Untitled

Annual Report 2021

3Bittium in 2021

Bittium Annual Report 2021

Contents

Bittium in 2021 4

CEO’s Review 6

Business and Operating Environment 8

Bittium in Brief 8

Business Model 9

Strategic Guidelines 10

Long-term Financial Targets 10

Products and Services 12

Defense & Security 13

Connectivity Solutions 18

Medical Technologies 20

Shares and Shareholders 24

Shares 24

Information to Shareholders 25

Bittium Corporation’s Annual General Meeting 2022 26

Corporate Governance Statement

Reporting Period Jan. 1–Dec. 31, 2021 29

Sustainability at Bittium in 2021 45

Report by the Board of Directors

and Financial Statements 2021 85

Bittium in 2021

Bittium Annual Report 2021Bittium Annual Report 2021

Bittium in 2021

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

6 53

in total

55Bittium in 2021

Bittium Annual Report 2021Bittium Annual Report 2021

Bittium in 2021

Products

63.1

MEUR

Cash and Other Liquid Assets

22.0

MEUR

Net Sales

86.9

MEUR

Services

23.8

MEUR

Operating Profit

3.2

MEUR

Equity Ratio

72.4

Earnings per Share

0.09

EUR

Order Book

29.5

MEUR

Net Gearing

0.2

Services-based Net Sales

Connectivity Solutions 15.5 MEUR

Product-based Net Sales

Medical Technologies 2 7. 8 MEUR

Defense & Security 35.3 MEUR

6 Bittium in 2021

Bittium Annual Report 2021

CEO’s Review

The last quarter of 2021 was excellent for

Bittium. Net sales increased by 37.8 per-

cent from the previous year, with product

deliveries focusing on the latter part of the

year. The operating result for the fourth

quarter was EUR 3.7 million correspond-

ing to 12.4 percent of net sales. In my opin-

ion, the development of the last quarter of

the year proves that our target, an operat-

ing result level of 10 percent, is realistic. We

aim at an average annual net sales growth

of more than 10 percent and an operating

result level of 10 percent.

The net sales in 2021 grew by 10.8 percent

from the previous year and the operating

result was EUR 3.2 million falling short of

our target. The growth in net sales result-

ed from the great development of Medi-

cal Technologies product sales. Defense

& Security’s product-based net sales re-

mained at the same level than in previous

year despite of the difficulties in sourcing

components. The additional costs caused

by the shortage of components also affect-

ed EBITDA and maintaining the expanded

product portfolio competitive was reflect-

ed as growth of annual R&D costs. Con-

nectivity Solutions’ business development

was slowed down by the travel restrictions

caused by the coronavirus pandemic.

The availability of components has been

weak and prices higher than before. We

were also unable to deliver all product

deliveries to our customers on time. The

shortage of components will affect our

product business also during the current

year. However, we believe that the situation

will gradually return to normal when going

towards 2023.

The level of R&D investments decreased.

Almost EUR 7 million less R&D costs were

capitalized in the balance sheet than in the

previous year, and despite that, the result

for the year was better than in the previous

year. As a result of lower R&D costs and al-

most 20 percent increase in the product

sales, the cash flow for the year was ap-

proximately EUR 8 million better than in

the previous year. We are unlikely to reduce

the absolute level of our R&D investments,

but the relative level will decrease through

the growth we are aiming at.

In the Defense business, the cooperation

with our most important domestic and in-

ternational customers continued well. The

general market slowdown due to the coro-

navirus pandemic had some effect on the

progress of ongoing projects. Product de-

liveries were delayed due to a shortage of

components. Towards the end of the year,

we were able to manufacture and deliver

a significant number of products to our

customers, which was reflected in signifi-

cant growth in Defense product-based net

sales in the fourth quarter. In the defense

market, the coronavirus pandemic affect-

ed the progress of government purchase

programs for tactical communications

systems, which affected the acquisition

of new customer projects.

Despite the delay in the development of

Bittium Tough SDR™ radios, I am really

pleased with the outcome. These are

world-class state-of-the-art vehicle and

military radios that are highly competitive

internationally. I want to take the opportu-

nity here and thank our development team

and our customer, Finnish Defence Forces,

who has been involved in the develop-

ment of the radios from the beginning. At

the end of the last year, the delivery of the

first phase of SDR radios and related equip-

ment to the customer was almost com-

pleted. The Finnish Defence Forces start-

ed testing radios and their waveforms and

will build readiness for more extensive use

of radios in the coming years. The Defense

Forces is preparing to purchase the next

batch of products, and the annual order

volumes, according to the letter of intent

for the acquisition of new tactical radios

published in August 2017, will be reached,

according to the current understanding,

from 2024 onwards.

a4ESSOR, a multinational joint venture for

the development of secure European soft-

ware-defined radio technology, progressed

well over the past year and the jointly de-

veloped ESSOR waveform received offi-

cial approval. a4ESSOR partners, of which

Bittium is one of the six companies, will

port the ESSOR waveform to their own

software radios as part of the next phase

of the project. Bittium has been the first

ESSOR partner to port the ESSOR wave-

form to its own SDR radios and to demon-

strate the functionality in field tests over

large networks. We have world-class

waveform expertise and are a national-

ly and internationally recognized partner

in the development of secure and inter-

ference-tolerant waveforms. Last year,

a4ESSOR launched a new project to de-

velop new ESSOR waveforms interopera-

ble with partner countries’ radios and im-

prove the existing waveform, to ensure that

these waveforms can be ported to the na-

tional radios of the ESSOR countries. In this

new project, Bittium will focus on develop-

ing ground-to-ground and air-to-ground

waveforms.

7Bittium in 2021

Bittium Annual Report 2021

The importance of mobile security in com-

munications has grown and the demand

for secure Bittium Tough Mobile 2 smart-

phones has increased steadily over the

past year. The security classification of the

smartphone and its related system plays

a key role, especially in the governmental

market, and we are actively applying for

security classification certificates in vari-

ous countries together with our customers.

In the first half of the year, we entered into a

distribution agreement with Mexican tele-

communication solutions provider Inmo-

sat for the distribution of Mexsat satellite

phones designed for the Mexican state’s

Mexsat satellite communications sys-

tem. The products of the first order under

the distribution agreement have been de-

livered to the customer, and we expect the

deliveries to continue this year.

The medical technology market clearly be-

gan to recover from the downturn caused

by the coronavirus pandemic. The de-

mand from the service providers recovered,

which was reflected in the development

of Medical Technologies’ product-based

net sales. Remote monitoring and remote

diagnostics solutions facilitate the chal-

lenges of limited medical resources and

cost pressures, which was reflected in

increased sales of Bittium’s medical re-

mote diagnostics solutions. The extent of

the growth was limited by the shortage of

components, which we expect to continue

until the end of 2022.

The European Medical Device Regulation

(MDR) entered into force in May, causing a

backlog of quality system audits and de-

vice approvals and thus a significant de-

lay in application lead times. We launched

our new home sleep apnea testing solution

Bittium Respiro™ in the early last year, and

its MDR approval has been delayed due to

a delay in lead times. With the current infor-

mation at hand, we believe we will get the

approval during the second half of this year.

The demand for Bittium’s ECG measur-

ing devices increased during the last year.

The majority of the product deliveries were

made to our customer Preventice, a pro-

vider of remote monitoring services in the

U.S. ECG market. The demand for Bittium’s

EEG devices designed for intensive care

slowed down. The temporary overload of

intensive care units with patients infected

by the coronavirus affected the ability of

intensive care units to promote the use of

new technologies and solutions.

In September, we announced an agree-

ment under which Bittium planned to buy

a 25 percent stake in the shares of Tech-

nomed Ltd, a UK provider of ECG diagnos-

tic services. Since the technical conditions

required for the share purchase were not

met, we terminated the agreement. How-

ever, the cooperation with Technomed con-

tinues in the measurement and monitor-

ing of biosignals and the development of

analysis software, and we signed a new dis-

tributor agreement for Bittium Faros™ ECG

measuring devices and Bittium Respiro™

home sleep apnea measuring devices and

software.

In the Connectivity Solutions business, the

delivery of our R&D services and connec-

tivity solutions to our customers continued.

The net sales of Bittium’s R&D services re-

mained at the same level as in the previ-

ous year. The business grew in the Open Ra-

dio Access Network (O-RAN) market, and

we made investments in the development,

sales, and marketing of our own O-RAN

business over the past year. There was

also new demand arising in wireless satel-

lite technology. The growth in these areas

brought us new international customers.

In the manufacturing industry, the coro-

navirus pandemic slowed down the start

of new R&D service projects, and the de-

mand in this market has clearly decreased.

The demand for the development of new

medical technology solutions, on the other

hand, remained stable despite the slow-

down in the approvals of new medical de-

vices caused by the new MDR regulation.

The exceptional circumstances caused by

the pandemic strengthened our remote

work practices with our existing customers.

Despite the virtual meetings and events

becoming more and more common, ac-

quiring new customers was challenging. In

addition, the availability of a professional

workforce on the market weakened. There

are not enough software engineers avail-

able in the markets compared to the de-

mand. The competition for the workforce

also increased labor mobility.

Our goal in the Connectivity Solutions

service business is to further increase the

number of product development service

projects and expand the international cus-

tomer base.

During 2021, we strengthened our position

as a provider of secure and reliable solu-

tions as well as a provider of solutions for

remote monitoring and remote diagnos-

tics. We also focused strongly on continu-

ously improving the customer experience

and quality. We will continue to develop our

operations and investments in line with our

strategy to enable the company’s interna-

tional growth this year as well.

To conclude, I would like to thank all our

customers and partners, as well as our

shareholders, for their trust in Bittium. I

would also like to thank all our employees

for the past year and their strong commit-

ment to our common goals. Our personnel

is united by the same enthusiasm for tech-

nologies and learning of new things, which

is ultimately reflected in our product de-

velopment and the work for our customers.

I am proud of all of you and the results we

have together achieved.

Hannu Huttunen

CEO

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 biosignal outside the hospital.

Bittium has deep, over 35-year legacy of ex-

pertise in advanced radio communication

technologies. Bittium provides innovative

products and services, customized solu-

tions based on its product platforms and

R&D services. Complementing its com-

munications and connectivity solutions,

Bittium offers proven information security

solutions for mobile devices and portable

computers.

Bittium also provides healthcare technolo-

gy products and services for biosignal mea-

surement in the areas of cardiology, neurol-

ogy, rehabilitation, and occupational health.

Bittium, formerly known as Elektrobit

Corporation, was established in 1985. It

changed its name to Bittium after selling

its Automotive business and the rights

to brand name Elektrobit on July 1, 2015.

Bittium is a publicly listed company on

Nasdaq Helsinki as BITTI.

Bittium operates in Finland, Germany,

the United States, Mexico and Singapore.

Bittium headquarters is located in Oulu, and

the company’s other Finnish offices are in

Espoo, Kajaani, Kuopio and Tampere.

At the end of 2021, Bittium had 653 employ-

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

neers. In 2021, the Company did not under-

go any significant changes in relation to its

size, structure, operating areas, ownership,

distribution of shares, income formation or

the maintenance of operations.

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 (environmental

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

Business and

Operating Environment

stances), REACH (chemicals regulations),

WEEE (recyclability of waste electrical and

electronic equipment), ETJ+ / ISO 50001

(energy efficiency), EICC (Electronic Indus-

try Citizenship Coalition) and GRI G4 (report-

ing guideline for sustainable development).

As a global enterprise, the Company also

takes the special requirements of its inter-

national customers into account.

Bittium’s Purpose

Bittium’s purpose is to adapt our deep

knowledge to deliver superior technology

innovations to enhance connectivity, bring

safety and improve health in the society.

Bittium’s Vision

Bittium’s vision is to be the world’s leading

provider of innovative products and services

for enhanced wireless communications, cy-

bersecurity, tactical communications and

outpatient biosignal measurement.

Bittium Annual Report 2021

Bittium in 2021

9Bittium in 2021

Bittium Annual Report 2021

Business Model

Key Resources

• Experts

• Own products

• IPR

• Partners

• Strong balance sheet

• Efficient processes

• Quality and

environment 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

• Web shop

Enablers

Megatrends and

Their Phenomenons

Customer Groups

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

hospitals and hospital districts, other public administration and organizations,

research institutes, universities

Connectivity as an enabler of digitalization, Internet of Things (IoT) and digitalization,

aging population, 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

is to adapt our deep knowledge to deliver superior technology innovations

to enhance connectivity, bring safety and improve health in the society.

Bittium’s Mission

Bittium’s Vision

is to be the world’s

leading provider of

innovative products and

services for enhanced

wireless communications,

cybersecurity, tactical

communications and

outpatient biosignal

measurement.

1010 Bittium in 2021

Bittium Annual Report 2021

Strategic

Guidelines

Bittium aims to be a significant global pro-

vider of secure and safe communication

solutions in the defense and public safe-

ty markets, and a leading provider of con-

nectivity solutions and R&D services for

different industries, as well as a significant

provider of remote measuring and diagnos-

tics solutions for measuring and analyzing

biosignals.

Bittium has made significant investments

in its future by increasing significantly R&D

investments in its own products and solu-

tions. These create a good foundation for

future growth. The company will continue

to invest in product development and in the

development of its operations based on its

strategy to enable its international growth.

Bittium continues to search for inorganic

growth opportunities in all its product and

service areas and is prepared to invest in

acquisitions that strengthen the compa-

ny´s growth strategy.

Bittium’s business is divided into three prod-

uct and service areas: Defense & Security,

Connectivity Solutions and Medical Tech-

nologies.

Defense & Security

In the Defense & Security product and ser-

vice area Bittium offers globally leading

products and services for its customers in

the defense, security and public safety mar-

kets aiming at strengthening the national

security of independent countries. Bittium´s

competitiveness in these markets is based

on trust and reliability, high quality of the

products and services, as well as on ad-

vanced technology and security know-how

developed within the company during the

last 35 years.

Bittium’s tactical communication products

targeted at customers in the defense mar-

ket offer a new kind of efficiency for their

management systems with products that

enable faster data transfer, better mobili-

ty, and large compatibility with other com-

munication systems. Secure communica-

tion solutions, targeted for the public safety

market, are responding to the increasing re-

quirements for information security. The de-

mand for secure communication solutions

in the public safety markets is driven by the

increasing use of LTE technology, smart-

phones and smartphone applications.

Connectivity Solutions

The development of wireless technology

continues and the digitalization creates

a growing need for wireless connections.

Bittium offers its customers R&D services

and wireless connectivity solutions for the

development of new innovative products in

a secure and evolving wireless environment.

The company’s competitiveness in these

markets is based on its unique technology

and information security expertise, as well

as the reliability and quality of its products

and services. Bittium’s special strength is

demanding systems.

Medical Technologies

The medical technology market is under-

going significant developments in patient

care, especially outside hospitals. There is

an increasing focus on the prevention of dis-

eases and health problems through early

diagnosis and the repatriation of patients at

an earlier stage in order to reduce hospital

and treatment days. These trends create

demand for biosignal measurement, digi-

tization of services, wireless, and secure

connections.

Bittium aims at promoting better health in

society by providing products and complete

solutions for the healthcare market in bio-

signals’ remote monitoring and diagnostics,

based on the company’s long experience

and deep knowledge of biosignal measure-

ment, wireless communications and secu-

rity technology.

Long-term

Financial Targets

Bittium aims for an average annual net sales

growth of more than 10 percent and an op-

erating result level of 10 percent.

Bittium Tough Mobile™ 2 C

Bittium BrainStatus™

Bittium in 2021

Bittium Annual Report 2021

Bittium Annual Report 2021Bittium Annual Report 2021

Products and

Services

Bittium in 2021

13Bittium in 2021

Bittium Annual Report 2021

In the Defense & Security product and ser-

vice area Bittium offers globally leading

products and services 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 products and services, 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 hard-

ware solutions, and the information secu-

rity features, and software integrated into

the source code. The phones are fully de-

signed 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 of different national government author-

ities. Bittium Tough Mobile 2 C smartphone

together with Bittium Secure Suite back-end

system form a smartphone-based commu-

nication solution that has been certified for

CONFIDENTIAL security level (NCSA-FI). As

the smartphones have been designed for

use by authorities, they have a significant-

ly longer availability and lifespan and better

availability of security updates compared to

conventional smartphones.

Bittium Secure Suite™ is a device manage-

ment and encryption software product that

complements Bittium Tough Mobile smart-

phone with a scalable set of new software

services for remote management, remote

attestation and securing the network con-

nections of the device. Bittium Tough Mobile

smartphone and Bittium Secure Suite form

a unique, complete, reliable system for pro-

cessing and transferring sensitive and clas-

sified material and securing critical com-

munication.

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 Specialized Device Platform™ is

a versatile device platform leveraging the

latest mass-market mobile device hardware

and software technologies. The platform en-

ables companies to roll out fully custom-

ized mobile devices in various form factors

(incl. module, smartphone, tablet and smart

watch) faster and with lower development

risks. The platform has been productized to

public safety, security, industrial and smart

watch markets. One of the major products

based on this platform is the secure Bittium

Tough Mobile smartphone.

Bittium SafeMove® Mobile VPN software

enables the utilization of all IP based ap-

plications and networks by securing the

connections between the work station and

corporate services immediately 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

applications they would have on a hospital

desktop, enabling safe and real-time ac-

cess to patient records. The new SafeMove

Streams feature enables opimized, durable

and secure connectivity, even when the net-

work connections in use are unreliable and

sensitive for interference.

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 positioning in-

formation if GPS data is available. In addi-

tion, the new 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 device that reported the deviation,

from the company network for the time of

clearance of the situation.

Defense & Security

Tactical and Secure Communication Systems

Android is a trademark of Google LLC.

14 Bittium in 2021

Bittium Annual Report 2021

ing on the situation. Together with the SDR-

based Bittium TAC WIN system, it is possi-

ble to bring broadband data and voice to all

mobile troops starting from brigade level and

all the way across the battlefield.

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 as well as Bittium Tough VoIP Service

and Bittium Tough VoIP Softphone software

products.

Bittium Tough Comnode™ fulfills the data

transfer needs for mobile troops by function-

ing for example as a VoIP phone (Voice over

IP), an IP router (Internet Protocol), and an

SHDSL repeater (Symmetrical High-speed

Digital Subscriber Line). Additionally, Bittium

Tough Comnode also provides SIP (Session

Initiation Protocol) server functionalities of

the tactical voice network for commercial

VoIP terminals and enables using also leg-

acy Combat Net Radios (CNR) as part of the

IP-based tactical communication system

(Radio over IP, RoIP).

Bittium Tough VoIP Field Phone™ is a SIP

(Session Initiation Protocol) compliant client

that provides interoperability with other SIP

clients and server implementations avail-

able in the market and incorporates func-

tionality that enables the introduction of

VoIP services in dynamic self-forming net-

works independent from server.

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 designed specifically for

mobile troops. It can be installed on

routing elements of the network, such as

the Bittium TAC WIN Tactical Router™, the

Bittium Tough Comnode™ device or the

Bittium Tough SDR™ radios.

Bittium Tough VoIP Softphone™ is a VoIP

software product designed especially for

tactical use. It can be used for VoIP calls,

instant messaging, conference calls and

screen sharing in the Bittium Tough VoIP

Service network either with a PC or smart-

phone.

Bittium Tactical Power Pack™ is specifical-

ly designed for tactical data transfer as an

accessory to the Bittium Tough SDR Hand-

held™ radio and the Bittium Tough Com-

node™ device, for example, but can also be

easily used with standard tablets and smart-

phones via USB. The Tactical Power Pack

enables uninterrupted field operation for the

devices.

Bittium Tactical LTE Access Point™ is a

stand-alone LTE access solution that en-

ables the creation of multiple parallel wire-

less LTE areas and seamless connection to

an IP network. The Tactical LTE Access Point

is fully compatible with the Bittium TAC WIN

backbone network. With the solution, dif-

ferent troops can benefit from cost-effec-

tive and fast multimedia data transfer and

VoIP services with both commercial smart-

phones and special terminals intended for

government use.

Bittium Tactical Device Management™ is

an advanced system that enables secure

deployment and operative use for the tac-

tical communication devices. With the sys-

tem, different defense forces can maintain

sovereign, centralized, and efficient con-

trol over Bittium’s tactical devices. The sys-

tem enables 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 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 mat-

ter where the location is. Bittium TAC WIN

is compatible with existing fixed and wire-

less network infrastructures. The core of the

system is a tactical router that enables us-

ers to freely form both wired and wireless

broadband data transfer IP connections. The

tactical router also enables connections to

different types of terminals and other com-

munication systems connecting them into

one communication network. In addition to

the router, the system comprises of three

types of radio heads, and each radio head

covers its own frequency band area and can

be used for flexible formation of optimized

network topologies for different communi-

cation needs. All the products of the sys-

tem are designed for harsh conditions, and

thanks to the system’s automated functions

the implementation of the system can be

done quickly. Due to the software-based

functionality of the Bittium TAC WIN system,

it can be easily updated with additional per-

formance cost-efficiently during the whole

lifespan of the system.

Tactical Bittium Tough SDR™ product family

of tactical radios consists of Bittium Tough

SDR Handheld™, handheld radio for individ-

ual soldiers, and Bittium Tough SDR Vehic-

ular™, tactical radio for vehicle installations.

Bittium Tough SDR products help to produce

and share real-time situational awareness

(location, image, voice, video, and sensor

data) to all levels of the organization. The

uniquely wide frequency range of the radi-

os brings combat resistance and the use

of multiple waveforms such as Bittium TAC

WIN Waveform™, Bittium Narrowband Wave-

form™ and ESSOR Wide Band Waveform

simultaneously improves compatibility and

allows for different tasks and levels depend-

Bittium Tactical Power Pack™

Bittium Tough SDR Vehicular™

Bittium Tough SDR Handheld™

15Bittium in 2021

Bittium Annual Report 2021

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™. Dif-

ferent defense forces can use the system’s

tools for planning the locations of the net-

works and their nodes so that optimal net-

work performance can be achieved. When

the networks are in operative use, the system

provides a real-time and reliable status view

of network operation and node configura-

tions. The data collected from the networks

and nodes during operative use is record-

ed and can be easily analyzed. This enables

optimizing the network performance for up-

coming operations.

Year 2021

Cooperation with the Finnish Defence Forces

continued closely during 2021. Deliveries

of products required for tactical commu-

nication continued, however, the shortage

of components slowed down the delivery

schedule. Despite the challenging avail-

ability of components in the fourth quarter,

a significant number of products were deliv-

ered to the customers, which was reflected

in fourth-quarter revenue growth in Defense

and Security products.

Deliveries of the first phase of the Bittium

Tough SDR™ handheld and vehicle radios

and related accessories, agreed under the

purchase agreement between the Finnish

Defence Forces and Bittium, published in

December 2018, were almost completed.

The poor availability of components need-

ed in production slowed down the final deliv-

eries. The Finnish Defence Forces launched

the Field Radio 2020 project, which serves

the testing and operational implementa-

tion of Bittium Tough SDR products and

their waveforms and is preparing the pur-

chase of the next batch of products to ex-

pand the Defence Forces’ testing activities

and preparations for the commissioning of

radios. With the current understanding, the

annual order volumes stated in the letter of

intent to acquire new tactical radios, pub-

lished in August 2017, will be reached from

2024 onwards. The Defence Forces have

been involved in defining the Bittium Tough

SDR™ system from the beginning of the proj-

ect and believe to achieve a significant per-

formance improvement through the system.

Alongside the testing and introduction of the

radios, the development of the waveforms

used in the radios continued as planned.

Bittium in 2021

16 Bittium in 2021

Bittium Annual Report 2021

The development of the Bittium Tactical

Wireless IP Network™ software-defined ra-

dio system continued in cooperation with

the Finnish Defense Forces as planned. In

March, the Defense Forces ordered products

from the TAC WIN system and Bittium Tough

Comnode™ products based on the existing

framework agreements for the purchase of

the products. The share of TAC WIN prod-

ucts was approximately EUR 8.5 million and

the share of Bittium Tough Comnode was

approximately EUR 1.7 million. All products

have been delivered to the Defence Forces

during 2021.

Cooperation with the Estonian Defense

Forces continued closely in the supply

of tactical communication products and

systems, which complement the tactical

communication system already delivered

for the customer. The product deliveries are

based on a framework agreement between

Bittium’s Estonian partner Telegrupp AS and

the Estonian Defense Forces, and it covers

the years 2021–2025. The deliveries, integra-

tion work and testing of tactical communi-

cation system products were also continued

with the Austrian Defense Forces.

In November, a4ESSOR, a multinational joint

venture developing secure European soft-

ware defined radio technology, launched a

new ESSOR New Capabilities (ENC) project

to develop new ESSOR waveforms interop-

erable with partner countries’ radios and to

improve the existing system to enable the

waveforms portability to the national radios.

The new project aims to improve the inter-

operability and security of ground-to-

ground, air-to-ground and satellite-based

tactical data transmission. In this project,

Bittium will focus on the development of

ground-to-ground and air-to-ground wave-

forms. Earlier in May, a4ESSOR received of-

ficial approval for its ESSOR High Data Rate

Base Waveform.

The importance of mobile security in com-

munications has increased and the de-

mand for the secure Bittium Tough Mobile™ 2

smartphones grew steadily over the past

year. The security classification of the phone

and its related system plays a key role, es-

pecially in the governmental market. Bittium

actively applies for security classification

certificates in various countries together

with its customers. The customer experi-

ence of the Secure Call communication ap-

plication, launched on the Tough Mobile 2

phone at the beginning of the year, has been

positive and the delivery volumes of the

Secure Call application increased.

Deliveries of Mexsat satellite phones de-

signed for the Mexican state’s Mexsat satel-

lite communications system continued. The

resale cooperation with the Mexican tele-

communications solutions provider Inmosat

has worked well and the products of the first

order related to the distributor agreement

have been delivered to the customer. The

product deliveries to Mexico are expected

to continue this year.

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 communica-

tion solutions that fulfill the needs of data

transfer of moving troops and individual sol-

diers. Bittium continues its efforts to bring

its defense market targeted products and

services also to the international defense

markets and aims to get new international

customers for its tactical communication

system in 2022. Due to the long sales cycles

driven by purchasing programs of national

governments, it will take time to receive pur-

chase orders. Exceptional circumstances

due to the coronavirus pandemic have to

some extent affected the progress of pro-

grams, which has slowed down the comple-

tion of larger deals.

The financial difficulties caused by the coro-

navirus pandemic affect the budgets of pub-

lic finances such as states and public au-

thorities and have required postponing of

procurement. This has somewhat delayed

the launch of new projects and receiving or-

ders. Especially in the defense and authori-

ties’ markets testing and piloting of products

and systems are typical phases before re-

ceiving orders of larger entities, and current

circumstances due to the pandemic situa-

tion have caused delays in them. However,

the market has begun to recover from the

effects of the pandemic. The global short-

age of components affects the availability of

various components used in products, which

affects the company’s ability to deliver prod-

ucts to its customers on time.

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 LTE smartphone and other cus-

tomized special terminals based on

Bittium’s own product platform. The aware-

ness of mobile security risks is growing, and

the interest in secure mobile devices is in-

creasing. The sales of secure terminal prod-

ucts are expected to develop moderately

according to the nature of public safety

markets.

The smartphone sales process often in-

volves testing and piloting systems and

equipment, possibly integrating third-par-

ty technologies, and possible local regula-

tory approvals, which are typically lengthy

processes. Exceptional circumstances

caused by the coronavirus pandemic may

have a significant impact on the progress

of projects, which slows down the closings

of larger transactions.

17Bittium in 2021

Bittium Annual Report 2021

18 Bittium in 2021

Bittium Annual Report 2021

Bittium provides product development ser-

vices in the areas of wireless communica-

tions, medical technologies, connected

vehicles, and manufacturing. Outsourcing

R&D either entirely or partly results in cost

savings and enables the scaling of cus-

tomers’ product development volumes ac-

cording to their prevailing needs. Bittium

has long experience in wireless connectivi-

ty, information security, and different com-

munications technologies such as 5G. The

understanding of industry-specific require-

ments and strong competence in R&D ser-

vices, wireless devices, digitalization, and

information security, as well as the ISO

13485:2016 quality certificate for medical

devices and equipment, enable Bittium to

create solutions that bring clear added val-

ue to customers and partners. Bittium also

conducts R&D in the technology areas of Ar-

tificial Intelligence (AI) and Cloud Solutions.

Year 2021

Bittium provides R&D services in the areas

of wireless telecommunications, medical

technology, automotive and manufactur-

ing industries. Outsourcing R&D services,

in whole or in part, brings customers cost

savings and enables the scaling of their

product development volume to meet their

current needs. Bittium has extensive exper-

tise in the areas of wireless connectivity, in-

formation security, and various communi-

cation technologies (such as 5G).

