. Skandinaviska Enskilda Banken AB 698,499 2.0%

8. Hildén Kai Jalmari 658,000 1.8%

9. Citibank Europe PLC 592,844 1.7%

10. Elo Mutual Pension Insurance Company 503,000 1.4%

At the end of December 2023, Bittium Corporation had 22,030 shareholders. The ten largest shareholders

owned 29.6 percent of the shares. Private ownership was 69.6 percent. The percentage of foreign and nom-

inee-registered shareholders was 4.0 percent at the end of December 2023.

Share and

Share Capital

The shares of Bittium Corporation are quot-

ed on Nasdaq Helsinki. The Company has

one series of shares. All shares entitle their

holders to dividends of equal value. Each

share has one vote. The share does not have

a nominal value. The Company’s shares

have been entered into the Euroclear Fin-

land Ltd.’s book-entry securities system.

At the end of the financial period, the fully

paid share capital of the Company entered

into the Finnish Trade Register was EUR

12,941,269.00, and the total number of the

shares was 35,702,264. The accounting par

value of the Company’s share is EUR 0.10.

Share Buy-Back Program

The Board of Directors of Bittium Corpora-

tion has decided on May 17, 2023, to launch

a share buy-back program concerning Bit-

tium’s own shares based on the authoriza-

tion to repurchase own shares granted by

the Annual General Meeting held on April

12, 2023.

Acquisitions of own shares started on May

19, 2023, and ended on October 3, 2023. The

repurchases of the own shares began on

May 19, 2023, and ended on October 3, 2023.

During that period, Bittium repurchased

240,000 of its own shares for the total val-

ue of EUR 980,112.00 and an average price

per share EUR 4.0838. The shares were

acquired at the market price quoted at the

time of acquisition in trading organized by

Nasdaq Helsinki Ltd on a regulated market.

The shares acquired through the buy-back

program are intended to be used for meet-

ing obligations arising from share-based

rewards to the Company’s management

under the Company’s current and possible

future incentive arrangements.

On December 31, 2023, Bittium held 216,146

treasury shares, which corresponds to

around 0.61 percent of all the shares in the

Company.

121

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Flagging Notifications

During the review period, there were no

changes related to ownership relationships

that would have led to the notification obli-

gation required by Section 2:9 of the Secu-

rities Market Act, i.e., the so-called flagging

notification.

The Board,

Board Committees

and the Auditor

The Annual General Meeting held on April

12, 2023, decided that the Board of Direc-

tors shall comprise five (5) members. Mr.

Erkki Veikkolainen, Ms. Riitta Tiuraniemi,

Mr. Veli-Pekka Paloranta, Mr. Petri Toljamo,

and Mr. Pekka Kemppainen were re-elected

as members of the Board of Directors for a

term of office expiring at the end of the next

Annual General Meeting.

At its organizing meeting held on April 12,

2023, the Board of Directors elected Mr. Erk-

ki Veikkolainen as the Chairman of the Board

of Directors. Further, the Board of Directors

resolved that it will continue to have an Audit

Committee. Ms. Riitta Tiuraniemi (Chairman

of the Committee), Mr. Petri Toljamo, and Mr.

Veli-Pekka Paloranta were elected as mem-

bers of the Audit Committee.

Ernst & Young Oy, authorized public ac-

countants, was re-elected auditor of the

company for a term of office ending at the

end of the next Annual General Meeting.

Ernst & Young Oy has notified that Mr. Jari

Karppinen, APA, will act as the principal au-

ditor. It was decided that the remuneration

to the auditor shall be paid against the au-

ditor’s reasonable invoice.

Corporate

Governance

Statement

The Board of Directors has issued the corpo-

rate governance statement separate from

this report.

Dividend from 2022

In accordance with the proposal of the Bo-

ard of Directors, the Annual General Meeting

held on April 6, 2022, decided that, based

on the balance sheet for the financial year

January 1, 2021–December 31, 2022, a di-

vidend of EUR 0.05 per share will be distri-

buted. The dividend was paid to sharehol-

ders who on the dividend record date of April

14, 2023, were registered in the company´s

shareholders´ register held by Euroclear Fin-

land Oy. The dividend was paid on April 21,

2023. All the shares in the company were

entitled to the dividend with the exception

of shares possibly held by the company on

the dividend record date.

122 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Consolidated Statement of Comprehensive Income

Continuing operations, 1000 EUR Notes

Jan. 1–Dec. 31,

2023

Jan. 1–Dec. 31,

2022

NET SALES 1, 2 75,247 82,464

Other operating income 3 3,108 2,740

Change in work in progress and finished goods

Work performed by the undertaking for its own purpose and capitalized 255 496

Raw materials -20,198 -20,227

Personnel expenses 6 -39,094 -39,463

Depreciation 7 -9,479 -10,699

Other operating expenses 4 -14,168 -14,784

Share of results of the associated companies 14 32 -185

OPERATING PROFIT -4,296 342

Financial income and expenses 8 -967 -761

PROFIT BEFORE TAX -5,263 -419

Income tax 9 -168 672

PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS -5,431 253

Profit for the year from discontinued operations

PROFIT FOR THE YEAR -5,431 253

Other comprehensive income:

Items that will not be reclassified to statement of income

Re-measurement gains (losses) on defined benefit plans

Income tax effect

Items that may be reclassified subsequently to the statement of income

Exchange differences in translating foreign operations -61 212

TOTAL COMPREHENSIVE INCOME FOR THE YEAR -5,492 466

Profit for the year attributable to

Equity holders of the parent -5,431 253

Total -5,431 253

Total comprehensive income for the year attributable to

Equity holders of the parent -5,492 466

Total -5,492 466

Earnings per share for profit attributable to the shareholders of the parent company 10

Earnings per share from continuing operations, EUR

Basic earnings per share -0.153 0.007

Diluted earnings per share -0.153 0.007

Earnings per share from discontinued operations, EUR

Basic earnings per share

Diluted earnings per share

Earnings per share from continuing and discontinued operations, EUR

Basic earnings per share -0.153 0.007

Diluted earnings per share -0.153 0.007

Average number of shares, 1000 pcs 35,609 35,702

Average number of shares, diluted, 1000 pcs 35,609 35,702

123

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Consolidated Statement of Financial Position

1000 EUR Notes

Dec. 31,

2023

Dec. 31,

2022

Non-current assets

Property, plant, and equipment 11 18,221 19,664

Goodwill 12 5,828 5,836

Intangible assets 12 51,246 50,114

Investments in associated companies 14 1,042 1,010

Other financial assets 15 112 112

Non-current receivables 18 730 856

Deferred tax assets 16 7,415 7,416

Total 84,595 85,008

Current assets

Inventories 17 26,621 24,196

Trade and other receivables 18 38,111 41,435

Financial assets at fair value through profit or loss 19 1 5,696

Cash and short-term deposits 20 8,331 13,320

Total 73,064 84,647

Total assets 157,659 169,656

Equity and liabilities

Equity attributable to equity holders of the parent 21

Share capital 12,941 12,941

Translation differences 1,257 1,318

Invested non-restricted equity fund 25,953 25,953

Retained earnings 67,433 75,561

Total 107,585 115,774

Non-controlling interests

Total equity 107,585 115,774

Non-current liabilities

Deferred tax liabilities 16 114 156

Interest-bearing loans and borrowings (non-current) 24 1,470 21,335

Other non-current liabilities, non-interest bearing 26 200 192

Total 1,785 21,684

Current liabilities

Trade and other payables 26 22,397 26,427

Provisions 23 4,795 4,662

Interest-bearing loans and borrowings (current) 24 21,098 1,110

Total 48,290 32,198

Total liabilities 50,075 53,882

Total equity and liabilities 157,659 169,656

124 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Consolidated Statement of Cash Flows

1000 EUR Notes

Jan. 1–Dec. 31,

2023

Jan. 1–Dec. 31,

2022

Cash flow from operating activities

Profit for the year from continuing operations -5,431 253

Profit for the year from discontinued operations

Adjustments

Effects of non-cash business activities 28 9,430 11,366

Finance costs 8 1,455 851

Finance income 8 -488 -90

Income tax 9 168 -672

Change in net working capital

Change in short-term receivables 18 3,461 -1,613

Change in inventories 17 -2,267 -4,571

Change in interest-free short-term liabilities 26 -4,167 3,295

Interest paid on operating activities -1,381 -850

Interest and dividends received from operating activities 488 90

Income taxes paid -57 -38

Net cash from operating activities 1,211 8,021

Cash flow from investing activities

Purchase of property, plant, and equipment 11 -329 -955

Purchase of intangible assets 12 -7,391 -7,092

Net cash from investing activities -7,720 -8,047

Cash flows from financing activities

Payment of finance lease liabilities 24

Dividend paid and capital repayment 24, 25 -1,344 -1,425

Dividend paid and capital repayment -1,785 -1,428

Purchases of own shares -1,046 -144

Net cash from financing activities -4,176 -2,997

Net change in cash and cash equivalents 20 -10,684 -3,023

Cash and cash equivalents on 1 January 19,016 22,039

Change in fair value of investments

Cash and cash equivalents at the end of the year 8,332 19,016

Cash and cash equivalents include liquid and low risk financing securities.

125

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Consolidated Statement of Changes in Equity

1000 EUR

capital

Invested

non-

restricted

equity fund

Translation

difference

Retained

earnings

Non-

controlling

interests Total

Shareholders' equity Jan. 1, 2023

12,941 25,953 1,318 75,561 0 115,774

Comprehensive income for the period

Profit for the period -5,431 -5,431

Exchange differences

on translating foreign operations -61 -61

Total comprehensive income for the period 0 0 -61 -5,431 0 -5,492

Transactions between the shareholders

Dividend distribution -1,785 -1,785

Purchases of own shares -1,046 -1,046

Share-related compensation 165 165

Total transactions between the shareholders -2,666 -2,666

Other changes -31 -31

Shareholders' equity Dec. 31, 2023 12,941 25,953 1,257 67,433 0 107,585

Shareholders' equity Jan. 1, 2022

12,941 25,953 1,106 76,814 0 116,815

Comprehensive income for the period

Profit for the period 253 253

Exchange differences

on translating foreign operations

212

Total comprehensive income for the period 0 0 212 253 0 466

Transactions between the shareholders

Dividend distribution -1,428 -1,428

Purchases of own shares -144 -144

Share-related compensation 74 74

Total transactions between the shareholders -1,498 -1,498

Other changes -9 -9

Shareholders' equity Dec. 31, 2022 12,941 25,953 1,318 75,561 0 115,774

Equity attributable to equity holders of the parent

126 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated

Financial Statements

Corporate Information

The company’s field of activities is the de-

velopment, production and selling of soft-

ware, equipment and other products for the

automotive and electronics industry, the

production of R&D services and other ser-

vices as well as other industrial operations.

The company may administer product and

other rights and conduct research and de-

velopment operations, hold and trade se-

curities and real-estate and conduct other

investment activities.

The parent company of the Group is Bittium

Corporation, which is a Finnish public com-

pany. The parent company is domiciled in

Oulu and its registered address is Rita-

harjuntie 1, 90590 Oulu.

Accounting Principles

for the Consolidated

Accounts

Basis of Preparation

The consolidated financial statements have

been prepared in accordance with Interna-

tional Financial Reporting Standards (IFRS)

as well as the SIC and IFRIC interpretations

in force on December 31, 2023. The finan-

cial statements are presented in thousands

of euros. The consolidated financial state-

ments have been prepared on a historical

cost basis unless otherwise indicated.

The auditor has not certified or audited the

2023 ESEF financial statements prepared in

accordance with the European Commis-

sion’s technical regulatory standard to be

published in accordance with Chapter 7,

Section 5 of the Securities Markets Act.

Consolidation

Principles

The consolidated financial statements of

Bittium include the financial statements of

the parent company Bittium Corporation

and its subsidiaries.

Subsidiaries

The consolidated financial statements in-

clude Bittium Corporation and its subsidiar-

ies’ financial statements. Subsidiaries are

companies in which the Bittium Corporation

has a controlling interest. A controlling inter-

est arises when the Group holds more than

half of the voting rights or it otherwise has

the power to govern the financial and oper-

ating policies of the entity. The existence of

potential voting rights is taken into account

in assessing the conditions under which

control arises whenever instruments con-

ferring potential voting rights can be exer-

cised at the review date.

Associated Companies

An associated company is a company in

which the Group has a significant influ-

ence. A significant influence exists, when

the Group has a right to participate in the

decision-making regarding financing or op-

erative business of the associated compa-

ny but has no sole or common control of

such decisions. In the consolidated finan-

cial statements, the investments in the

associated companies are accounted for

using the equity method according to the

IAS 28 Investments in Associates and Joint

Ventures Joint Arrangements standard. The

investment in associated companies is re-

corded using the acquisition price, adjust-

ed for the Group’s share of changes in the

associated companies’ equity after the date

of acquisition. If the Group’s share of as-

sociated companies’ losses exceeds the

carrying amount of the investment, the

investment in the associated company in

the balance sheet shall be written off. The

losses exceeding the carrying amount are

consolidated only if the Group has a bind-

ing obligation of covering the associated

companies’ liabilities. Investments in the

associated companies include the goodwill

emerging upon the acquisition. The unre-

alized profits or losses between the Group

and the associated companies are elimi-

nated according to the share of the Group’s

ownership.

The Group’s share of results in the associat-

ed companies is recorded as an item above

the operating result if the result arises from

the operative business. The Group’s share of

associated companies’ other comprehen-

sive income is recorded in the other items of

comprehensive income in the consolidated

statement of profit and loss.

The carrying value of investments in the as-

sociated companies is tested by comparing

the carrying amount and the recoverable

amount of the associated companies. An

impairment loss is recognized if the car-

rying amount of the investment in associ-

ated companies exceeds the recoverable

amount. An impairment loss is recognized

in the income statement.