The delivery of R&D services and connec-

tivity solutions for the customers continued

and the demand for Bittium’s R&D services

remained stable during 2021. The market for

Open Radio Access Network (O-RAN) archi-

tecture developed further and the demand

for O-RAN know-how increased. During

the last year, Bittium has been investing

in the development, sales and marketing

of its own O-RAN business. New demand

also arose in wireless satellite technology.

The growth of these areas has provided the

company with new international customers.

The coronavirus pandemic slowed down

the start of new R&D service projects in

the manufacturing industry and automo-

tive markets, and the demand clearly de-

clined. The demand for medical technolo-

gy solutions remained stable despite the

slowdown in the lead times of the new

medical device approvals caused by the

new European Medical Device Safety Reg-

ulation (MDR).

The exceptional circumstances caused by

the pandemic strengthened the remote

work practices with existing customers.

However, despite the virtual meetings and

events becoming more and more common,

acquiring new customers was challenging.

Also, the availability of a professional work-

force on the market weakened, and, in par-

ticular, there is an insufficient amount of

software engineers available compared to

the demand. The competition for the work-

force also increased labor mobility.

Market Outlook

Telecommunication

and Digitalization

In mobile telecommunications, the imple-

mentation of 5G is accelerating in pace.

Investments in developing new features

continue and the importance of software

development in the 5G network develop-

ment expands. This creates demand for

Bittium’s R&D services. There is a wide

range of frequencies allocated for the 5G

technology, thus creating the need to de-

velop multiple products to cover the market

and creating demand for R&D services for

the development of product variants. The

different kinds of needs for solutions in the

open radio frequency network architecture,

Open Radio Access Network (O-RAN), and

satellite communication increase the de-

mand for Bittium’s R&D expertise as new

players enter the traditional supplier net-

work. Also, the development of new devices

utilizing 5G technology increases the de-

mand for Bittium’s services.

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

Connectivity Solutions

R&D Services

Bittium Annual Report 2021

Bittium in 2021

5G technology is expanding and the num-

ber of digitalized devices increases continu-

ously. The devices will also feature new and

more advanced features that will create de-

mand for design services. Therefore, the in-

tegration of different systems and technol-

ogies plays an important role in enabling

complete digitalization services. There are

several learning systems and devices un-

der development that use different kinds

of artificial intelligence (AI) technologies to

ease and speed up the processing of large

data amounts.

Changes in the digitalization of the auto-

motive industry and new business models

as well as the automation of automotive

operations create a need for technological

development. Most significant technology

trends, such as wireless connectivity, intelli-

gent mobility, self-driving cars, and electric

cars, are guiding needs for innovative soft-

ware development. The share of software

in cars is quicly increasing, and software is

becoming a major enabler and a differen-

tiator. The use of the Android™ Automotive

operating system in the In-Vehicle Infotain-

ment (IVI) systems is strongly entering the

market. Several carmakers have announced

the launch of cars with Android Automotive.

Bittium’s more than a decade of experience

with the Android operating system and the

Google ecosystem combined with wireless

connectivity know-how create good busi-

ness opportunities for this market.

The coronavirus pandemic has slowed sales

of product development services. Despite

the fact that adaptation to new circum-

stances and practices has gone well, the

pandemic has slowed down the progress of

existing projects and the acquisition of new

customers. However, the market has slow-

ly begun to recover from the effects of the

pandemic and new customer projects have

been launched. The coronavirus pandemic

and labor competition are expected to con-

tinue prevailing in the market during 2022.

The goal is to further increase the number of

product development service projects and

expand the international customer base.

20 Bittium in 2021

Bittium Annual Report 2021

Medical Technologies

Products and Services for Biosignal Measuring

In the Medical Technologies product and

service area Bittium offers its customers

healthcare technology products and ser-

vices in biosignal measuring in the areas

of cardiology, neurology, rehabilitation, oc-

cupational health, and sports medicine.

Combining healthcare technologies with

Bittium´s long-term experience and com-

petence in wireless and security technolo-

gies gives Bittium a good basis to serve its

customers in the healthcare 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 measure-

ments for long-term holtering, cardiac event

monitoring, mobile cardiac telemetry and

assessing the autonomic nervous system

functions. Bittium Faros outpatient moni-

toring solutions include several software

options for cardiac monitoring. The built-

in arrhythmia detection algorithms on the

Bittium Faros device are used for event

recording and cardiac event monitoring.

Bittium’s solutions enable the earlier dis-

charge of patients and the ability to react

to detected arrhythmias faster.

Bittium OmegaSnap™ Product Family

Bittium OmegaSnap™ 1-CH ECG Electrode

(released in January 2021) – Bittium Ome-

gaSnap™ one-channel electrode is the most

cost-effective, patient compliant and reli-

able patch electrode for long-term ECG

measurements. It is also suitable for HRV

applications and for heart monitoring for

stroke patients.

Bittium MiniSnap™ Sensitive 1-CH ECG

Electrode – Bittium MiniSnap™ Sensitive

one-channel electrode is the most suitable

electrode for 24h ECG measurements on

small adults and children.

Bittium OmegaSnap™ 2-CH ECG Electrode

– Bittium OmegaSnap™ two-channel elec-

trode is the best choice when more than

one-channel measurement is needed for

more comprehensive arrhythmia analysis,

while maximizing patient compliance.

Bittium OmegaSnap™ 3-CH ECG Electrode

– Bittium OmegaSnap™ three-channel elec-

trode is the most patient compliant way to

perform traditional three-channel measure-

ments.

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

electrode when charging, for example. In

the case of remote heart monitoring, such

as the Bittium HolterPlus™ solution, it sig-

nificantly enhances the long-term use of

the same electrode, thus ensuring that the

skin contacts of the attached electrode re-

main optimal for the measurement to con-

tinue. There are two adapter versions avail-

able: Bittium OmegaSnap™ 1-CH Adapter is

designed for one-channel electrodes, and

Bittium OmegaSnap™ Multi-CH Adapter is

designed for two- and three-channel elec-

trodes.

Bittium Cardiac Explorer™ offers a quick

and flexible way of working with event-

based ECG arrhythmia analysis. The big-

gest benefits of the software are having full

disclosure ECG always available, full access

to the events identified by the device, to-

tal control on the reporting content and the

ability to analyze an unlimited amount of

measurement data.

Bittium HolterPlus™ is a web-based remote

cardiac monitoring solution, consisting of

a Bittium Faros ECG device and Bittium

MedicalSuite™ mobile application integrated

into a secure smart device and Medical

Suite remote service platform. Bittium

HolterPlus enables remote monitoring and

earlier discharge of the patient and allows

the ECG measurement data of the remote-

ly monitored patient to be wirelessly trans-

ferred securely from the monitoring device

to the Bittium MedicalSuite remote diag-

nostics service platform. From the platform

the ECG recording can be downloaded to a

cardiologist for the diagnosis and the diag-

nosis will be uploaded for the treating phy-

sician 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 service

providers, clinics, and specialists. Bittium

MedicalSuite™ platform allows specialists

to perform remote consultations regardless

of location. The Service is a combination of

intelligent analysis, wireless data transfer,

reporting, and management modules that

you can optimize according to your needs.

The easy-to-use web user interface allows

dashboard customization for different user

groups, which ensures effortless workflow

and improves efficiency. Currently the sys-

tem 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 Respiro™

Bittium Annual Report 2021

Bittium in 2021

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 meth-

od for measuring the brain function of in-

tensive care patients. Bittium BrainStatus

measures and monitors the electrical ac-

tivity in the brain, and with the help of Cere-

nion 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

artificial 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 sleep apnea

screening device and analysis service solu-

tion for service providers, hospitals, clinics,

and health centers. It is focused on Home

Sleep Apnea 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 per-

form further analysis and diagnosis. Bittium

MedicalSuite™ provides the same cloud

backend system for all Bittium medical

products and services and enables fast and

location-independent data analysis.

Bittium Faros™

Bittium OmegaSnap™

Bittium in 2021

Bittium Annual Report 2021

Year 2021

During 2021, the medical technology mar-

ket clearly began to recover from the down-

turn caused by the coronavirus pandemic.

Demand from the service providers recov-

ered, which was also clearly reflected in the

development of net sales. During the past

year, the medical remote diagnostics mar-

ket was consolidated as major service pro-

viders merged, which might lead to higher

device sales volumes, thus creating growth

opportunities for device manufacturers.

The importance of remote care and remote

monitoring has increased during the coro-

navirus pandemic due to insufficient med-

ical resources and cost pressures. Remote

monitoring and remote diagnostics solu-

tions alleviate these problems, which was

also reflected in increased sales of Bittium’s

medical remote diagnostics solutions.

Component shortages limited the growth

during the past year and component short-

ages are expected to continue at least until

2022. All of Bittium’s cardiology and neuro-

physiology solutions operate on the cloud-

based MedicalSuite service platform, en-

abling service operators to further digitize

their remote diagnostic service processes.

Along with an aging population, the coro-

navirus pandemic has provided a strong

incentive to streamline and digitize prima-

ry care and specialist care. Together, these

factors are driving demand for the device

and total service solutions in the medical

technology market.

The transitional periods for the applica-

tion of the European Medical Device Safety

Regulation (MDR) (EU 2017/745) expired and

entered into force in full on May 26, 2021. The

regulation harmonises European health leg-

islation and replaces the old MD and AIMD

directives on medical and implantable de-

vices. The change has caused a backlog of

quality system audits and product approvals

and thus a significant delay in application

lead times. Bittium has several medical de-

vice approvals underway in several coun-

tries.

23Bittium in 2021

Bittium Annual Report 2021

Early in the year, Bittium launched a new

home sleep apnea testing solution, Bittium

Respiro™. MDR approval of the solution is

still pending due to lead time delays. Based

on current information, approval is expected

in the second half of this year. The device,

designed for home use, has received pos-

itive feedback, especially due to its com-

pact size and ease of use. Deliveries of the

product variant of the device that is target-

ed at the Finnish market, began during the

autumn of 2021, and demand developed

positively.

The temporary overload in intensive care

units by the patients with coronavirus in-

fection affected the ability of intensive care

units to promote the introduction of new

technologies and solutions. This slowed

down the demand for Bittium’s EEG devices

designed for intensive care. Bittium Brain-

Status™ EEG measuring devices were deliv-

ered to customers for pilot use, but the over-

load of patients with coronavirus slowed

down the progress of the pilots.

Demand for Bittium Faros™ ECG measuring

devices increased during the past year. The

majority of product deliveries were made

to Preventice, a provider of remote moni-

toring services in the U.S. ECG market. The

global shortage of components declined

the amount of product deliveries. Demand

for disposable Bittium OmegaSnap™ patch

electrodes designed for Faros devices for

long-term ECG measurement increased

and deliveries progressed well.

During the last year, Bittium launched new

products and software versions and they

have been very well received. Product man-

agement, product development and pro-

duction organizations were strengthened,

and the quality system and operating pro-

cesses were developed in accordance with

the new MDR requirements. To further in-

crease the international sales, the sales or-

ganization was strengthened, and the in-

ternational distribution network expanded.

In September, Bittium announced to have

signed an agreement under which Bittium

planned to buy a 25 percent stake in Tech-

nomed, a British provider of ECG diagnostic

services. Since the technical conditions re-

quired for the share purchase were not met,

Bittium canceled the agreement. However,

the cooperation between Bittium and Tech-

nomed will continue in the measurement

and monitoring of biosignals and the devel-

opment of analysis software, and the com-

panies signed a distributor agreement for

Bittium Faros™ ECG measuring devices and

Bittium Respiro™ home sleep apnea mea-

suring devices and software. The agreement

sets out the distribution rights for both de-

vices. Technomed is granted an exclusive

right to use Bittium Faros™ ECG devices to

provide cardiology diagnostic services in

the UK. In other respects, the agreement

does not define exclusive rights related to

sales rights. Under the agreement, Tech-

nomed will commit to minimum purchases

of both devices for the period 2022–2024.

Market Outlook

Medical ECG and EEG

Remote Monitoring Markets

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 making

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 compromising the

quality of specialist services.

For remote monitoring and remote diag-

nostics, Bittium provides its Bittium Faros™

product family for remote heart monitoring,

Bittium BrainStatus™ for measuring the

electrical activity of the brain, home sleep

apnea testing solution Bittium Respiro™,

and different kinds of diagnostics software

offered by Bittium.

As the coronavirus pandemic spread, the

number of non-emergency patients going

to treatments and tests to healthcare pro-

viders decreased. Several hospitals and

medical care facilities have postponed

their non-emergency tests and examina-

tions and focused on the treatment of the

pandemic patients as well as on the actions

aimed to prevent the virus from spreading.

The pandemic situation varies from coun-

try to country, but generally the market is

beginning to get back to normal again. In

the long-term, the pandemic will accelerate

the use of remote services in hospitals and

medical care facilities, and thus create posi-

tive development on the demand for remote

monitoring products and services.

The global shortage of components affects

the availability of various components used

in products and can affect the company’s

ability to deliver products to its customers

on time.

24 Bittium in 2021

Bittium Annual Report 2021

Shares and Shareholders

The shares of Bittium Corporation are quot-

ed on the 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 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 and the total number of the

shares was 35,702,264.

The accounting par value of the Company’s

share is EUR 0.10. The Company does not

have its own shares in its possession.

Share Price and

Share Trading in 2021

The closing price of Bittium Corporation’s

share was EUR 5.30 at the end of 2021; the

share reached a high of EUR 7.89 and a low

of EUR 4.93. During the year, a total of 13.5

million shares with the value of EUR 83.2

million changed hands on the Nasdaq

Helsinki. This is 37.7 percent of the share

capital. Bittium Corporation’s market cap-

italization on December 31, 2021 was EUR

189.2 million.

Dividend and Dividend Policy

Bittium Corporation follows a dividend pol-

icy that takes into account the group’s net

income, financial situation, need for capital

and financing growth.

Dividend from 2020

Based on the shareholder vote concerning

minority dividend, the Annual General Meet-

ing decided in deviation from the propos-

al of the Board of Directors that a minority

dividend corresponding to half of the profit

for the financial period shall be paid in ac-

cordance with Chapter 13, Section 7 of the

Companies Act. The Board of Directors of

the company had proposed to the Annual

General Meeting that no dividend be distrib-

uted by the Annual General Meeting based

on the adopted balance sheet for the finan-

cial period of January 1, 2020–December 31,

2020. The total amount of the minority divi-

dend to be distributed was EUR 1,110,327.74,

corresponding to EUR 0.0311 per share.

The dividend was paid to shareholders who

on the dividend record date April 16, 2021,

were registered in the company’s share-

holders’ register held by Euroclear Finland

Oy. The dividend was paid on April 23, 2021.

All the shares in the company were entitled

to the dividend with the exception of shares

possibly held by the Company on the divi-

dend 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, 2021, the parent compa-

ny’s distributable funds amounted to EUR

117,996,832.83, of which EUR 127,479.11 is

profit for the last financial year. The Board of

Directors proposes that the Annual General

Meeting resolve to pay EUR 0.04 per share

as a divident based on the balance sheet to

be adopted for the financial period January

1, 2021–December 31, 2021.

The proposed dividend corresponds to a to-

tal of EUR 1,428,090.56 as of the date of the

notice of the Annual General Meeting. The

proposed dividend exceeds the amount of

a minority dividend, which would be EUR

63 739,56, i.e. approximately EUR 0.0018 per

share. The dividend will be paid to the share-

holders who are registered in the compa-

ny’s register of shareholders as maintained

by Euroclear Finland Ltd on the dividend re-

cord date, April 8, 2022. The Board of Direc-

tors proposes that the dividend be paid on

April 19, 2022.

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 2021, Bittium Corporation had

21,663 shareholders. The ten largest share-

holders owned 28.6 percent of the shares.

Private ownership was 70.2 percent. The

percentage of foreign and nominee-regis-

tered shareholders was 3.0 percent at the

end of 2021.

Shareholding of the Board

of Directors and the CEO

At the end of 2021, the shareholding of the

Board of Directors, CEO and the companies

controlled by them was 1,777,727 shares,

corresponding to 5.0 percent of all shares.

25Bittium in 2021

Bittium Annual Report 2021

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 2022

Bittium Corporation reports its financial de-

velopment by publishing financial reports

every half year. From the reporting periods

of January–March and January–September

the company publishes Business Reviews

with a lighter and narrower structure than

those of the financial reports. The reports

are published both in Finnish and in English

at the company website www.bittium.com/

investors.

In 2022 the Financial Reports

are published as follows:

• Financial Statement Bulletin 2021:

February 10, 2022 at 8.00 am (CET+1)

• Half Year Financial Report January–June

2022: August 5, 2022 at 8.00 am (CEST+1)

In 2022 the Business Reviews

are published as follows:

• Business Review January–March 2022:

on April 29, 2022 at 8.00 am (CET+1)

• Business Review January–September

2022: on October 21, 2022 at 8.00 am

(CET+1)

Bittium Corporation

OMX Helsinki PI

OMX Helsinki

Technology PI

100%

80%

60%

40%

20%

-20%

-40%

-60%

-80%

-100%

Trading Volume and Average Share Price 2017–2021

8.00

7. 0 0

6.00

5.00

4.00

3.00

2.00

1.00

Share Price Development in Nasdaq Helsinki 2017–2021

Trading volume

(EUR/month)

Average share

price (EUR)

Silent Period

Bittium Corporation observes a three week

silent period prior to announcing its finan-

cial reports. In 2022, the silent periods are

as follows:

• January 20–February 10, 2022

• April 8–April 29, 2022

• July 15–August 5, 2022

• September 30–October 21, 2022

2017 2018 2019 2020 2021

25 000 000

20 000 000

15 000 000

10 000 000

5 000 000

26 Bittium in 2021

Bittium Annual Report 2021

Bittium Corporation’s

Annual General

Meeting 2022

Notice is given to the shareholders of

Bittium Corporation to participate in the

Annual General Meeting to be held on

Wednesday April 6, 2022 at 13.00 (CEST+1)

in the Company’s headquarters at Ri-

taharjuntie 1, 90590 Oulu, Finland. In order

to prevent the spread of the coronavirus

pandemic and to prepare for unpredict-

able changes in the pandemic situation,

the Annual General Meeting will be held

without shareholders’ and their proxy rep-

resentatives’ presence at the meeting ven-

ue. Shareholders of the Company and their

proxy representatives may participate in the

meeting and exercise shareholder rights

only through voting in advance as well as

by making counterproposals and present-

ing questions in advance. Instructions for

shareholders are presented in this notice

under section C. “Instructions for the par-

ticipants in the Annual General Meeting”.

The Board of Directors of the Company has

resolved on the exceptional procedure for

the meeting based on the temporary legis-

lative act (375/2021) to limit the spread of

the coronavirus pandemic. The Company

has resolved to take actions enabled by the

act in order to hold the meeting in a predict-

able manner, taking into account the health

and safety of the Company‘s shareholders,

personnel and other stakeholders.

Instructions for

the Participants

In order to prevent the spread of the coro-

navirus pandemic and to prepare for un-

predictable changes in the pandemic situ-

ation, the General Meeting will be organized

so that the shareholders and their proxies

are not allowed to be present at the Gen-

eral Meeting venue. Shareholders and their

proxies cannot participate in the General

Meeting through real-time telecommunica-

tions either. Shareholders and their proxies

can participate in the General Meeting and

use their shareholder rights only by voting

in advance and by submitting counterpro-

posals and asking questions in advance in

the manner instructed below.

1. Shareholders registered

in the shareholders’ register

Each shareholder who is registered on the

record date of the General Meeting, Friday

March 25, 2022, in the shareholders’ reg-

ister of the Company kept by Euroclear

Finland Ltd is entitled to participate in the

General Meeting. A shareholder, whose

shares are registered on his/her Finnish

book-entry account, is registered in the

ny. Shareholders cannot participate in the

General Meeting by any other means than

voting in advance in the manner instruct-

ed below as well as by submitting counter-

proposals and asking questions in advance.

2. Registration and advance voting

Registration for the General Meeting and ad-

vance voting will begin on March 22, 2022, at

10.00 a.m. following the deadline for submit-

ting counterproposals. A shareholder with

a Finnish book-entry account, who wishes

to participate in the General Meeting, must

advance no later than by March 31, 2022, at

4.00 p.m. by which time the registration and

votes need to have been received.

When registering, requested information

such as the name, personal identification

number, address, and telephone number

of the shareholder as well as requested in-

formation on a possible proxy representa-

tive such as the name and personal identi-

fication number of the proxy representative

must be provided. The personal data given

by the shareholder to Bittium Corporation

and Euroclear Finland Oy will be used only

in connection with the General Meeting and

with the processing of related registrations.

A shareholder, who has a Finnish book-entry

account, may register and vote in advance

on certain items on the agenda of the Gen-

eral Meeting from 10.00 a.m. on March 22,

2022 until 4.00 p.m. on March 31, 2022 by

the following means:

a) through the website at

www.bittium.com/agm

The Finnish personal identity code or busi-

ness ID and book-entry account number of

the shareholder is needed for voting in ad-

vance. When a shareholder who is individual

logs in to Euroclear Finland Oy’s service via

the Company’s website, he or she is direct-

ed to strong electronic identification. For

shareholders that are legal persons strong

electronic identification is not required.

However, shareholders that are legal per-

sons must notify their book-entry account

number and other required information.

If the shareholders that are legal persons

use the electronic Suomi.fi e-authorization,

registration requires a strong electronic au-

thentication of the authorized person, which

works with bank IDs or a mobile certificate.

b) by mail or email

A shareholder may send the advance voting

form available on the Company’s website

or corresponding information to Euroclear

Finland Oy by letter to Euroclear Finland Oy,

Yhtiökokous, P.O. Box 1110, FI-00101 Helsinki

or by email at yhtiokokous@euroclear.eu. If

the shareholder participates in the Gener-

al Meeting by sending the votes in advance

by mail or email to Euroclear Finland Oy,

this constitutes registration for the Gener-

al Meeting, if the shareholder simultaneous-

ly provides the information required for reg-

istration mentioned above.

Instructions relating to the advance vot-

ing may be found on the Company’s web-

site www.bittium.com/agm. Further in-

formation is available by telephone at

+358 40 344 3322 from Monday to Friday

at 9.00 a.m. to 3.00 p.m.

3. Proxy representatives and

powers of attorney

A shareholder may participate in the Gener-

al Meeting and use his/her rights by proxy.

The proxy representative of a shareholder

may participate in the General Meeting only

by voting in advance on behalf of the share-

holder in the manner instructed above.

27Bittium in 2021

Bittium Annual Report 2021

A proxy representative shall produce a dat-

ed proxy document or otherwise in a reliable

manner demonstrate his/her right to repre-

sent the shareholder. Should a shareholder

participate in the General Meeting by means

of several proxy representatives represent-

ing the shareholder with shares in different

book-entry accounts, the shares by which

each proxy representative represents the

shareholder shall be identified in connection

with the registration for the General Meeting.

Possible proxy documents should be deliv-

ered by regular mail to Euroclear Finland Oy,

Yhtiökokous, PL 1110, FI-00101 Helsinki, Fin-

land or by e-mail to yhtiokokous@euroclear.

eu before the end of the registration period,

by which time the documents must be re-

ceived by Euroclear Finland Oy.

Shareholders that are legal persons can

also use the electronic Suomi.fi authoriza-

tion service instead of a traditional proxy au-

thorization document in Euroclear Finland’s

general meeting service. In this case, the

shareholder that is a legal person authorizes

an assignee nominated by it in the Suomi.fi

service at www.suomi.fi/e-authorizations

using the authorization topic “Repre-

sentation at the General Meeting”. The

assignee must identify himself or herself

with strong electronic authentication in

Euroclear Finland’s general meeting service

when registering, after which the electron-

ic authorization is automatically checked.

The strong electronic authentication works

with personal banking IDs or a mobile cer-

tificate. More information on www.suomi.

fi/e-authorizations.

4. Holders of nominee registered shares

A holder of nominee-registered shares has

the right to participate in the General Meet-

ing by virtue of such shares, based on which

he/she on the record date of the General

Meeting Friday March 25, 2022, would be

entitled to be registered in the Register of

Shareholders of the Company held by Euro-

clear Finland Oy. The right to participate

in the General Meeting requires, in addi-

tion, that the shareholder on the basis of

such shares has been registered into the

temporary shareholders’ register held by

Euroclear Finland Oy at the latest by Friday

April 1, 2022 by 10.00 a.m. As regards nom-

inee-registered shares this constitutes due

registration for the General Meeting.

A holder of nominee-registered shares is

advised to request without delay necessary

instructions regarding the temporary regis-

tration in the Register of Shareholders of the

Company, the issuing of proxy documents

and registration for the General Meeting

from his/her custodian bank. The account

management organization of the custodian

bank shall temporarily register a holder of

nominee-registered shares into the Regis-

ter of Shareholders of the Company at the

latest by the time stated above. In addition,

the account management organization of

the custodian bank shall arrange advance

voting on behalf of a nominee-registered

shareholder within the registration period

applicable to nominee-registered shares.

5. Other instructions

Shareholders who hold at least one hun-

dredth of all the shares in the Company have

a right to make a counterproposal concern-

ing the items on the agenda of the General

Meeting to be placed for a vote. Such coun-

terproposals are required to be sent to the

Company by email to yhtiokokous@bittium.

com no later than by March 21, 2022 at 12.00

noon. In connection with making a coun-

terproposal, shareholders are required to

provide adequate evidence of shareholding.

The counterproposal will be placed for a vote

subject to the shareholder having the right

to participate in the General Meeting and

that the shareholder holds at least one hun-

dredth of all shares in the Company on the

record date of the General Meeting. Should

the counterproposal not be placed for a vote

at the General Meeting, advance votes in

favour of the proposal will not be taken into

account. The Company will publish possible

counterproposals to be put to a vote on the

Company‘s website www.bittium.com/agm

by no later than March 22, 2022.

A shareholder has the right to ask ques-

tions referred to in Chapter 5, Section 25

of the Finnish Limited Liability Compa-

nies Act with respect to the matters to

be considered at the General Meeting.

Such questions must be sent by email to

yhtiokok[email protected] no later than

March 25, 2022, at 10.00 a.m. Such questions

from shareholders, the Company’s man-

agement’s answers to them, and any coun-

terproposals that have not been placed for a

vote are available on the Company’s website

www.bittium.com/agm on March 28, 2022,

at the latest. In connection with asking

questions and making counterproposals,

shareholders are required to provide ade-

quate evidence of shareholding.

Information on the General Meeting re-

quired by the Finnish Limited Liability

Companies Act and the Securities Markets

Act is available on the Company’s website

www.bittium.com/agm.

On the date of this notice, February 10, 2022,

of the General Meeting the total number of

shares in Bittium Corporation and votes

represented by such shares is 35,702,264.

On the date of this notice to the General

Meeting the Company does not hold any of

its own shares.

Changes in the number of shares held after

the record date of the General Meeting shall

not have an effect on the right to participate

the General Meeting nor on the number of

votes held by a shareholder in the General

Meeting.

Documents of

the General Meeting

The proposals for the resolutions on the

matters on the agenda of the General Meet-

ing, and the notice, the Company’s Remu-

neration Report and the Annual Report of

Bittium Corporation, which includes the

Company’s Annual Accounts, the Consol-

idated Annual Accounts, the Annual Re-

port of the Board of Directors and the Audi-

tor’s Report, are available on the website at

www.bittium.com/agm latest on March 16,

2022. The minutes of the General Meeting

will be available on the above-mentioned

website latest on April 20, 2022.

28 Bittium in 2021

Bittium Annual Report 2021

Bittium in 2021

Corporate

Governance Statement

Reporting Period

Jan. 1–Dec. 31, 2021

Contents

Corporate Governance 30

The Board of Directors 31

Description of Activities 31

Diversity Principles of the Board of Directors 32

The Board Committees 35

Chief Executive Officer 36

Management Group 38

Election and Remuneration of the Auditor 41

Main Features of Internal Control and

Risk Management Processes Related to

Financial Reporting Processes 41

Insider Guidelines 44

Related Party Transcations 44

3030

Bittium Annual Report 2021

Corporate Governance Statement

Corporate

Governance

Bittium Annual Report 2021

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 Annu-

al General Meeting shall elect 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 members 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 following

recommendation 10. A member of the Board

is required to submit to the Company the in-

formation necessary to evaluate indepen-

dence. A Board member is also required to

notify the Company of any changes in infor-

mation relating to independence.

The Annual General Meeting held on April

14, 2021, decided that the Board of Directors

shall comprise five (5) members. Mr. Erkki

Veikkolainen, Ms. Riitta Tiuraniemi, Mr. Veli-

Pekka Paloranta, 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 Meet-

ing. Further, Mr. Petri Toljamo was elected

as a new member of the Board of Directors

for a corresponding term of office. At its as-

sembly meeting held on April 14, 2021, the

Board of Directors elected Mr. Erkki Veikko-

lainen as the Chairman of the Board of Di-

rectors. Further, the Board has resolved to

keep the Audit Committee. Ms. Riitta Tiura-

niemi (Chairman of the committee), Mr.

Petri Toljamo, and Mr. Veli-Pekka Paloran-

ta 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 are duly organized. The Board of Di-

rectors appoints the CEO and possible Dep-

uty for him or her as well as approves the

Company´s organizational structure.

The CEO, CFO, and CLO (who acts as sec-

retary of the Board of Directors) attend the

meetings of the Board of Directors. Other

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 business challeng-

es posed by the global component shortage

and prolongation of the coronavirus pan-

demic (SARS-CoV-2).

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 2021 the Board convened 13 times.

The Board members attended to the meetings as follows:

January 1–December 31, 2021 Board Audit committee

Erkki Veikkolainen 13/13

Veli-Pekka Paloranta 13/13 6/6

Seppo Mäkinen 3/13

Riitta Tiuraniemi 13/13 6/6

Juha Putkiranta 3/13 2/6

Pekka Kemppainen 13/13

Petri Toljamo 10/13 4/6

Bittium Annual Report 2021

Corporate Governance Statement

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 the

achievement of strategic targets and con-

tinuous 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. The diversity plays a part in sup-

porting this goal, so the Company aims to

reach a situation where the facts supporting

diversity are taken into account as signifi-

cant 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 leadership as well as diverse personal

characteristics. Experience in 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

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 in the process. The status of di-

versity and progress of the goal mentioned

above is monitored in the self-assessment

discussions of the Board. A person elect-

ed as a Board member of the Company

must have the competence required for

the position and be able to devote a suffi-

cient amount of time for the duties required.

When 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)

deputy 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 Com-

pany´s Annual General Meeting.

During the financial period of January 1,

2021–December 31, 2021, the Board of Di-

rectors has comprised five members. Four

of the members have been males and

one female. The self-assessment discus-

sions 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 de-

velopment.

Bittium Annual Report 2021

Corporate Governance Statement

HYR: Half Year Reports JM: Joint Meeting with management team

BR: Business Review

Board of Directors’ Annual Clock 2021

Key topics covered during the year

OVK

DECEMBER (1 day)

• Monthly Business Review

• Business Plan and Budget Approval for The Next Year

• Board Self-Assessment and Action Plan

• Personnel Survey Results and Actions

NOVEMBER (1 day)

• Monthly Business Review

• Next Year Budget Snapshot for Comments

• Compensation Policy and Structure Review

OCTOBER (1 day)

• Monthly Business Review

• Quarterly Business Review

• Next Year Budget and Operational

Target Setting

• Risk Management Assessment

and Plan Review

• Management Successor Plan Review

SEPTEMBER (1 day)

• Monthly Business Review

• Strategy Theme 4

AUGUST II (1 day)

• Monthly Business Review

• Investor Relation Strategy Review

• Bittium Values Review

AUGUST I (2 hours)

• H1 Interim Half Year Financial Report Approval

12 1

11 2

HYR

H1H2

HYR

JANUARY (1 day)

• 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

• Corporate Governance Statement Review

• Compliance Review

• Sustainability Review

FEBRUARY (2 hours)

• Financial Statement Approval

MARCH (1 day)

• Monthly Business Review

• Strategy Workshop

APRIL I (2 hours)

• Board of Directors’ Assembly Meeting

APRIL II (1 day)

• Monthly Business Review

• Quarterly Business Review

• Customer Satisfaction Survey Results

and Action plans

• Strategy Theme 1

MAY (1 day)

• Monthly Business Review

• Next Year Annual Calendar &

Annual Clock Approval

• Strategy Theme 2

JUNE (1 day)

• Monthly Business Review

• Strategy Theme 3

Bittium Annual Report 2021

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, 2021:

Holds 3,891 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 Oy,

Member of the Board 2015–,

Chairman of the Board 2006–2015.

• Maustaja Oy,

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, 2021:

Holds 1,741,908 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–.

• Nestor Cables,

Member of the board, 2020–,

Chairman of the Board 2021–.

Previous work history:

• 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, 2021:

Holds 3,655 Bittium Corporation shares.

Independent as regards both the Company

and its significant shareholders.

3535

Bittium Annual Report 2021

Corporate Governance Statement

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, Founder and

Chairman of the Board 2019–.

• Celltrum Ltd,

Member of the Board 2020–.

Previous work history:

• 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, 2021:

Holds 10,626 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:

Keysight Technologies Inc.,

NEMO Wireless Network Testing,

Vice President and Keysight Technologies

Finland Oy, Managing Director and

Chairman of the Board

Positions of trust:

• Bittium Corporation,

Member of the Board,

Member of the Audit Committee, 2021–.

• Bittium Corporation,

Member of the Board, 2018–2020.

• Moontalk Oy,

Member of the Board, 2020–2021,

Chairman of the Board 2021–.

• Keysight Finland Oy,

Chairman of the Board, 2017–.

• Manea Capital Oy,

Chairman of the Board, 2016–.

Previous work history:

• 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,

Vice President, Device and Network Solutions

Business Area, 2010.

• Elektrobit Wireless Communications,

Vice President, Mobile Device Solutions

Business Area, 2008–2009.

• Elektrobit Wireless Communications,

Cellular Terminal Solutions Business Area,

Director, 2007–2008.

• Elektrobit Wireless Communications,

Platform R&D and Head of Terminal

Programs, Director, 2005–2006.

• Elektrobit GmbH, Business Development,

Director, 2004–2005.

• Elektrobit Oy, various product development,

project management and business posi-

tions, 1996–2004.

Holdings Dec. 31, 2021:

Holds 1,505 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.

3636

Bittium Annual Report 2021

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.

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 Compa-

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

months´ written notice.

The pension security of the CEO is statutory,

and he does not have a supplementary pen-

sion. According to the pension legislation,

the lowest limit of the pension age for a CEO

is 65 years and 3 months at the moment.

Audit Committee

The Audit Committee has the following

duties:

• to monitor and assess the reporting

process of financial statements;

• to monitor and assess the financing

reporting system;

• to supervise the financial reporting

process 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

Company and its related parties meet

the requirements of the ordinary course

of business and arm´s -length terms;

• to handle the Company´s corporate

governance statement and nonfinancial

report;

• to monitor the Company´s auditing;

• to monitor and evaluate the

independence of the auditor and, in

particular, the offering of services other

than auditing services by the auditor;

and

• to prepare the appointment of the

Company´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 14, 2021,

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 of the

immediate interest of both the Company

and its significant shareholders and they

have long-term experience in business

management.

In addition to Committee members, other

regular participants to the committee meet-

ings are the CEO, CFO, and CLO who acts as

the Committee´s secretary and optionally

external auditors. Further, the Committee

members may meet the external auditors

without the operative management being

present in such meetings. In 2021, the Audit

Committee convened six (6) times to ordi-

nary meetings. The Committee has evalu-

ated, prepared, and reviewed, inter alia, the

following subject matters during the finan-

cial period of January 1, 2021–December

31, 2021:

• Financial Statements of 2020;

• Business Reviews and Half Year

Financial Reports of 2021;

• Annual audit plan for 2021;

• Observations based on auditing during

the financial period;

• Starting to prepare the appointment

of the Company´s auditor;

• Observation by the internal control;

• Cash flow monitoring and evaluation

of the 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 2022 the Committee´s focus areas

are:

• To monitor the working capital of the

Defense & Security business area; and

• To review the risk management process.

373737

Bittium Annual Report 2021

Corporate Governance Statement

Hannu Huttunen

Chief Executive Officer, 2015–.

b. 1966, M.Sc. (Econ.)

Positions of trust:

• Oulu University of Applied Sciences,

Member of the Board, 2021–.

• Advisory Board of

Oulu University 2019–.

• Technology Industries

of Finland, Member of

the Board 2017–.

Previous work history:

• Elektrobit Technologies Ltd.,

President, Wireless Business

Segment 2010–2015.

• Tekniseri Oy, Member of

the Board 2012–2016.

• EXFO Inc., Vice President,

Wireless Division (previously

NetHawk Oyj) 2010.

• NetHawk Oyj, CEO 2003–2010,

NetHawk Oy, Executive Vice

President 2002–2003.

• Nokia Mobile Phones Oy,

Vice President, IP Convergence

2002, Vice President Special

Products Business 1998–2002,

NMT450 Business unit leader

1995–1998.

Holdings Dec. 31, 2021:

Holds 16,142 shares in

Bittium Corporation.

Bittium Annual Report 2021

Corporate Governance Statement

3838

Bittium Annual Report 2021

Corporate Governance Statement

Jari-Pekka Innanen

Vice President, Engineering, 2015–.

b. 1968, M.Sc. (ME)

Previous work history:

• Elektrobit Wireless Communications Ltd.,

Vice President, Engineering, Wireless

Business Segment, 2011–2015.

• Elektrobit, Senior Manager,

WS Global Resourcing, 2007–2010.

• Elektrobit, Manager, Head of Global HW,

2006–2007.

• Elektrobit, Manager, Mobile Terminal

Solutions, Head of HW Competence

areas, 2006.

• Elektrobit, Manager, Mechanical

Competence Center, 2003–2005.

• Elektrobit, Project Manager, 1999–2003.

• Elektrobit, Mechanical Designer, 1998–1999.

• Outokumpu Stainless Steel,

Supervisor Cold Rolling Mills, 1994–1997.

Holdings Dec. 31, 2021:

Holds 6,496 Bittium Corporation shares.

Management Group

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

CEO as the chairman, CFO, CLO, Vice President, Communications and

Marketing, Directors responsible for product and service areas, and Vice

President responsible for Engineering. In 2021, the Management Group

also included the Senior Vice President responsible for Sales until May 31,

2021.

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, and risk management.

Corporate Governance Statement

Bittium Annual Report 2021

3939

Bittium Annual Report 2021

Corporate Governance Statement

Pekka Kunnari

Chief Financial Officer, 2015–.

b. 1967, M.Sc. (Econ.), LL.M.

Positions of trust:

• Partnera Corporation,

Member of the Board 2019–2020,

Chairman of the Board 2020–.

Previous work history:

• Elektrobit Technologies Ltd.,

Vice President, Finance, 2011–2015.

• Elektrobit Corporation, Director,

Finance, 2005–2011.

• Elektrobit Inc, Group Controller,

2004–2005.

• Elektrobit Group Corporation,

Group Controller, 2003–2004.

• Elektrobit Ltd.,

Business Controller, 2001–2003.

• RPC Rapid Prototyping Center Oy,

Finance Manager, 2000–2001.

• Tilintarkastajien Ltd. - Ernst & Young,

Auditor, 1998–2000.

• Tuottotieto Ltd., Business Consultant,

1994–1998.

Holdings Dec. 31, 2021:

Holds 3,496 Bittium Corporation shares.

Kari Jokela

Chief Legal Officer, 2014–.

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

Mag.Iur. (Saarbrücken)

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, 2021:

Holds 1,596 Bittium Corporation shares.

Tommi Kangas

Senior Vice President,

Connectivity Solutions, 2019–.

b. 1971, Master of Engineering,

Machine Automation

Previous work history:

• Bittium, Sales Director, Connectivity

Solutions Product and Service Area

and Sales, 2015–2019.

• Elektrobit, Senior Account Manager,

Wireless Solutions Business Segment,

2010–2014.

• Elektrobit, Key Account and Business

Line Manager, Mobile Infra Solutions

Business Area, 2009–2010.

• Elektrobit, Business Line Manager,

Radio Network Solutions Business Unit,

2006–2008.

• Elektrobit, Project Manager, Radio Network

base station project, 2004–2005.

• Elektrobit, Mechanical Chief Designer

and Specialist, 2000–2004.

• Elektrobit, Mechanical Designer, 1998–2000.

Holdings Dec. 31, 2021:

Holds 1,093 Bittium Corporation shares.

4040

Bittium Annual Report 2021

Corporate Governance Statement

Jari Sankala

Senior Vice President,

Defense & Security, 2016–.

b. 1966, M.Sc. (Electrical Engineering,

Digital Communications)

Previous work history:

• Bittium Corporation,

Senior Vice President, Sales, 2015–2016.

• Elektrobit Wireless Communications Ltd,

Senior Vice President, Sales & Marketing,

Wireless Business Segment, 2014–2015.

• Elektrobit Wireless Communications Ltd,

Executive Vice President, Defence and

Security, 2011–2014.

• NetHawk Group, Executive Vice President

of Sales & Marketing, 2005–2011.

• NetHawk Germany, Managing Director,

2001–2005.

• Siemens AG, Sales Director Northern Europe,

Mobile Networks, Germany, 1996–2001.

Holdings Dec. 31, 2021:

Holds 28,493 Bittium Corporation shares.

Arto Pietilä

Senior Vice President,

Medical Technologies, 2016–.

b. 1958, M.Sc. (Applied Electronics)

Previous work history:

• Bittium Wireless Ltd, Senior Vice President,

Operations, 2015–2016.

• Elektrobit Wireless Communications Ltd.,

Senior Vice President, Operations,

Wireless Business Segment, 2010–2015.

• Elektrobit Wireless Communications Ltd.,

Senior Vice President, Operations, Wireless

Solutions Business Unit, 2008–2010.

• Elektrobit Wireless Communications Ltd.,

Executive Vice President, Mobile Terminal

Solutions Business Unit, 2006–2008.

• Elektrobit Wireless Communications Ltd.,

Executive Vice President, Contract R&D

Business Unit, 2004–2006.

• Elektrobit Technologies Ltd.,

Managing Director, 2004–2006.

• Elektrobit Ltd., Managing Director,

2002–2004.

• Elektrobit Ltd., Vice President,

Contract R&D, 2001–2002.

• Polar Electro Oy, President & CEO,

1999–2001.

• Polar Electro Oy, Executive Vice

President, 1996–1999.

• Polar Electro Oy, Technical Director,

1992–1996.

• Polar Electro Oy, Product Development

Manager, 1986–1992.

• Polar Electro Ky/Oy, SW/HW Design

Engineer, 1980–1986.

Holdings Dec. 31, 2021:

Holds 80,993 Bittium Corporation shares.

Karoliina Malmi

Vice President, Communications

and Marketing, 2015–.

b. 1977, M.A. International Business

Communications

Previous work history:

• 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, 2021:

Holds 2,096 Bittium Corporation shares.

Bittium Annual Report 2021

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 2021 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. Ernst & Young Oy

has notified that Mr. Jari Karppinen, APA, will

act as responsible auditor. It was decided

that the remuneration to the auditor shall

be paid against the auditor’s reasonable in-

voice.

The auditor´s fees in 2021 amounted to

EUR 89,000 (EUR 102,000 in 2020). Of the

aggregate fees, EUR 79,000 was attribut-

able to auditing (EUR 85,000 in 2020), EUR

8,000 to tax advice (EUR 15,000 in 2020),

and EUR 2,000 to other services (EUR 2,000

in 2020).

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 systematically

throughout the different businesses.

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, currencies, financing, and strat-

egy;

• optimize business opportunities and

secure 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 business, increasing market share

and creating 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

occurrences, crimes or misconduct

by operating procedures, control, and

supervision;

• 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 achieve-

ment of strategic or financial targets. Risk

assessment reports are produced to sup-

port the strategy process. Strategic and op-

erative risks are monitored through monthly

reporting by businesses in the Board of the

Company. Businesses must produce as-

sessments of risks in their designated ar-

eas of responsibilities and provide action

plans to manage risks as well as to report

on measures taken including the stage and

effectiveness of such measures.

General Description

of Internal Control and

Operational Procedures

Internal control is a process applied by the

Board of Directors, management, and all

levels of personnel in the Company to en-

sure that management has reasonable as-

surance 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 complies with applicable

laws and regulations as well as the

Company´s internal policies and

ethical values including sustainability.

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 condensed financial state-

ments and selected financial data derived

from such statements, such as earnings

releases, reported publicly. The third cate-

gory deals with complying with those laws

and regulations to which the Company is

subject to.

424242

Bittium Annual Report 2021

Corporate Governance Statement

Internal Control Framework

of the Company

Bittium’s internal control framework con-

sists of:

• the internal control, risk management

and corporate governance policies and

principles set by the Company´s Board

of Directors;

• management overseeing the implemen-

tation and application of the policies

and principles;

• finance function and business control-

lers monitoring the efficiency and effec-

tiveness of the operations and reliabil-

ity of the financial and management

reporting;

• enterprise risk management process

identifying, assessing, and mitigating

risks threatening the realization of

the Company´s objectives;

• monitoring possible agreements

and other legal acts between the

Company and its related parties;

• compliance procedures making sure

that all applicable laws, regulations,

internal policies and ethical values (in-

cluding sustainability) are adhered to;

• effective control environment at all

organizational levels including control

activities tailored for defined processes

and creating group minimum require-

ments 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.

Risks and Controls in

Core Business Processes

Risk management procedures are in place

for business processes in the form of de-

fined control points:

• relevant process risks are identified;

• common control points / Company´s

minimum requirement control points

are identified;

• common control points are implemented

in business processes; and

• additional control points can be

determined as needed at business

or functional levels.

Control activities are the policies and pro-

cedures that help ensure that manage-

ment directives are carried out. They help

ensure that necessary actions are taken

to address risks to the achievement of the

Company´s objectives. Control activities are

set throughout the organization, at all lev-

els, and in all functions. They include various

range of activities including but not limited

to approvals, authorizations, verifications,

reviews of operating performance, securing

of assets, and segregation of duties.

Internal Controls

over 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-

Corporate Governance Statement42

Bittium Annual Report 2021

Corporate Governance Statement

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 are organized

through various programs or purchased as

an outsourced service. Purchase invoices

are circulated through the electronic invoice

processing system. Global forecasts and

budgets are prepared by using the forecast

and reporting 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 sustainability,

are adhered to. The management and busi-

nesses are responsible for following up on

developments in legislation and regulations

in their respective areas and communicat-

ing them to the organization. The members

of the Management Group are responsible

for setting up adequate compliance con-

trols and compliance-related training in

their units. CLO of the Company coordinates

the appropriateness and compliance 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 regularly as part of

the strategy and goal setting of the Compa-

ny. The Board reports to the shareholders of

the Company.

Audit Committee

Audit Committee is responsible for the

following internal control related duties:

• to monitor the reporting process of

financial statements;

• to supervise the financial reporting

process;

• to monitor the efficiency of the compa-

ny´s internal control, internal audit, if

applicable, and risk management

systems;

• to review the description of the main

features of the internal control and risk

management systems of pertaining to

the financial reporting process, which is

included in the company´s corporate

governance statement; and

• to monitor the statutory audit of the

financial statements and consolidated

financial statements.

More detailed descriptions of 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 Di-

rectors of the Company.

Chief Executive Officer

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

agement of the Company following the in-

structions and orders given by the Board.

The CEO sets the ground for the internal

control environment by providing leader-

ship and direction to senior managers and

reviewing the way they are controlling the

business. The CEO is in charge of the risk

management process of the Company

and its continuous development, alloca-

tion of resources to the work, review of risk

management policies as well as defining

the principles of operation and the overall

process. The CEO reports to the Board on

risk management as part of the monthly

reporting. The CEO and the Management

Group, which operates under the CEO, are

responsible for the management of risks

endangering the fulfillment of objectives

set for the Company.

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 the planning cycle and daily operations,

and ensuring the adherence of:

• laws;

• regulations;

• internal policies; and

• ethical values

in their designated responsibility areas.

The CFO:

• ensures a setup of adequate control

activities for product and service areas

in cooperation with the business

management;

• 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.

4444

Bittium Annual Report 2021

Corporate Governance Statement

CLO ensures that the Group´s corporate

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.

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 Helsin-

ki Ltd, and Helsinki Stock Exchange), the

Central Chamber of Commerce, and the

Confederation of Finnish Industries. The

Company has complemented the Guide-

lines by its internal insider guidelines. The

insider and trading guidelines approved by

the Company include regulations on insid-

ers, publication, and postponement of the

publication of inside information, prohibited

use of inside information, insider registers, a

duty of notification of managers´ and their

closely associated persons´ transactions,

and personnel´s own trading with the Com-

pany´s financial instruments. The purpose

of the guideline is to explain the content of

the guideline published by Nasdaq Helsin-

ki Ltd and other regulations and restrictions

relating to the matter and to unify and coor-

dinate 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

financial instruments (closed period). In

accordance with the Company´s Board

of Directors´ decision, the Company has,

in addition, determined certain time pe-

riods during which persons taking part in

the preparations of the Company´s finan-

cial reporting and other persons who have

access to information about the Compa-

ny´s financial status are prohibited to trade

the Company´s financial instruments. The

purpose of the trade restrictions is to con-

trol the trading of the Company´s financial

instruments and thereby increase trust in

the Company and the operation of the se-

curities 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 the business review and the half-year re-

port as well as the release of the Company´s

financial statements. The restriction applies

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 a company´s financial

instruments.

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 the Company’s Guidelines

on Related Party Transactions is to ensure

that any business transactions involving

persons 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. These

kinds 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 2021

Contents

Sustainability Highlights in 2021 46

CEO’s Sustainability Review 48

Bittium in Brief 50

Desciption of Operations 50

Strategy in a Nutshell 50

Bittium Value Creation Model 52

Megatrends Affecting the Business 53

Sustainability Management 54

Sustainability Organization and Risk Management 54

Bittium’s Ethical Principles and Code of Conduct 54

Stakeholder Cooperation 55

Sustainability Program 2020–2022 57

Sustainability Program 2022–2025 57

Sustainability at Bittium 58

Economic Impact 58

Sustainability Focus Areas 60

Alignment with the UN’s Sustainable Development Goals 60

Innovative and Developing People 62

Trust-Based Customer Relationships and Secure Products 68

Corporate Citizenship and Sustainable Business 72

Environmental Sustainability 76

Reporting 80

Reporting Basics and Principles 80

GRI Index 81

464646

Bittium Annual Report 2021

Sustainability at Bittium in 2021

Sustainability

Highlights

in 2021

4747

Bittium Annual Report 2021

Sustainability at Bittium in 2021

COMPETENCE

DEVELOPMENT

Days of training

3.8 days /

employee / year

CUSTOMER

PROJECT

SATISFACTION

SURVEY

NPS

99.1

45.5

46.9

719

tCO

3.0

SHARE OF SOLAR POWER

As high as 5% of the energy

requirements of the Oulu office

on a monthly basis

EMPLOYEE SURVEY

RESPONSE RATE

CUSTOMER

SATISFACTION

SURVEY

NPS

WASTE

RECYCLING

RATIO

ELECTRICITY

CONSUMPTION

TOTAL

CARBON

FOOTPRINT

1,096 kg CO

/ person / year

484848

Bittium Annual Report 2021

Sustainability at Bittium in 2021

CEO’s

Sustainability Review

Bittium acts as a responsible corporate cit-

izen in the surrounding society. We are a re-

liable local partner and employer that oper-

ates in accordance with common operating

principles and seeks policies and solutions

that promote sustainable development. To

support this, in the autumn of 2021 we pre-

pared a new sustainability program for the

years 2022–2025. Our sustainability will be

based on three key themes: our employees,

customers and information security, and the

environment. This sustainability report, con-

cerning the year 2021, is based on the indi-

cators and targets of the existing sustain-

ability program.

A responsible business practice lays the

foundation for trust, which is nurtured by

implementing Bittium’s values in actions.

Our operations are very regulated, so huge

part of our sustainability is based on confi-

dentiality and ensuring security. Our industry

is full of ever-changing standards and regu-

lations that we obey and be up to date with

changes. This is one of the basic conditions

for our operation.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

The second year of the coronavirus pan-

demic has, in a good way, forced us to con-

tinue to reform the company’s policies. Tak-

ing care of the well-being of our staff has

been high on our work list, as about 70 per-

cent of our employees have been working re-

motely from home during the year. We have

maintained our participatory and conversa-

tional culture through various measures and

will continue to invest in good leadership.

The global shortage of components also af-

fects Bittium. We have mapped numerous

Finnish and European suppliers to obtain the

necessary components for our products. For

some critical components, deliveries have

been relocated from afar to Europe and even

Finland, closer to us.

At Bittium, ecology is the starting point for

all product design and development, which

is why we constantly pay more attention to

the principles of the circular economy. We

aim to comply with the EU’s Ecodesign Di-

rective, which aims to improve the energy

efficiency of products by integrating en-

vironmental considerations and life-cycle

thinking into the product design phase. The

directive is now being extended to include

the effects of software production on the

life-cycle assessment of a product’s eco-

logical footprint. Bittium has participated in

the authority work of this directive both at

the Finnish and EU level.

In 2021, we achieved the goals we set for en-

vironmental sustainability. At its best, 13.5

per cent of the utilized electricity at the Oulu

premises came from solar energy. Our total

carbon footprint was 718,690 kg CO

e, which

is a decrease of about 5% from a year ago.

The reduction in the carbon footprint was

due to a significant reduction in air travel

caused by the coronavirus pandemic and a

change in the calculation method for waste

emissions.

Hannu Huttunen

CEO

Bittium in Brief

Description

of Operations

Bittium is a Finnish technology company

that specializes in both the development

of reliable and secure communication and

connectivity solutions and the development

of products and services for measuring and

monitoring biosignals outside the hospital.

Bittium has over 35 years of in-depth exper-

tise in various technologies. Bittium offers

its customers innovative products and solu-

tions based on its product platforms, as well

as product development services.

Sustainability is present in Bittium´s oper-

ations throughout the life cycle of its prod-

ucts, in procurement chains and in the way

the company creates value for the surround-

ing society.

Strategy in a Nutshell

Bittium aims to be a significant global pro-

vider of secure and safe communications

solutions in the defense and public safety

markets and a leading provider of connec-

tivity solutions and R&D services for differ-

ent industries, as well as a significant pro-

vider of remote measuring and diagnostics

solutions for measuring and analyzing bi-

osignals.

Bittium’s business is divided into three prod-

uct and service areas: Defense & Security,

Connectivity Solutions and Medical Tech-

nologies.

In the Defense & Security product and ser-

vice area, Bittium offers globally leading

products and services for its customers in

the defense, security and public safety mar-

kets, aiming at strengthening the national

security of independent countries.

In the Connectivity Solutions product and

service area, Bittium provides its customers

with R&D services and wireless connectivi-

ty solutions for the development of new in-

novative products in a secure and evolving

wireless environment.

In the Medical Technologies product and

service area, Bittium aims at promoting bet-

ter health in society by providing products

and complete solutions for the healthcare

market in biosignals remote monitoring and

diagnostics. This is based on the company´s

long experience and deep knowledge of bio-

signal measurement, wireless communica-

tions and security technology.

Bittium has made significant investments

in the future by considerably increasing

R&D investments in in-house products and

solutions. These investments provide an

excellent foundation for future growth. The

company will continue to invest in product

development and the development of its

operations in accordance with its strategy

to enable international growth. Bittium also

continues to search for inorganic growth op-

portunities in all of its product and service

areas. The company is prepared to invest

in acquisitions that strengthen its growth

strategy.

Operating

Profit

Net Gearing

Product

development

investments,

% of net sales

Net Sales

Cash and

short-term deposits

3.2

MEUR

0.2

22.8

86.9

MEUR

22.0

MEUR

Sustainability at Bittium in 2021

Bittium Annual Report 2021

5151Sustainability at Bittium in 2021

Bittium Annual Report 2021

Our Mission

We adapt our deep knowledge to deliver superior technology

innovations to enhance connectivity, bring safety and

improve health in the society.

Our Value Creation Model

Our Key

Resources

People

• Almost 700 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.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

5353

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

The Megatrends

Affecting the Business

Bittium’s operations are strongly influenced by dig-

italization, the various phenomena of which cre-

ate both threats and opportunities for the business.

The digital revolution in society continues and in-

vestment in smart devices, people and processes

is growing. Digitalization increases efficiency and

allows for a better allocation of resources.

Rapid Technological Development

as an Enabler of Digitalization

The rise of embedded software, the management

of complex systems, and the rapid development of

technology create opportunities to provide added

value to Bittium´s customers. To maintain a com-

petitive edge, Bittium must continue intensifying

the in-house technological development.

The Internet of Things (IoT)

The growing importance of IoT requires the integra-

tion of operating processes and secure IoT solutions

to achieve efficiency advantages. The tools and ap-

proaches used in developing Bittium´s operations

include robotic process and testing automation as

well as data visualization. The company develops

challenging IoT solutions with high information se-

curity requirements for its customers.

Digitalization and the Aging Population

The aging of the population and population growth

make the digitalization of healthcare crucial for

maintaining the productivity and coverage of ser-

vices. Remote monitoring, wireless solutions, new

home-based care methods as well as faster and

more efficient health data analysis are among the

technological solutions Bittium has developed for

its customers.