Elimination of

Intra-Group Transactions

Intra-Group share ownership has been elim-

inated by means of the purchase method.

Acquired subsidiaries are included in the

consolidated financial statements from the

time when the Group has obtained control

and divested subsidiaries up to the time

when control ceases. The excess of the ac-

quisition cost of the subsidiary shares over

the fair value of the net assets acquired is

allocated partly to the identifiable assets

and liabilities. Any excess is recorded as

goodwill. For business combinations that

127

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

occurred before the implementation of

IFRS, in 2004, the carrying amount of the

goodwill has been treated according to the

Finnish GAAP in accordance with the ex-

emption under IFRS 1. According to IFRS,

goodwill is not amortized but tested annu-

ally for impairment.

Intra-Group transactions, receivables, lia-

bilities and margins are eliminated in the

preparation of the consolidated financial

statements.

Foreign Currency Transactions

Figures relating to the financial statements

of Group entities are measured in the cur-

rency that is the currency of each entity’s

main operating environment (“functional

currency”). The consolidated financial state-

ments are presented in euros, which is the

functional currency of the Group’s parent

company.

Transactions denominated in foreign cur-

rency are recorded in euros using the ex-

change rate on the date of the transaction.

Monetary items denominated in foreign

currency are translated to euros using the

European Central Bank exchange rates at

the balance sheet date. Gains and losses

arising from transactions denominated

in foreign currency and the translation of

monetary items are recorded in the income

statement.

Income statements and cash flows of sub-

sidiaries, whose functional and reporting

currency is not the euro, are translated into

euros at the average exchange rates during

the financial period. Their balance sheets

are translated at the exchange rates pre-

vailing at the balance sheet date. Translat-

ing the profit for the period using different

rates in the income statement and the bal-

ance sheet leads to a translation difference

that is recorded in equity. The translation

differences arising from the elimination of

the cost of foreign subsidiaries are recorded

in equity. When a subsidiary is sold, the cu-

mulative translation differences are entered

into the income statement as part of the

capital gain or loss.

Cumulative exchange differences arising

from the translation of internal long-term

loans, which are in actual terms net invest-

ments in foreign operations, are taken di-

rectly to a separate component of equity.

The goodwill arising from the acquisition of

foreign operations as well as fair value ad-

justments made to the carrying amounts

of the assets and liabilities of said foreign

operations in connection with an acquisi-

tion are treated as the assets and liabilities

of said foreign operations and translated to

euros using the exchange rates at the bal-

ance sheet date.

Property, Plant and Equipment

Property, plant, and equipment are mea-

sured at historical cost less depreciation

and impairment losses. Assets of acquired

companies are stated at their fair values at

the date of acquisition.

Assets are depreciated using the straight-

line or reducing balance method over their

useful life.

The residual value of assets and their useful

life are reviewed periodically in connection

with each set of financial statements and

the interim report and, if necessary, they are

adjusted to reflect changes that have oc-

curred in the expectations for the asset’s

useful life. Ordinary repair and maintenance

costs are charged to the income statement

during the financial year in which they in-

curred. Gains and losses on sales and dis-

posals are determined by comparing the

received proceeds with the carrying amount

and are included in the operating profit.

Intangible Assets

Goodwill

After January 1st, 2004, the cost of good-

will is the excess of the cost of the busi-

ness combination over the acquirer’s inter-

est in the net fair value of the identifiable

assets. The goodwill arising from the busi-

ness combinations prior to this represents

the amount recorded under previous GAAP,

which has been used as the deemed cost.

The classification and accounting treat-

ment of these business combinations has

not been adjusted when the Group’s open-

ing IFRS balance sheet has been prepared.

Goodwill is tested annually or, if necessary,

more frequently to determine any impair-

ment. For this purpose, goodwill has been

allocated to cash-generating units. The re-

coverable amount of a cash generating unit

is compared to its carrying amount, and an

impairment loss is recognized if the carrying

amount of the assets exceeds the recover-

able amount. An impairment loss is recog-

nized in the income statement.

Research and Development Expenditure

Research expenditures are recorded as an

expense as they are incurred. Expenditure

on development activities is capitalized if

they meet the criteria defined in IAS 38 In-

tangible Asset. Capitalized development ex-

penses include mainly materials, supplies

and direct labor costs. They are amortized

on a systematic basis over their expected

useful lives.

Capitalized development expenses are re-

viewed for potential impairment regularly

by comparing the carrying amount to their

recoverable amount. Significant changes

in the technological environment are taken

into account. If the carrying amount of the

128 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

development expenses is greater than the

recoverable amount, an impairment loss is

recognized immediately.

Other Intangible Assets

Patents, trademarks, licenses, and other

intangible assets having a finite useful life

are entered in the balance sheet and the

amortized expense is recorded in the in-

come statement over their useful life. If in-

dications on possible impairment exist, the

recoverable amount is determined and an

impairment loss is recognized if necessary.

Intangible assets with an indefinite useful

life are not amortized but tested annually or,

if necessary, more frequently to determine

any impairment.

Inventories

Inventories are stated at the lower of initial

cost or net realizable value. Net realizable

value is the estimated selling price in the

normal course of business less the estimat-

ed costs of sale. The value of raw materi-

al inventory is determined using a weight-

ed average cost formula. The initial cost of

finished and semi-finished products com-

prise raw material, direct labor, and other

direct expenses as well as an appropriate

share of fixed and variable production over-

heads, based on the normal capacity of the

production facilities.

Borrowing Costs

Borrowing costs are recognized in the in-

come statement as they accrue, according

to the existing IFRS standards.

Government Grants

Government grants are recognized when

there is reasonable assurance that the

Group will comply with the conditions at-

taching to them and the grant will be re-

ceived. Government grants received from

public corporations are presented as other

income in the income statement.

Leases

According to the IFRS 16 Leases standard,

in principle all lease contracts of the Group

are recognized as assets and liabilities in

Group’s Balance Sheet. When the Group is

a lessee, lease liabilities are recognized at

the present value of the future lease pay-

ments at the contact date which the leased

asset is available for use by the group. Lease

payments are discounted by using lessee’s

incremental borrowing rate. Corresponding

asset to the lease liability is recognized on

the historical cost basis. According to the

historical cost basis model, depreciation

and amortization costs are deducted from

the initially recognized right-of-use asset.

When adjustments to lease payments take

effect, the lease liability is reassessed and

adjusted against the right-of-use asset.

The Group determines the lease term as

a period when a lease contract cannot be

terminated. In determining the lease term,

all facts and circumstances are considered

that create an economic incentive to exer-

cise an extension option, or not exercise a

termination option. The Group adjusts the

lease term if the period when a lease con-

tract cannot be terminated changes. Pay-

ments associated with short-term leases

and all leases of low-value assets may be

recognized on a straight-line or other sys-

tematic basis as an expense in profit or loss.

The right-of-use assets are presented within

the same line item as the corresponding un-

derlying assets would be presented if they

were owned. Lease liabilities are included in

interest-bearing liabilities.

Impairment of Assets

At each balance sheet date (including in-

terim reports) the Group estimates wheth-

er there is any indication that an asset may

be impaired. If any such indication exists,

the recoverable amount of the asset is esti-

mated. The recoverable amount is estimat-

ed annually regardless of any indication of

impairment to the following assets: invest-

ments, goodwill, intangible assets with an

indefinite useful life and for intangible as-

sets which are not yet ready for use. The

recoverable amount is based on the future

discounted net cash flows, which are equiv-

alent with the expected cash flows gener-

ated by the asset.

An impairment loss is recognized whenever

the carrying amount of an asset exceeds its

recoverable value. The loss is booked to the

income statement. A previously recognized

impairment loss is reversed only if there has

been a change in the estimates used to de-

termine the recoverable amount. However,

the reversal must not cause that the adjust-

ed value is higher than the carrying amount

that would have been determined if no im-

pairment loss had been recognized in pri-

or years. Impairment losses recognized for

goodwill will under no circumstances be

reversed.

Employee Benefits

Pension Liabilities

Group companies in different countries

have pension plans in accordance with lo-

cal conditions and practices. The plans are

classified as either defined contribution

plans or defined benefit plans.

In Finland, the Group has organized pension

coverage for its staff through independent

pension insurance companies. The Finnish

system under the Employees’ Pensions Act

and the disability portion are treated as a

129

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

defined contribution plan. The contributions

to defined contribution plans are charged to

the income statement in the year to which

they relate. After this, the Group has no oth-

er obligations for additional payment. Also,

the pension arrangements of the foreign

subsidiaries are classified as defined con-

tribution plans.

Share-Based Payment

The Group has applied IFRS 2 Share-Based

Payment standard. The Group has incen-

tive plans in which part of the remunera-

tion for the Board of Directors is paid in

shares of Bittium. The managing directors

of the Group also have an incentive plan in

which the fair value of equity-settled share-

based payments granted are recognized as

an employee expense with a corresponding

increase in equity. The fair value of cash-

settled share-based payments is valued at

each reporting period closing date and the

changes in fair value of liability are recog-

nized as an expense when incurred. The fair

value is measured at the grant date and

spread over the vesting period during which

the employees become unconditionally en-

titled to the awards. Share-based incentives

are measured at fair value at the time they

are granted and entered as an expense in

the income statement when the right is

granted.

Provisions

A provision is recognized when the Group

has a legal or constructive obligation as a

result of a past event, it is probable that a

payment obligation will be realized or cause

a financial loss and the amount of the obliga-

tion can be estimated reliably. Provisions can

arise from restructuring plans, onerous con-

tracts, warranty repairs and allowances ,and

from environmental, litigation or tax risks.

The amount recognized as a provision is the

best estimate of the expenditure required

to settle the present obligation at the bal-

ance sheet date. If the time value of money is

material, provisions will be discounted.

If a reimbursement can be obtained from a

third party for part of the obligation, the re-

imbursement is treated as a separate asset

when it is virtually certain that the reimburse-

ment will be received.

Taxes

Tax expense in the Group’s income state-

ment comprises the current tax and change

in deferred taxes of each group company.

Current tax is calculated based on the tax-

able income using the tax rate that is en-

acted in each country at the balance sheet

date.

Deferred tax liability is calculated on the

temporary differences between the car-

rying amounts and the amounts used for

taxation purposes. Deferred tax assets are

recognized for deductible temporary differ-

ences and tax losses to the extent that it

is probable that taxable profit will be avail-

able against which tax credits and deduct-

ible temporary differences can be utilized.

In calculating deferred tax liabilities and as-

sets, the tax base which is in force at the

time of preparing the financial statements

or which has been enacted by the balance

sheet date for the following period, has been

applied.

Revenue Recognition

Bittium identifies and reviewes the cus-

tomer contracts and the revenue recogni-

tion principles for the different contract ele-

ments using the five step method presented

in IFRS 15. According to Bittium principles,

the signed contracts and purchase orders

are customer contracts in accordance with

IFRS 15. Frame contracts and Letters of in-

tent can be classified as customer con-

tracts only when the conditions of the con-

tract are otherwise fully in accordance with

the IFRS 15.

Bittium has recognized following IFRS 15

contract elements: product and license

sales, sales of R&D services, maintenance

and support services of products and ex-

tended warranties of the products. Bittium

has listed prices for the products and their

maintenance and support services as well

as for their extended warranties. If the con-

tract does not define a single price of a con-

tract element, the price can be estimated

using the market price method or using a

cost base method. The prices for the sales

of services are defined in each service con-

tract. Bittium has not activated any costs

of gaining a contract nor has it allocated

them for the projects or products as part of

the revenue to be recognized. These addi-

tional costs have been minor and the pos-

sible assets borne as a result would have a

depreciable lifetime of less than one year.

The revenue of the services is recognized

as the service has been performed. In this

case, the contract element is delivered over

time. Revenue from long-term construc-

tion contracts is recognized based on the

stage of completion when the outcome of

the project can be reliably measured. The

stage of completion is measured by using

the cost-to-cost method under which the

percentage of completion is defined as the

ratio of costs incurred to total estimated

costs. This requires accurate forecasting of

future sales and costs during the lifetime of

the contract. The forecasts are a basis for

the revenue recognized and they contain

the latest estimates of the contract sales,

costs, and the risks related to the contract.

The forecasts are also subject to remark-

able changes due to possible changes in

contract scope, cost estimate changes, and

changes in customers’ plans as well as oth-

er factors affecting the forecast.

130 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

The revenue of product sales is recognized

when the significant risks and rewards

normally connected with ownership, have

been transferred to the buyer. Neither the

Group retains a continuing managerial in-

volvement to the degree usually associat-

ed with ownership, nor effective control of

these goods. In this case, the contract ele-

ment is transferred at a point in time. Sales

are presented net of indirect sales taxes and

discounts.

In case Bittium receives prepayments from

customers, the income related to them is

recognized according to the abovemen-

tioned principles. For product warranties

Bittium makes warranty provisions that

are reversed over time during the warran-

ty periods. The extended warranties paid

separately are accrued as income over time

during the warranty period.

Assets Held for Sale

and Discontinued Operations

The Group classifies a non-current as-

set or disposal as held for sale if its car-

rying amount will be recovered principal-

ly through a sale transaction rather than

through continuing use. Non-current as-

sets and asset items related to discontin-

ued operations, which are classified as held

for sale, are measured at the lower of their

carrying amount and fair value less costs to

sell. Depreciation and amortization on these

asset items are discontinued at the time of

classification. Profit after tax and gain on

sale of discontinued operation is presented

as a separate line item in the consolidated

income statement.

Financial Assets,

Financial Liabilities and

Derivative Contracts

The hedge accounting according to the

IFRS 9 Financial Instruments standard has

not been applied for the financial statement

period or for the comparative period.