Information Security

The progress of digitalization and technologies

brings with it an increase in information security

threats. Cyber security is one of the most signifi-

cant threats associated with digitalization. Stricter

information security and regulatory requirements

are reflected in the operations of the company and

its customers. The requirements are also expand-

ing 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.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

5454

Sustainability

Organization and

Risk Management

Bittium has a specific sustainability work-

ing group, that develops, monitors and eval-

uates issues related to sustainability. The

working group is responsible for managing

and sounding sustainability risks, as well

as reporting on the company’s sustainabil-

ity. The working group has six (6) members:

CEO; Chief Legal Officer; Vice President,

Communications and Marketing; Director,

Human Resources; CFO; and Head of Qual-

ity, the Environment and Technology Man-

agement. The sustainability working group

holds quarterly meetings and prepares the

sustainability report. The Bittium manage-

ment and the Board of Directors review the

sustainability report annually.

Sustainability

Management

The Management Group of Bittium discuss-

es sustainability issues, monitors the ef-

fectiveness 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 and pre-

pares sustainability matters regularly and

when necessary.

The Board of Directors of Bittium Corpora-

tion discusses sustainability issues on the

basis of the Management Group’s propos-

als and approves annually the company’s

sustainability report.

The sustainability report describes the ap-

plicable methods that guarantee a sufficient

level of diligence. The management of risks

related to 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

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

ambiguities in the operations of its partners.

The company provides both our external and

internal stakeholders with a channel for re-

porting violations of anti-corruption rules.

There were no cases of corruption reported

to Bittium in 2021.

2) Information security

and data protection

Bittium’s information security and data pro-

tection policies specify the methods em-

ployed in the classification, storage and dis-

closure of information.

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 at Bittium in 2021

Bittium Annual Report 2021

5555

3) Fair business, advertising

and competition

Bittium follows the rules on fair business,

advertising and competition. The company

uses various methods to secure the custom-

ers’ information in accordance with informa-

tion 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 procurement 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

section ‘Confidential customer relationships

and secure products’.

Stakeholder

Cooperation

Bittium’s operations affect many different

stakeholders. Understanding their views

and expectations is important for our oper-

ations and success. Open dialogue with the

stakeholders helps to develop Bittium’s op-

erations, products and solutions as well as

a goal-driven approach to finding solutions

to social challenges.

Bittium works in cooperation with nation-

al as well as international stakeholders.

Our largest stakeholders include our em-

ployees, customers, different actors, part-

ners, the authorities and other controlling

actors, shareholders, students and different

schools and academies, as well as differ-

ent communities. The company’s stakehold-

er-related activities are guided by Corporate

Governance and Code of Conduct.

In 2021, the coronavirus pandemic had a

significant impact on the cooperation with

stakeholders. The travel restrictions and

quarantines have prevented face-to-face

meetings, and communication over the in-

ternet has become the new norm.

Personnel

Bittium arranges several different staff

events each year where our employees get

the opportunity to ask questions and give

feedback. The management’s physical pres-

ence at these events and the opportunity to

ask questions have constituted an import-

ant part of communication. As the corona-

virus pandemic has been prevailing, all per-

sonnel events were held online to safeguard

the personnel’s health and the continuity of

business. The situation was made easier

by the fact that Bittium is an international

player. Therefore, online meetings have been

routine for us for years. Thus, arranging on-

line events for the entire staff did not involve

much extra effort or costs. Despite the lack

of physical presence, the dialogue between

management and personnel on these occa-

sions has remained active.

In addition to staff events, the employees

can give feedback through the annual anon-

ymous employee survey. Equal treatment

and open interaction are important to the

employees. They expect Bittium to offer in-

teresting and meaningful work and opportu-

nities for professional growth. In addition to

the annual personnel surveys, the company

surveys the well-being of its personnel with

a once-a-month Pulse survey. Pulse allows

for a faster response to any grievances that

have arisen. The results of both surveys are

available for personnel to view on the com-

pany’s intranet.

Customers

Bittium receives constant feedback from the

customers, primarily by continuously stay-

ing in touch with them and through various

annual surveys. The surveys are arranged

online. The used Scrum and Agile methods

and the supporting online systems (as real-

time as possible) allow ongoing monitoring

and open dialogue. This enables Bittium to

quickly react to potential problems. Bittium’s

customers value competitive and reliable

products and services as well as sustainable

and real-time approach to operations. The

company’s major customers are leading in-

ternational players in their respective fields.

Therefore, the travel restrictions imposed

in 2021 as a result of the coronavirus pan-

demic have had some impact on Bittium’s

communications with them. The company

has had to take care of many matters on-

line that would normally be discussed face

to face. These include, for instance, product

and project inspections or approvals.

Suppliers and partners

When it comes to our suppliers and oth-

er partners, Bittium has often worked with

them in close cooperation for a long time fol-

lowing established rules and ways of work-

ing. Constant communication enables open

dialogue. The company’s suppliers and part-

ners expect fair and sustainable operations

and long-term cooperation. Bittium expects

suppliers and partners to work in a sustain-

able way, and monitors this on a regular ba-

sis. The coronavirus pandemic did not have

a material effect on cooperation with sup-

pliers and partners.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

56 Sustainability at Bittium in 2021

Bittium Annual Report 2021

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 our compliance with the laws and

regulations. Applying them to Bittium’s busi-

ness operations requires open and ongoing

interaction with the authorities. The com-

pany has always mainly engaged in virtual

communication with the authorities. There-

fore, the coronavirus pandemic did not have

a material effect on cooperation in 2021.

Local cooperation

As part of Bittium’s sustainable corporate

citizenship, the company actively collabo-

rates with different communities. Bittium

meets the expectations of different com-

munities in a variety of ways. The company

regularly supports educational institutions

and schools to introduce young students to

working life – and not forgetting the teach-

ers. Thanks to this collaboration, Bittium is

also able to recruit new and enthusiastic

graduates. Restrictions on gatherings and

meetings caused by the coronavirus pan-

demic prevented the company from arrang-

ing workplace visits or admitting students

to practical training during 2021. At the end

of 2021, Bittium donated 50,000 euros to

the University of Oulu’s technical research.

Research and development cooperation

with companies and research institutions

broadens Bittium’s expertise and makes it

possible to mutually promote development.

This cooperation is mainly carried out online,

and the coronavirus pandemic had no ma-

terial effect on the progress of cooperation.

Shareholders and investors

Shareholders, investors and analysts expect

Bittium to create long-term value and act re-

sponsibly. Bittium meets with analysts fol-

lowing the company on a regular basis and

participates in events for various institution-

al investors. At the annual general meeting,

shareholders have the opportunity to meet

and discuss with the company’s manage-

ment and the members of the Board of Di-

rectors. Due to travel and gathering restric-

tions caused by the coronavirus pandemic,

the 2021 Annual General Meeting was held

again via the Internet instead of a physical

opportunity. Similarly, other investor and

analyst meetings and events were held

online during the past year. In 2021, the

company joined a moderated investor forum

to improve and increase communication

with investors. It is pursued that the open

and transparent discussion will provide an-

swers to the questions that concern inves-

tors and thus improve the understanding

of the company’s business.

57Sustainability at Bittium in 2021

Bittium Annual Report 2021

Sustainability Program

2020–2022

Bittium is a global technology company that aims to adapt its deep

knowledge to deliver superior, socially beneficial technical innova-

tions that enhance connectivity, bring safety and promote health-

care in society. Bittium’s sustainability program is based on the

company strategy, values, stakeholders’ expectations and the mega-

trends in the operating environment. It is part of the company’s

organizational culture, its way of acting and creating value for the

surrounding society.

Bittium’s sustainability program relies on the materiality analysis

conducted in 2019, on the basis of which the focus areas of sustain-

ability were defined. The program is composed of the development

targets and actions of the focus areas as well as the related perfor-

mance indicators. Bittium continuously monitors and improves its

sustainability efforts. The achievement of the targets specified in

the sustainability program is monitored annually against various

performance indicators. Progress with the program and toward

the targets is reported annually in Bittium’s sustainability report.

The sustainability

program and its

targets are divided

into focus areas.

Innovative

and Developing

People

Trust-Based Customer

Relationships and

Secure Products

Environmental

Sustainability

Corporate Citizenship

and Sustainable

Business Practices

Customers and

Information Security

The Environment

Sustainability Program

2022–2025

In the second half of 2021, Bittium created a new sustainability pro-

gram for the period 2022–2025. While the previously defined focus

areas were not changed, they were regrouped. Going forward, Bittium’s

sustainability will be based on three key themes: Bittium employees,

customers and information security, and the environment. Ethical

principles and sustainable business practices create the foundation

for trust, which is maintained by putting Bittium’s values into action.

The sustainability program will be launched internally in the first quar-

ter of 2022.

The sustainability actions taken in 2021 are reported in accordance

with the sustainability program 2020–2022.

Ethical principles and sustainable business practices

Bittium

Employees

Economic Impact

For Bittium, economic impact means ensur-

ing the long-term profitability of the com-

pany’s business. This creates added value

for the company’s various stakeholders and

the surrounding society. Profitable opera-

tions create economic benefits for share-

holders, employees, partners, subcontrac-

tors, distributors, customers, municipalities

and governments.

Legal compliance is the basic premise of

economic sustainability. However, in many

respects, Bittium’s sustainability and im-

pact exceed the legal requirements.

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 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.

Bittium’s business must respond to the

changes in the operating environment to

maintain profitability and future competi-

tiveness. The technological transformation

and the resulting technology solutions cre-

ate both opportunities and threats for the

company – changes that must be taken into

account already during the product devel-

opment stage.

Tax Footprint

Taxes are part of Bittium’s business process,

and tax management supports the compa-

ny’s strategy. Bittium is present in five coun-

tries and its business profits and the result-

ing taxes are generated locally.

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 to ensure that

the company calculates, reports and pays

taxes correctly to the authorities, in compli-

ance with the regulations in effect. Bittium

is committed to complying with the laws of

its operating countries as well as lower-level

regulations, such as the OECD transfer pric-

ing guidelines. Good corporate citizenship

is part of Bittium’s values. Accordingly, the

quality of the company’s tax processes is

Tax Footprint 2021

MEUR

Taxes collected 2021 2020

Value added taxes (VAT) -2.4 -2.2

Payroll taxes -10.0 -9.6

Total -12.4 -11.8

Taxes borne

Employment taxes -0.6 -0.5

Taxes on property -0.1 -0.1

Total -0.8 -0.7

Taxes total -13.2 -12.5

75.6

18.1

0.9

4.8

0.6

Taxes on property

Employment taxes

Other

Payroll taxes

Value added taxes (VAT)

Sustainability at Bittium

Sustainability at Bittium in 2021

Bittium Annual Report 2021

59Sustainability at Bittium in 2018

an important cornerstone of Bittium’s tax

strategy. The company’s guiding principle

is to be open and transparent with the tax

authorities in all the countries in which it is

present. In Finland, Bittium works in close

cooperation with the Large Taxpayers’ Of-

fice of the Finnish 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 2021, Bittium was involved in the role of

a funding provider and research partner in

several EU cooperation projects (for exam-

ple, ITEA4, Horizon2020 and EDIDP) and

national projects financed by Business

Finland. The focus areas of these cooper-

ation projects included technologies that

are highly relevant to Bittium’s future prod-

uct and service business, such as various

communications solutions for the defense

industry and the public authorities, informa-

tion security solutions related to products

and future factories, the development of

AI and machine learning methods in fields

such as healthcare, and methods and op-

erating practices related to regulatory soft-

ware development.

In 2021, research and development expens-

es represented 22.8 percent of net sales

(2020: 29.1%). They were mainly allocated to

the development of a tactical communica-

tions system and related products targeted

at the defense industry, the development of

various devices and special terminal prod-

ucts for the authorities, including related

security software, and the development of

medical technology products. In 2021, the

focus of investments has gradually shifted

from tactical communications to the devel-

opment of new health technology products.

Customers

Net sales

86.9

MEUR

Suppliers

Business

- 3 7. 2

MEUR

Employees

Salaries and wages

-39.0

MEUR

Creditors

Cost of borrowed

capital

-0.7

MEUR

Share price

2020–2021

-8.5

Net gearing

0.2

Operating

profit

3.7

Equity ratio

72.4

Tax footprint

13.2

MEUR

Shareholders

Dividend

1.1

MEUR

Product

development

investments,

% of net sales

22.8

Stakeholders

and Economic

Impact in 2021

Share Price Average 2020–2021

8.00

6.00

4.00

2.00

2020 2021

EUR

Sustainability at Bittium in 2021

Bittium Annual Report 2021

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 discrimi-

nation, and taking care of employee well-

being and competence. Bittium provides

its employees with challenging and moti-

vating jobs and is committed to support-

ing 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 relationships,

sustainability is reflected in the way of work-

ing, the quality of products and the trust that

characterizes the company’s customer re-

lationships. Trust is the starting point for Bit-

tium’s operations.

Sustainable business practices are a cor-

nerstone of Bittium’s operations. It provides

a solid foundation for risk management and

represents a core value as well as a com-

petitive advantage. Sustainability helps the

company with long-term value creation.

Sustainability 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

minimize the environmental impacts of its

operations. The company’s performance is

monitored through the environmental pro-

gram.

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

selected focus areas of sustainability, the

following UN SDGs are of particular rele-

vance 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

Sustainability

Focus Areas

Sustainability at Bittium in 2021

Bittium Annual Report 2021

616161Sustainability at Bittium in 2021

Bittium Annual Report 2021

6262

Bittium’s values are trust, courage and innovation. These values are an integral

part of everyday work and the company culture of participation and discus-

sion. The company culture is characterized by a flat organization and a low

level of hierarchy as well as agility and openness. Bittium’s employees share

a passion for technology and learning. Bittium’s innovation requires moti-

vated employees with a high level of well-being, good managerial work and

a sense of community. Innovation is supported in various ways, including an

FOCUS AREA #1

Innovative and

Developing People

Goals Performance Measures Target 2021 Result 2021

Employee well-being

and engagement

Results and scope of the

employee satisfaction survey.

Developing the employee

experience and a sense of

community under exceptional

circumstances and supporting

managerial work.

The average overall score in the

employee satisfaction survey

decreased to 3.74 (2020: 3.80*).

The response rate decreased

to 70% (2020: 81%).

Competence development Time spent on training

per employee.

Increasing and enabling training

and taking special competencies

into consideration.

3.8 days/employee.

Developing the employer image External employer image survey.

Bittium Employee Survey (BES).

Increasing awareness of

Bittium and communicating

the company’s strengths.

Developing the employer image

internally.

The external employer image

survey was postponed to 2022.

In the BES survey, the score for

the section “Bittium as a com-

pany and employer” was 3.36 on

a scale of 1–5 (2020: 3.53).

Sustainability at Bittium in 2021

Bittium Annual Report 2021

* In the sustainability report 2020, the average of 2020 was announced 3.83. The figures has been recalculated to be comparable with the 2021 figure.

Promote sustained, inclusive and sus-

tainable economic growth, full and pro-

ductive employment and decent work

for all.

8.7 Take immediate and effective measures to

eradicate forced labor, end modern slavery and

human trafficking and secure the prohibition

and elimination of the worst forms of child la-

bor, including recruitment and use of child sol-

diers, and by 2025 end child labor in all its forms.

8.8 Protect labor rights and promote safe and

secure working environments for all workers, in-

cluding migrant workers, in particular women

migrants, and those in precarious employment.

• Our Supplier Requirements include the obser-

vance of human rights in activities that are di-

rectly related to our operations. The Supplier

Requirements are published on our website.

• We monitor employee well-being in various

ways, and our company applies clearly defined

practices to support work ability. We maintain

up-to-date safety plans as well as an equality

plan. Safety issues are taken into account in

our orientation training program. The employ-

ee benefits provided by our company have

been selected to support mental and physical

well-being and build a strong sense of com-

munity.

Alignment between

the Focus Area and

the UN’s Sustainable

Development Goals

Build resilient infrastructure, promote

inclusive and sustainable industrializa-

tion and foster innovation.

9.5 Enhance scientific research, upgrade the

technological capabilities of industrial sectors

in all countries, in particular developing coun-

tries, including, by 2030, encouraging innova-

tion and substantially increasing the number

of research and development workers per 1 mil-

lion people and public and private research and

development spending.

• We make significant investments in our R&D

activities to support our renewal and main-

tain an innovative and competitive portfolio

of products. In 2021, R&D activities represent-

ed 22.8 percent of our net sales (2020: 29.1%).

• We create opportunities for our personnel

to continuously develop their competence

through studying as well as internal and exter-

nal training. Our diverse and varying tasks en-

able continuous on-the-job learning and devel-

opment. We encourage our employees to share

their knowledge openly.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

encouraging and diverse company culture

as well as effective working methods and

business premises. Ultimately, Bittium’s in-

novative approach is reflected in the com-

pany’s R&D and work with customers.

In 2021, the company’s personnel contin-

ued to work remotely under a model where

approximately 70 percent of the employees

worked remotely as a rule. Ensuring employ-

ee well-being and supporting active man-

agerial work have remained key elements

of HR management. Monthly Pulse surveys

have been used to monitor remote work,

the spirit among employees, the efficiency

of work and job satisfaction. The sense of

community among the personnel has been

strengthened by openly communicating the

survey results and also by organizing lec-

tures on well-being at work and sharing ex-

periences. The restrictions concerning trav-

el and visits have remained in place for the

most part.

While most of Bittium’s employees have

continued to work remotely, the company

has nevertheless been able to produce crit-

ical products and services for its customers

in various industries.

Skilled, motivated and committed profes-

sionals constitute Bittium’s most important

resource. The company’s strengths as an

employer include diverse tasks and devel-

opment opportunities through work on var-

ious technologies, products and projects.

Bittium employees have a strong team spirit

and feel that they are appreciated by their

colleagues and the workplace community.

Bittium’s

Remote Work Policy

and Hybrid Work Model

Approximately 70 percent of Bittium’s em-

ployees has been working primarily remotely

due to the coronavirus pandemic. Employ-

ees who, due to the nature of their duties,

cannot work remotely include those who

work in production and laboratories as well

as those whose job requires working in secu-

rity-classified areas. Bittium has been able

to prevent Covid-19 infections by continuing

to work remotely as a rule. Bittium’s Covid-19

working group, which focuses on monitoring

the pandemic as well as planning, imple-

menting and communicating pandemic-re-

lated measures has continued to hold status

meetings at least once a week. In addition,

the company continued close cooperation

on occupational safety and health between

offices as well as weekly meetings. Up-to-

date internal communication on Covid-19

has been highlighted as a priority. The infor-

mation website for employees, introduced

in March 2020, is still in use. The website

has proved to be a useful communication

tool, especially for informing employees of

Covid-19 infections and reminding everyone

of infection prevention practices.

Bittium adopted a more permanent remote

work policy in mid-October. Under the hy-

brid model, each project and team agree

on the most suitable remote work practic-

es for their work and the aim is to use an

optimal combination of remote work and

in-office work. When the policy was drafted,

the views of employees and project man-

agers were assessed by means of surveys,

and collaborative workshops were orga-

nized with supervisors, project managers

and guild managers to develop the policy.

The effectiveness of the remote work mod-

el will be monitored and developed further

as necessary. The new remote work model

was in use for just over a month before new

remote work recommendations were en-

tered into effect.

Project meetings, staff events, joint coffee

breaks and internal product demonstrations

were mostly organized as virtual events.

Bittium Employee

Survey and the

Employee Experience

The annual Bittium Employee Survey (BES)

is an important tool for developing well-be-

ing at work and job satisfaction and enhanc-

ing the employee experience. The results

of the survey are discussed at all levels of

the organization, from the Board of Direc-

tors and Management Group to individual

teams.

The survey consists of five sections with 50

statements in total. The sections are:

1. My work

2. Bittium as a working community

3. Bittium as a company and employer

4. Supervisory work

5. Projects

In the 2021 employee survey, the respon-

se rate decreased to 70 percent, compa-

red with 81 percent in the previous year. The

overall average score decreased slightly and

came to 3.74 (2020: 3.80, 2019: 3.72). The

survey results in 2021 were largely in line

with the results in 2019. The year 2020 was

exceptional, also in light of the survey re-

sults. Team spirit, support for colleagues

and commitment to the working community

were again highlighted as Bittium’s streng-

ths. The scores for supervisory work remain-

ed at an excellent level.

The employees evaluate the realization

of the company’s values in the employee

survey. On a scale from 1 to 10, the sco-

res for trust, courage and innovation were

7.75 (2020: 8.06), 6.87 (2020: 7.34) and 7.02

(2020: 7.38) respectively. These results are

in line with the general trend seen in the sur-

vey responses from 2020 to 2021.

In addition to the BES survey, the emplo-

yee experience was monitored by means of

monthly Pulse surveys. During the excepti-

onal circumstances created by the pande-

mic, the Pulse surveys are an important tool

for monitoring the spirit among the compa-

ny’s employees. However, as the response

rate has declined steadily, the survey imple-

mentation method and focus will be re-eva-

luated going forward.

Based on the previous year’s BES survey,

the focus areas selected for 2021 were tools,

processes, the renewal of the organiza-

tion’s working methods, workload and the

development of critical competencies. In

addition to communications related to the

exceptional circumstances, communica-

tions activity regarding the status of bu-

siness operations and the general picture

were increased.

The special development themes that were

identified on the basis of the results of the

BES survey in 2021 include engaging the

commitment of employees and strengt-

hening the employer image, competence

development, managerial work and leader-

ship. Process development will also conti-

nue. The challenges that are identified in-

clude engaging the commitment of newly

recruited employees during the exceptional

circumstances and remote work, and the

employee experience of new recruits will be

assessed in more detail by means of a se-

parate survey.

Supervisory Work

and Strengthening

the Employer Image

Remote work has changed the nature of su-

pervisory work, making it necessary to pay

particular attention to this area. Leadership

coffee meetings held every three weeks are

one example of the measures taken by Bit-

tium to support supervisory work.

Bittium Leader for Projects, a training pro-

gram that promotes coaching-style leader-

ship for project managers and team leaders,

was launched near the end of the year when

the Covid-19 situation made it possible to

carry out training events in person, which

supports networking between the partici-

pants. The training program consists of five

training modules. The training began as

in-person training with three groups. The

plan is to continue the training with two

new groups next year. Each group has 15–

20 participants.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Bittium’s external employer image is also

strengthened by the open-for-all webinars

launched in the fall. Four webinars were or-

ganized in the fall. Their themes focused on

generating added value for customers in dif-

ferent industries. The plan is for the webinar

series to continue in 2022.

The employees’ views of Bittium’s attrac-

tiveness as an employer were assessed by

means of the BES survey in 2021. Commu-

nications materials related to recruitment

were developed to better communicate Bit-

tium’s strengths, internal culture and team

spirit. The employer image will also be mea-

sured by means of an external employer im-

age survey in 2022.

Competence

Development and

Performance Reviews

In accordance with the performance review

model, the employee and supervisor have

an informal quarterly discussion (Quarter

Chat). A key objective of the switch to more

frequent, regular discussions has been to

take into consideration individuality, support

well-being at work and build trust in the rela-

tionships between supervisors and subordi-

nates. The employees also have the option

to agree to have a separate longer conver-

sation, especially with regard to a long-term

competence development plan. This actu-

al performance review is held at a time that

effectively supports competence develop-

ment.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Activities related to competence develop-

ment emphasize the development of ef-

fective and agile working methods to en-

sure that competence development needs

will be identified on a more business-driv-

en and employee-driven basis in the future.

This effort has been supported by, for exam-

ple, change agent activities and the infor-

mation obtained from the personnel survey

and pulse surveys on how the employees

perceive the current situation as regards

competence development. Bittium has tak-

en many measures and conducted assess-

ments related to competence development,

and these will continue in 2022.

Topical themes in competence development

include data, analytics and artificial intelli-

gence, cloud solutions and virtualization. Ef-

forts related to software life-cycle process

development and management, increased

We help each other

We value each other’s work

We have a strong team spirit

My work is meaningful

Overall index for supervisory work

Bittium Employee Survey 2021: highlights related to sustainability

0 1 2 3 4 5

4.3

4.1

3.9

4.2

Response rate: 70%. Scale: 1=poor, 5=excellent. 2021 2020

use of efficient operating models, and pro-

gramming languages and new technologies

will also continue. When training is organized

to support competence development, on-

line learning methods and platforms are

used where possible, but in-person events

to support competence development are

also organized as necessary. For example,

a training program to support the product

development and project competencies of

employees who work with medical technol-

ogies was successfully carried out online, on

a location-independent basis.

A new tool was introduced in 2020 to devel-

op the orientation training process for new

employees. The tool serves as a platform for

the orientation training material and train-

ing sessions as well as various eLearning

courses. The development of the orientation

training path for various jobs and expanding

the use of eLearning solutions continued in

2021. Internal eLearning courses have also

been created outside the actual orienta-

tion training path to serve broader compe-

tence development needs, and these types

of solutions will also be taken advantage of

in the future. A dedicated eLearning module

created on the topic of strategic communi-

cation has been well received.

Employees are encouraged to discuss com-

petence development needs with their su-

pervisor, and self-development and training

are also encouraged. In 2021, the average

number of training days was 3.8 per employ-

ee. This includes both internal and external

training as well as orientation training and in-

dependent study. Internal training may also

involve learning on the job and the sharing of

expertise, and external training may involve

independent study.

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. The need for occupation-

al healthcare services at Bittium has in-

creased slightly compared to the most re-

cent pre-pandemic year. In particular, the

number of medium-duration sickness-re-

lated absences related to mental health

has increased. In response to this, supervi-

sors and project managers have been en-

couraged to meet their team members face

to face more frequently, at least via video

calls. In 2022, the company will focus on

early support to make it possible to address

challenges in a timely manner and prevent

stress.

Employee well-being is supported by occu-

pational healthcare services that are more

extensive than required by law, as well as

other employee benefits. The occupation-

al healthcare services also include a digital

clinic and opportunities for remote consul-

tations. Employees also have access to the

services of an occupational physiotherapist

and the Cuckoo Workout application. HR

coffee breaks were organized in 2021. They

are open virtual events for personnel, ad-

dressing topics related to well-being, such

as the ergonomics of knowledge work and

the importance of good sleep. At its highest,

the number of attendees in these events

was several hundreds of people represent-

ing various parts of the organization. A com-

pany bicycle benefit was introduced near

the end of the first half of the year. Bittium

has taken out remote work insurance for

employees.

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 manual

work are a relatively small concern.

The Close Call reporting channel in Bittium’s

intranet enables employees to report po-

tential safety and ‘close call’ concerns. A

total of three such concerns were report-

ed in 2021.

Bittium’s HR management and OHS func-

tion analyze occupational accidents at reg-

ular intervals and whenever particular risks

emerge. In 2021, a total of three occupation-

al accident reports were submitted in Bit-

tium’s companies in Finland. None of these

accidents led to disability or liability under

the Finnish legislation governing occupa-

tional accidents and diseases.

Human rights, Equality

and Diversity

From the aspect of managing and develop-

ing diversity, it is important to take into ac-

count different backgrounds and skills and

to put them to good use. Participation-ori-

ented and coaching style supervisory work

plays an important role in this. All employ-

ees and job applicants are treated equally

regardless of their gender, age, ethnic back-

ground, political views or other background

factors. Bittium’s equality plan is based on

the Finnish Act on Equality Between Men

and Women. The realization of equality at

work is assessed in employee surveys from

the perspectives of pay, career development

and recruitment.

As the extensive annual employee survey

enables Bittium to address the themes of

equality and non-discrimination, the com-

pany does not carry out a specific equality

survey each year. The next survey is planned

for 2022.

The principles concerning the diversity of

the Board of Directors are defined in the Cor-

porate Governance Statement.

The vast majority of Bittium’s employees

work in countries with progressive human

rights legislation. Subcontractors and part-

ners are required to adhere to Bittium’s Sup-

plier Requirements, which also address the

company’s approach to human rights ques-

tions. Compliance with the Supplier Re-

quirements was evaluated in 2021 based on

self-assessments. In 2021, no violations or

significant non-conformities related to the

use of child labor, forced labor, inappropriate

disciplinary action, physical punishment,

or health-related discriminatory practices

were observed in Bittium’s or its subcon-

tractors’ operations.

Active Engagement

Interaction between the employees and

teams has been mainly virtual. Normally, the

company promotes the employees’ collec-

tive spirit and activity also outside working

hours in the form of various clubs, physical

exercise and activities. Club activities were

resumed in 2021 and new clubs were es-

tablished, which speaks to the value given

to team spirit at Bittium. Several teams of

Bittium employees also participated in the

Kilometrikisa cycling challenge for the third

time. Organizing team meetings was also

possible during the year.