As presented in IFRS 9, Bittium has three

classes of financial assets and liabilities:

those measured at amortized cost, financial

assets and liabilities at fair value through

other comprehensive income and financial

assets, and liabilities at fair value through

statement of income. The classification is

made based on the business models and

based on the analysis of cash flows. The fi-

nancial assets and liabilities are classified

as they are initially recorded. After this, no

reclassifications are made unless the busi-

ness model of asset management changes.

At the financial statement date, Bittium had

a marginal amount of financial assets oth-

The following matrix states the different aspects of estimating and classifying the revenue recognition of different contract elements:

Type of Contract Contract Element

The Principle for Revenue Recognition

and Possible Estimates

Sales of services Customer contract,

fixed price

Percentage of completion is defined as the ratio

of costs incurred to total estimated costs.

Sales of services Customer contract based

on time, price per hours

Revenue is based on the work performed,

recognition based on regular invoicing.

Product/licence sales Product, off the shelf The revenue based on product delivery

as the customer has achieved control

of the goods delivered.

Product/licence sales Product, customized The revenue based on product delivery

as the customer has achieved control

of the goods delivered. The customization work

is accrued over time according to the percentage

of completion or based on the time as mentioned

above in the sales of services.

Product/licence sales Product + maintenance The revenue is based on product delivery

as the customer has achieved control

of the goods delivered. Maintenance accrued

over the maintenance period.

Product/licence sales Product support services Over time, based on the work done.

Other contracts Rental agreements During the rental period,

according to the rental agreement.

131

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

er than those measured at amortized cost.

As an exception to this, the cash and short-

term deposits include a low-risk short-term

investment portfolio that is assessed at fair

value through a statement of income.

The financial assets are written off when:

• The agreement-based right for the cash

flows of the financial asset is terminat-

ed or;

• The group has either transferred all the rel-

evant risks and rewards related to the fi-

nancial assets or has transferred its con-

trol outside the group.

The Impairment

of Financial Assets

IFRS 9 has a small effect on the assess-

ment of group financial assets. Based on

the simplified approach allowed by IFRS 9

standard the group assesses and writes off

the amount of expected credit losses from

accounts receivables. There are no signifi-

cant financing components contained into

Bittiums’ accounts receivables.

For assessing the expected credit losses,

Bittium applies a provision matrix that is

based on historical realized loss rates ad-

justed by forward-looking estimates of the

lifetime of accounts receivables. All the

components of the provision matrix are up-

dated for each reporting date. The expected

credit losses are presented in the group of

provisions in the balance sheet. The chang-

es in the expected credit losses are present-

ed in the profit and loss statement.

Cash and Short-Term Deposits

Cash comprises cash on hand, bank de-

posits, and other highly liquid investments

with low risk. Assets classified as cash and

short-term deposits have a maximum ma-

turity of three months from the date of ac-

quisition. Cash and bank deposits are mea-

sured at amortized cost, and the short-term

investment portfolio is assessed at fair value

through a statement of income.

Financial Liabilities

Financial liabilities include trade and other

payables, loans, and other financial liabili-

ties. All financial liabilities are measured at

amortized cost. The loans are initially rec-

ognized at fair value. Transaction costs are

entered in the profit and loss. Subsequent-

ly, the loans are measured at the amortized

cost by using the effective interest rate.

Financial liabilities are not reclassified after

the initial recognition. Non-current finan-

cial liabilities are due after one year where-

as current financial liabilities are due with-

in one year.

Financial liabilities are disposed of as the

liability related to the contract is declared

void, canceled, or due. As the terms of the

financial liability are substantially changed

or when a new contract with the existing

creditor is made, the change is entered as

disposal of the old liability and as an entry

of a new liability. The changes in the bal-

ance sheet values are entered through prof-

it and loss.

Significant Accounting

Estimates and

Judgments

The preparation of financial statements

requires management to make estimates

and assumptions about the future that af-

fects the reported amounts. Used estimates

and assumptions are based on prior expe-

rience and presumptions, which reflect the

circumstances and expectations prevailing

at the time of the preparation of the financial

statements. Materiality and judgment in as-

sessing the effect of uncertainties and the

application of accounting principles have

been observed in the preparation of the

financial statements.

The management has exercised judgment

during the financial year in applying e.g. in

assessing the future cost forecasts in the

percentage of completion projects, assess-

ing the value of intangible assets in busi-

ness acquisitions, and also when assessing

the future prospects of Group companies

in conjunction with standards IAS 12 In-

come Taxes and IAS 36 Impairment of As-

sets. Based on the management judgment,

the majority of the capitalized R&D invest-

ments are depreciated over their expected

useful lives. Part of the capitalized R&D in-

vestments is depreciated based on the pro-

duction amounts of the goods.

Financial statements may include non-re-

curring income or expenses that are not re-

lated to normal operative business or that

occur only infrequently. Such items are

among others sales profits or losses, sub-

stantial changes in asset values, like impair-

ment or reversal of impairment, substan-

tial restructuring costs, or other substantial

items that are considered non-recurring by

the management. The substantiality of the

item is based on the item’s euro amount

and the relative share of the total value of

the asset.

The Application of

New and Revised

IFRS Regulations

The consolidated financial statements are

prepared in accordance with International

Financial Reporting Standards (IFRS) effec-

tive at the end of the period. The new, revised,

or amended IFRS regulations did not have

a significant impact on the consolidated fi-

nancial statements during the period. The

other forthcoming revisions or amendments

of the standards are not expected to have

a significant impact on the consolidated

financial statements.

132 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

1. OPERATING SEGMENTS

Bittium has one reporting business seg-

ment, the Wireless business, that includes

product and services areas supporting each

other. These areas are as follows: Defence &

Security, Engineering Services, and Medical.

The wireless business is focused on cre-

ating reliable and secure communica-

tion and connectivity solutions, as well

as on developing healthcare techno-

logy solutions for biosignal measuring.

For its customers, Bittium offers innovative

products and solutions based on its prod-

uct platforms and R&D services. Bittium

also offers high-quality information secu-

rity solutions for mobile devices and porta-

ble computers. For customers in biosignal

measuring in the areas of cardiology, neu-

rology, rehabilitation, occupational health,

and sports medicine, Bittium offers health-

care technology products and services.

The highest operative decision-making

body of the company is the Board of Direc-

tors of Bittium, which is responsible for al-

locating resources to and evaluating the re-

sults of Bittium’s operating segment. The

income statement and balance sheet infor-

mation of the Wireless business are equiva-

lent to the corresponding information of the

Bittium group.

133

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Geographical areasJan. 1–Dec. 31, 2023OtherGroup1000 EUR FinlandEuropeAmericas Asia Eliminations totalNet salesSales to external customers 32,102 21,401 20,894 850 75,247Non-current assets 76,968 213 77,180Total non-current assets *) 76,968 213 77,180*) does not include deferred tax assetsCapital expenditure Tangible assets -1,443 -1,443 Intangible assets 1,132 1,132 Investments 32 32 Goodwill -8 -8 Non-current receivables -125 -125

Geographical areasJan. 1–Dec. 31, 2022OtherGroup1000 EUR FinlandEuropeAmericas Asia Eliminations totalNet salesSales to external customers 39,857 18,026 23,322 1,259 82,464Non-current assets 7 7, 3 72 220 77,592Total non-current assets *) 77, 3 72 220 77,592*) does not include deferred tax assetsCapital expenditure Tangible assets -1,226 -1 -1,227 Intangible assets 171 171 Investments -273 -273 Goodwill 13 13 Non-current receivables -225 -225

Information of primary customers

Group’s revenues from the 10 largest customers in period 1.1.–31.12.2023 were EUR 54.8 million

(EUR 62.0 million in 2022) representing 72.8 percent of the net sales (75.1 percent in 2022).

Group had two customers in period 1.1.–31.12.2023 having income separately over 10 percent of

Group’s revenue. Income from these customers were EUR 20.8 million and EUR 16.7 million.

Wireless

Geographical areas

Bittium operates in three geographical areas which are Europe, Americas and Asia. In

presenting the geographical information, the revenue is based on the geographical location

of customers. Geographical assets are based on the geographical location of the assets.

134 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

The services include project sales with fixed prices and hourly rates.

The product sales include all the sales affected by products:

the sales of products, product maintenance, extended warranties, and licence sales.

Construction contracts

The contract revenue is recognized in the income statement in proportion to the stage of completion

of the contract. The stage of completion is defined as the ratio of costs incurred to total estimated

costs. The turnover of construction contracts is, depending on the contract elements, recognized

over time or at a point in time. The principles of revenue recognition based on IFRS 15 are presented

in detail in the accounting principles of the consolidated financial statements.

Income recognized from construction contracts 8,399 9,188Net sales other 66,848 73,276Total 75,247 82,464Income recognized over time based on the stage of completion of long-term construction contracts 8,399 9,188Revenue recognized from long-term construction contracts in progress amounted to 6,203 4,954Advances received from long-term construction contracts recognized in the balance sheet amounted to 718 772Receivables recognized from long-term construction contracts amounted to 2,162 1,382

The net sales by geographical areas is presented in the Note 1.

2. NET SALES 1000 EUR 2023 2022Services 29,456 25,054Products 45,791 57, 41 0OtherTotal 75,247 82,464

135

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

3. OTHER OPERATING INCOME

1000 EUR 2023 2022Government grants 2,998 2,635Other income 110 105Total 3,108 2,740

4. OTHER OPERATING EXPENSES

External services 1,961 1,530Voluntary staff expenses 1,597 1,190Premises expenses 1,126 1,094Travel expenses 1,111 1,048IT expenses 3,304 3,096Other expenses 5,070 6,826Total 14,168 14,784Expense relating to short-term leases under IFRS 16 163 157

More information about Leases in Note 11.

Auditor's charges

Ernst & Young Auditing 58 67Tax advice 1Other services 13 4Total 71 72OthersAuditing 29 24Tax advice 10 7Other services 1Total 40 30

136 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

1000 EUR 2023 2022

5. DEPRECIATIONS AND IMPAIRMENTS

DepreciationsIntangible assets Capitalized development expenditure 5,608 5,897 Intangible rights 525 430 Customer relations and technology 119 173 Other intangible assets 49 289Tangible assets Buildings and constructions 759 753 Machinery and equipment 2,418 3,157Total 9,479 10,699Depreciation on property, plant, and equipment acquired by leasesBuildings and constructures 364 358Machinery and equipment 978 1,063

More information about Leases in Note 11.

6. EMPLOYEE BENEFIT EXPENSES AND NUMBER OF PERSONNEL

Number of personnel Average number of personnel during the fiscal periodContinuing operations 601 641

Personnel expenses 1000 EUR

Personnel expensesManaging Director 539 353Board of Directors * 175 176Other salaries and wages 36,672 36,650Salaries capitalized to development expenses -6,037 -5,399Total 31,350 31,780Pension expenses, defined contribution plans 6,411 6,422Other personnel expenses 1,333 1,261Total 39,094 39,463

*Including the share-based incentives. Further information in the Note 31.

137

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

1000 EUR 2023 2022

7. RESEARCH AND DEVELOPMENT EXPENSES

The research and development expenses total 20,229 22,287Capitalized to the balance sheet -7,244 -6,647Recognition as an asset 5,608 5,897The expensed research and development expenses recognized in the income statement amounted to 18,593 21,537

8. FINANCIAL EXPENSES (NET)

Interest expenses -890 -390Interest income 191 17Dividend income 0Exchange gains and losses -330 -309Change of financial assets and liabilities at fair value through profit or lossOther financial expenses -235 -152Other financial income 297 72Total -967 -761Interest expenses on lease liabilities under IFRS 16 -50 -22

More information about Leases in Note 11.

9. INCOME TAXES

Income taxes, current year -163 -164Other taxes -18 -8Income taxes, previous years -17 -18Deferred taxes 30 862Total -168 672

A reconciliation between the effective tax rate and domestic tax rate (20.0 percent) of the Group:

Profit before taxes -5,431 -419Tax at the domestic tax rate 604 198Effect of tax rates of foreign subsidiaries -2 -6Taxes for prior years -17 -18Tax free income 802 190Non-deductible expenses -418 -1,026Utilization of deferred tax assets from previous years 303 529Reassessment of deferred tax assets 30 862The deferred tax assets from tax losses -1,452Others -18 -58Income taxes in the consolidated income statement -168 672

138 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

2023 2022

10. EARNINGS PER SHARE

Basic

Basic earnings per share amounts are calculated by dividing net profit for the year attributable

to ordinary equity holders of the parent by the weighted average number of ordinary shares

outstanding during the year.

Profit attributable to the equity holders of the parent, continuing operations (1,000 EUR) -5,431 253Profit attributable to the equity holders of the parent, discontinued operations (1,000 EUR) 0 0Profit attributable to the equity holders of the parent, continuing and discontinued operations (1,000 EUR) -5,431 253Weighted average number of ordinary shares during the financial year (1,000 PCS) 35,609 35,702Basic earnings per share, continuing operations, EUR -0.153 0.007Basic earnings per share, discontinued operations, EUR 0.000 0.000Basic earnings per share, continuing and discontinued operations, EUR -0.153 0.007

Diluted

Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders

of the parent by the weighted average number of ordinary shares outstanding during the year plus the

weighted average number of ordinary shares that would be issued on the conversion of all the dilutive

potential ordinary shares into ordinary shares. The Group had no share-based payment schemes which

would have a diluting effect on the number of shares.