Bittium was not able to organize visits to

educational institutions in 2021 due to the

coronavirus pandemic.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

6767

WOMEN

AVERAGE AGE YEARS AT BITTIUM RETIRED

At the end of 2021, Bittium had 653 employees in Fin-

land, the United States, Mexico, Singapore and Ger-

many. 99% of the company’s employees are based

in Finland. Most of the employees are R&D engineers.

2018 2019 2020

800

700

600

500

TRAINING

DAYS OF TRAINING

as supervisors in the

Management

Group

on the Board

of Directors

Master’s

degree/

Bachelor’s

degree

Licentiate/

PhD

total

engineers

on average

at the end of

the year

/employee

persons

Bittium Annual Report 2021

39.244

2,502 3.8

Sustainability at Bittium in 2021

667 557653

2019 2020 2021

85.2

2.4

Personnel in 2021

Confidentiality and ensuring information security are part of Bittium’s sustainability. Trust is

one of Bittium’s values and a necessary condition for the company’s business. It is an essen-

tial element of Bittium’s customer relationships, products, 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 security

solutions, and provide health technology products and solutions for the company’s customers.

Bittium responds to the constantly growing and changing information security require-

ments by monitoring global information security threats in real time, by training employees

and by participating in Finnish, European and international information security develop-

ment projects.

FOCUS AREA #2

Trust-Based

Customer

Relationships

and Secure

Products

Sustainability at Bittium in 2021

Goals Actions Performance Measures Situation in 2020 Result in 2021

Building

deeper trust

with customers

Continued development

of trust-based and

performance-driven

operating methods.

Customer satisfaction survey

NPS (Net Promoter Score).

Project satisfaction survey

NPS (Net Promoter Score).

46.9

(2019: 49.3)

(2019: 62)

46.9

45.5

Enhancing

the added value

of information

security

Continuous development

of the information security

of products and operations.

Information security

management systems.

Highlighting information securi-

ty threats and the importance of

information security with various

stakeholders and participating

in information security develop-

ment projects and forums.

Auditing and certification of

products, business premises

and business functions.

The development of the num-

ber of observations concer-

ning information security

threats.

Annual certification audits

and various information security

certificates.

The employees have been trained to

report any observations of potential

information security threats. A total

of 149 persons participated in the

training in 2021.

Training on practices and procedures

to maintain a high level of information

security, training rate above 90%.

Participation in the following

development projects, for example:

Post-Quantum Cryptography

(Finland), TIoCPS (EU),

CyberFactory#1 (EU).

Alignment between

the Focus Area and

the UN’s Sustainable

Development Goals

Ensure healthy lives

and promote well-being

for all at all ages.

3.4 By 2030, reduce by one third premature

mortality from non-communicable diseases

through prevention and treatment and promote

mental health and well-being.

• Our medical technology products improve the

quality of modern healthcare and are safe to

use. Our products emphasize prevention, for ex-

ample, in the context of serious complications

caused by cardiovascular and neurological dis-

orders. Our product portfolio also supports re-

mote diagnostics, which can help healthcare

services to achieve considerable efficiency and

savings. Remote services enable the diagnosis

of illnesses also during times when face-to-face

contacts should be avoided – such as during a

pandemic.

Promote sustained, inclusive and

sustainable economic growth, full

and productive employment and

decent work for all.

8.7 Take immediate and effective measures to

eradicate forced labor, end modern slavery and

human trafficking and secure the prohibition

and elimination of the worst forms of child labor,

including recruitment and use of child soldiers,

and by 2025 end child labor in all its forms.

8.8 Protect labor rights and promote safe and

secure working environments for all workers, in-

cluding migrant workers, in particular women

migrants, and those in precarious employment.

• We operate sustainably in our purchasing ac-

tivities. We avoid the use of minerals from con-

flict zones and counterfeit materials. These is-

sues are covered by our monitoring processes.

The requirements related to purchasing as well

as procedures related to minerals from conflict

zones and counterfeit materials are published

on our website.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Customer

Relationships

Built on Trust

The cornerstone of trust-based customer

relationships is to take into account the spe-

cial requirements related to Bittium’s cus-

tomers’ operating industry and technology.

Bittium achieves this by carefully managing

product information, among other things.

Bittium has continued the development of

product information management that be-

gan in 2020 and the deployment of relat-

ed tools. As the project involves checking

that all existing product information is up-

to-date, the work will continue in 2022. The

plan is to also expand the use of the sys-

tem in 2022.

Bittium’s working methods are character-

ized by a strong focus on information secu-

rity and ensuring the confidentiality of the

customers’ data. The products are designed

to be secure, always taking the customers’

needs into account. Bittium’s Code of Con-

duct is also an integral element of the com-

pany’s secure and responsible way of work-

ing with customers and other stakeholders.

Systems and

Standards

Standards define the industry’s common

operating methods that make life easier for

the authorities as well as the companies in

the industry. Standardization also makes it

easier to promote global exports.

Certified integrated management systems

are an important tool with which Bittium

can improve its efficiency and reliability,

transparency and customer satisfaction.

Customers increasingly expect Bittium’s

products and working methods to be stan-

dardized and certified.

Bittium had six certified systems in use at

the end of 2021. All in all, 400 different stan-

dards, approximately 100 of them on a daily

basis, are observed in the company’s opera-

tions. All of Bittium’s management systems

are audited by an external party each year.

Bittium also applies product branch-spe-

cific product approval procedures, such as

MDSAP (Medical Single Audit Program) in

health technology products. The changes

in procedures, products and approval pro-

cesses arising from the EU Medical Device

Regulation were taken into account in Bit-

tium’s Medical Technologies business in

2021.

The relevant industry standards are applied

in the design of the electrical safety and per-

formance features of Bittium’s products.

Customer, country and market-specific re-

quirements are also taken into account in

hardware development.

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).

Product development projects are also au-

dited in accordance with the PSSL (Product

Safety, Security and Liability) audit proce-

dures as part of Bittium’s End Product Pro-

cess (EPP) requirements. Employees re-

ceive PSSL product liability training.

Information Security

Management System

Ensuring information security constitutes

such an integral part of Bittium’s business

that the company has developed a specif-

ic management system, including a man-

agement group, for this purpose. Informa-

tion security objectives and responsibilities

as well as the resourcing of operations are

defined in the system.

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

397

STANDARDS AND DIRECTIVES

OBSERVED

Sustainability at Bittium in 2021

Bittium Annual Report 2021

The management system covers informa-

tion security-related policies, guidelines and

templates pursuant to the relevant stan-

dards and requirements (ISO 27001, Katakri

2015 and FSC) as well as the requirements

set by the customers and by law. In prac-

tice, they completely cover the information

security of the company’s operations and

also the information security of the physi-

cal premises and employees.

Bittium has a real-time monitoring system

for information security threats, and the em-

ployees also report any information secu-

rity threats they observe. Employees also

receive training on the use of working meth-

ods and procedures that help maintain a

high level of information security.

No serious information security non-con-

formities were observed in 2021.

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.

Sustainable

Purchasing

Bittium’s products contain a range of elec-

tronic and mechanical components. The

sustainability of the purchasing chain is en-

sured, for instance, through material and

component supplier requirements and ma-

terial assessments. Bittium maintains a da-

tabase in which it records all the materials

and substances contained in components.

Bittium conforms to sustainable business

practices and requires the same of its sup-

pliers. The company’s partners must com-

ply with Bittium’s Code of Conduct as well

as the Bittium Supplier Requirements. The

Bittium Supplier Quality Manual was updat-

ed with details in 2021, and it is available on

Bittium’s website. Suppliers are always ex-

pected to comply with the latest version of

the guidelines.

Suppliers are also audited according to

pre-defined criteria. Audits are carried out

as a self-assessment based on the Bit-

tium Supplier Requirements or as an audit

conducted by Bittium. Most of the audits

conducted in 2021 were based on self-as-

sessment. However, especially in Finland,

conducting audits physically at the suppli-

ers’ premises was possible to some extent

in spite of the pandemic. As regards inter-

national suppliers, local partners have been

used for audits. This approach has enabled

on-site audits in China, for example.

In 2021, Bittium started a development proj-

ect entitled Marimin with the aim of finding

more Finnish and European suppliers of crit-

ical components. A large number of suppli-

ers has been evaluated under the project

and, for certain critical components, it has

been possible to move deliveries to Finland

and Europe.

Employee training is also an important part

of ensuring sustainable purchasing. Sus-

tainable purchasing is part of the environ-

mental training package that Bittium’s em-

ployees complete independently.

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. In

this way, it can be ensured that the minerals

used in Bittium’s products do not originate

from conflict or risk zones.

In practice, the legislation requires sus-

tainable purchasing and transparent sup-

ply chains with respect to certain min-

erals, such as tin, tantalum, wolfram and

gold from conflict areas. These minerals

are typically used in household goods and

their electronic components, such as mo-

bile devices and computers. External data-

bases are used for monitoring.

In 2021, 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, config-

uration, certification status or other fea-

ture is presented falsely and with mislead-

ing markings on the material, packaging or

container.

Bittium is aware of the risks associated

with counterfeit materials, both when pur-

chasing materials as ready-to-use compo-

nents and when using the previously men-

tioned raw materials. Bittium is committed

to conducting the necessary assessments

to avoid using counterfeit materials in its

products. The company has developed a

supplier reporting method to avoid the use

of counterfeit materials. The procedures

address different stages of the purchasing

process, starting from the selection of sup-

pliers. Bittium’s employees are trained to

identify counterfeit materials. By combining

product information management with in-

formation in the material database, Bittium

can respond to customer expectations re-

garding real-time information management

in relation to counterfeit materials.

Due to the impact of the global component

shortage on Bittium’s operations, new sup-

pliers have been added to the supply chain

to ensure the availability of certain compo-

nents. While this may only be a temporary

arrangement, diligent assessments have

been conducted on the new suppliers to en-

sure that the materials are authentic.

No counterfeit materials were found in Bit-

tium’s products in 2021.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Bittium operates as a responsible corporate citizen within the sur-

rounding society. The company is a reliable local partner and emp-

loyer. It engages in active and open dialogue with its stakeholders,

acts in accordance with its harmonized operating principles, crea-

tes added value for its shareholders and seeks working methods

and solutions that promote sustainable development.

FOCUS AREA #3

Corporate Citizenship

and Sustainable

Business Practices

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Goals Actions Performance Measures Examples of Results

Anti-corruption Internal anti-corruption training.

Incorporating anti-corruption

principles into cooperation

agreements.

Using an external background

evaluation tool to identify

corruption or other ambiguities

among business partners.

Rate of participation in training.

Observations of ambiguities

or anti-corruption activities,

number of observations per year.

Mandatory digital self-learning

module for new employees, of whom

73% completed the training.

The requirements are available

to all of the company’s partners

on the Bittium website.

No observations in 2021.

Responsible corporate

citizenship

Bittium is actively involved in the

development of local business and

supporting schools and educational

institutions.

Reviewing the export control

system from the perspective

of internal process development.

Continuous monitoring and adoption

of laws and regulations.

Participation in various working

groups, supporting non-profit

organizations.

Number of visits to educational

institutions, number of participants.

Making the processing of export

control applications more efficient.

Monitoring laws and regulations

that are of relevance to Bittium.

In 2021, Bittium had 8 research

projects under way with universities

and research institutes. Bittium

donated EUR 50,000 to research

in the field of technology at the

University of Oulu.

No visits to educational institutions

were made during the year due to the

pandemic.

Application filing procedures have

become more efficient.

Monitoring and adoption of new and

amended regulations; dozens of

changed regulatory requirements

in 2021.

Developing stakeholder

cooperation

Further improving Bittium’s

understanding of stakeholder

views and expectations.

Developing even more open dialogue

between stakeholders.

The form of stakeholder engagement

has been changed due to the pande-

mic, shifting the focus to webinars,

for example.

Alignment between

the Focus Area and

the UN’s Sustainable

Development Goals

Strengthen the means of implementation

and revitalize the global partnership for

sustainable development.

17.17 Encourage and promote effective public,

public-private and civil society partnerships,

building on the experience and resourcing

strategies of partnerships.

• We engage in dialogue with our customers

and partners regarding the solutions we

develop so that we can produce appropriate

and resource-efficient products that benefit

our customers and society while reducing

waste.

Ensure sustainable consumption

and production patterns.

12.6 Encourage companies, especially large

and transnational companies, to adopt

sustainable practices and to integrate

sustainability information into their reporting

cycle.

12.7 Promote public procurement practices

that are sustainable, in accordance with

national policies and priorities.

• We set an example by reporting on the

planning, implementation and results

of our sustainability actions in our annual

sustainability report. We take a systematic

approach to the development of our

sustainability efforts and the reliability

of our reporting.

• We cooperate with our customers to

ensure that we can take sustainability into

consideration in our products and operations

to the greatest possible extent, including

environmental sustainability.

• We publish more detailed requirements

for our partners on our public website

with regard to quality, the environment

and information security.

Promote peaceful and inclusive

societies for sustainable development,

provide access to justice for all and

build effective, accountable and

inclusive institutions at all levels.

16.5 Substantially reduce corruption

and bribery in all their forms.

• We are committed to the prevention of

corruption in accordance with our anti-

corruption statement and we report

corruption incidents as part of our

sustainability reporting.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Each year, Bittium participates in many dif-

ferent Finnish, European and international

development projects. In 2021, Bittium was

involved in significant development projects

in the industry, including iMUGS and Cyber-

Factory#1.

The iMUGS (integrated Modular Unmanned

Ground System) project under the European

Defence Industrial Development Program-

me (EDIDP) develops new capabilities for the

defense forces of European countries based

on autonomous systems.

In the project, Bittium is responsible for the

execution of resilient and networked data

transfer, including both tactical communica-

tions and data transfer over commercial 4G

and 5G cellular networks. The iMUGS project

began in 2021 and its duration will be appro-

ximately 30 months.

CyberFactory#1 (CF#1) aims to design, de-

velop, integrate and demonstrate a set of

key capabilities to promote the optimization

and resilience of the Factory of the Future.

The project involves 28 parties from seven

countries, including pilot users and supp-

liers as well as research and academic orga-

nizations. It thereby covers various technical,

financial, human and societal dimensions.

Bittium’s role has been to develop cyber se-

curity architecture and capabilities in its pro-

ducts and manufacturing support systems,

such as device management solutions.

There are constant changes in legislation

and regulations in the industries that Bit-

tium represents. For example, in 2021, regu-

lations pertaining to medical devices ente-

red into effect, such as the Medical Device

Regulation (MDR), which has also affected

Bittium’s operations. Regulatory develop-

ments pertaining to cyber security and the

environment are also on the horizon.

As in the previous year, due to the coronavi-

rus pandemic, Bittium was unable to arrange

visits to educational institutions, which the

company considers important under normal

circumstances.

74 Sustainability at Bittium in 2021

Bittium Annual Report 2021

Bittium continuously monitors the impacts of

the company’s operations and the added value

it creates for different stakeholders. The com-

pany’s key stakeholders include shareholders,

customers, employees, partners and other sup-

pliers as well as the public sector. More informa-

tion on stakeholder cooperation is provided un-

der ‘Sustainability management’.

Good Corporate

Governance

Guides Sustainability

The management of Bittium Corporation

is governed by the Articles of Association,

Finnish law and Bittium’s governance guide-

lines. Bittium observes the Finnish Corpo-

rate Governance Code 2020 published by

the Securities Market Association, which en-

tered into force on 1 January 2020. Bittium’s

Corporate Governance Statement is avail-

able at www.bittium.com.

GRC (governance, risk management and

compliance) refers to the skills and abili-

ties that enable an organization to meet its

targets, address uncertainties and operate

with integrity. Bittium’s GRC measures also

include the company’s framework for inter-

nal control.

Export Control

With respect to Bittium’s customers, export

control constitutes an important part of op-

erations. Effective export control is a pre-

condition for successful cooperation with

the authorities as well as customers. Bittium

is one of the first companies in its size cat-

egory to incorporate a comprehensive ex-

port control system into its management

system. Bittium closely monitors changes in

legislation in different market areas. In 2021,

the company continued to cooperate with

the authorities on prior declarations, which

has resulted in smoother processing of ap-

plications.

CEO

ENGINEERING

Product development personnel,

competence management, business

premises, measurement devices

PRODUCT OPERATIONS

Product delivery, after-market services,

purchasing, logistics

DEFENSE & SECURITY

Business management, program

management, product management, sales

CONNECTIVITY SOLUTIONS

Business management, program

management, solutions management,

sales, technology management

Creation of

shareholder

value

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

Corporate governance, operating principles, risk management, compliance, sustainability

Values, Code of Conduct, ethics

Vision and strategy

Products

MEDICAL TECHNOLOGIES

Business management, program

management, service management, sales

MARKETING

Marketing and PR

CUSTOMER

Services

Planning and

monitoring of

strategy

Strategy

execution

Operational

efficiency

Financial

reporting

MANAGEMENT

Solutions marketing and sales

Solutions development and management

Delivery of service solutions

Delivery of product solutions

The Board of Directors

SALES

Support functions: HR management, legal department, financial administration,

information management, the environment and processes

Corporate governance,

risk management and

compliance at Bittium

Sustainability at Bittium in 2021

Bittium Annual Report 2021

FOCUS AREA #4

Environmental Sustainability

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Actions Performance Measures Situation in 2020 Target 2021 Result in 2021

Continuous improvement

of the waste recovery rate

Recovery rate (%) Recovery rate 99.84% Recovery rate over 95% 99.08%

Reducing the overall

carbon footprint

Carbon footprint/emplo-

yee (CO

e kg/employee).

1,130 CO

e kg/employee.

Note! The figure is not

entirely accurate due

to incomplete data. For

example, the estimate

does not include all of the

company’s travel-related

emissions because not

all business travel was

booked through the des-

ignated travel agency.

<2,900 CO

e kg/

employee. This target

is assessed for a

three-year period based

on the available data.

1,096 CO

e kg/employee.

Note! The emission fac-

tors have changed from

the previous calculation

due to a change in statis-

tical methods.

Maximize the use of

renewable energy

Rate of solar power usage

at the Oulu office.

The solar power plant

generates approximately

10–13% of the energy con-

sumed by the Oulu office

from May to August. This

represents approximately

5% of the annual energy

consumption of the Oulu

office.

Solar power represents

over 10% of the Oulu of-

fice’s energy consump-

tion during the summer

months.

The solar power plant

generates approximately

9–13% of the energy con-

sumed by the Oulu office

from May to August. This

represents approximately

5% of the annual energy

consumption of the Oulu

office.

Share of renewable

energy of purchased

energy

Evaluating energy

consumption at each

location.

Energy transmission files

and energy profiles are

available for each office to

the extent required for the

performance indicators.

Indicators are available

for each office.

Energy transmission files

and energy profiles are

available for each office to

the extent required for the

performance indicators.

Increasing environmental

awareness among

Bittium’s employees

The employees’ rate of

participation in training

(%).

58% of new employees

participated in the man-

datory training. Voluntary

further training was not

organized.

Mandatory basic training:

60% of new employees.

Voluntary further training:

50%. Core target groups:

operation, product man-

agement, project man-

agement and device en-

gineering.

58% of new employees

participated in the man-

datory training. Voluntary

further training was not

organized.

Promote sustained, inclusive and

sustainable economic growth, full

and productive employment and

decent work for all.

8.4 Improve progressively, through 2030,

global resource efficiency in consumption

and production and endeavor to decouple

economic growth from environmental

degradation, in accordance with the 10-Year

Framework of Programmes on Sustainable

Consumption and Production, with developed

countries taking the lead.

• We recognize the need for resource

efficiency and respond by observing various

environmental standards in our operations.

Ecological design is the starting point of our

product development.

Ensure sustainable

consumption and

production patterns.

12.2 By 2030, achieve the sustainable

management and efficient use of natural

resources.

12.5 By 2030, substantially reduce waste

generation through prevention, reduction,

recycling and reuse.

• We pay special attention to the use of

renewable energy, our waste recovery rate

and the reduction of waste at our operating

locations and report them as part of our

sustainability reporting.

Alignment between

the Focus Area and

the UN’s Sustainable

Development Goals

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Management

of Environmental

Sustainability

at Bittium

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. In accor-

dance with its environmental policy, Bittium

is committed to minimizing the environ-

mental impacts of the production, use and

disposal of products. The ISO 14001 stan-

dard is applied to Bittium’s environmental

management system and the principles of

sustainable development are observed in

accordance with the standard in the follow-

ing ways, for instance:

• Monitoring and observing amendments

to the laws and regulations concerning

environmental protection. Also includes

the use of energy-efficient solutions in

R&D (ecological design) and at business

premises.

• 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.

The Company regularly monitors the inter-

national environmental requirements that

govern its products as well as the local reg-

ulations derived from these. The require-

ments also extend to our major suppliers.

The provisions of the ROHS directives (I, II

and III), the REACH regulation (on hazard-

ous substances) as well as the WEEE (re-

cycling of waste electronic and electrical

equipment) directive have been applied in

Bittium’s product design since 2002. Com-

panies are under the obligation to report any

substances of very high concern (SVHCs)

in their products to the SCIP database for

information on Substances of Concern

In articles as such or in complex objects

(Products), maintained by the European

Chemicals Agency (ECHA) effective from

the beginning of 2021. SCIP has not had a

significant impact on Bittium’s operations.

Although regulations prohibiting the use of

halogens in electronics have not been in-

troduced yet, Bittium aims to offer halo-

gen-free products whenever alternatives to

halogen components that meet the rele-

vant functional requirements are available.

Bittium’s halogen-free statement conforms

to the IEC (International Electrochemical

Commission) definition of halogen-free ma-

terials (IEC 61249-2-21).

Circular economy principles are taken into account

in Bittium’s product design and product development

Bittium’s business is mainly focused on product design, sales

and marketing. Product assembly is performed by manufacturing

partners. Bittium’s share in the early part of the product life cycle

only accounts for a small proportion of the products’ life cycle im-

pacts. The greatest environmental impact occurs during the last

stage of the product life cycle, i.e. recycling. Eco-friendliness is a

starting point for all product design and product development at

Bittium. Accordingly, circular economy principles are increasingly

taken into account in these activities.

Bittium’s products are designed to have long life cycles and to be

repairable and recyclable. In the case of many defence industry

products, for example, the company must be able to guarantee

operational reliability and delivery reliability for several decades.

These products include a maintenance service that involves de-

vice maintenance and updates. Material cycles are created in re-

lation to product repairs or returns related to the product life cy-

cle, for example. The information security risks associated with

the products are also taken into account in this context. Bittium

disassembles decommissioned products, sorts the components

and recycles them appropriately.

Bittium’s product design and product development activities aim

for compliance with the EU Ecodesign Directive, which is intended

to improve the energy efficiency of products by integrating envi-

ronmental perspectives and life cycle thinking into the product

design stage. The Directive is in the process of being expanded

to also address the impacts of software production on the life cy-

cle assessment of a product’s ecological footprint. Bittium has

participated in the authorities’ work on the Directive at the Finn-

ish and EU levels.

Environmental Program

2020–2022,

Performance Measures

and Results Achieved in 2021

Bittium started an environmental program in 2020 that will con-

tinue until 2022. In the program, it was determined that the areas

that are the most relevant to reducing Bittium’s carbon footprint

include the recycling of waste generated by the company’s oper-

ations, the use of renewable energy and increasing environmental

awareness among Bittium’s employees. Four targets were set for

the environmental program:

1. Maintaining the waste recovery rate at over 95 percent

2. Maximizing the use of renewable energy

3. Increasing the share of renewable energy in energy purchasing

4. Increasing environmental awareness among employees.

We achieved our environmental sustainability targets in 2021.

• Our total carbon footprint was 719 tCO

e, 1,096 kg CO

e/emplo-

yee (2020: 753 tCO

e, 1,130 kg CO

e/employee; 2019: 1,153 tCO

1,755 kg CO

e/employee; 2018: 1,219 tCO

e, 2,865 kg CO

e/emp-

loyee). The lower carbon footprint was attributable to a signi-

ficant reduction in air travel due to the coronavirus pandemic

and a change in the calculation method concerning emissions

generated by waste.

• At its highest, the share of solar power of the electricity consu-

med at the Oulu office was 13.5 percent (2020: 13%, 2019: 11.9%,

2018: 12%).

• Bittium utilizes in its carbon footprint calculations accu-

rate information on the properties available and the infor-

mation available from the properties where Bittium is for

rent. This includes for example available waste information.

In addition Bittium acknowledges for example the CO

emission

co-efficiency factors published by the Finnish Statistical Center

for the average district heating production from which the avera-

ge of last three years is calculated. For this reason, benchmarks

for the carbon footprint may vary slightly from year to year.

• Altogether 104 employees (15.9 percent of the personnel)

completed the test included in the environmental training mo-

dule.

Most of the waste generated by Bittium is packaging waste. The

waste volume has remained relatively stable since 2018 in spite

of the delivery volumes of Bittium’s products increasing over the

years. This is due to Bittium’s manufacturing partners taking a

larger role in the supply chain and a larger share of manufac-

tured components and partial assemblies being delivered directly

to factories. The packaging modules have also been simplified.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Bittium’s environmental sustainability indicators, Oulu Office

28.4 tons

WASTE

1.5% less than in 2020

/ employee

1,752

ELECTRICITY

3.8

/ employee3.3% less than in 2020

420

HEATING

0.9

/ employee85.8% less than in 2020*

1,073

WATER

/ employee

2.3

15.6% less than in 2020

Environmental Sustainability Indicators 2017–2021

(Trend), Oulu Office

Sustainability at Bittium in 2021

THE GROUP’S

CARBON FOOTPRINT

kg CO

718,690

1,096

kg CO

employee / year

Premises

/ Heating

Travel

/ Flying

Premises

/ Electricity

consumption

Travel

/ Road transport

Waste

Environmental Sustainability Indicators

The company is following the annual level of environmental protec-

tion continuously. The following indicators have been selected as

essential environmental environmental sustainability indicators.

ELECTRICITY CONSUMPTION

2017 2018 2019 2020 2021

3 000

2 000

1 000

1,752

MWh

WASTE VOLUME

2017 2018 2019 2020 2021

28.4

tons

* The significant growth of heating consumption year-on-year

resulted by the returning to work at office part-time as the corona-

virus pandemic temporarily eased, as well as the failures of the

heating capture system.

Reporting Basics

and Principles

Scope of Reporting

This sustainability report, as a part of the

annual report, is the fourth extensive report

on the management and implementation

of sustainability at Bittium. In 2021, Bittium

has implemented actions on topics related

to sustainability according to the sustain-

ability program and developed its sustain-

ability metrics, providing more information

on the impacts. The sustainability program

is based on the materiality analysis con-

ducted in 2019, which aimed at gaining an

understanding of stakeholders´ views on

previously selected sustainability focus ar-

eas. With the materiality analysis, the com-

pany updated its sustainability focus areas

and created a sustainability program for the

years 2020–2022.

In order to enable comparability, Bittium´s

sustainability report is based on the Global

Reporting Initiative (GRI) Standards frame-

work. The table at the end of the report con-

tains references to the relevant elements of

the GRI Standards framework. The report

covers all four sustainability focus areas

and a description of Bittium´s financial ef-

fectiveness. The financial data is collected

from Bittium´s financial information sys-

tems, and the majority of personnel data

is from HR management systems. The re-

ported financial figures are based on Bit-

tium´s audited financial statements from

2020 and 2021.

Reporting

Bittium selected its reporting model on the

basis of Bittium´s sustainability principles,

taking into account the GRI framework and

the focus areas of the Company´s business:

wireless, secure communications in B2B

operations. Bittium has customers both in

Finland and in other countries. However, the

majority of operations and most of the per-

sonnel are located in Finland.

This report will be published in electronic

form 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

report is the same as the financial period,

January 1–December 31, 2021. Environmen-

tal data is not reported from offices where

the Company only uses a part of the office

premises.

The report does not cover all suppliers or ser-

vice providers. In other respects, the report

covers all the operations of Bittium Corpo-

ration and its subsidiaries.

Sustainability at Bittium in 2021

Bittium Annual Report 2021

Reporting Principles

and Instructions

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 2021 sustainability report follows the

core level of the GRI Standards guidelines.

The sustainability report has not been ve-

rified by an independent third party. The

figures presented in the ´Financial effec-

tiveness´ section are based on the Group´s

audited financial statements.