Profit attributable to the equity holders of the parent, continuing operations (1,000 EUR) -5,431 253Profit attributable to the equity holders of the parent, discontinued operations (1,000 EUR) 0 0Profit attributable to the equity holders of the parent, continuing and discontinued operations (1,000 EUR) -5,431 253Weighted average number of ordinary shares during the financial year (1,000 PCS) 35,609 35,702Effect of dilution (1,000 PCS)Weighted average number of ordinary shares during the financial year (1,000 PCS) 35,609 35,702Diluted earnings per share, continuing operations, EUR -0.153 0.007Diluted earnings per share, discontinued operations, EUR 0.000 0.000Diluted earnings per share, continuing and discontinued operations, EUR -0.153 0.007

139

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Dec. 31, Dec. 31, 1000 EUR20232022Land and waterAcquisition cost Jan. 1 1,091 1,091Additions during the periodAcquisition cost at the end of the period 1,091 1,091Carrying amount at the end of the period 1,091 1,091Buildings and constructuresAcquisition cost Jan. 1 20,170 19,450Translation differences 26 23Additions during the period 776 697Disposals during the period -40Acquisition of business unitTransfer to assetsAcquisition cost at the end of the period 20,932 20,170Accumulated depreciation Jan. 1 -6,616 -5,840Translation differences -26 -23Depreciation for the period -759 -753Depreciations on disposalsCarrying amount at the end of the period 13,530 13,554No revaluations or capitalizations of interest costs have been done.Machinery and equipmentAcquisition cost Jan. 1 64,288 62,297Translation differences 19 -8Additions during the period 1,149 2,010Acquisition of business unitDisposals during the period -86 -11Transfer to assetsAcquisition cost at the end of the period 65,370 64,288Accumulated depreciation Jan. 1 -59,357 -56,195Translation differences -19 8Depreciation for the period -2,483 -3,170Depreciations on disposalsCarrying amount at the end of the period 3,511 4,931Other tangible assetsAcquisition cost Jan. 1 88 88Additions during the periodDisposals during the periodAcquisition cost at the end of the period 88 88Translation differencesAccumulated depreciation Jan. 1Depreciation for the periodCarrying amount at the end of the period 88 88

11. PROPERTY, PLANT, AND EQUIPMENT

The Group has not revalued property, plant, and equipment, hence the Group has not recognized any impairment

losses directly to equity or recorded any reversals of those.

140 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

Property, plant, and equipment totalAcquisition cost Jan. 1 85,637 82,925Translation differences 45 15Additions during the period 1,925 2,707Acquisition of business unit 0 0Disposals during the period -126 -11Transfer to assets 0 0Acquisition cost at the end of the period 87,481 85,637Accumulated depreciation Jan. 1 -65,973 -62,035Translation differences -45 -15Depreciation for the period -3,242 -3,923Depreciations on disposals 0 0Carrying amount at the end of the period 18,221 19,664

Leases

The Group had the following amounts of property,

plant and equipment acquired by finance leases:

Machinery and equipmentAcquisition cost 12,614 11,883Accumulated depreciation -11,397 -10,419Carrying amount at the end of the period 1,216 1,464Buildings and constructuresAcquisition cost 3,279 2,545Accumulated depreciation -1,950 -1,586Carrying amount at the end of the period 1,329 959

Additions of property, plant, and equipment include assets acquired by leases

of EUR 1.6 million in 1.1.–31.12.2023 (EUR 1.6 million in 2022).

141

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Dec. 31, Dec. 31, 1000 EUR20232022Capitalized development expensesAcquisition cost Jan. 1 74,601 67,954Additions during the period 7,244 6,647Acquisition of business unitAcquisition cost at the end of the period 81,845 74,601Accumulated depreciation Jan. 1 -25,784 -19,887Depreciation for the period -5,608 -5,897Carrying amount at the end of the period 50,452 48,817Intangible rightsAcquisition cost Jan. 1 6,032 5,719Additions during the period 141 313Disposals during the periodAcquisition of business unitTransfer to assetsAcquisition cost at the end of the period 6,172 6,032Accumulated depreciation Jan. 1 -5,117 -4,686Depreciation for the period -450 -430Carrying amount at the end of the period 606 915Customer relations and technologyAcquisition cost Jan. 1 1,780 1,780Acquisition of business unitAcquisition cost at the end of the period 1,780 1,780Accumulated depreciation Jan. 1 -1,528 -1,356Depreciation for the period -119 -173Carrying amount at the end of the period 133 252

12. INTANGIBLE ASSETS

142 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

Other intangible assetsAcquisition cost Jan. 1 4,882 4,876Translation differences -4 6Additions during the periodTransfer to assetsAcquisition cost at the end of the period 4,878 4,882Accumulated depreciation Jan. 1 -4,752 -4,458Translation differences 4 -6Depreciation for the period -75 -289Carrying amount at the end of the period 54 130Intangible assets totalAcquisition cost Jan. 1 87, 2 9 5 80,329Translation differences -4 6Additions during the period 7,385 6,960Acquisition of business unit 0 0Disposals during the period 0 0Transfer to assets 0 0Acquisition cost at the end of the period 94,676 8 7, 2 9 5Accumulated depreciation Jan. 1 -37,1 8 1 -30,387Translation differences 4 -6Depreciation for the period -6,252 -6,788Carrying amount at the end of the period 51,246 50,114

GoodwillAcquisition cost Jan. 1 5,836 5,823Translation differences -8 13Additions during the periodDisposals during the periodCarrying amount at the end of the period 5,828 5,836

143

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Impairment Test

Preparation of impairment analysis re-

quires use of numerous estimates. The val-

uation is inherently judgmental and highly

susceptible to change from period to pe-

riod, because it requires management to

make assumptions about future supply and

demand related to its individual business

units, future sales prices and investment

needs and achievable cost levels.

The cash flow forecasts employed in im-

pairment test calculations are based on the

budgets for 2024 and the Long Range Plans

(LRP) for 2025-2028 approved by manage-

ment for the strategical period. Cash flows

beyond five-year period are calculated by

using the terminal value method. Future

cash flows are exposed to the risks that are

discussed in section “Risks and uncertain-

ties” in the Report by the Board of Directors.

The used discount rate in impairment

testing is Weighted Average Cost of Cap-

ital (WACC) before tax defined for Bittium.

WACC defines average costs of equity

and debt by noticing the risks belonging

to the each component. The components

of WACC are risk-free interest rate, mar-

ket risk premium, beta, cost of debt, cor-

porate income tax rate and target capital

structure. WACC calculated according to

these parameters amounted to 9.9 % (9.8 %

in 2022). Valuation have applied the perpet-

ual growth of 2 %.

In 2023 business did not reach the fore-

casted cash flow. This was mainly because

of increase in working capital and slower

than expected growth and profitability in

the business.

The impairment test is done when need-

ed, but at least once a year. Impairment

tests made for 2023 financial statements

did not indicate need for impairment book-

ings. Recoverable amounts exceed signifi-

cantly the book value of goodwill and other

assets. The terminal value represents 78 %

of business value.

Sensitivity analysis was also carried out

during the impairment test. Cash flow fore-

cast was either decreased by 20% or the

discount factor was increased by 5%. It was

noticed that cash flows are relatively sensi-

tive to increase in discount factor. However,

there are no expectations for impairment

losses in the future. However, based on

sensitivity analysis management does not

belive that possible changes to the major

assumptions will not lead situation where

accumulated cash amount would be below

the book value.

144 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

Acquisitions in 2023

In 2023 or in the comparative period 2022 the Group did not have acquisitions to be reported according to the IFRS standards.

13. ACQUISITIONS

145

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Bittium Group owns 25% of Coronaria

Analyysipalvelut Oy shares at the end of

2023. Through this joint ownership, Bittium

and Coronaria aim at gaining synergies

from Bittium’s device and system de-

velopment and the interfaces formed by

Coronaria’s clinical medicine and ser-

vices. Coronaria Analyysipalvelut Oy has

been consolidated using the equity method

using the information that was available

for the Bittium financial statements. The

domicile of the company is Oulu.

Bittium Group owns 25% of evismo AG

shares at the end of 2023. evismo AG pro-

vides medical remote diagnostics services

in Switzerland. evismo AG has been con-

solidated using the equity method using

the information that was available for the

Bittium financial statements. The domicile

of the company is in Zurich.

14. SHARES IN ASSOCIATED COMPANIES

1000 EUR 2023 2022

Shares in associated companiesCoronaria Analyysipalvelut Oy 1,021 988evismo AG 0 0Other associated companies 22 22Assets total 1,042 1,010Coronaria Analyysipalvelut OyCurrent assets 688 494Non-current assets 1,534 1,725Non-current liabilities 51 76Turnover 3,631 4,192Net profit 154 111evismo AGCurrent assets 532 261Non-current assets 785 61Non-current liabilities 2,365 1,045Turnover 1,172 700Net profit -471 -650Shares in associated companiesAcquisition cost Jan. 1 1,010 1,283Translation differences 0 -10Additions during the period 38 28Disposals during the period -6 -291Carrying amount at the end of the period 1,042 1,010

146 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

RecognizedAcquisitionsin the incomeand disposals 1000 EUR Jan. 1, 2023statementof subsidiaries Dec. 31, 2023Deferred tax assetsUnutilized losses in taxation 526 526Other items 6,890 -1 6,889Total 7, 41 6 -1 7,4 1 5

RecognizedAcquisitionsin the incomeand disposals 1000 EUR Jan. 1, 2023statementof subsidiaries Dec. 31, 2023Deferred tax liabilitiesCustomer and technology assets 156 -42 0 114Total 156 -42 0 114

1000 EUR 2023 2022At 1 January 112 112AdditionsDisposalsAt the closing date 112 112

16. DEFERRED TAX LIABILITIES AND ASSETS

On December 31, 2023 the Group had 64.7 million euros tax losses and non-depreciated depreciations of which it had not booked

deferred tax receivables in full amount due to the uncertainty of the future profits, their timing, taxation or location. The amount of these

non booked deferred tax receivables is approximately 12.9 million euros. The aging of these tax losses begins from year 2024.

15. OTHER FINANCIAL ASSETS

147

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

RecognizedAcquisitionsin the incomeand disposals 1000 EUR Jan. 1, 2022statementof subsidiaries Dec. 31, 2022Deferred tax assetsUnutilized losses in taxation 526 526Other items 6,219 671 6,890Total 6,745 671 0 7, 41 6

RecognizedAcquisitionsin the incomeand disposals 1000 EUR Jan. 1, 2022statementof subsidiaries Dec. 31, 2022Deferred tax liabilitiesCustomer and technology assets 208 -52 0 156Total 208 -52 0 156

On December 31, 2022, the Group had 64.6 million euros in tax losses and non-depreciated depreciations of which it had not booked

deferred tax receivables in the full amount due to the uncertainty of the future profits, their timing, taxation, or location. The amount of

these non-booked deferred tax receivables is approximately 12.9 million euros. The aging of these tax losses begins in the year 2023.

148 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

Dec. 31, Dec. 31, 1000 EUR20232022Raw materials and supplies 17,790 18,255Work in progress 4,395 3,251Finished products 4,436 2,690Other inventoriesTotal 26,621 24,196

Dec. 31, Dec. 31, 1000 EUR20232022Non-current receivables 730 856Non-current receivables total 730 856Current receivables:Trade receivables 32,813 37, 24 2Receivables from construction contracts 2,162 1,382Prepaid expenses and accrued income 2,367 1,953Other receivables 769 858Current receivables total 38,111 41,435

Receivables are valued at nominal value or probable current value, whichever is lower.

During the financial year group has booked impairment losses from accounts receivable EUR 0.0 million

(EUR 0.0 million 2022).

Age distribution of accounts receivableCurrent 31,196 35,598Aged Overdue Amounts 0–3 months 1,580 1,594 4–6 months 4 49 7–12 months 33 2 > 12 monthsTotal 32,813 37,242

17. INVENTORIES

18. TRADE AND OTHER RECEIVABLES (CURRENT)

During the financial year 1.1.–31.12.2023, group has booked non-recurring write-down of EUR 2.5 million

due to the impairment of inventory.

149

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Dec. 31, Dec. 31, 1000 EUR20232022Interest rate fundsBalance sheet value on Jan. 1 5,696 5,732Disposals -5,695Changes in fair value -36Balance sheet value at the end of the period 1 5,696Financial assets at fair value through profit or loss totalBalance sheet value on Jan. 1 5,696 5,732Disposals -5,695Changes in fair value -36Balance sheet value at the end of the period 1 5,696

20. CASH AND SHORT-TERM DEPOSITS

Cash and short-term deposits 8,331 13,320Total 8,331 13,320Cash and cash equivalents at the consolidated cash flow statement consist of:Interest rate funds 1 5,696Cash and short-term deposits 8,331 13,320Total 8,332 19,016

Fair value of cash and cash equivalents does not significantly differ from the carrying amount.

19. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

150 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

21. ISSUED CAPITAL AND RESERVESInvestednon-SharePremiumrestrictedSharespremiumfundequity fundTotal1000 PCS1000 EUR1000 EUR1000 EUR1000 EUROn December 31, 2022 35,702 12,941 0 25,953 38,894On December 31, 2023 35,702 12,941 0 25,953 38,894

Shares and the Share Capital

The shares of Bittium Corporation are listed

on the NASDAQ OMX Helsinki Ltd. The Cor-

poration has one series of shares. All the

shares entitle their holders to dividends of

equal value. Each share has one vote. The

share does not have a nominal value. The

company’s shares have been entered into

the Finnish Central Securities Depository

Ltd’s book-entry securities system.

At the end of the financial period, the ful-

ly paid share capital of the company en-

tered into the Finnish Trade Register was

EUR 12,941,269.00 and the total number of

the shares was 35,702,264. The account-

ing per value of the company’s share is

EUR 0.10. The company has 216,146 own

shares in its possession.

Translation Differences

The translation reserve comprises all for-

eign exhange differences arising from the

transition of the financial statements of for-

eign subsidiaries.