Sustainability Contact

at Bittium

Karoliina Malmi

Vice President,

Communications and Marketing

kar[email protected]

102-1 Name of the organization Bittium in Brief Page 8

102-2

Industries, brands, products,

and services

Bittium in Brief;

Bittium Products and Services

Page 8

Page 13

102-3 Location of headquarters Bittium in Brief Page 8

102-4 Location of operations Bittium in Brief Page 8

102-5 Ownership and legal form

Bittium in Brief,

Corporate Governance

Page 8

Page 24

102-6 Markets served Bittium in Brief Page 8

102-7 Scale of the organization Bittium in 2021 Page 4

102-8

Information on employees

and other workers

Innovative and developing people Page 62

102-9 Supply chain

Suppliers and Partners;

Sustainable Purchasing

Page 55

Page 71

102-10

Significant changes

to the organization

and its supply chain

Report by the Board of Directors;

Customer Relations Built on Trust

Organization: Changes in the

Management Group, Sales

organization as part of

Product and Services

organizations

Page 100

Supply chain: Deliveries of

components transferred to

Europe and Finland

Page 71

102-11 Precautionary Principle or approach Risk Management Page 41

102-12 External initiatives None

102-13 Membership of associations Technology Industries of Finland

102-14 Statement from CEO CEO Review Pages 6–7

102-15 Key impacts, risks, and opportunities

Business and Operating Environment;

Main features of Internal Control and

Risk Management Processes related to

Financial Reporting Processes;

Report by the Board of Directors

Page 8

Page 41

Page 86

Organization

Strategy

GRI 102 GENERAL DISCLOSURES

G4 Title Location Additional info / comments

Sustainability at Bittium in 2021

Bittium Annual Report 2021

102-16

Values, principles, standards,

and norms of behavior

Corporate Citizenship and

Sustainable Business Practices;

Value Creation Model

Page 72

Pages 52–53

102-17

Mechanisms for advice

and concerns about ethics

Corporate Citizenship and

Sustainable Business Practices

Page 72

Pages 52–54

102-18 Governance structure Corporate Governance Page 31

102-19 Delegating authority

Corporate Governance;

Sustainability Management

Page 31

Page 54

102-20

Executive-level responsibility

on economic, environmental,

and social topics

Sustainability Management,

Stakeholder Organization, and Risk Management

Page 54

102-21

Consulting stakeholders on economic,

environmental, and social topics

Stakeholder cooperation;

Corporate Citizenship and

Sustainable Business Practices

Page 55

Page 72

102-22 Composition of the Board Corporate Governance Page 31

102-23 Chairman of the Board Corporate Governance Page 31

102-24 Election of the Board Corporate Governance Page 31

102-31

Review of economic, environmental,

and social topics

Sustainability Management Page 54

102-32

Highest governance body’s role i

n sustainability reporting

Sustainability Management Page 54

102-35

Remuneration of Board of Directors

and Management

Corporate Governance;

Remuneration Report

Page 30

www.bittium.com/investors/

corporate-governance/salary-

and-remuneration-report

102-40 List of stakeholder groups Stakeholder Cooperation Page 55

102-42 Identifying and selecting stakeholders Stakeholder Cooperation Page 55

102-43 Approach to stakeholder engagement Stakeholder Cooperation Page 55

102-44 Key topics and concerns raised Stakeholder Cooperation

Materiality analysis online:

annualreport2019.bittium.com/

sustainability_report/

focus_areas_in_sustainability

Page 55

102-45

Entities included in the

consolidated financial statements

Notes to the Consolidated Financial Statements;

32. Related Party Disclosures

Page 144

102-46

Defining report content

and topic Boundaries

Sustainability at Bittium in 2021;

Scope of reporting

Page 57

Page 80

102-47 List of material topics Sustainability Program 2020–2022 Page 57

102-48 Restatements of information

GRI Standard Content Index,

Environmental Sustainability

Page 81

The emission factors used have

changed from the previous cal-

culation due to a change in sta-

tistical methods.

102-49 Changes in reporting

GRI Standard Content Index,

Environmental Sustainability

Page 76

102-50 Reporting period Reporting Basics and Principles Page 80

102-51 Date of most recent report GRI Standard Content Index 19.3.2021

102-52 Reporting cycle Reporting The report is published annually.

Reporting Principles

Ethics and Integrity

Governance

Stakeholder Engagement

GRI 102 GENERAL DISCLOSURES

G4 Title Location Additional info / comments

Sustainability at Bittium in 2021

Bittium Annual Report 2021

306 Effluents and Waste

GRI 102 GENERAL DISCLOSURES

GRI 103 MANAGEMENT APPROACH

102-53

Contact point for questions

regarding the report

Reporting

Karoliina Malmi,

Vice President,

Communications and Marketing

karoliina.malmi@bittium.com

Page 81

102-54

Claims of reporting in accordance

with the GRI Standards

Reporting Basics and Principles Page 80

102-55 GRI content index GRI Standard Content Index Page 81

102-56 External assurance Reporting Basics and Principles Page 80

TOPICAL CONTENT

Financial Impacts

201-1

Direct economic value generated

and distributed

Financial Influence Pages 58–59

201-4

Financial assistance received

from government

Notes to the Consolidated Financial Statements;

4. Other Operating Income

Page 117

205-3

Confirmed incidents of corruption

and actions taken

Corporate Citizenship and

Sustainable Business Practices

No violations

Page 72

201 Economic Performance

205 Anti-corruption

103-1

Explanation of the material topic

and its Boundary

GRI Standard Content Index;

Focus Areas in Sustainability

Calculation boundary:

Bittium Corporation

Page 81

Page 60

103-2

The management approach

and its components

Sustainability Management;

Focus Areas in Sustainability

Page 54

Page 60

103-3

Evaluation of the management

approach

Sustainability Management Page 54

301-1 Materials used by weight or volume Environmental Sustainability

Bittium does not use paper, car-

ton, or metals to manufacture its

products. Bittium reports mate-

rial waste and the recycling rate

associated with the use of mate-

rials at its operating locations.

Pages 78–79

302-1

Energy consumption within

the organization

Environmental Sustainability Pages 78–79

302-4 Reduction of energy consumption Environmental Sustainability Pages 77–79

303-1 Water withdrawal by source

Environmental Sustainability;

Environmental Sustainability Indicators

Total and per-capita water

consumption figures are report-

ed for Bittium’s operating loca-

tions. No water is used in the

manufacture of products.

Page 79

305-1 Direct (Scope 1) GHG emissions Environmental Sustainability

Reported carbon footprint.

Pages 78–79

306-2 Waste Environmental Sustainability Pages 78–79

307-1 Environmental compliance Environmental Sustainability

Database of applicable environ-

mental laws and regulations

Environmental Impacts

302 Energy

301 Materials

303 Water

305 Emissions

306 Effluents and Waste

307 Non-compliance with Environmental Laws and Regulations

G4 Title Location Additional info / comments

Sustainability at Bittium in 2021

Bittium Annual Report 2021

403-1

Occupational health

and safety management system

Innovative and Developing People;

Well-being and Occupational Safety

Page 66

403-2

Hazard identification,

risk assessment, and

incident investigation

Innovative and Developing People;

Well-being and Occupational Safety

Bittium continuously develops its occupational

safety processes and risk management. More in-

formation pertaining to subcontractors is provid-

ed in Bittium’s Supplier Manual: www.bittium.com/

about-bittium/suppliers/supplier-manual

Page 66

403-3 Occupational health services

Innovative and Developing People;

Well-being and Occupational Safety

Occupational health services beyond the scope

of the statutory requirements cover 99% of the

personnel. The provision of occupational health

services as part of compliance with the Act on

Contractor’s Liability is part of Bittium’s subcon-

tracting process.

Page 66

403-4

Worker participation, consultation,

and communication on occupational

health and safety

Innovative and Developing People;

Well-being and Occupational Safety

Page 66

403-5

Worker training on

occupational health and safety

Innovative and Developing People;

Well-being and Occupational Safety

All Bittium operating locations have appropriate

safety plans in place, and safety issues are

addressed in Bittium’s orientation training program.

Occupational health information is regularly

communicated to the personnel. Subcontractors

are responsible for the occupational health and

occupational safety training of their employees

in accordance with their respective principles.

Bittium provides orientation training to subcontrac-

tors who work on Bittium’s premises. Subcontrac-

tors who work on the premises of Bittium’s custom-

ers receive orientation training from the customer

in question. In other respects, subcontractors are

responsible for training their employees.

Page 66

403-6 Promotion of worker health

Innovative and Developing People;

Well-being and Occupational Safety

Page 66

403-7

Prevention and mitigation

of occupational health and

safety impacts directly linked

by business relationships

Customer Relationships

Built on Trust and Secure Products;

Sustainable Purchasing,

Innovative and Developing People;

Statement of Non-financial Information

More information pertaining to subcontractors

is provided in Bittium’s Supplier Manual:

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

supplier-manual

Page 71

Page 62

Page 98

403-8

Workers covered by an occupational

health and safety management system

Innovative and Developing People;

Well-being and Occupational Safety

Bittium Employees.

Page 67

403-9 Work-related injuries

Innovative and Developing People;

Well-being and Occupational Safety

In 2021, there were 3 near misses and 3 occupation-

al accidents reported at Bittium companies in

Finland. None of them resulted in incapacity for

work or an obligation to pay compensation under

the Accidents at Work and Occupational Diseas-

es Act.

Page 66

403-10 Work-related ill health

Innovative and Developing People;

Well-being and Occupational Safety

The sickness-related absence rate was 3% in 2021

(calculated from the occupational health service

provider’s data, day/employee vs. theoretical regular

working hours). Bittium does not have access to this

data with regard to workers from staffing services.

Page 66

404-1

Average hours of training

per year per employee

Innovative and Developing People

Reported hours of training per employee

Pages 62, 67

404-2

Programs for upgrading employee skills

and transition assistance programs

Innovative and Developing People Page 65

405-1

Diversity of governance bodies and

employees

Diversity Principles

of the Board of Directors;

Innovative and Developing People

Page 32

Page 66

419-1

Non-compliance with

laws and regulations

in the social and economic area

Sustainable Purchasing;

Statement of Non-financial Information

No violations

• Anti-corruption: pages 54, 72, 99

• Conflict minerals: page 71

• Counterfeit materials: page 71

Social Impacts

403 Occupational Health and Safety

404 Training and Education

405 Diversity and Equal Opportunity

419 Socioeconomic Compliance

G4 Title Location Additional info / comments

Sustainability at Bittium in 2021

Report by the

Board of Directors

and Financial

Statements 2021

Contents

The Bittium Group Financial Statements, IFRS

Report by the Board of Directors 86

Consolidated Statement of Comprehensive Income 104

Consolidated Statement of Financial Position 105

Consolidated Statement of Cash Flows 106

Consolidated Statement of Changes in Equity 107

Notes to the Consolidated Financial Statements

Accounting Principles for the Consolidated Accounts 108

1 Operating Segments 114

2 Discontinued Operations 116

3 Net Sales 116

4 Other Operating Income 117

5 Other Expenses 117

6 Depreciations and Impairments 118

7 Employee Benefit Expenses and Number of Personnel 118

8 Research and Development Expenses 119

9 Financial Expenses (Net) 119

10 Income Taxes 119

11 Earnings per Share 120

12 Property, Plant and Equipment 121

13 Intangible Assets 123

14 Acquisitions 126

15 Shares in Associated Companies 127

16 Other Financial Assets 128

17 Deferred Tax Liabilites and Assets 128

18 Inventories 130

19 Trade and Other Receivables (Current) 130

20 Financial Assets at Fair Value Through Profit or Loss 131

21 Cash and Short-Term Deposits 131

22 Issued Capital and Reserves 132

23 Share-Based Payment Plans 133

24 Provisions 135

25 Financial Liabilities 135

26 Changes in Liabilities Arising from Financing Activities 137

27 Trade and Other Payables 137

28 Financial Risk Management 138

29 Adjustments to Net Cash from Operating Activities 143

30 Operating Lease Agreements 143

31 Securities and Contingent Liabilities 144

32 Related Party Disclosures 144

33 Key Ratios 146

34 Shareholdings and Shares 149

The Parent Company Financial Statements, FAS

Income Statement, Parent 151

Balance Sheet, Parent 152

Cash Flow Statement, Parent 153

Accounting Principles for the Preparation

of Financial Statements, Parent 154

Notes to the Financial Statement of the Parent Company 155

Proposal by the Board of Directors

on the Use of the Profit Shown on the Balance Sheet

and the Payment of the Dividend 162

Auditor’s Report 163

8686

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Report by the Board

of Directors 2021

Year 2021 in Short

Net Sales Increased over 10%

in 2021

• Net sales were EUR 86.9 million

(EUR 78.4 million), representing a

10.8 percent increase year-on-year.

• The share of product-based net sales

was EUR 63.1 million (EUR 53.1 million),

representing 72.6 percent of the net

sales. The share of Medical Technologies

products was EUR 27.8 million

(EUR 17.4 million) and the share of

Defense & Security products was

EUR 35.3 million (EUR 35.8 million).

• The share of services-based net sales

was EUR 23.8 million (EUR 25.3 million),

representing 27.4 percent of the net

sales. The share of Connectivity Solu-

tions R&D services was EUR 15.5 million

(EUR 15.9 million).

• EBITDA was EUR 13.7 million

(EUR 13.5 million).

• Operating result was EUR 3.2 million

(EUR 2.1 million).

Unless otherwise mentioned, the figures in brackets refer

to the corresponding period in the previous year.

• Result for the period was EUR 3.3 million

and earnings per share were EUR 0.093

(result for the period EUR 2.2 million and

earnings per share EUR 0.061).

• Cash flow from operating activities was

EUR 8.3 million (EUR 6.9 million).

• Net cash flow was EUR -2.6 million

(EUR -10.5 million).

• The order backlog was EUR 29.5 million

(EUR 27.6 million)

• The Board of Directors of Bittium Corpo-

ration proposes to the Annual General

Meeting of shareholders to be held on

April 6, 2022, resolve to pay EUR 0.04

per share as dividend based on the

adopted balance sheet for the financial

period of January 1–December 31, 2021.

Bittium’s net sales in January–December

2021 increased by 10.8 percent year-on-

year to EUR 86.9 million (EUR 78.4 million).

The share of product-based net sales was

EUR 63.1 million (EUR 53.1 million), repre-

senting 72.6 percent of the net sales. The

share of Medical Technologies products

was EUR 27.8 million (EUR 17.4 million) and

the share of Defense & Security products

and systems was EUR 35.3 million (EUR

35.8 million). The increase in product-based

net sales resulted from the growth in the de-

mand for Medical Technologies business’

Faros ECG monitoring devices.

The share of services-based net sales was

EUR 23.8 million (EUR 25.3 million), repre-

senting 27.4 percent of the net sales. The

share of Connectivity Solutions R&D ser-

vices was EUR 15.5 million (EUR 15.9 million),

resulting mainly from R&D services for wire-

less telecommunication customers.

EBITDA for January–December 2021 was

EUR 13.7 million (EUR 13.5 million). EBITDA

was affected by increased production costs,

which was mainly due to additional costs

caused by the component shortages. The

level of R&D investments decreased, which

reflected as a decrease in R&D expenses

capitalized in the balance sheet. Maintain-

8787

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

ing the expanding product portfolio com-

petitive increases the annual continuing

product development costs.

Operating result in January–December

2021 was EUR 3.2 million (EUR 2.1 million).

Cash flow from operating activities was

EUR 8.3 million (EUR 6.9 million). Net cash

flow during the period was EUR -2.6 million,

including as the most significant items

EUR 7.0 million R&D investments into own

products and EUR 1.1 million dividend pay-

ment (EUR -10.5 million, including as the

most significant item EUR 13.6 million

R&D investments into own products, no

dividends was paid during the compari-

son period).

The equity ratio was 72.4 percent (73.1 per-

cent).

Net gearing was 0.2 percent (-1.9 percent).

The order backlog at the end of the year

was EUR 29.5 million (EUR 27.6 million).

Report by the Board of Directors and Financial Statements

CONSOLIDATED STATEMENT

OF COMPREHENSIVE INCOME, MEUR

2021

12 months

2020

12 months

Net sales 86.9 78.4

Operating profit / loss 3.2 2.1

Financial income and expenses -0.7 -0.4

Result before tax 2.5 1.6

Result for the period 3.3 2.2

Total comprehensive income for the period 3.6 1.9

Result for the period attributable to:

Equity holders of the parent 3.3 2.2

Total comprehensive income for the period attributable to:

Equity holders of the parent 3.6 1.9

Earnings per share from continuing operations, EUR 0.093 0.061

Financial Performance

in January–December 2021

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Half Year Figures

GROUP’S NET SALES AND OPERATING RESULT, MEUR 2H/21 1H/21 2H/20 1H/20

Net sales 47. 2 39.7 35.8 42.5

Operating profit (loss) 3.9 -0.7 -0.8 2.9

Result before taxes 3.6 -1.0 -0.9 2.5

Result for the period 4.4 -1.0 -0.4 2.5

DISTRIBUTION OF NET SALES BY PRODUCT AND SERVICES, MEUR AND % 2H/21 1H/21 2H/20 1H/20

Product based net sales 35.2 27.9 23.0 30.1

74.5% 70.3% 64.3% 70.7%

Services based net sales 12.0 11.8 12.8 12.5

25.5% 29.7% 35.7% 29.3%

DISTRIBUTION OF PRODUCT-BASED NET SALES, MEUR AND % 2H/21 1H/21 2H/20 1H/20

Defense & Security products 20.8 14.5 15.1 20.6

59.3% 51.8% 65.5% 68.6%

Medical Technologies products 14.3 13.5 8.0 9.5

40.7% 48.2% 34.5% 31.4%

DISTRIBUTION OF SERVICES-BASED NET SALES, MEUR AND % 2H/21 1H/21 2H/20 1H/20

Connectivity Solutions R&D services 7. 7 7. 8 8.0 7.4

63.8% 66.6% 62.4% 58.9%

Other service-based net sales 4.4 3.9 4.8 5.1

36.2% 33.4% 3 7. 6% 41.1%

DISTRIBUTION OF NET SALES BY MARKET AREAS, MEUR AND % 2H/21 1H/21 2H/20 1H/20

Asia 0.3 0.3 0.2 0.2

0.6% 0.6% 0.5% 0.4%

Europe 32.0 25.0 29.3 35.2

6 7.9 % 62.9% 81.7% 82.8%

Americas 14.9 14.4 6.4 7.1

31.5% 36.4% 17.8% 16.7%

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

GROUP’S NET SALES AND OPERATING RESULT, MEUR 4Q/21 3Q/21 2Q/21 1Q/21 4Q/20

Net sales 30.1 1 7.1 22.6 1 7. 0 21.8

Operating profit (loss) 3.7 0.2 0.7 -1.5 0.3

Result before taxes 3.5 0.1 0.5 -1.6 0.2

Result for the period 4.3 0.1 0.5 -1.6 0.7

DISTRIBUTION OF NET SALES

BY PRODUCT AND SERVICES, MEUR AND % 4Q/21 3Q/21 2Q/21 1Q/21 4Q/20

Product based net sales 23.0 12.2 16.7 11.2 14.5

76.5% 71.0% 73.8% 65.7% 66.5%

Services based net sales 7.1 5.0 5.9 5.9 7. 3

23.5% 29.0% 26.2% 34.3% 33.5%

Quarterly Figures

DISTRIBUTION OF NET SALES

BY MARKET AREAS, MEUR AND % 4Q/21 3Q/21 2Q/21 1Q/21 4Q/20

Asia 0.2 0.1 0.1 0.1 0.1

0.6% 0.5% 0.6% 0.7% 0.5%

Europe 21.1 10.9 15.3 9.7 18.8

70.2% 63.8% 6 7. 5% 56.9% 86.2%

Americas 8.8 6.1 7. 2 7. 2 2.9

29.2% 35.7% 31.9% 42.5% 13.3%

DISTRIBUTION OF PRODUCT-BASED

NET SALES. MEUR AND % 4Q/21 3Q/21 2Q/21 1Q/21 4Q/20

Defense & Security products 15.5 5.3 11.2 3.3 10.7

6 7. 6 % 43.4% 66.8% 29.5% 73.6%

Medical Technologies products 7. 4 6.9 5.6 7.9 3.8

32.4% 56.6% 33.2% 70.5% 26.4%

DISTRIBUTION OF SERVICES-BASED

NET SALES, MEUR AND % 4Q/21 3Q/21 2Q/21 1Q/21 4Q/20

Connectivity Solutions R&D services 4.6 3.1 3.8 4.1 4.3

64.8% 62.5% 63.7% 69.6% 58.9%

Other service-based net sales 2.5 1.9 2.2 1.8 3.0

35.2% 3 7. 5 % 36.3% 30.4% 41.1%

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Dec. 31,

2021

Dec. 31,

2020

Non-current assets 85.9 86.4

Current assets 80.3 71.7

Total assets 166.1 158.0

Share capital 12.9 12.9

Other capital 103.9 101.3

Total equity 116.8 114.2

Non-current liabilities 21.5 21.9

Current liabilities 2 7. 8 21.8

Total equity and liabilities 166.1 158.0

CASH FLOW OF THE REVIEW PERIOD

Dec. 31,

2021

Dec. 31,

2020

+ profit of the period +/- adjustment of accrual basis items 15.2 14.1

+/- change in net working capital -6.2 -6.8

- interest, taxes and dividends -0.7 -0.5

= net cash from operating activities 8.3 6.9

- net cash from investing activities -8.4 -15.9

- net cash from financing activities -2.5 -1.5

= net change in cash and cash equivalents -2.6 -10.5

Statement of Financial Position and Financing

The figures presented in the statement of financial position of December 31, 2021,

are compared with the statement of the financial position of December 31, 2020

(MEUR).

The number of gross investments in the pe-

riod under review was EUR 9.6 million. Net

investments for the review period totaled

to EUR 9.3 million. The total amount of de-

preciation during the period under review

was EUR 10.5 million. The amount of inter-

est-bearing debt, including finance lease

liabilities, was EUR 22.3 million at the end

of the reporting period (EUR 22.5 million).

Bittium’s equity ratio at the end of the period

was 72.4 percent (73.1 percent).

The Group’s liquidity remained good de-

spite the uncertainty caused by the coro-

navirus pandemic and the global disruption

in the availability of electronic components.

Securing cash flow has not required any

special adjustment measures and no sig-

nificant changes have been identified in

the credit risks of trade receivables.

Cash and other liquid assets at the end of

the reporting period were EUR 22.0 million

(EUR 24.7 million). Net cash flow during the

period was EUR -2.6 million. The net cash

flow resulted from EUR 7.0 million invest-

ments made into own product development

and EUR 1.1 million dividend payment as the

most significant items (EUR -10.5 million in-

cluding EUR 13.6 million investments made

into own product development as the most

significant item, no dividends were paid in

the corresponding period).

Bittium has a EUR 20.0 million senior loan

and a EUR 10.0 million committed over-

draft credit facility agreement with Nor-

dea 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. Bittium has EUR 10.0 million commit-

ted overdraft credit facility agreement with

OP Corporate Bank Plc valid until May 24,

2022. At the end of the review period, no

limits from these facilities were in use.

Bittium follows a hedging strategy that has

an objective to ensure the business mar-

gins in changing market circumstances by

minimizing the influence of exchange rates.

According to the hedging strategy prin-

ciples, the net position in the currency is

hedged when it exceeds the euro limit de-

fined in the hedging strategy. The net posi-

tion is determined based on accounts re-

ceivable, accounts payable, order book, and

budgeted net currency cash flow.

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Research and Development

Bittium continued to make significant in-

vestments to develop its own products and

product platforms. In January-December

2021, the R&D investments were EUR 19.8

million (EUR 22.8 million), representing 22.8

percent of the net sales (29.1 percent).

The R&D investments focused mainly on

developing tactical communication sys-

tem and its products for the defense in-

dustry, developing different types of spe-

cial terminal products for authorities and

their related security software, as well as

developing medical technology products.

During 2021, the focus of investments has

gradually shifted from tactical communi-

cations to the development of new medical

technology products.

R&D INVESTMENTS, (MEUR) 1-12/2021 1-12/2020

Total R&D investments 19.8 22.8

Capitalized R&D investments -7. 0 -13.6

Depreciations and impairment of R&D investments 5.5 6.1

Cost impact on income statement 18.3 15.4

R&D investments, % of net sales 22.8% 29.1%

CAPITALIZED R&D INVESTMENTS IN BALANCE SHEET, MEUR 1-12/2021 1-12/2020

Balance sheet value in the beginning of the period 46.6 39.1

Additions during the period 7. 0 13.6

Depreciations and impairment of R&D investments -5.5 -6.1

Balance sheet value at the end of the period 48.1 46.6

The capitalized R&D investments are re-

lated to the investments in developing the

software defined radio based tactical radi-

os, Bittium Tough SRD™ product family, fur-

ther development of tactical communica-

tion networks, and development of medical

technology products.

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Market Environment

and Business

Development

in January–December

2021

Defense & Security

Business

Cooperation with the Finnish Defence Forc-

es continued closely during 2021. Deliveries

of products required for tactical communi-

cation continued, however, the shortage of

components delayed the delivery sched-

ule. Despite the challenging availability of

components in the fourth quarter, a signif-

icant number of products were delivered

to the customers, which was reflected in

fourth-quarter revenue growth in Defense

and Security products.

Deliveries of the first phase of the Bittium

Tough SDR™ handheld and vehicle radios

and related accessories, agreed under the

purchase agreement between the Finish

Defence Forces and Bittium, published in

December 2018, were almost completed.

The poor availability of components needed

in production slowed down the final deliver-

ies. The Finnish Defence Forces launched

the Field Radio 2020 project, which serves

the testing and operational implementa-

tion of Bittium Tough SDR products and

their waveforms and is preparing the pur-

chase of the next batch of products to ex-

pand the Defence Forces’ testing activities

and preparations for the commissioning of

radios. Current understanding is that the

annual order volumes stated in the letter

of intent to acquire new tactical radios,

published in August 2017, will be reached

from 2024 onwards. The Defence Forces

have been involved in defining the Bittium

Tough SDR ™ system from the beginning of

the project and believe to achieve a signif-

icant performance improvement through

the system. Alongside the testing and in-

troduction of the radios, the development

of the waveforms used in the radios con-

tinued as planned.

The development of the Bittium Tactical

Wireless IP Network™ software defined ra-

dio system continued in cooperation with

the Finnish Defense Forces as planned. In

March, the Defense Forces ordered prod-

ucts from the TAC WIN system and Bittium

Tough Comnode™ products based on the

existing framework agreements for the pur-

chase of the products. The share of TAC WIN

products was approximately EUR 8.5 mil-

lion and the share of Bittium Tough Com-

node was approximately EUR 1.7 million.

All products have been delivered to the De-

fence Forces during 2021.

Cooperation with the Estonian Defense

Forces continued closely in the supply of

tactical communication products and sys-

tems, which complement the tactical com-

munication system already delivered for the

customer. The product deliveries are based

on a framework agreement between Bit-

tium’s Estonian partner Telegrupp AS and

the Estonian Defense Forces, and it covers

the years 2021–2025. The deliveries, inte-

gration work and testing of tactical com-

munication system products were also con-

tinued with the Austrian Defense Forces.

In November, a4ESSOR, a multination-

al joint venture developing secure Euro-

pean software defined radio technology,

launched a new ESSOR New Capabilities

(ENC) project to develop new ESSOR wave-

forms interoperable with partner countries’

radios and to improve the existing system

to enable the waveforms portability to the

national radios. The new project aims to

improve the interoperability and securi-

ty of ground-to-ground, air-to-ground and

satellite-based tactical data transmission.

In this project, Bittium will focus on the de-

velopment of ground-to-ground and air-to-

ground waveforms. Earlier in May, a4ESSOR

received official approval for its ESSOR High

Data Rate Base Waveform.

The importance of mobile security in com-

munications has increased and the de-

mand for the secure Bittium Tough Mobile™

2 smartphones grew steadily over the past

year. The security classification of the phone

and its related system plays a key role, es-

pecially in the governmental market. Bittium

actively applies for security classification

certificates in various countries together

with its customers. The customer experi-

ence of the Secure Call communication ap-

plication, launched on the Tough Mobile 2

phone at the beginning of the year, has been

positive and the delivery volumes of the Se-

cure Call application increased.

Deliveries of Mexsat satellite phones de-

signed for the Mexican state’s Mexsat sat-

ellite communications system continued.

The resale cooperation with the Mexican

telecommunications solutions provider In-

mosat has worked well and the products

of the first order related to the distributor

agreement have been delivered to the cus-

tomer. The product deliveries to Mexico are

expected to continue this year.

Medical Technologies

Business

During 2021, the medical technology mar-

ket clearly began to recover from the down-

turn caused by the coronavirus pandemic.

Demand from the service providers recov-

ered, which was also clearly reflected in the

development of net sales. During the past

year, the medical remote diagnostics mar-

ket was consolidated as major service pro-

viders merged, which might lead to higher

device sales volumes, thus creating growth

opportunities for device manufacturers.