Dividends

The Board of Directors proposes to the An-

nual General Meeting that a dividend of EUR

0.03 per share be paid based on the balance

sheet to be adopted for the financial year

ended December 31, 2023.

The Board of Directors furthermore propos-

es that the Annual General Meeting would

authorize the Board of Directors to decide,

at its discretion, on the payment of an ex-

traordinary dividend of EUR 0.03 per share,

by October 31, 2024. The Board of Directors

expects that this discretionary extraordi-

nary dividend will be paid, unless there is

a significant deterioration in the business

environment during 2024.

22. SHARE-BASED PAYMENT PLANS

Share-based Remuneration of the Board of Directors paid in financial year 2023Form of the reward SharesGrant date May 3, 2023Total amount of executed shares 14,611Share price at the grant date, EUR 4.25Total expenses of the reward, EUR million 0.062Vesting conditions Ownership of the shares was transferred to the recipients at once but the recipients have agreed on the lock-up undertaking until the membership in the board has ceased.Execution In shares

Share-based Remuneration of the Board of Directors

During the financial year 2023, the group has paid of total part remuneration of the board of directors of Bittium Plc by the shares of

Bittium. The shares were acquired from the stock exchange. The main terms of the remuneration arrangement are presented in the

table below.

151

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Share-based Remuneration of the Management paid in financial year 2023Form of the reward SharesGrant date June 1, 2023Total amount of executed shares 23,854Share price at the grant date, EUR 4.16Total expenses of the reward, EUR million 0.099Vesting conditions Ownership of the shares was transferred to the CEO at once but the matching shares will be subject to a transfer restriction (lock-up) of three years.Execution In shares

Share-based Remuneration of the Management, PSP 2023–2025

The Board of Directors of Bittium Corporation has decided on the establishment of a new share-based long-term incentive scheme

for the Company’s management. It comprises a Performance Share Plan (“PSP”). The PSP consists of three annually commenc-

ing three-year performance share plans, PSP 2023–2025, PSP 2024–2026 and PSP 2025–2027, each with a one-year performance

period, which is followed by the payment of the share reward and a two-year transfer restriction period. The commencement of the

following two plans, PSP 2024–2026 and PSP 2025–2027, is, however, subject to a separate Board decision. Eligible to participate

in the first plan, PSP 2023–2025, are the members of Bittium’s Management Group. The performance measure based on which

the potential share reward under the first plan, PSP 2023–2025, will be paid is the revenue growth of Bittium. A precondition for the

payment of the share reward is, in addition, that the employment relationship of the participant with Bittium continues at the time

the reward is paid. The potential reward will be paid in shares of Bittium and in cash.

Form of the reward SharesGrant date June 22, 2023Total amount of the shares at the most 250,000Share price at the grant date, EUR 4.365Total expenses of the reward at the most, EUR million 1.1Execution In shares

The performance measure for share-based incentive scheme PSP 2023–2025 was not reached and the reward was not booked in fi-

nancial year 1.1.–31.12.2023.

Share-based Remuneration of the Management

The Board of Directors of Bittium Corporation has decided on the establishment of a one-off fixed Matching Share Plan for the Chief

Executive Officer (CEO) of Bittium (below also the “Plan”). The fixed Matching Share Plan is a one-off plan, in which the CEO is expect-

ed to purchase shares of Bittium Corporation with at least the value of 200,000 euros at a price formed in public trading on Nasdaq

Helsinki. Bittium Corporation will match the share investment by way of the CEO receiving matching shares without consideration with

a net value of 100,000 euros. The matching shares will be paid in listed shares of Bittium Corporation. The matching shares received by

the CEO based on the Plan will be subject to a transfer restriction (lock-up) of three years.

152 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

Share-based Remuneration of the Board of Directors paid in financial year 2022

Form of the reward SharesGrant date May 5, 2022Total amount of executed shares 12,247Share price at the grant date, EUR 5.07Total expenses of the reward, EUR million 0.062Vesting conditions Ownership of the shares was transferred to the recipients at once but the recipients have agreed on the lock-up undertaking until the membership in the board has ceased.Execution In shares

Share-based Remuneration of the Management paid in financial year 2022

Form of the reward SharesGrant date March 25, 2022Total amount of executed shares 13,467Share price at the grant date, EUR 5.44Total expenses of the reward, EUR million 0.07Vesting conditions Ownership of the shares was transferred to the recipients at once but the recipients have agreed on the lock-up undertaking for two years.Execution In shares

Share-based Remuneration of the Board of Directors

During the financial year 2022, the group has paid of total part remuneration of the board of directors of Bittium Plc by the shares of

Bittium. The shares were acquired from the stock exchange. The main terms of the remuneration arrangement are presented in the

table below.

Share-based Remuneration of the Management

The Management of Bittium Corporation has a Share-Based Incentive Scheme. The Performance Share Plan (PSP) consists of three

annually commencing three-year performance share plans, PSP 2020–2022, PSP 2021–2023 and PSP 2022–2024, each with a

one-year performance period, which is followed by the payment of the share reward and a two-year transfer restriction period. The

commencement of the following two plans, PSP 2021–2023 and PSP 2022–2024, is, however, subject to a separate Board decision.

The performance measures based on which the potential share reward under PSP 2020–2022 will be paid are the revenue growth

and cash flow before financial items of Bittium. A precondition for the payment of the share reward is, in addition, that the employ-

ment relationship of the participant with Bittium continues at the time the reward is paid. The potential reward will be paid in shares

of Bittium.

Form of the reward SharesGrant date February 10, 2022Total amount of the shares at the most 122,100Share price at the grant date, EUR 5.2Total expenses of the reward at the most, EUR million 0.7Execution In shares

Share-based Remuneration of the Management

During the financial year 2022, the group has paid share-based incentive scheme remuneration for the Management of Bittium Plc

by the shares of Bittium. Half of the remuneration was paid in cash and half by the new shares issued in directed share issue

without consideration. The main terms of the remuneration arrangement are presented in the table below.

153

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Dec. 31, Dec. 31, 1000 EUR20232022Non-current loansNon-current loans from financial institutions 20,000Finance lease liabilities 1,470 1,335Total 1,470 21,335Current loans Current loans from financial institutions 20,000Lease liabilities 1,098 1,110Total 21,098 1,110Repayment schedule of long-term loans:2023 1,1102024 21,098 20,7032025 665 3502026 395 1492027 273 58Later 137 76Total 22,568 22,446

24. FINANCIAL LIABILITIES

GuaranteeExpected 1000 EURprovisionscredit losses Others TotalDecember 31, 2022 4,280 365 16 4,661Increase in provisions 1,866 1,866Utilized provisions -1,668 -8 -1,676Reversal of untilized provisions 0 -56 -56December 31, 2022 4,478 309 9 4,796Current provisions 4,478 309 9 4,796Total 4,478 309 9 4,796

23. PROVISIONS

154 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

Dec. 31, Dec. 31, 1000 EUR20232022EUR 1,470 21,335Total 1,470 21,335

Dec. 31, Dec. 31, 1000 EUR20232022EUR 21,098 1,110Total 21,098 1,110

The interest-bearing non-current loans are distributed by currency as follows:

The interest-bearing current loans are distributed by currency as follows:

Dec. 31, Dec. 31, 1000 EUR20232022Lease liabilities - Minimum lease paymentsWithin one year 1,225 1,159After one year but no more than five years 1,413 1,306After five years 92 96Lease liabilities - Present value of minimum lease payments 2,568 2,446Within one year 1,098 1,110After one year but no more than five years 1,397 1,260After five years 73 76Future finance charges 162 115Total amount of finance lease liabilities 2,730 2,561

Maturities of the finance lease liabilities:

155

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Dec. 31, Dec. 31, 1000 EUR20232022Non-current liabilitiesOther non-current liabilities, non-interest bearingNon-current advances receivedOther non-current liabilities, non-interest bearing 200 192Total 200 192Current liabilitiesTrade and other payablesTrade liabilities 5,984 10,251Accrued liabilities, deferred income 10,342 9,394Other liabilities 6,070 6,782Total 22,397 26,427

Material of accrued expenses and deferred income consists of personnel expenses and other accruals.

The fair value of the other liabilities than derivatives doesn’t significantly differ from the initial carrying

value, because the impact on discounting is not significant when taking into account the

maturities of the loans.

26. TRADE AND OTHER PAYABLES

1000 EUR Jan. 1, 2023 Cash flows New leases Dec 31, 2023Lease and financing contracts 22,446 -1,344 1,467 22,568Total 22,446 -1,344 1,467 22,568

25. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

156 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

27. FINANCIAL RISK MANAGEMENT

Under its normal business activities, Bittium

Corporation is exposed to several finan-

cial risks. The primary financial risks are for-

eign exchange rate risk, interest rate risk,

investment risk, and default risk. The goal of

the Group’s financial risk management func-

tion is to reduce the adverse effects of price

fluctuations and other uncertainties on earn-

ings, balance sheet, and cash flows as well as

to ensure sufficient liquidity. In its risk manage-

ment, the Group uses financial instruments

such as forward exchange agreements and

interest rate swaps. External professional port-

folio managers are employed for investing

activities.

The Group’s general risk management princi-

ples are approved by the Board of Directors.

The responsibility for their implementation

lies with the group finance department togeth-

er with operational units. The group finance

department identifies and assesses risks

and obtains relevant financial instruments

for hedging them in close co-operation with

the operative units. Management evaluates

risk concentrations from the viewpoint of

business activities, taking into consideration

shared factors between underlying variables

such as those arising from changes in eco-

nomic conditions or other variables. Opera-

tions and funding programs executed in the

financial markets are mainly concentrated

into the parent company. Subsidiaries are

mainly funded through intra-company loans

and group account overdraft credit limits.

The Group’s financial risks are divided into

market, default and liquidity risk.

Market risks

Market risks are caused by changes in for-

eign exchange rates, interest rates, and the

price of securities. Fluctuations in these

may have an impact on the Group’s income

statement, cash flow or balance sheet.

Foreign exchange rate risk

The Group operates globally and is exposed

to transaction risk from foreign exchange

positions as well as to risks due to the trans-

lation of investments in different curren-

cies to the functional currency of the par-

ent company. The most relevant currencies

for the Group are the euro and the US dol-

lar. Foreign exchange rate risk is caused by

commercial activities, monetary items on

the balance sheet and net investments in

foreign subsidiaries. A business unit’s func-

tional currency or generally used currencies

(EUR, USD) are used as invoicing currency.

Additional information on functional curren-

cy and foreign currency conversion is avail-

able in the accounting principles section of

the consolidated financial statements.

The Group follows a currency strategy

that aims at securing the margin of busi-

ness activities in changing market condi-

tions by minimizing the effect of fluctua-

tions in foreign exchange rates. According

to the principles of the currency strategy,

surely considered and the most proba-

ble net cash flow in a particular currency

is hedged as a net position. The cash flow

is defined based on the net position of the

trade receivables, trade payables, order in-

take, and forecasted net currency cash flow.

According to the currency strategy, the de-

gree of hedging can vary from approximate-

ly 50% to 100% of the forecasted net posi-

tion when the net position exceeds EUR 1

million. The Group could also apply hedge

accounting as defined in the IFRS 9 stan-

dard. Hedge accounting was not applied

during 2023. At the end of the financial pe-

riod, the counter value of the hedged net

position was EUR 2.2 million. During the

financial year, the amount of the hedged

position has been changing between

EUR 1.5–3.5 million.

The Group has hedged the transaction risk

related to its income statement, and the

translation risk related to equity on the bal-

ance sheet or economic risk has not been

hedged. Foreign currencies denominated

equities of foreign subsidiaries on Decem-

ber 31, 2023, was EUR 2.5 million (EUR 4.5

million in 2022) from which dollar-denomi-

nated equities of foreign subsidiaries were

EUR 2.2 million (EUR 4.2 million in 2022).

157

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

1000 EUR 2023 2022Forward contracts Market value 19 33 Nominal value 2,200 1,400

Changes in incomeChanges in equity statement before taxbefore tax 1000 EUR 2023 2022 2023 2022EUR appreciates -200 -400 -200 -400EUR depreciates 200 500 200 500

On the closing date, the Group had the following foreign exchange derivative contract

nominal amounts outstanding (the nominal amounts do not represent the amounts

exchanged by the parties):

Dollar-denominated assets and liabilities translated to euros using the closing date’s value:1000 EUR 2023 2022Long-term assets 0 0Long-term liabilities 0 0Current assets 5,345 8,049Current liabilities 3,118 3,825

The table below describes the 10% appreciation or depreciation of the euro against the

US dollar, with other variables remaining constant. The sensitivity analysis is based on

foreign currency-denominated assets and liabilities as of the closing date. The change in

dollar-denominated trade receivables and debt would primarily have been due to fluctu-

ations in the foreign exchange rate.

158 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

1000 EUR 2023 2022Fixed interest rate debts 2,568 2,446

2023 2022Stock shares 0.0% 0.0%Bonds 0.0% 76.8%Money market investments 100.0% 23.2%Total 100.0% 100.0%

Interest Rate Risk

Part of the Group’s debt is tied to fixed interest rates.

At the closing date, the Group had the following fixed interest rate debts outstanding:

The table below describes the interest rate risk of debts should there have been a ±1%

change in interest rates of short-term reference interest rate debts, with other variables

remaining constant. The figures presented indicate the change in yearly interest

expense calculated using the average amount of debt during the financial period.

Changes in income Changes in equity statement before taxbefore tax 1000 EUR 2023 2022 2023 2022Loan stock January, 1 22,400 22,300Loan stock December, 31 22,600 22,400 Average loan stock 22,500 22,400Change in interest +/- 200 +/- 200 +/- 200 +/- 200

Market Risk of Investment Activities

The Group’s interest investments result in

interest rate exposure, but their effect is not

considered significant. The Group’s revenue

and operative cash flows are mainly inde-

pendent of market rate fluctuations.