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

The importance of remote care and remote

monitoring has increased during the coro-

navirus pandemic due to insufficient med-

ical resources and cost pressures. Remote

monitoring and remote diagnostics solu-

tions alleviate these problems, which was

also reflected in increased sales of Bittium’s

medical remote diagnostics solutions.

Component shortages limited the growth

during the past year and component short-

ages are expected to continue at least until

2022. All of Bittium’s cardiology and neuro-

physiology solutions operate on the cloud-

based MedicalSuite service platform, en-

abling service operators to further digitize

their remote diagnostic service processes.

Along with an aging population, the coro-

navirus pandemic has provided a strong

incentive to streamline and digitize prima-

ry care and specialist care. Together, these

factors are driving demand for the device

and total service solutions in the medical

technology market.

The transitional periods for the application

of the European Medical Device Safety Reg-

ulation (MDR) (EU 2017/745) expired and en-

tered into force in full on May 26, 2021. The

regulation harmonises European health leg-

islation and replaces the old MDD and AIMD

directives on medical and implantable de-

vices. The change has caused a backlog of

quality system audits and product approv-

als and thus a significant delay in applica-

tion lead times. Bittium has several med-

ical device approvals underway in several

countries.

Early in the year, Bittium launched a new

home sleep apnea testing solution, Bittium

Respiro™. MDR approval of the solution is

still pending due to lead time delays. Based

on current information, approval is expected

in the second half of this year. The device,

designed for home use, has received pos-

itive feedback, especially due to its com-

pact size and ease of use. Deliveries of the

product variant of the device that is target-

ed at the Finnish market, began during the

autumn of 2021, and demand developed

positively.

The temporary overload in intensive care

units by the patients with coronavirus in-

fection affected the ability of intensive care

units to promote the introduction of new

technologies and solutions. This slowed

down the demand for Bittium’s EEG devices

designed for intensive care. Bittium Brain-

Status™ EEG measuring devices were deliv-

ered to customers for pilot use, but the over-

load of patients with coronavirus slowed

down the progress of the pilots.

Demand for Bittium Faros™ ECG measuring

devices increased during the past year. The

majority of product deliveries were made

to Preventice, a provider of remote moni-

toring services in the U.S. ECG market. The

global shortage of components declined

the amount of product deliveries. Demand

for disposable Bittium OmegaSnap™ patch

electrodes designed for Faros devices for

long-term ECG measurement increased

and deliveries progressed well.

During the last year, Bittium launched new

products and software versions and they

have been very well received. Product man-

agement, product development and pro-

duction organizations were strengthened,

and the quality system and operating pro-

cesses were developed in accordance with

the new MDR requirements. To further in-

crease the international sales, the sales or-

ganization was strengthened, and the in-

ternational distribution network expanded.

In September, Bittium announced to have

signed an agreement under which Bittium

planned to buy a 25 percent stake in Tech-

nomed, a British provider of ECG diagnostic

services. Since the technical conditions re-

quired for the share purchase were not met,

Bittium canceled the agreement. However,

the cooperation between Bittium and Tech-

nomed will continue in the measurement

and monitoring of biosignals and the devel-

opment of analysis software, and the com-

panies signed a distributor agreement for

Bittium Faros™ ECG measuring devices and

Bittium Respiro™ home sleep apnea mea-

suring devices and software. The agreement

sets out the distribution rights for both de-

vices. Technomed is granted an exclusive

right to use Bittium Faros™ ECG devices to

provide cardiology diagnostic services in

the UK. In other respects, the agreement

does not define exclusive rights related to

sales rights. Under the agreement, Tech-

nomed will commit to minimum purchases

of both devices for the period 2022–2024.

Connectivity Solutions

Business

Bittium provides R&D services in the areas

of wireless telecommunications, medical

technology, automotive and manufactur-

ing industries. Outsourcing R&D services, in

whole or in part, brings customers cost sav-

ings and enables the scaling of their product

development volume to meet their current

needs. Bittium has extensive expertise in

the areas of wireless connectivity, informa-

tion security, and various communication

technologies (such as 5G).

The delivery of R&D services and connec-

tivity solutions for the customers continued

and the demand for Bittium’s R&D services

remained stable during 2021. The market for

Open Radio Access Network (O-RAN) archi-

tecture developed further and the demand

for O-RAN know-how increased. During

the last year, Bittium has been investing

in the development, sales and marketing

of its own O-RAN business. New demand

also arose in wireless satellite technology.

The growth of these areas has provided the

company with new international customers.

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

The coronavirus pandemic slowed down

the start of new R&D service projects in

the manufacturing industry and automo-

tive markets, and the demand clearly de-

clined. The demand for medical technology

solutions remained stable despite the slow-

down in the lead times of the new medical

device approvals caused by the new Europe-

an Medical Device Safety Regulation (MDR).

The exceptional circumstances caused by

the pandemic strengthened the remote

work practices with existing customers.

However, despite the virtual meetings and

events becoming more and more common,

acquiring new customers was challenging.

Also, the availability of professional work-

force on the market weakened, and, in par-

ticular, there is an insufficient amount of

software engineers available compared to

the demand. The competition for the work-

force also increased labor mobility.

Significant Events after

the Reporting Period

On January 18, 2022, Mr. Antti Näykki (45

years), B.Eng. Embedded Systems, was ap-

pointed as Senior Vice President, Medical

Technologies Product and Service Area in

Bittium Corporation and as a member of Bit-

tium Corporation’s Management Group, ef-

fective on February 1, 2022. Mr. Näykki has

worked at Bittium since 2019, among oth-

er things, as responsible for business de-

velopment, and as the head of the Medical

Technologies product management. In his

new position as Senior Vice President of

Medical Technologies Product and Service

Area, he reports to Mr. Hannu Huttunen, CEO

of Bittium Corporation. Mr. Arto Pietilä, Se-

nior Vice President of Medical Technologies

Product and Service Area and a member of

Bittium Corporation’s Management Group,

will retire in March 2022. He has agreed to

support a smooth transition of responsibil-

ities to Mr. Antti Näykki in the first months

of 2022.

As of February 1, 2022, Bittium Corpora-

tion’s management group consists of the

following persons: Mr. Hannu Huttunen, CEO

(Chairman); Mr. Pekka Kunnari, CFO; Mr. Kari

Jokela, CLO; Mrs. Karoliina Malmi, Vice Pres-

ident Communications and Marketing; Mr.

Jari Sankala, Senior Vice President Defense

& Security; Mr. Tommi Kangas, Senior Vice

President Connectivity Solutions; Mr. Antti

Näykki, Senior Vice President Medical Tech-

nologies; and Mr. Jari-Pekka Innanen, Vice

President, Engineering.

On February 2, 2022, Bittium Biosignals Ltd,

a subsidiary of Bittium Corporation, and

Preventice Solutions, a wholly-owned sub-

sidiary of Boston Scientific, announced to

have signed an agreement by which Bittium

will extend its supply of BodyGuardian® MINI

devices for monitoring cardiac arrhythmias

to Preventice Solutions. In addition, accord-

ing to the agreement the parties continue

to cooperate in the development of new tai-

lored ECG technology for Preventice Solu-

tions. When the minimum volumes required

for the exclusive rights under the agreement

are met, the total value of the agreement is

approximately USD 40–45 million (approx-

imately EUR 35–40 million based on an ex-

change rate of February 1, 2022), with rev-

enues accruing during 2022, 2023, 2024

and 2025. The final total value is mainly af-

fected by the purchase volumes of different

product models. The cooperation between

Bittium and Preventice Solutions began in

February 2018 regarding the development

and delivery of wireless ECG measurement

devices. A continuation of the cooperation

was announced on September 10, 2020. The

agreement signed on February 2, 2022 re-

places the extension agreement signed in

September 2020 for the supply of ECG mea-

suring devices for the years 2021–2024.

On February 8, 2022, the Finnish Defence

Forces ordered the Bittium Tactical Wire-

less IP Network™ (TAC WIN) system’s prod-

ucts based on a Framework Agreement on

the purchase of the products. The value

of the purchase order was approximately

EUR 8.8 million. The ordered tactical routers

and radio heads are related to several ongo-

ing projects in the Finnish Defense Forces,

where Bittium TAC WIN provides broadband

IP network connections for mobile commu-

nication stations and command posts. Bit-

tium TAC WIN system’s products were or-

dered based on a Framework Agreement

between Bittium and the Finnish Defence

Forces, according to which the Finnish De-

fence Forces purchase Bittium TAC WIN

system’s products for tactical communi-

cations. The Framework Agreement covers

the years 2021–2024, with a total value of

approximately EUR 30 million at the maxi-

mum. According to the Framework Agree-

ment, the Finnish Defence Forces will issue

separate purchase orders for the products

each year. Bittium announced on Decem-

ber 22, 2020 that the Finnish Minister of De-

fence, Mr. Antti Kaikkonen had authorized

the Finnish Defence Forces to purchase the

Bittium Tactical Wireless IP Network™ (TAC

WIN) system’s products. The ordered prod-

ucts will be delivered to the Finnish Defence

Forces during the year 2022.

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Outlook for 2022

The global disruption in the availability of

electronic components and the spread of

new variants of the coronavirus are having

a significant impact on the global market.

More than 70 percent of Bittium’s net sales

accumulate from products and related sys-

tems, and the prevailing shortage of compo-

nents is causing significant uncertainty to

the development of Bittium’s product-based

net sales in 2022. Due to these uncertain-

ties, at this point of the year, the company

will exceptionally publish only the first half-

year outlook instead of the full-year outlook.

Bittium expects the net sales in January–

June 2022 to be at the same level as in the

previous year (EUR 39.7 million in January–

June 2021) and the operating result to be

negative (operating loss of EUR -0.7 million

in January–June 2021).

More information about Bittium’s market

outlook, risks and uncertainties are present-

ed in this report in the sections “Market Out-

look” and “Risks and Uncertainties” as well

as on the company’s internet pages at

www.bittium.com.

Market Outlook

and the Implications

of the Coronavirus

Pandemic for Bittium

Bittium’s customers operate in various in-

dustries, each of them having its own in-

dustry specific factors driving the demand.

A common factor creating demand among

the whole customer base is the growing

need for higher quality and secure data

transfer. Due to the technology competen-

cies accrued over time and the long his-

tory in developing mobile communication

solutions, Bittium is in a good position to

offer customized solutions to its customers.

Over thirty years of experience and exten-

sive competence in measuring biosignals

also act as a basis for medical technolo-

gy solutions.

In 2020 and 2021, the global coronavirus

pandemic has significantly affected the

global economy and market situation. Bit-

tium’s business sales cycles are long by

their nature, but the pandemic has also af-

fected Bittium’s business, among others,

by slowing down existing projects and post-

poning new projects. The market is slowly

beginning to recover from the effects of the

pandemic, but the global shortage of com-

ponents will affect product manufacturing

and thus the ability to deliver products to

customers on schedule.

The factors affecting the demand for Bit-

tium’s products and services and the ef-

fects of the coronavirus pandemic on them

are described below:

Defense, Public Safety,

and Information Security

Markets

• In the defense market’s tactical commu-

nications sector, the governments’ de-

fense forces and other authorities need

networks that troops, who are more and

more constantly on the move, can use

and transfer growing amounts of data se-

curely. This creates demand for Bittium

Tactical Wireless IP Network™ (TAC WIN)

broadband network, Bittium Tough SDR™

handheld and vehicular radios, and for oth-

er Bittium’s IP-based (Internet Protocol)

tactical communication solutions that

fulfill the needs of data transfer of mov-

ing troops and individual soldiers. Bittium

continues its efforts to bring its defense

market targeted products and services

also to the international defense markets

and aims to get new international custom-

ers for its tactical communication system

in 2022. Due to the long sales cycles driven

by purchasing programs of national gov-

ernments, it will take time to receive pur-

chase orders. Exceptional circumstances

due to the coronavirus pandemic have to

some extent affected the progress of pro-

grams, which has slowed down the com-

pletion of larger deals.

• The financial difficulties caused by the

coronavirus pandemic affect the budgets

of public finances such as states and pub-

lic authorities and have required postpon-

ing of procurement. This has somewhat

delayed the launch of new projects and

receiving orders. Especially in the defense

and authorities’ markets testing and pilot-

ing of products and systems are typical

phases before receiving orders of larger

entities, and current circumstances due

to the pandemic situation have caused

delays in them. However, the market has

begun to recover from the effects of the

pandemic. The global shortage of com-

ponents affects the availability of various

components used in products, which af-

fects the company’s ability to deliver prod-

ucts to its customers on time.

• The use of LTE technology, smartphones,

and applications continue to increase in

special verticals, such as public safety,

creating demand for Bittium Tough Mo-

bile™ secure LTE smartphone and oth-

er customized special terminals based

on Bittium’s own product platform. The

awareness of mobile security risks is

growing, and the interest in secure mobile

devices is increasing. The sales of secure

terminal products are expected to devel-

op moderately according to the nature of

public safety markets.

• The smartphone sales process often in-

volves testing and piloting systems and

equipment, possibly integrating third-par-

ty technologies, and possible local reg-

ulatory approvals, which are typically

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

lengthy processes. Exceptional circum-

stances caused by the coronavirus pan-

demic may have a significant impact

on the progress of projects, which slows

down the closings of larger transactions.

Telecommunication

and Digitalization

• In mobile telecommunications, the imple-

mentation of 5G is accelerating in pace.

Investments in developing new features

continue and the importance of software

development in the 5G network develop-

ment expands. This creates demand for

Bittium’s R&D services. There is a wide

range of frequencies allocated for the 5G

technology, thus creating the need to de-

velop multiple products to cover the mar-

ket and creating demand for R&D services

for the development of product variants.

The different kinds of needs for solutions

in the open radio frequency network ar-

chitecture, Open Radio Access Network

(O-RAN), and satellite communication in-

crease the demand for Bittium’s R&D ex-

pertise as new players enter the traditional

supplier network. Also, the development

of new devices utilizing 5G technology in-

creases the demand for Bittium’s services.

• 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 solu-

tions. To this end, the market needs se-

cure devices, for both demanding indus-

trial and leisure applications, which collect

information from the sensors used by the

device and create a reliable wireless con-

nection to the Internet and cloud services.

The deployment of 5G technology is ex-

panding and the number of digitalized de-

vices increases continuously. The devices

will also feature new and more advanced

features that will create demand for de-

sign services. Therefore, the integration

of different systems and technologies

play an important role in enabling com-

plete digitalization services. There are sev-

eral learning systems and devices under

development that use different kinds of

artificial intelligence (AI) technologies to

ease and speed up the processing of large

data amounts.

• Changes in the digitalization of the auto-

motive industry and new business models

as well as the automation of automotive

operations create a need for technological

development. Most significant technolo-

gy trends, such as wireless connectivity,

intelligent mobility, self-driving cars, and

electric cars, are guiding needs for inno-

vative software development. The share of

software in cars quickly is increasing, and

software is becoming a major enabler and

a differentiator. The use of the Android™

Automotive operating system in the In-Ve-

hicle Infotainment (IVI) systems is strong-

ly entering the market. Several carmakers

have announced the launch of cars with

Android Automotive. Bittium’s more than

a decade of experience with the Android

operating system and the Google ecosys-

tem combined with wireless connectivity

know-how create good business opportu-

nities for this market.

• The coronavirus pandemic has slowed

sales of product development services.

Despite the fact that adaptation to new

circumstances and practices has gone

well, the pandemic has slowed down the

progress of existing projects and the ac-

quisition of new customers. However, the

market has slowly begun to recover from

the effects of the pandemic and new cus-

tomer projects have been launched. The

coronavirus pandemic and labor compe-

tition are expected to continue prevailing

in the market during 2022. The goal is to

further increase the number of product de-

velopment service projects and expand

the international customer base.

Medical ECG, EEG,

and Sleep Apnea

Remote Monitoring Market

• The medical technology market is under-

going significant development in patient

care, especially outside hospitals. There

is an increasing focus on the prevention

of diseases and health problems through

early diagnosis and the discharge of pa-

tients at an earlier stage to reduce hos-

pital and treatment days. These actions

significantly increase 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 en-

abled through remote monitoring. Remote

monitoring and remote diagnostics also

enable specialists’ diagnoses regardless

of time and place. Also, evolving artificial

intelligence-based algorithms become

more common in supporting physicians

in making diagnoses. Remote monitoring

and remote diagnostics make it possible

and faster to obtain more accurate diag-

noses, 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, with-

out compromising the quality of special-

ist services.

• For remote monitoring and remote di-

agnostics, Bittium provides its Bittium

Faros™ product family for remote heart

monitoring, Bittium BrainStatus™ for mea-

suring the electrical activity of the brain,

home sleep apnea testing solution Bittium

Respiro™, and different kinds of diagnos-

tics software offered by Bittium.

• As the coronavirus pandemic spread, the

number of non-emergency patients going

to treatments and tests to healthcare pro-

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

viders decreased. Several hospitals and

medical care facilities have postponed

their non-emergency tests and exam-

inations and focused on the treatment of

the pandemic patients as well as on the

actions aimed to prevent the virus from

spreading. The pandemic situation varies

from country to country, but generally the

market is beginning to get back to normal

again. In the long-term, the pandemic will

accelerate the use of remote services in

hospitals and medical care facilities, and

thus create positive development on the

demand for remote monitoring products

and services.

• The global shortage of components af-

fects the availability of various compo-

nents used in products and can have an

impact on company’s ability to deliver

products to its customers on time.

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.

The coronavirus pandemic has caused

changes in the company’s operating en-

vironment. The company management

has been actively following and anticipat-

ing the development of the pandemic and

has taken measures to prevent and reme-

dy the impacts of the pandemic. It is diffi-

cult to estimate the length of the situation

or its impacts on business operations and

financial results.

The global disruption in the availability of

electronic components and their price de-

velopment has caused fast changes in the

company’s operating environment. The

company monitors the development of

the situation and actively strives to ensure

the availability of components required for

product deliveries. Poor availability of com-

ponents can weaken the progress of cus-

tomer projects and the ability to deliver

products.

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.

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

on a 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 Annual Report 2021

Report by the Board of Directors and Financial Statements

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, prod-

uct deliveries are typically executed over

several years.

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 the Bittium’s prod-

ucts and services, and on the other hand,

related to an ability to protect technologies

that Bittium develops or licenses from oth-

ers from claims that third parties’ intellec-

tual property rights are infringed. Addition-

ally, 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 in-

tellectual property rights. At worst, claims

that third parties’ intellectual property rights

are infringed could lead to substantial lia-

bilities for damages. In addition, the prog-

ress of the customer projects and delivery

capability may also be affected by poten-

tial challenges in global accessibility of key

technologies and components on commer-

cially acceptable terms, as well as by the ac-

ceptance of the necessary export licenses.

The company changed its name to Bittium

Corporation as of July 1, 2015 and started

using the new trademark. The registration

and the use of the new trademark can in-

clude customary risks involved in taking in

use a new trademark.

Financing Risks

Global economic uncertainty may lead to

payment delays, increase the risk for cred-

it losses, and weaken the availability and

terms of financing. To fund its operations,

Bittium relies mainly on income from its

operative business and may from time to

time seek additional financing from select-

ed financial institutions. Bittium has EUR

20.0 million senior loan and EUR 10.0 million

committed overdraft credit facility agree-

ment 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 com-

mitted overdraft credit facility agreement

with OP Corporate Bank Plc valid until May

24, 2022.

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 provides socially beneficial tech-

nological innovations that improve com-

munications, create safety, 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 strategy,

values, stakeholder expectations and mega-

trends in the operating environment, which

include digitalization and aging of the popu-

lation, as well as information security.

Sustainability is part of Bittium’s organiza-

tional culture and way of work. The compa-

ny identifies and manages risks related to

sustainability 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 mea-

sures in day-to-day operations.

Key Operating

Principles

Bittium’s operations are guided by good cor-

porate governance, ethical principles, and

Codes of Conduct. The Code of Conduct is

part of the induction program for new em-

ployees.

Bittium’s partners are expected to comply

with the Bittium Code of Conduct principles,

supplier guidelines and supplier require-

ments (Bittium Supplier Manual and Bit-

tium Supplier Requirements), which set out,

for example, Bittium’s policies and supplier

selection and quality control requirements.

Bittium reviews the principles of responsi-

ble operations of suppliers and partners and

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

audits them in accordance with the defined

criteria. In 2021, the company was able to

carry out some audits at suppliers’ premis-

es in Finland, but due to the pandemic, the

majority of foreign suppliers were assessed

on the basis of self-assessments.

Export control is an important part of the

company’s operations and a prerequisite

for cooperation between authorities and

customers. The company has always fol-

lowed the instructions and rules of export

control when operating in areas such as the

defense and information security industries

and closely monitors changing legislation in

various market areas. In 2021, Bittium has

continued to cooperate with the authority in

connection with preliminary investigations.

Environmental Topics

In accordance with its environmental policy,

Bittium is committed to minimizing the en-

vironmental impact of the production, use

and disposal of the products it designs.

Therefore, Bittium’s products are designed

to be long-lasting, repairable and recycla-

ble. As Bittium’s business is mainly focused

on the beginning of the product life cycle,

its environmental impact is very small. The

greatest environmental impact is caused

by the recycling of the product.

The Scope 1 carbon dioxide emissions of

Bittium’s Finnish sites in 2021 were 102.9

t CO2e (travel and waste) and the Scope 2

emissions were 615.7 t CO

e (heating and

electricity). The share of renewable energy

in the energy sources used in Finnish offices

increased significantly to 35% (17% in 2020).

When working on the 2020–2022 environ-

mental program, it was stated that the most

important aspects in reducing Bittium’s car-

bon footprint are the recycling of waste gen-

erated from operations, the utilization of re-

newable energy sources and increasing the

environmental awareness of personnel. The

recovery rate of bitumen waste was 99.1%

last year (target > 95%). In terms of office

space in Oulu, approximately 5% of the en-

ergy used was generated by solar energy

on an annual basis (target > 5%). 17% of the

personnel participated in the training to in-

crease the environmental awareness of the

personnel.

Social Responsibility

and Employees

Personnel

Bittium’s equality plan is based on the

Equality and Gender Equality Act. The

Company does not allow discrimination or

unequal treatment based on gender, age,

origin, religion or belief, opinion, sexual ori-

entation, disability, or any other personal

reason. The implementation of equality is

examined, for example, through personnel

surveys and surveys from the perspective of

pay, career development and recruitment. In

addition to the annual personnel surveys,

in 2020, the company introduced the bi-

weekly Pulssi survey, which inspects per-

sonnel’s resilience during the coronavirus

pandemic.

The most typical work ability risks in the in-

dustry are musculoskeletal disorders, as

well as coping at work and mental well-

being. Bittium invests in good occupational

ergonomics and occupational health care

services that support the well-being of its

employees, as well as other employee ben-

efits. In 2020, three accidents at work were

reported in Bittium’s Finnish companies.

Bittium is an active player in its local com-

munity. The company cooperates with local

educational institutions in the form of ed-

ucational visits. Due to the Covid-19 pan-

demic in 2020, it has not been possible to

organize student visits.

Respect for Human Rights

and the Fight against

Corruption and Bribery

In all of its business activities, Bittium re-

spects human rights, avoids violating hu-

man rights, and intervenes in the potential

negative human rights impacts of its oper-

ations in accordance with the UN Guiding

Principles on Business and Human Rights.

At Bittium, the monitoring of the implemen-

tation of human rights is mainly related to

the activities of subcontractors and suppli-

ers. Bittium is responsible for the compa-

ny’s supply chain in terms of, among other

things, supplier requirements and material

clearances related to materials and compo-

nents. Staff training is part of ensuring re-

sponsible sourcing. During 2021, no doubts

have been reported to Bittium regarding

minerals in conflict areas.

Due to Bittium’s market and business areas,

corruption is one of the key risks related to

social responsibility. Bittium does not ac-

cept any form of bribery or corruption in its

own activities or in the activities of its part-

ners. The company has internal and exter-

nal guidelines for preventing anti-corruption

activities, and an electronic self-study mod-

ule on anti-corruption activities has been

implemented for new employees. In 2021,

73% of new employees completed training.

The company has a monitoring tool in place

to identify corruption or other ambiguities in

its partners, and a channel is available to the

company’s stakeholders to report breach-

es of anti-corruption rules anonymously. In

2021, the company did not become aware

of any suspicions of corruption.

Bittium does not have any activities covered

by the classification system of the EU Tax-

onomy Regulation, so taxonomy-eligible ac-

tivities account for 0% of net sales, invest-

ments and operating expenses.

100

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Personnel

The Bittium group employed an average of

664 people in January–December 2021. At

the end of 2021, the company had 653 em-

ployees (684 employees at the end of 2020).

Changes in the

Company’s Management

On May 17, 2021, Bittium announced that Mr.

Sammy Loitto, Senior Vice President, Sales

and a member of Bittium Corporation’s

Management Group, will transfer to anoth-

er company. Mr. Loitto acted as Senior Vice

President, Sales at Bittium for three years,

and successfully developed Bittium’s sales

and sales management processes, environ-

ment, and systems during his career.

The company decided that it will divide its

sales management and development into

the Company’s three product and service

areas, which are Defense & Security, Med-

ical Technologies, and Connectivity Solu-

tions. Dividing the sales activities into prod-

uct and service areas in this context enables

even stronger sales management and de-

velopment. After the change, Bittium has

product and service area specific sales

management, which reports to the heads

of the product and service areas in their

positions. As a result, sales development is

better targeted to the needs of each product

and service areas. The changes have taken

effect on June 1, 2021.

As of June 1, 2021, Bittium Corporation’s

management group consisted of the fol-

lowing persons: Mr. Hannu Huttunen, CEO

(Chairman); Mr. Pekka Kunnari, CFO; Mr. Kari

Jokela, CLO; Mrs. Karoliina Malmi, Vice Pres-

ident Communications and Marketing; Mr.

Arto Pietilä, Senior Vice President Medical

Technologies; Mr. Jari Sankala, Senior Vice

President Defense & Security; Mr. Tommi

Kangas, Senior Vice President Connectiv-

ity Solutions; and Mr. Jari-Pekka Innanen,

Vice President, Engineering.

Incentive Systems

Employee Profit-Sharing Plan

In 2021, Bittium had an employee prof-

it-sharing plan that applies to all employ-

ees, excluding those covered by other short-

term bonus plans. According to the 2021

profit-sharing plan, a separately defined

part of Bittium’s operating profit will be dis-

tributed to employees as a profit-sharing

bonus in proportion to salaries. The goal of

the system is to enable the company’s suc-

cess to be shared with employees and to

engage employees.

Variable Pay

The variable pay is paid based on the

achievement of goals. In 2021, earning pe-

riod for the variable pay was the calendar

year. The targets are determined separately

for each earning period. The setting of tar-

gets and the review of their achievement is

decided on a one-over-one basis. The cri-

teria for the short-term merit pay are the

financial and strategic targets of the Com-

pany. In 2020, operating result formed the

financial targets. In addition, part of the tar-

gets may be other Company objectives or

personal targets. Personal targets vary be-

tween duties.

Management Share-Based

Incentive Plan

The management of Bittium group share-

based long-term incentive scheme which

comprises a Performance Share Plan

(“PSP”). The objectives of the Performance

Share Plan are to align the interests of Bit-

tium’s management with those of the Com-

pany’s shareholders and, thus, to promote

shareholder value creation in the long term,

to commit the management to achieving

Bittium’s strategic targets and the reten-

tion of Bittium’s management. The Perfor-

mance Share Plan consists of three annu-

ally 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 fol-

lowed by the payment of the share reward

and a two-year transfer restriction period.

The commencement of each plan is, how-

ever, subject to a separate Board decision.

Further information can be found at the

company’s internet pages at the address

www.bittium.com.

On February 11, 2021, the Board of Directors

of Bittium Corporation decided on the new

period in the share-based long-term incen-

tive scheme for the Bittium group’s man-

agement. The members of Bittium’s Man-

agement Group are eligible to participate in

the second PSP 2021–2023 plan. The per-

formance measures based on which the po-

tential share reward under PSP 2021–2023

will be paid are the revenue growth and cash

flow before financial items of Bittium. A pre-

condition for the payment of the share re-

ward 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. If all the performance targets set for

the second plan, PSP 2021–2023, are fully

achieved, the aggregate maximum num-

ber of shares to be paid based on this sec-

ond plan is approximately 111,900 shares

(gross before the withholding of the appli-

cable payroll tax). The aggregate gross val-

ue of PSP 2021–2023, estimated based on

the volume-weighted average quotation of

Bittium’s share during the period H2/2020,

is approximately EUR 0.7 million.