The Group invests in low-risk interest rate

funds and therefore it has not been ex-

posed to the security price risk of fluctu-

ations in the stock markets. According to

the Group’s principles, investments relat-

ed to cash management are made in liquid

and low-risk money markets or bond instru-

ments and thus have not been hedged us-

ing derivatives.

The table below describes the distribution of

investments in securities at the closing date.

The combined value of the above instruments during the financial period has ranged from

approximately EUR 0.0 to EUR 5.8 million. At the closing date their value was approximate-

ly EUR 0.0 million. This risk concentration has been managed by investing in well-spread

and low-risk money market funds.

159

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

The table below describes the price risk of the investments if they had exhibited a ±1%

change in a market rate of interest, other variables remaining constant. Financial assets

that are recognized at market value in the income statement affect net income. Chang-

es in the value of for-sale financial assets affect equity. In the calculations it is presumed

that the Group’s investments change with the interest rate level in question. The sensitiv-

ity analysis describes the total market risk of investment activity because all investments

are in the interest rate instruments.

Default risk

Group’s credit risks are mainly related to

accounts receivable, cash, financial invest-

ments and derivatives used in hedging. In

it’s deposit, financial investment and hedg-

ing activities Bittium operates only with

well-known partners who have good cred-

it rating.

About 82% of the Group’s trade receiv-

ables are from ten customers. The other

trade receivables are distributed among

a wide customer base and across several

geographical areas. Credit risk is mitigat-

ed, for example, by documentary credits or

bank guarantees when needed. Default risk

concentration is mainly assessed as a sin-

gle customer’s share of total trade receiv-

ables but also according to the receivable’s

date of maturity.

During the past financial year, the amount

of recognized credit losses was approxi-

mately EUR 0.0 million (EUR 0.0 million in

2022). The amount of loans granted to affili-

ated companies were EUR 0.2 million at the

end of 2023 (EUR 0.1 million in 2022). Group

did not have capital loans granted outside

of the Group at the end of 2023 (EUR 0.0

million in 2022).

Changes in income Changes in equity statement before taxbefore tax 1000 EUR 2023 2022 2023 2022Interest investments +/- 0 +/- 0 +/- 0 +/- 0

The amount of the Group’s counterparty

default risk is consistent with the book val-

ue of financial assets at the closing date.

For the maturity distribution of trade receiv-

ables, see note 19.

Liquidity risk

The Group and business segments strive

to continuously evaluate and monitor the

amount of liquid funds needed for busi-

ness operations and loan repayments. The

Group strives to guarantee the availabili-

ty and flexibility of financing by its strong

financial position and liquid investments.

Bittium has EUR 20.0 million senior loan

and EUR 10.0 million committed overdraft

credit facility agreement with Nordea Bank

Finland Plc. Maturity date for the senior loan

is May 24, 2024 and the credit limit agree-

ment is valid until May 24, 2024. Bittium has

started negotiations to arrange refinancing

for the financial instruments due on May 24,

2024. Bittium has EUR 10.0 million commit-

ted overdraft credit facility agreement with

OP Corporate Bank Plc valid until Septem-

ber 30, 2025. These agreements include

customary covenants related to, among

other things, equity ratio, interest bearing

debt to EBITDA, and transferring property

and pledging. These credit facilities were

in use EUR 0.0 million at the end of the re-

porting period. For the maturity distribution

of the Group’s debt, see note 24.

Capital structure management

The Group strives to optimize its capital

structure and thus support business activ-

ities by ensuring normal operating condi-

tions under all circumstances. An optimal

capital structure also ensures that the cost

of capital is minimized.

The capital structure is affected by dividend

policy and share issuance. The Group can

alter and adjust dividends paid to share-

holders as well as share repurchases. The

Group can also alter and adjust the amount

of shares issued, or make decisions on the

sale of assets.

The management has continuously mon-

itored the development of the Group’s net

gearing and solvency ratio. The Group’s in-

terest-bearing net debt at the end of 2023

was EUR 14.2 million (EUR 3.4 million in

2022) and net gearing was 13.2% (3.0% in

2022). The Group’s solvency ratio at the end

of 2022 was 69.7% (69.7% in 2022).

160 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

Fair Values of Financial Assets and Liabilities

This section presents the Group’s fair valuing principles for all financial instruments. The table be-

low presents book values for each item in detail. Their fair values are not considered to materially

differ from the book values presented in the consolidated balance sheets.

Book value Fair valueBook value Fair value 1000 EUR Note2023202320222022Financial assets Other financial assets 15 112 112 112 112 Non-Current receivables 18 730 730 856 856 Trade receivables 18 32,816 32,816 3 7, 2 4 2 37, 24 2 Financial assets at fair value through profit or loss 19 1 1 5,696 5,696 Cash and cash equivalents 20 8,329 8,329 13,320 13,320 Currency forwards 19 19 19 33 33Financial liabilities Bank loans 24 20,000 20,000 20,000 20,000 Trade payables and advances received 25 9,059 9,059 13,910 13,910 Currency forwards 26 0 0 0 0

Investments in Shares and Funds

and Other Investments

For-sale financial assets consist mainly of

money market investments that fair values

are based on the quotes of the closing day

(IFRS 13 fair value hierarchy level 1; quoted

prices (unadjusted) in active markets for

identical assets or liabilities).

Derivatives

The fair values of forward contracts are de-

fined based on publicly quoted currency and

interest rate information and using com-

monly accepted valuation methods (IFRS

13 fair value hierarchy level 2; instruments

whose fair value is observable either directly

(i.e. as prices) or indirectly (i.e. derived from

prices)). These calculations have been car-

ried out by an outside professional party.

Bank Loans

Book values are considered to closely ap-

proximate fair values.

Trade Receivables and Other Receivables

The original book value of receivables is con-

sidered to equal their fair values, since the

effect of discounting is non-significant con-

sidering the maturities of the receivables.

Trade Payables and Other Debts

The original book value of payables and

other debts is considered to equal their fair

values, since the effect of discounting is

non-significant considering the maturities

of the receivables.

161

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

28. ADJUSTMENTS TO NET CASH FROM OPERATING ACTIVITIES

29. OPERATING LEASE AGREEMENTS

Dec. 31, Dec. 31, 1000 EUR20232022Business transactions without paymentsDepreciations 9,479 10,699Share of profits in associated companies -32 185Other adjustments -17 483Total 9,430 11,366

Dec. 31, Dec. 31, 1000 EUR20232022Not later than one year 53 63Later than one year and not later than five yearsAfter five years

The Group as Lessee

The total of future minimum lease payments under non-cancellable operating leases for each of the following periods:

The Group owns its facilities in Oulu and Kuopio. The facilities in other locations are rented. In average the maturities of

the lease agreements are from 1 month to 5 years, and normally they include an option to extend the rental period from

originally agreed end date. IFRS 16 Leases standard has come into force on 1st of January 2019. According to the standard,

in principle all lease contracts of the Group are recognized as assets and liabilities in Group’s Balance Sheet.

162 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Consolidated Financial Statements

30. SECURITIES AND CONTINGENT LIABILITIES

Dec. 31, Dec. 31, 1000 EUR20232022Against own liabilities Floating charges Guarantee limits 2,989 2,992 Other contractual liabilities Falling due in the next year 2,311 2,504 Falling due after one year 861 708Mortgages are pledged for liabilities totaled Other liabilities (guarantees issued)Material purchase commitments 8,152 13,912

31. RELATED PARTY DISCLOSURES

The Group has the following structure:

Related party transactions and balances:1000 EUR 2023 2022Associated companiesNet sales 1,462 817Receivables 953 1,057Debts 150 204

Country ofOwned by Owned by incorporationParent %Group %ParentBittium Oyj FinlandSubsidiariesBittium Technologies Oy Finland 100.00 100.00Bittium Wireless Oy Finland 0.00 100.00Bittium Safemove Oy Finland 0.00 100.00Bittium Biosignals Oy Finland 0.00 100.00Bittium Medanalytics Oy Finland 0.00 100.00Kiinteistöosakeyhtiö Oulun Ritaharjuntie 1 Finland 0.00 100.00Bittium Germany GmbH Germany 0.00 100.00Bittium Mexico S.A. de C.V. Mexico 0.00 100.00Bittium USA, Inc. USA 0.00 100.00Bittium Singapore Pte. Ltd. Singapore 0.00 100.00

Information on the associated companies is presented in Note 15.

Related party transactions have occured based on market terms.

163

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

1000 EUR 2023 2022

Employee benefits for key managementSalaries and remunerationManaging director of the parentHannu Huttunen 1.1.–31.12.2022, 1.1.–31.3.2023 62 298Johan Westermarck, 1.4.–31.12.2023 265Total 328 298Remuneration of the members of the board of the parent, the financial committee and the managing directors of the business segmentsErkki Veikkolainen 1.1.–31.12.2022, 1.1.–31.12.2023 32 32Riitta Tiuraniemi 1.1.–31.12.2022, 1.1.–31.12.2023 21 22Pekka Kemppainen 1.1.–31.12.2022, 1.1.–31.12.2023 18 19Petri Toljamo 1.1.–31.12.2022, 1.1.–31.12.2023 20 21Veli-Pekka Paloranta 1.1.–31.12.2022, 1.1.–31.12.2023 20 20Total 112 114Share-based incentivesBoard of Directors 62 62Management 212 142Total 274 204

Except for the Remuneration of the Management and the Members of the Board Bittium has not had

significant business transactions with its Board, Managing Director, or Members of the Group

Executive Board, including the companies that they have control or significant influence in.

There have not been any business transactions or open balances between the related parties.

Members of the group executive board 1,069 1,008

Loans and guarantees to related party

There are no loans or guarantees granted between the related parties.

164 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

32. KEY RATIOS

IFRSIFRSIFRSIFRSIFRS20232022202120202019INCOME STATEMENT, MEURNet sales, MEUR 75.2 82.5 86.9 78.4 75.2 Net sales change, % -8.8 -5.1 10.8 4.2 19.7 Operating profit/loss, MEUR -4.3 0.3 3.2 2.1 6.3 % of net sales -5.7 0.4 3.7 2.7 8.4 Profit/loss for continuing operations before taxes, MEUR -5.3 -0.4 2.5 1.6 5.9 % of net sales -7. 0 -0.5 2.9 2.1 7.9 Profit for the year from continuing operations, MEUR -5.4 0.3 3.3 2.2 7. 6 % of net sales - 7. 2 0.0 3.8 2.8 10.2 Profit after tax for the year from discontinued operations, MEUR % of net sales 0.0 0.0 0.0 0.0 0.0 Profit for the year attributable to equity holders of the parent, MEUR -5.4 0.3 3.3 2.2 7. 6 % of net sales - 7. 2 0.0 3.8 2.8 10.2 BALANCE SHEET, MEURNon-current assets 84.6 85.0 85.9 86.4 80.5 Inventories 26.6 24.2 18.8 20.9 18.2 Current assets 46.4 60.5 61.4 50.7 55.6 Shareholders' equity 1 0 7. 6 115.8 116.8 114.2 112.3 Non-current liabilities 1.8 21.7 21.5 21.9 22.1 Current liabilities 48.3 32.2 27.8 21.8 19.9 Balance sheet total 1 5 7. 7 169.7 166.1 158.0 154.2

Notes to the Consolidated Financial Statements

165

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

*) Proposal of the Board of Directors for 2023.

IFRSIFRSIFRSIFRSIFRS20232022202120202019PROFITABILITY AND OTHER KEY FIGURESReturn on equity, % (ROE) -4.9 0.2 2.9 1.9 6.9 Return on investment, % (ROI) -3.0 0.3 2.3 1.6 5.0 Interest-bearing net liabilities, (MEUR) 14.2 3.4 0.2 -2.1 -12.6 Net gearing, % 13.2 3.0 0.2 -1.9 -11.2 Equity ratio, % 69.6 69.7 72.4 73.1 73.4 Gross investments, (MEUR) 9.4 9.5 9.6 17.4 21.3 Gross investments, % of net sales 12.4 11.6 11.1 22.2 28.3 R&D costs, (MEUR) 20.2 22.3 19.8 22.8 25.1 R&D costs, % of net sales 27. 0 2 7. 0 22.8 29.1 33.4 Average personnel during the period, parent and subsidiaries 601 641 664 673 665 STOCK-RELATED FINANCIAL RATIOSEarnings per share from continuing operations, EUR Basic earnings per share -0.153 0.007 0.093 0.061 0.214 Diluted earnings per share -0.153 0.007 0.093 0.061 0.214Earnings per share from discontinued operations, EUR Basic earnings per share Diluted earnings per shareEarnings per share from continuing and discontinued operations, EUR Basic earnings per share -0.153 0.007 0.093 0.061 0.214 Diluted earnings per share -0.153 0.007 0.093 0.061 0.214Equity per share, EUR 3.03 3.24 3.27 3.20 3.15Dividend per share, EUR *) 0.03 0.05 0.04 0.03Dividend per earnings, % -19.7 704.5 43.0 50.9P/E ratio -31.5 560.1 56.9 94.8 30.4Effective dividend yield, % 0.6 1.3 0.8 0.5Market values of shares, (EUR) Highest 5.20 6.08 7. 8 9 7. 6 7 8.03 Lowest 3.31 3.47 4.93 3.40 5.91 Average 4.22 4.71 6.18 5.74 6.70 At the end of the period 4.81 3.98 5.30 5.79 6.50Market value of the stock, (MEUR) 170.7 141.9 189.2 206.7 232.0Trading value of shares MEUR 17.0 44.0 83.2 117.9 51.5 1000 PCS 4,021 9,346 13,464 20,557 7, 6 8 9 Related to the average number of shares, % 11.3 26.2 3 7. 7 57. 6 21.5Adjusted number of the shares at the end of the period (1000 PCS) 35,486 35,702 35,702 35,693 35,693Adjusted number of the shares average for the period (1000 PCS) 35,609 35,702 35,700 35,693 35,693Adjusted number of the shares average for the perioddiluted with stock options (1000 PCS) 35,609 35,702 35,700 35,693 35,693

166 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Profit for the year x 100

Total equity (average for the accounting period)

Profit before tax + interest and other financial expenses x 100

Balance sheet total - interest-free liabilities (average for the accounting period)

Interest-bearing liabilities - cash and cash equivalents x 100

Total equity

Total equity x 100

Balance sheet total - advances received

Profit attributable to equity holders of the parent

Share issue adjusted number of the shares average for the period

Dividend per share x 100

Earnings per share

Equity attributable to equity holders of the parent

Share issue adjusted number of the shares at the end of the period

Dividend for the period (Board’s proposal) per share

Adjustment coefficient of post-fiscal share issues

Share issue adjusted share price at the end of the period

Earnings per share

Dividend per share x 100

Share issue adjusted share price at the end of the period

CALCULATION OF KEY RATIOS

Notes to the Consolidated Financial Statements

Return on equity % (ROE)

Return on investment % (ROI)

Net gearing, %

Equity ratio, %

Earnings per share

Equity per share

Dividend per share

Dividend per earnings, %

P/E ratio

Effective dividend yield, %

167

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

33. SHAREHOLDINGS AND SHARES

Breakdown of Shares by Shareholding, December 31, 2023Number of Percentage of Number Percentage ofNumber of sharesshareholdersshareholdersof shares shares and votes1 - 100 10,222 46.4 451,579 1.3101 - 500 6,787 30.8 1,783,314 5.0501 - 1000 2,132 9.7 1,671,292 4.71001 - 5000 2,153 9.8 4,833,000 13.55001 - 10000 365 1.7 2,659,155 7. 410001 - 50000 303 1.4 5,934,090 16.650001 - 100000 33 0.2 2,192,226 6.1100001 - 500000 25 0.1 5,620,020 15.7500001 - 999999999999 10 0.0 10,557,588 29.6Total 22,030 100.0 35,702,264 100.0Nominee-registered 9 1,350,441 3.8

Breakdown of Shareholders by Shareholder Type, December 31, 2023Number of Percentage of Number Percentage ofShareholders by shareholder typeshareholdersshareholdersof shares shares and votesNon-financial corporations 511 2.3 4,191,362 11.7 Financial sector and insurance corporations 22 0.1 1,969,316 5.5 General government 4 0.0 3,165,537 8.9 Non-profit institutions 28 0.1 104,936 0.3 Households 21,376 97. 0 24,857,249 69.6 Foreign owners 80 0.4 63,423 0.2 Nominee-registered shares 9 0.0 1,350,441 3.8 Total 22,030 100.0 35,702,264 100.0

168 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Major Shareholders, December 31, 2023Number Percentage ofof sharesshares and votesNumber of shares total 35,702,264 100.01. Veikkolainen Erkki, Chairman of the Board 1,822,112 5.12. Ponato Oy 1,501,300 4.23. Hulkko Juha 1,419,370 4.04. Varma Mutual Pension Insurance Company 1,365,934 3.85. Ilmarinen Mutual Pension Insurance Company 1,296,529 3.66. Special Investment Fund Aktia Mikro Markka 700,000 2.07. Skandinaviska Enskilda Banken AB 698,499 2.08. Hildén Kai 658,000 1.89. Citibank Europe Plc 592,844 1.710. Elo Mutual Pension Insurance Company 503,000 1.4Total 10,557,588 29.6Others (incl. nominee-registered shares) 25,144,676 70.4The Board and CEOVeikkolainen Erkki, Chairman of the Board 1,822,112 5.1Kemppainen Pekka, Member of the Board 8,326 0.0Paloranta Veli-Pekka, Member of the Board 8,562 0.0Tiuraniemi Riitta, Member of the Board 19,292 0.1Toljamo Petri, Member of the Board 26,176 0.1Westermarck Johan, CEO 71,854 0.21,956,322 5.5

Notes to the Consolidated Financial Statements

169

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Income Statement, Parent

1000 EUR Notes 2023 2022

NET SALES 1, 2 1,316 790

Other operating income 3 0 0

Personnel expenses 4 -1,878 -1,154

Depreciation and reduction in value 5 - 15 - 14

Other operating expenses 6 -1,150 - 872

OPERATING PROFIT -1,728 -1,250

Financial income and expenses 7 4,809 1,590

PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES 3,081 340

Appropriations 8 -2,200 1,500

PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES 881 1,840

Taxes 9 0 0

NET PROFIT FOR THE FINANCIAL YEAR 881 1,840

170 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Balance Sheet, Parent

1000 EUR Notes

Dec. 31,

2023

Dec. 31,

2022

ASSETS

Non-current assets

Intangible assets 10 72 77

Tangible assets 11 71 71

Investments 12 39,750 39,750

Non-current assets total 39,893 39,898

Current assets

Receivables

Current receivables 13 109,883 100,152

Receivables total 109,883 100,152

Financing securities 14 1 5,696

Cash and bank deposits 5,836 8,845

Current assets total 115,720 114,693

TOTAL ASSETS 155,613 154,591

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity 15

Share capital 12,941 12,941

Invested non-restricted equity fund 25,953 25,953

Retained earnings 89,481 90,472

Net profit/loss for the year 881 1,840

Shareholders' equity total 129,256 131,206

Provisions

Provisions, non-current

Provisions, current

Liabilities 16

Non-current liabilities 20,000

Current liabilities 26,357 3,385

Liabilities total 26,357 23,385

SHAREHOLDERS' EQUITY AND LIABILITIES TOTAL 155,613 154,591

171

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Cash Flow, Parent

1000 EUR 2023 2022

CASH FLOW FROM OPERATING ACTIVITIES

Profit (loss) before taxes +/- 881 1,840

Adjustments

Depreciation according to plan + 15 14

Effects of non-cash business activities 2,200 -1,500

Financial income and expenses +/- -4,809 -1,590

Cash flow before change in net working capital -1,713 -1,236

Change in net working capital

Change in interest-free short-term receivables -581 8

Change in interest-free short-term payables 58 169

Cash flow before financing activities -2,235 -1,058

Interest paid - -946 -881

Dividends received + 0 0

Interest received + 5,828 2,471

Net cash from operating activities 2,647 531

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of tangible and intangible assets - -10 -4

Net cash used in investing activities -10 -4

CASH FLOW FROM FINANCIAL ACTIVITIES

Change in interest-free short-term financial receivables in Group -10,650 -152

Change in interest-free short-term financial payables in Group 640 48

Received Group contributions 1,500 0

Dividend paid and capital repayment -1,785 -1,428

Purchases of own shares -1,046 -144

Net cash used in financial activities -11,341 -1,676

NET CHANGE IN CASH AND CASH EQUIVALENTS -8,704 -1,149

Cash and cash equivalents at beginning of the period 14,541 15,690

Cash and cash equivalents at end of the period 5,837 14,541

Change in cash and cash equivalents in the balance sheet -8,704 -1,149

Cash and cash equivalents include liquid and low risk financing securities.

172 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Accounting Principles for the Preparation

of Financial Statements, Parent Company

The financial statements have been pre-

pared in accordance with the Finnish Ac-

counting Act.

Valuation Principles

Valuation of Non-current Assets

Non-current assets are capitalized in the

balance sheet at the original acquisition

cost deducted by accumulated depreci-

ation. Depreciation according to the plan

is calculated either using the straight-line

method or the reducing balance method,

taking into consideration of the useful life of

assets. The depreciation periods are:

Intangible assets 3–10 years

Tangible assets 3–5 years

Valuation of Financial Securities

Financial securities are valued at fair value.

The fair value of forward exchange are de-

fined based on forward exchange prices on

balance sheet date and option contracts are

defined based on market prices on balance

sheet date.

Pensions

The Company has organized pension cover-

age for its personnel through independent

pension insurance companies. The pen-

sion insurance expenditures are included

into personnel expenses.

Leasing Agreements

Leasing agreements and fixed-term rental

agreements are reported as contingent li-

abilities off the balance sheet.

Income Tax

Taxes of the financial year have been re-

ported in the income statement as income

taxes. Deferred tax or liabilities or receiv-

ables has not been recorded on the finan-

cial statement.

Foreign Currency Items

The transactions in the income statement

have been converted into euro using the

exchange rate of the transaction date. Re-

ceivables and payables denominated in

foreign currency have been converted into

euro by using the exchange rate of the

European Central Bank at the balance sheet

date.

Net Sales

Sales of goods is recorded when goods

have been handed over to the customer

or the services have been rendered. Sales

are shown net of indirect sales taxes and

discounts.

173

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Financial Statements

of the Parent Company

1000 EUR 2023 2022

1. NET SALES BY SEGMENTS

Other functions 1,316 790

Total 1,316 790

2. NET SALES BY MARKET AREAS

Europe 1,158 701

Americas 158 89

Asia

Total 1,316 790

3. OTHER OPERATING INCOME

Other operating income 0 0

Total 0 0

4. NUMBER OF PERSONNEL AND PERSONNEL EXPENSES

Average number of personnel during the period

Other functions 8 7

Total 8 7

Number of personnel at the end of the year 9 7

Personnel expenses *

Management salaries 539 353

Board of Directors 175 176

Other salaries and wages 898 472

Total 1,612 1,001

Pension expenses 242 136

Other social expenses 24 17

Total 1,878 1,154

* The Board of Directors’ salaries include the share-based compensation.

5. DEPRECIATION AND REDUCTION IN VALUE

Intangible rights 15 14

Other capitalized long-term expenditures 0 0

Machinery and equipment 0 0

Total 15 14

174 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Financial Statements

of the Parent Company

1000 EUR 2023 2022

6. OTHER OPERATING CHARGES

IT equipment and SW expenses 55 33

Premises expenses 27 17

Administrative services 585 440

Travel expenses 102 39

Voluntary staff expenses 31 22

Other business expenses 351 320

Total 1,150 872

Auditor's charges

Auditing 25 23

Tax advice 0 1

Other services 1 1

Total 26 25

7. FINANCIAL INCOME AND EXPENSES

Income from investments

From Group companies

From others 73 63

Total 73 63

Other interest and financial income

From Group companies 5,471 2,284

From others 377 35

Total 5,848 2,320

Other interest and financial expenses

To Group companies 4 3

To others 1,109 790

Total 1,113 793

Reduction in the value of the investment 0 0

Net financial income and expenses 4,809 1,589

Net financial income and expenses including exchange gains and losses -6 -237

8. APPROPRIATIONS

Received Group contributions -2,200 1,500

9. INCOME TAX

Other direct taxes 0 0

Total 0 0

175

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

10. INTANGIBLE ASSETS

Intangible rights

Acquisition cost Jan. 1 345 341

Investments during the period 10 4

Disposals during the period

Acquisition cost at the end of the period 355 345

Accumulated depreciation Jan. 1 -269 -254

Depreciation for the period -15 -14

Book value at the end of the period 72 77

Other capitalized long-term expenditures

Acquisition cost Jan. 1 6 6

Investments during the period

Acquisition cost at the end of the period 6 6

Accumulated depreciation Jan. 1 -6 -6

Depreciation for the period

Book value at the end of the period

Intangible assets total

Acquisition cost Jan. 1 352 348

Investments during the period 10 4

Acquisition cost at the end of the period 361 352

Accumulated depreciation Jan. 1 -275 -261

Depreciation for the period -15 -14

Book value at the end of the period 72 77

176 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Notes to the Financial Statements

of the Parent Company

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

11. TANGIBLE ASSETS

Machinery and equipment

Acquisition cost Jan. 1 6 6

Investments during the period

Disposals during the period

Acquisition cost at the end of the period 6 6

Accumulated depreciation Jan. 1 -6 -6

Depreciation for the period 0 0

Book value at the end of the period 0 0

Other tangible assets

Acquisition cost Jan. 1 71 71

Acquisition cost Dec. 31 71 71

Book value at the end of the period 71 71

Tangible assets total

Acquisition cost Jan. 1 77 77

Investments during the period

Acquisition cost at the end of the period 77 77

Accumulated depreciation Jan. 1 -6 -6

Depreciation for the period 0 0

Book value at the end of the period 71 71

12. INVESTMENTS

Investments in subsidiaries

Acquisition cost Jan. 1 39,749 39,749

Book value at the end of the period 39,749 39,749

Investments in other shares

Acquisition cost Jan. 1 1 1

Book value at the end of the period 1 1

Investments total

Acquisition cost Jan. 1 39,750 39,750

Book value at the end of the period 39,750 39,750

177

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

13. CURRENT RECEIVABLES

Accounts receivable

From Group companies 547 0

Total 547 0

Other receivables

From Group companies 109,257 98,607

From others 21 52

Total 109,278 98,659

Prepaid expenses and accrued income

From Group companies 0 1,500

From others 58 60

Total 58 1,560

Current receivables total 109,883 100,219

14. FINANCING SECURITIES

Cash and cash equivalents include liquid and low-risk financing securities.

Financial assets at fair value through profit or loss 1 5,696

15. SHAREHOLDERS’ EQUITY

Share capital at the beginning of the period 12,941 12,941

Share capital at the end of the period 12,941 12,941

Invested unrestricted equity fund at the beginning of the period 25,953 25,953

Share issue

Invested unrestricted equity fund at the end of the period 25,953 25,953

Retained earnings at the beginning of the period 92,312 92,044

Dividend distribution -1,785 -1,428

Purchases of own shares -1,046 -144

Net profit for the period 881 1,840

Retained earnings at the end of the period 90,362 92,312

Distributable earnings at the end of the period 116,315 118,265

Shareholders’ equity total 129,256 131,206

178 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

16. LIABILITIES

Current liabilities

Accounts payable

To Group companies 36 0

To others 49 163

Total 85 163

Other short-term liabilities

To Group companies 5,710 2,936

To others 20,138 32

Total 25,848 2,968

Accrued expenses and deferred income

To others 424 321

Total 424 321

Current liabilities total 26,357 3,452

Notes to the Financial Statements

of the Parent Company

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

17. SECURITIES AND CONTINGENT LIABILITIES

On behalf of Group companies

Guarantee limits 2,989 2,992

of which guarantees in use total

Leasing liabilities

Falling due in the next year 1,501 1,011

Falling due after one year 1,337 868

Other liabilities

Credit Cards 1 6

Rental liabilities

Falling due in the next year 11 9

Contractual liabilities

Falling due in the next year 20 16

Falling due in 1–5 years

179

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Owned by

Parent, %

Owned by

Group, %

Book value

1000 EUR

19. SHARES AND HOLDINGS

Subsidiaries

Bittium Technologies Oy 100.00 100.00 39,749

Other holdings by Parent

Partnera Oy 1

1000 EUR

Dec. 31,

2023

Dec. 31,

2022

18. NOMINAL VALUE OF CURRENCY DERIVATES

Foreign exchange forwards

Market value 19 33

Nominal value 2,200 5,000

180 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Erkki Veikkolainen Pekka Kemppainen Veli-Pekka Paloranta

Chairman of the Board Member of the Board Member of the Board

Riitta Tiuraniemi Petri Toljamo Johan Westermarck

Member of the Board Member of the Board CEO

Proposal by the Board of Directors on

the Use of the Profit Shown on the Balance Sheet

and the Payment of the Dividend

Auditor’s Note

Auditor’s Report has been issued today.

In Oulu February 9, 2024

Ernst & Young Oy

Authorized Public Accountant Firm

Jari Karppinen, Authorized Public Accountant

According to the parent company’s balance

sheet at December 31, 2023, the distribut-

able assets of the parent company are EUR

116,314,733.29 of which the profit of the fi-

nancial year is EUR 880,995.75.

The Board of Directors proposes to the An-

nual General Meeting to be held on April 10,

2024, that a dividend of EUR 0.03 per share

be paid based on the balance sheet to be

adopted for the financial year ended De-

cember 31, 2023.

The Board of Directors furthermore propos-

es that the Annual General Meeting would

authorize the Board of Directors to decide,

at its discretion, on the payment of an ex-

traordinary dividend of EUR 0.03 per share,

by October 31, 2024. The Board of Directors

expects that this discretionary extraordi-

nary dividend will be paid, unless there is

a significant deterioration in the business

environment during 2024. The company will

publish any possible decisions on dividend

payment by the Board of Directors sepa-

rately, and simultaneously confirm the div-

idend record and payment dates.

Bittium Corporation follows a dividend

policy that takes into account the Corpora-

tion’s net income, financial status, need for

capital, and financing of growth.

In Oulu, February 8, 2024

181

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Auditor’s Report

(Translation of the Finnish original)

To the Annual General Meeting of Bittium Oyj

Report on the Audit of

Financial Statements

Opinion

We have audited the financial statements of

Bittium Oyj (business identity code 1004129-5)

for the year ended 31 December, 2023. The

financial statements comprise the consol-

idated balance sheet, statement of com-

prehensive income, statement of chang-

es in equity, statement of cash flows and

notes, including a summary of significant

accounting policies, as well as the parent

company’s balance sheet, income state-

ment, statement of cash flows and notes.

ln our opinion

• the consolidated financial statements

give a true and fair view of the group’s fi-

nancial position as well as its financial

performance and its cash flows in accor-

dance with International Financial Report-

ing Standards (IFRS) as adopted by the EU.

• the financial statements give a true and

fair view of the parent company’s finan-

cial performance and financial position

in accordance with the laws and regula-

tions governing the preparation of finan-

cial statements in Finland and comply

with statutory requirements.

Our opinion is consistent with the additional

report submitted to the Audit Committee.

Basis for Opinion

We conducted our audit in accordance with

good auditing practice in Finland. Our re-

sponsibilities under good auditing prac-

tice are further described in the Auditor’s

Responsibilities for the Audit of Financial

Statements section of our report.

We are independent of the parent compa-

ny and of the group companies in accor-

dance with the ethical requirements that

are applicable in Finland and are relevant

to our audit, and we have fulfilled our other

ethical responsibilities in accordance with

these requirements.

ln our best knowledge and understanding,

the non-audit services that we have provid-

ed to the parent company and group com-

panies are in compliance with laws and

regulations applicable in Finland regarding

these services, and we have not provided

any prohibited non-audit services referred

to in Article 5(1) of regulation (EU) 537/2014.

The non-audit services that we have provid-

ed have been disclosed in note 5 to the con-

solidated financial statements.

We believe that the audit evidence we have

obtained is sufficient and appropriate to

provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that,

in our professional judgment, were of most

significance in our audit of the financial

statements of the current period. These

matters were addressed in the context of

our audit of the financial statements as a

whole, and in forming our opinion thereon,

and we do not provide a separate opinion

on these matters.

We have fulfilled the responsibilities de-

scribed in the Auditor’s responsibilities for

the audit of the financial statements section

of our report, including in relation to these

matters. Accordingly, our audit included the

performance of procedures designed to re-

spond to our assessment of the risks of ma-

terial misstatement of the financial state-

ments. The results of our audit procedures,

including the procedures performed to ad-

dress the matters below, provide the basis

for our audit opinion on the accompanying

financial statements.

We have also addressed the risk of man-

agement override of internal controls. This

includes consideration of whether there was

evidence of management bias that repre-

sented a risk of material misstatement due

to fraud.

182 Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

Responsibilities of the Board

of Directors and the Managing

Director for the Financial

Statements

The Board of Directors and the Managing

Director are responsible for the preparation

of consolidated financial statements that

give a true and fair view in accordance with

International Financial Reporting Standards

(IFRS) as adopted by the EU, and of financial

statements that give a true and fair view in

accordance with the laws and regulations

governing the preparation of financial state-

ments in Finland and comply with statutory

requirements. The Board of Directors and

the Managing Director are also responsible

for such internal control as they determine

is necessary to enable the preparation of fi-

nancial statements that are free from ma-

terial misstatement, whether due to fraud

or error.

ln preparing the financial statements, the

Board of Directors and the Managing Direc-

tor are responsible for assessing the parent

company’s and the group’s ability to contin-

ue as going concern, disclosing, as applica-

ble, matters relating to going concern and

using the going concern basis of account-

ing. The financial statements are prepared

using the going concern basis of account-

ing unless there is an intention to liquidate

the parent company or the group or cease

operations, or there is no realistic alterna-

tive but to do so.

Auditor’s Responsibilities

for the Audit of Financial

Statements

Our objectives are to obtain reasonable

assurance on whether the financial state-

ments as a whole are free from materi-

al misstatement, whether due to fraud or

error and to issue an auditor’s report that

includes our opinion. Reasonable assur-

ance is a high level of assurance but is not

a guarantee that an audit conducted in ac-

cordance with good auditing practice will

always detect a material misstatement

when it exists. Misstatements can arise

from fraud or error and are considered ma-

terial if, individually or in the aggregate, they

could reasonably be expected to influence

the economic decisions of users taken on

the basis of the financial statements.

As part of an audit in accordance with good

auditing practice, we exercise professional

judgment and maintain professional skep-

ticism throughout the audit. We also:

• Identify and assess the risks of material

misstatement of the financial statements,

whether due to fraud or error, design and

perform audit procedures responsive to

those risks, and obtain audit evidence that

is sufficient and appropriate to provide a

basis for our opinion. The risk of not de-

tecting a material misstatement result-

ing from fraud is higher than for one re-

sulting from error, as fraud may involve

collusion, forgery, intentional omissions,

misrepresentations, or the override of in-

ternal control.

• Obtain an understanding of internal con-

trol relevant to the audit in order to design

audit procedures that are appropriate in

the circumstances, but not for the pur-

pose of expressing an opinion on the ef-

fectiveness of the parent company’s or the

group’s internal control.

• Evaluate the appropriateness of account-

ing policies used and the reasonableness

of accounting estimates and related dis-

closures made by management.

• Conclude on the appropriateness of the

Board of Directors’ and the Managing Di-

rector’s use of the going concern basis of

accounting and based on the audit evi-

dence obtained, whether a material un-

certainty exists related to events or con-

ditions that may east significant doubt

KEY AUDIT MATTER

Recognition of Revenue from long-term construction contracts

We refer to the Group’s accounting policies and to the note 2

Fixed price contracts in long-term construction contracts are part of

the Group’s business. These projects constitute a significant portion

of the consolidated net sales. ln the financial statements 2023 the

revenue recognized from these projects was 8.4 million euro, which is

11 percentage of the total net sales. The group applies the percentage of

completion method for recognizing revenue from long-term construction

contracts, which involves the use of significant management estimates.

E.g. the following estimates include significant management judgement

for each project: stage of completion, total contract costs and the

project margin. During the performance phase, the financial outcome of

a project is based on the estimates made by the management and will

come more accurate when the project advances.

ln the Group net sales is a key performance indicator, which might

generate an incentive to prematurely recognition of revenue. Revenue

recognition was determined to be a key audit matter and a significant

risk of material misstatement referred to in EU Regulation No 537/2014,

point (c) of Article 10(2), because of the risk related to correct timing of

revenue.

HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Our audit procedures in which risk of material misstatement

on revenue recognition has been taken into account included,

among other:

• assessment of the accounting principles of the group on

revenue recognition and comparing them with the applied

accounting standards;

• examination of the nature of revenue, stage of completion and

financial contract terms behind the revenue recognized in the

long-term projects;

• tests of revenue recognition, which included testing of the

calculations and the estimates used in the revenue recognition;

• assessing the revenue recognized with substantive analytical

procedures, and

• assessment of the disclosure in respect of the revenue.

183183

Report by the Board of Directors and Financial Statements

Bittium Annual Report 2023

on the parent company’s or the group’s

ability to continue as a going concern. lf

we conclude that a material uncertainty

exists, we are required to draw attention

in our auditor’s report to the related dis-

closures in the financial statements or, if

such disclosures are inadequate, to mod-

ify our opinion. Our conclusions are based

on the audit evidence obtained up to the

date of our auditor’s report. However, fu-

ture events or conditions may cause the

company to cease to continue as a go-

ing concern.

• Evaluate the overall presentation, struc-

ture and content of the financial state-

ments, including the disclosures, and

whether the financial statements rep-

resent the underlying transactions and

events so that the financial statements

give a true and fair view.

• Obtain sufficient appropriate audit evi-

dence regarding the financial informa-

tion of the entities or business activities

within the group to express an opinion on

the consolidated financial statements. We

are responsible for the direction, supervi-

sion and performance of the group audit.

We remain solely responsible for our au-

dit opinion.

We communicate with those charged with

governance regarding, among other mat-

ters, the planned scope and timing of the

audit and significant audit findings, includ-

ing any significant deficiencies in internal

control that we identify during our audit.

We also provide those charged with gover-

nance with a statement that we have com-

plied with relevant ethical requirements re-

garding independence, and communicate

with them all relationships and other mat-

ters that may reasonably be thought to bear

on our independence, and where applicable,

related safeguards.

From the matters communicated with

those charged with governance, we de-

termine those matters that were of most

significance in the audit of the financial

statements of the current period and are

therefore the key audit matters. We describe

these matters in our auditor’s report unless

law or regulation precludes public disclo-

sure about the matter or when, in extreme-

ly rare circumstances, we determine that a

matter should not be communicated in our

report because the adverse consequences

of doing so would reasonably be expected

to outweigh the public interest benefits of

such communication.

Other Reporting

Requirements

lnformation on

Our Audit Engagement

We were first appointed as auditors by the

Annual General Meeting on April 12, 2002,

and our appointment represents a total

period of uninterrupted engagement of

22 years.

Other Information

The Board of Directors and the Managing

Director are responsible for the other infor-

mation. The other information comprises in-

formation included in the report of the Board

of Directors and in the Annual Report but

does not include the financial statements

and our report thereon. We obtained the re-

port of the Board of Directors prior to the

date of the auditor’s report, and the Annual

Report is expected to be made available to

us after the date of the auditor’s report.

Our opinion on the financial statements

does not cover the other information.

ln connection with our audit of the financial

statements, our responsibility is to read the

other information identified above and, in

doing so, consider whether the other infor-

mation is materially inconsistent with the

financial statements or our knowledge ob-

tained in the audit, or otherwise appears to

be materially misstated. With respect to re-

port of the Board of Directors, our responsi-

bility also includes considering whether the

report of the Board of Directors has been

prepared in accordance with the applicable

laws and regulations.

ln our opinion, the information in the report

of the Board of Directors is consistent with

the information in the financial statements

and the report of the Board of Directors has

been prepared in accordance with the ap-

plicable laws and regulations.

lf, based on the work we have performed on

the other information that we obtained prior

to the date of this auditor’s report, we con-

clude that there is a material misstatement

of this other information, we are required to

report that fact. We have nothing to report

in this regard.

Oulu, February 9, 2024

Ernst & Young Oy

Authorized Public Accountant Firm

Jari Karppinen

Authorized Public Accountant

Connectivity to be trusted.

www.bittium.com

Bittium / Ritaharjuntie 1, FI-90590 Oulu, Finland / t. +358 40 344 2000 / www.bittium.com

to the material expressed in this document. Any reproduction of the content of this document without prior written permission from Bittium is prohibited.