On March 24, 2021, the Board of Directors of

Bittium Corporation decided on a directed

101

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

share issue without consideration for the

payment of the share rewards based on the

Company’s share-based incentive scheme

to the Company’s management. The direct-

ed share issue without consideration decid-

ed was about the first Performance Share

Plan (PSP 2020–2022) of the share-based

incentive scheme. In the Share Issue 9,098

new shares of the Company was issued

without consideration to the management

entitled to share rewards according to the

terms and conditions of the share-based in-

centive scheme. A total of nine persons of

the Company’s management group were in

the target group of the payment.

On March 29, 2021, the new shares issued

without consideration were registered in

the Trade Register. After the registration,

the total number of Bittium Corporation

shares was 35,702,264. The newly regis-

tered shares were admitted to trading on

the Nasdaq Helsinki stock exchange on

March 30, 2021.

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 Annual General Meeting authorized the

Board of Directors to decide on the repur-

chase of the Company’s own shares as fol-

lows.

The number of own shares to be repur-

chased shall not exceed 3,500,000 shares,

which corresponds to approximately 9.80

percent of all of the shares in the company

as of the date of the Annual General Meet-

ing. Only the unrestricted equity of the com-

pany can be used to repurchase its own

shares on the basis of the authorization.

Own shares can be repurchased at a price

formed in public trading on the date of the

repurchase or otherwise at a price formed

on the market.

The Board of Directors decides how own

shares will be repurchased. Own shares can

be repurchased using, inter alia, derivatives.

Own shares can be repurchased otherwise

than in proportion to the shareholdings of

the shareholders (directed repurchase).

The authorization cancels the authoriza-

tion given by the Annual General Meeting

on June 15, 2020, to decide on the repur-

chase of the company’s own shares.

The authorization is effective until June 30,

2022.

Authorizing the Board

of Directors to Decide

on the Issuance of Shares

as well as the Issuance

of Special Rights Entitling

to Shares

The Annual General Meeting authorized

the Board of Directors to decide on the is-

suance of shares and special rights entitling

to shares referred to in Chapter 10 Section 1

of the Companies Act as follows.

The number of shares to be issued shall

not exceed 3,500,000 shares, which corre-

sponds to approximately 9.80 percent of all

of the shares in the company as at the date

of the Annual General Meeting.

The Board of Directors decides on all the

conditions of the issuance of shares and of

special rights entitling to shares. The au-

thorization concerns both the issuance of

new shares as well as the transfer of trea-

sury shares. The issuance of shares and of

special rights entitling to shares may be car-

ried out in deviation from the shareholders’

pre-emptive rights (directed issue).

The authorization cancels the authorization

given by the General Meeting on June 15,

2020 to decide on the issuance of shares as

well as the issuance of special rights enti-

tling to shares referred to in Chapter 10 Sec-

tion 1 of the Companies Act.

The authorization is effective until June 30,

2022.

Shares and

Shareholders

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 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 accounting

par value of the Company’s share is EUR

0.10. The Company does not have its own

shares in its possession.

102

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Shareholders

MARKET VALUES OF SHARES (EUR)

1–12/2021

12 months

1–12/2020

12 months

Highest 7. 8 9 7. 67

Lowest 4.93 3.40

Average 6.18 5.74

At the end of period 5.30 5.79

Market value of the stock. (MEUR) 189.2 206.7

Trading value of shares. (MEUR) 83.2 117.9

Number of shares traded (1,000 pcs) 13,464 20,557

Related to average number of shares, % 3 7. 7 5 7. 6

LARGEST SHAREHOLDERS

Number

of shares

% of

1. Veikkolainen Erkki 1,741,908 4.88%

2. Ponato Oy 1,501,300 4.21%

3. Hulkko Juha 1,419,379 3.98%

4. Mutual Pension Insurance Company Varma 1,365,934 3.83%

5. Mutual Pension Insurance Company Ilmarinen 1,296,529 3.63%

6. OP-Suomi Mikroyhtiöt - special investment company 752,757 2.11%

7. Hilden Kai Jalmari 658,000 1.84%

8. Mutual Pension Insurance Company Elo 500,000 1.40%

9. Investment Fund Taaleritehdas Mikro Markka 500,000 1.40%

10. Citibank Europe PLC 479,789 1.34%

At the end of 2021, Bittium Corporation had 21,663 shareholders. The ten largest sharehold-

ers owned 28.6 percent of the shares. Private ownership was 70.2 percent. The percent-

age of foreign and nominee-registered shareholders was 3.0 percent at the end of 2021.

Market Values of Shares

103

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Flagging Notifications

On September 29, 2021, Bittium Corpora-

tion received a notification under Chapter

9, Section 5 of the Finnish Securities Mar-

ket Act (FSMA), according to which Jbit Oy,

a company 100% owned by Juha Hulkko has

acquired 159,000 shares in Bittium Corpo-

ration. In connection with the completion of

the share purchase, Juha Hulkko’s aggre-

gate amount of direct and indirect holdings

in Bittium Corporation’s shares and votes

exceeded the five percent limit on 28.9.2021.

According to the notification, the aggregate

holdings of Juha Hulkko in Bittium Corpo-

ration on September 28, 2021 amounted

to a total of 1,783,450 shares, correspond-

ing to 5.00 percent of the total number of

shares and voting rights of Bittium Corpo-

ration. The share stock of Bittium Corpo-

ration consists of 35,702,264 shares, each

entitling one vote.

The Board,

Board Committees

and the Auditor

The Annual General Meeting decided that

the Board of Directors shall comprise five

(5) members. Mr. Erkki Veikkolainen, Ms.

Riitta Tiuraniemi, Mr. Veli-Pekka Paloranta,

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. Further, Mr. Petri

Toljamo was elected as a new member of

the Board of Directors for a corresponding

term of office.

At its assembly meeting held on April 14,

2021, the Board of Directors elected Mr. Erkki

Veikkolainen as the Chairman of the Board

of Directors. Further, the Board has resolved

to keep the Audit Committee. Ms. Riitta Tiu-

raniemi (Chairman of the committee), Mr.

Petri Toljamo, and Mr. Veli-Pekka Paloran-

ta were elected as members of the Audit

Committee.

Ernst & Young Oy, authorized public accoun-

tants, was re-elected auditor of the Compa-

ny for a term of office ending at the end of

the next Annual General Meeting. Ernst &

Young Oy has notified that Mr. Jari Karppin-

en, authorized public accountant, will act as

responsible auditor.

Corporate Governance

Statement

The Board of Directors has issued the cor-

porate governance statement separate

from this report.

Dividend from 2020

Based on the shareholder vote concerning

minority dividend, the Annual General Meet-

ing decided in deviation from the propos-

al of the Board of Directors that a minority

dividend corresponding to half of the profit

for the financial period shall be paid in ac-

cordance with Chapter 13, Section 7 of the

Companies Act. The Board of Directors of

the company had proposed to the Annual

General Meeting that no dividend be distrib-

uted by the Annual General Meeting based

on the adopted balance sheet for the finan-

cial period of January 1, 2020–December 31,

2020. The total amount of the minority divi-

dend to be distributed was EUR 1,110,327.74,

corresponding to EUR 0.0311 per share.

The dividend was paid to shareholders who

on the dividend record date April 16, 2021,

were registered in the company’s share-

holders’ register held by Euroclear Finland

Oy. The dividend was paid on April 23, 2021.

All the shares in the company were entitled

to the dividend with the exception of shares

possibly held by the Company on the divi-

dend record date.

104

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Consolidated Statement of Comprehensive Income

Continuing operations, 1000 EUR Notes

Jan. 1–

Dec. 31, 2021

Jan. 1–

Dec. 31, 2020

NET SALES 1, 3 86,868 78,385

Other operating income 4 2,594 852

Change in work in progress and finished goods

Work performed by the undertaking for its own purpose and capitalized 530 342

Raw materials -23,311 -21,189

Personnel expenses 7 -38,992 -32,484

Depreciation 6 -10,452 -11,400

Other operating expenses 5 -13,923 -12,459

Share of results of the associated companies 15 -90 33

OPERATING PROFIT 3,223 2,079

Financial income and expenses 9 -688 -434

PROFIT BEFORE TAX 2,535 1,644

Income tax 10 790 537

PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 3,324 2,181

Profit for the year from discontinued operations 2

PROFIT FOR THE YEAR 3,324 2,181

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 on translating foreign operations 231 -237

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3,556 1,944

Profit for the year attributable to

Equity holders of the parent 3,324 2,181

Total 3,324 2,181

Total comprehensive income for the year attributable to

Equity holders of the parent 3,556 1,944

Total 3,556 1,944

Earnings per share for profit attributable to the shareholders of the parent company 11

Earnings per share from continuing operations, EUR

Basic earnings per share 0.093 0.061

Diluted earnings per share 0.093 0.061

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 0.093 0.061

Diluted earnings per share 0.093 0.061

Average number of shares, 1000 pcs 35,700 35,693

Average number of shares, diluted, 1000 pcs 35,700 35,693

105

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Consolidated Statement of Financial Position

1000 EUR Notes

Dec. 31,

2021

Dec. 31,

2020

Non-current assets

Property, plant and equipment 12 20,891 22,810

Goodwill 13 5,823 5,807

Intangible assets 13 49,943 48,953

Investments in associated companies 15 1,283 1,507

Other financial assets 16 112 112

Non-current receivables 19 1,081 1,207

Deferred tax assets 17 6,745 5,961

Total 85,878 86,358

Current assets

Inventories 18 18,837 20,939

Trade and other receivables 19 39,396 26,080

Financial assets at fair value through profit or loss 20 5,732 5,689

Cash and short-term deposits 21 16,306 18,968

Total 80,272 71,676

Total assets 166,150 158,033

Equity and liabilities

Equity attributable to equity holders of the parent 22

Share capital 12,941 12,941

Translation differences 1,106 874

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

Retained earnings 76,814 74,478

Total 116,815 114,247

Non-controlling interests

Total equity 116,815 114,247

Non-current liabilities

Deferred tax liabilities 17 208 273

Interest-bearing loans and borrowings (non-current) 25 21,111 21,391

Other non-current liabilities, non-interest bearing 27 200 281

Total 21,519 21,945

Current liabilities

Trade and other payables 27 23,140 18,131

Provisions 24 3,524 2,580

Interest-bearing loans and borrowings (current) 25 1,152 1,130

Total 27,816 21,841

Total liabilities 49,335 43,786

Total equity and liabilities 166,150 158,033

106

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Consolidated Statement of Cash Flows

1000 EUR Notes

Jan. 1–

Dec. 31, 2021

Jan. 1–

Dec. 31, 2020

Cash flow from operating activities

Profit for the year from continuing operations 3,324 2,181

Profit for the year from discontinued operations

Adjustments

Effects of non-cash business activities 29 12,018 12,056

Finance costs 9 760 579

Finance income 9 -71 -144

Income tax 10 -790 -537

Change in net working capital

Change in short-term receivables 19 -13,063 -5,503

Change in inventories 18 1,905 -2,395

Change in interest-free short-term liabilities 27 4,928 1,139

Interest paid on operating activities -753 -579

Interest and dividend received from operating activities 71 144

Income taxes paid -51 -38

Net cash from operating activities 8,278 6,903

Cash flow from investing activities

Purchase of property, plant and equipment 12 -954 -1,388

Purchase of intangible assets 13 -7,457 -14,537

Sale of property, plant and equipment 12

Sale of intangible assets 13

Purchase of investments/associated companies 15 0 0

Net cash from investing activities -8,410 -15,925

Cash flows from financing activities

Proceeds from borrowings 25

Payment of finance lease liabilities 25, 26 -1,375 -1,475

Dividend paid and capital repayment -1,110

Net cash from financing activities -2,486 -1,475

Net change in cash and cash equivalents 21 -2,618 -10,497

Cash and cash equivalents at 1 January 24,657 35,154

Change in fair value of investments

Cash and cash equivalents at the end of the year 22,039 24,657

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

107

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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, 2021

12,941 25,953 874 74,478 0 114,247

Comprehensive income for the period

Profit for the period 3,324 3,324

Exchange differences

on translating foreign operations

231 231

Total comprehensive income for the period 0 0 231 3,324 0 3,556

Transactions between the shareholders

Dividend distribution -1,110 -1,110

Share-related compensation 114 114

Total transactions between the shareholders -996 -996

Other changes 8 8

Shareholders' equity Dec. 31, 2021 12,941 25,953 1,106 76,814 0 116,815

Shareholders' equity Jan. 1, 2020 12,941 25,953 1,112 72,321 0 112,327

Comprehensive income for the period

Profit for the period 2,181 2,181

Exchange differences

on translating foreign operations

-237

Total comprehensive income for the period 0 0 -237 2,181 0 1,944

Transactions between the shareholders

Share-related compensation 40 40

Other changes -64 -64

Shareholders' equity Dec. 31, 2020 12,941 25,953 874 74,478 0 114,247

Equity attributable to equity holders of the parent

108

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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 Ritahar-

juntie 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 at December 31, 2021. The financial

statements are presented in thousands of

euro. The consolidated financial statements

have been prepared on a historical cost ba-

sis unless otherwise indicated.

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 subsid-

iaries 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 in regards of financing or

operative business of the associated com-

pany but has no sole or common control

of such decisions. In the consolidated fi-

nancial statements the investments in the

associated companies are accounted for

using the equity method according to the

IFRS 11 Joint Arrangements standard. The

investment in associated companies is re-

corded using the acquisition price, adjust-

ed for the Groups’ share of changes in the

associated companies’ equity after the date

of acquisition. If the Groups’ 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 eliminat-

ed according to the share of Groups’ own-

ership.

The Groups’ 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 Groups’ 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

acquisition cost of the subsidiary shares

over fair value of the net assets acquired

is allocated partly to the identifiable as-

sets and liabilities. Any excess is recorded

as goodwill. Business combinations that

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

109

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

goodwill is not amortized but tested annu-

ally for impairment.

Intra-Group transactions, receivables, liabil-

ities and margins are eliminated in prepa-

ration of the consolidated financial state-

ments.

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

in the income statement as part of the cap-

ital 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 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

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

110

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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-

prises of raw material, direct labor and oth-

er direct expenses as well 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 IFRS standards.

Government Grants

Government grants are recognized when

there is reasonable assurance that Group

will comply with the conditions attaching to

them and the grant will be received. Govern-

ment grants received from public corpora-

tions 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

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 is 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-

111

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

nized as expense when incurred. The fair

value is measured at grant date and spread

over the vesting period during which the em-

ployees become unconditionally entitled

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 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 construction

contracts is recognized based on the stage

of completion when the outcome of the proj-

ect 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 an accurate forecasting of fu-

ture 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

change in customers’ plans as well as other

factors affecting the forecast.

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 in 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 abovementioned

principles. For the product warranties Bit-

tium makes warranty provisions that are

reversed over time during the warranty pe-

riods. The extended warranties paid sep-

arately are accrued as income over time

during the warranty period.

112

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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 is 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.

Profit for the year from discontinued opera-

tions is presented separately in Consolidat-

ed Statement of Comprehensive Income.

Discontinued operations are disclosed in

note 2.

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-

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 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 re-

levant risks and rewards related to the fi-

nancial assets or it has transferred their

control outside the group.

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 defined as the ratio

of costs incurred to total estimated costs.

Sales of services Customer contract based

on time, price per hours

Revenue 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 the control

of the goods delivered.

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

as the customer has achieved the control

of the goods delivered. The customization work

is accrued over time according to the percentace

of completion or based on the time as mentioned

above in the sales of services.

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

as the customer has achieved the 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.

113

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

The Impairment

of Financial Assets

IFRS 9 has a small effect on assessment of

group financial assets. Based on the sim-

plified approach allowed by IFRS 9 stan-

dard the group assesses and writes off the

amount of expected credit losses from ac-

counts 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 life-

time of accounts receivables. All the com-

ponents of the provision matrix are updated

for each reporting date. The expected credit

losses are presented in the group of provi-

sions in the balance sheet. The changes in

the expected credit losses are presented 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, the short-term

investment portfolio is assessed at fair val-

ue through 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 the current financial liabilities are due

within one year.

Financial liabilities are disposed as the li-

ability related to the contract is declared

void, cancelled 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 produc-

tion 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 as non-recurring

by the management. Substantiality of the

item is based on the item’s euro amount and

the relative share of 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, re-

vised or amended IFRS regulations did not

have significant impact on the consolidat-

ed financial statements during the period.

The other forthcoming revisions or amend-

ments of the standards are not expected to

have significant impact on the consolidated

financial statements.

114

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1. OPERATING SEGMENTS

Bittium has one reporting business seg-

ment, the Wireless business, that in-

cludes three product and service areas

supporting each other. These areas are

as follows: Defence & Security, Connec-

tivity Solutions and Medical Technologies.

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 Di-

rectors of Bittium which is responsible for

allocating resources to and evaluating the

results of Bittium’s operating segment. In-

come statement and balance sheet infor-

mation of the Wireless business are equiv-

alent to corresponding information of the

Bittium group.

115

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Geographical areas

Jan. 1–Dec. 31, 2021

1000 EUR Finland

Other

Europe

Americas Asia Eliminations

Group

total

Net sales

Sales to external customers 41,391 15,615 29,334 528 86,868

Non-current assets 78,924 208 79,133

Total non-current assets *) 78,924 208 79,133

*) does not include deferred tax assets

Capital expenditure

Tangible assets -1,879 -41 -1,919

Intangible assets 989 989

Investments -224 -224

Goodwill 16 16

Non-current receivables -125 -125

Geographical areas

Jan. 1–Dec. 31, 2020

1000 EUR Finland

Other

Europe

Americas Asia Eliminations

Group

total

Net sales

Sales to external customers 38,315 26,209 13,499 362 78,385

Non-current assets 80,163 233 80,396

Total non-current assets *) 80,163 233 80,396

*) does not include deferred tax assets

Capital expenditure

Tangible assets -1,321 -107 -1,428

Intangible assets 7,1 51 7,1 5 1

Investments -154 -154

Goodwill -18 -18

Non-current receivables -146 -146

Information of primary customers

Group’s revenues from the 10 largest customers in period 1.1–31.12.2021 were EUR 71.5 million

(EUR 64.2 million in 2020) representing 82.3 per cent of the net sales (82.0 per cent in 2020).

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.

116

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

2. DISCONTINUED OPERATIONS

3. NET SALES

1000 EUR 2021 2020

Services 23,815 25,261

Products 63,053 53,124

Other

Total 86,868 78,385

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

The product sales includes all the sales affected by products:

the sales of products, the 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 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 9,245 11,246

Net sales other 77,623 67,138

Total 86,868 78,385

Income recognized over time based on the stage of completion of long-term construction contracts 9,245 11,246

Revenue recognized from long-term construction contracts in progress amounted to 7,78 5 7,364

Advances received from long-term construction contracts recognized in the balance sheet amounted to 435 661

Receivables recognized from long-term construction contracts amounted to 1,421 2,539

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

In 2021 or in the comparative period 2020 the Group did not have discontinued operations

to be reported according to the IFRS standards.

117

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

4. OTHER OPERATING INCOME

1000 EUR 2021 2020

Government grants 2,526 792

Other income 67 59

Total 2,594 852

5. OTHER OPERATING EXPENSES

External services 1,647 1,792

Voluntary staff expenses 963 794

Premises expenses 965 870

Travel expenses 422 381

IT expenses 3,287 3,001

Other expenses 6,640 5,622

Total 13,923 12,459

Expense relating to short-term leases under IFRS 16 150 100

Auditor's charges

Ernst & Young

Auditing 58 65

Tax advice 0 12

Other services 2 2

Total 60 79

Others

Auditing 21 20

Tax advice 8 3

Other services

Total 29 23

118

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 EUR 2021 2020

6. DEPRECIATIONS AND IMPAIRMENTS

Depreciations

Intangible assets

Capitalized development expenditure 5,503 6,145

Intangible rights 351 442

Customer relations and technology 234 234

Other intangible assets 352 352

Tangible assets

Buildings and constructions 735 829

Machinery and equipment 3,277 3,398

Total 10,452 11,400

Depreciation on property, plant and equipment acquired by leases

Buildings and constructures 395 434

Machinery and equipment 1,033 1,028

7. EMPLOYEE BENEFIT EXPENSES AND NUMBER OF PERSONNEL

Number of personnel

Average number of personnel during the fiscal period

Continuing operations 664 673

Personnel expenses 1000 EUR

Personnel expenses

Managing Director 320 274

Board of Directors * 169 214

Other salaries and wages 37, 1 4 6 36,440

Salaries capitalized to development expenses -5,776 -10,766

Total 31,860 26,163

Pension expenses, defined contribution plans 5,854 5,150

Other personnel expenses 1,278 1,171

Total 38,992 32,484

*Including the share-based incentives. Further information in the Note 32.

119

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR 2021 2020

8. RESEARCH AND DEVELOPMENT EXPENSES

The research and development expenses total 19,848 22,821

Capitalized to the balance sheet -7,009 -13,579

Recognition as an asset 5,503 6,145

The expensed research and development expenses recognized in the income statement amounted to 18,342 15,388

9. FINANCIAL EXPENSES (NET)

Interest expenses -352 -321

Interest income

Dividend income 0 0

Exchange gains and losses -343 -35

Change of financial assets and liabilities at fair value through profit or loss 3

Other financial expenses -65 -223

Other financial income 71 141

Total -688 -434

Interest expenses on lease liabilities under IFRS 16 -21 -25

10. INCOME TAXES

Income taxes, current year -1 -87

Other taxes -8 -12

Income taxes, previous years -21 -16

Deferred taxes 819 651

Total 790 537

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

Profit before taxes 2,535 1,644

Tax at the domestic tax rate -594 -665

Effect of tax rates of foreign subsidiaries -8 -2

Taxes for prior years -21 -16

Tax free income 262 214

Non-deductible expenses -541 -605

Utilization of deferred tax assets from previous years 957 971

Reassessment of deferred tax assets 819 651

The deferred tax assets from tax losses

Others -83 -12

Income taxes in the consolidated income statement 790 537

120

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

2021 2020

11. 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) 3,324 2,181

Profit attributable to the equity holders of the parent, discontinued operations (1,000 EUR) 0 0

Profit attributable to the equity holders of the parent, continuing and discontinued operations (1,000 EUR) 3,324 2,181

Weighted average number of ordinary shares during the financial year (1,000 PCS) 35,700 35,693

Basic earnings per share, continuing operations, EUR 0.093 0.061

Basic earnings per share, discontinued operations, EUR 0.000 0.000

Basic earnings per share, continuing and discontinued operations, EUR 0.093 0.061

Diluted

Diluted earnings per share is 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) 3,324 2,181

Profit attributable to the equity holders of the parent, discontinued operations (1,000 EUR) 0 0

Profit attributable to the equity holders of the parent, continuing and discontinued operations (1,000 EUR) 3,324 2,181

Weighted average number of ordinary shares during the financial year (1,000 PCS) 35,700 35,693

Effect of dilution (1,000 PCS)

Weighted average number of ordinary shares during the financial year (1,000 PCS) 35,700 35,693

Diluted earnings per share, continuing operations, EUR 0.093 0.061

Diluted earnings per share, discontinued operations, EUR 0.000 0.000

Diluted earnings per share, continuing and discontinued operations, EUR 0.093 0.061

121

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Land and water

Acquisition cost Jan. 1 1,091 1,091

Additions during the period

Acquisition cost at the end of the period 1,091 1,091

Carrying amount at the end of the period 1,091 1,091

Buildings and constructures

Acquisition cost Jan. 1 19,436 19,081

Translation differences 11 -30

Additions during the period 2 385

Disposals during the period

Acquisition of business unit

Transfer to assets

Acquisition cost at the end of the period 19,450 19,436

Accumulated depreciations Jan. 1 -5,094 -4,265

Translation differences -10 16

Depreciation for the period -735 -845

Depreciations on disposals

Carrying amount at the end of the period 13,610 14,342

No revaluations or capitalizations of interest costs have been done.

Machinery and equipment

Acquisition cost Jan. 1 60,197 57,74 4

Translation differences -18 12

Additions during the period 2,117 2,442

Acquisition of business unit

Disposals during the period

Transfer to assets

Acquisition cost at the end of the period 62,297 60,197

Accumulated depreciations Jan. 1 -52,908 -49,503

Translation differences 16 -17

Depreciation for the period -3,303 -3,388

Depreciations on disposals

Carrying amount at the end of the period 6,102 7,289

Other tangible assets

Acquisition cost Jan. 1 88 88

Additions during the period

Disposals during the period

Acquisition cost at the end of the period 88 88

Translation differences

Accumulated depreciations Jan. 1

Depreciation for the period

Carrying amount at the end of the period 88 88

12. 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.

122

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Property, plant and equipment total

Acquisition cost Jan. 1 80,812 78,003

Translation differences -7 -18

Additions during the period 2,120 2,827

Acquisition of business unit 0 0

Disposals during the period 0 0

Transfer to assets 0 0

Acquisition cost at the end of the period 82,925 80,812

Accumulated depreciations Jan. 1 -58,002 -53,767

Translation differences 6 -2

Depreciation for the period -4,038 -4,233

Depreciations on disposals 0 0

Carrying amount at the end of the period 20,891 22,810

Leases

The Group had the following amounts of property,

plant and equipment acquired by finance leases:

Machinery and equipment

Acquisition cost 10,971 9,856

Accumulated depreciations -9,356 -8,322

Carrying amount at the end of the period 1,615 1,533

Buildings and constructures

Acquisition cost 1,835 1,826

Accumulated depreciations -1,214 -868

Carrying amount at the end of the period 621 958

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

of EUR 1.1 million in 1.1.–31.12.2021 (EUR 1.4 million in 2020).

123

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Capitalized development expenses

Acquisition cost Jan. 1 60,945 47,366

Additions during the period 7,009 13,579

Acquisition of business unit

Acquisition cost at the end of the period 6 7,9 5 4 60,945

Accumulated depreciations Jan. 1 -14,385 -8,239

Depreciation for the period -5,503 -6,145

Carrying amount at the end of the period 48,067 46,560

Intangible rights

Acquisition cost Jan. 1 5,313 5,107

Additions during the period 406 206

Disposals during the period

Acquisition of business unit

Transfer to assets

Acquisition cost at the end of the period 5,719 5,313

Accumulated depreciations Jan. 1 -4,335 -3,893

Depreciation for the period -351 -442

Carrying amount at the end of the period 1,032 978

Customer relations and technology

Acquisition cost Jan. 1 1,780 1,780

Acquisition of business unit

Acquisition cost at the end of the period 1,780 1,780

Accumulated depreciations Jan. 1 -1,122 -888

Depreciation for the period -234 -234

Carrying amount at the end of the period 425 659

13. INTANGIBLE ASSETS

124

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Other intangible assets

Acquisition cost Jan. 1 4,855 4,317

Translation differences 8 -9

Additions during the period 14 546

Transfer to assets

Acquisition cost at the end of the period 4,876 4,855

Accumulated depreciations Jan. 1 -4,098 -3,747

Translation differences -8 9

Depreciation for the period -352 -360

Carrying amount at the end of the period 418 757

Intangible assets total

Acquisition cost Jan. 1 72,893 58,570

Translation differences 8 -9

Additions during the period 7,4 29 14,332

Acquisition of business unit 0 0

Disposals during the period 0 0

Transfer to assets 0 0

Acquisition cost at the end of the period 80,329 72,893

Accumulated depreciations Jan. 1 -23,940 -16,767

Translation differences -8 9

Depreciation for the period -6,439 -7,1 8 1

Carrying amount at the end of the period 49,943 48,953

Goodwill

Acquisition cost Jan. 1 5,807 5,825

Translation differences 16 -18

Additions during the period

Disposals during the period

Carrying amount at the end of the period 5,823 5,807

125

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Impairment Test

The cash flow forecasts employed in im-

pairment test calculations are based on the

budgets for 2022 and the Long Range Plans

(LRP) for 2023-2025 approved by manage-

ment for the strategical period and man-

agement estimations for 2026. 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 test-

ing is Weighted Average Cost of Capital

(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, market risk

premium, beta, cost of debt, corporate in-

come tax rate and target capital structure.

WACC calculated according to these pa-

rameters amounted to 9.8% (9.8% in 2020).

In 2021 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 growth in business was

still delayd due to Covid-19-Pandemic and

the global shortage of components during

the fiscal year. That results with lower ex-

pectations of future operating cash flows.

The impairment test is done when needed,

but at least once a year. Impairment tests

made in December 2021 did not indicate

need for impairment bookings. Recover-

able amounts exceed significantly the book

value of goodwill and other assets. The ter-

minal value represents 81 % of business val-

ue. The growth in business was slower than

expected due to Covid-19-Pandemic, which

moves focus of forecasted net present val-

ue based cash flows from the near future to

further in the future.

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.

126

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

Acquisitions in 2021

In 2021 or oin the comparative period 2020 the Group did not have acquisitions to be reported according to the IFRS standards.

14. ACQUISITIONS

127

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Bittium Group owns 25 % of Coronaria

Analyysipalvelut Oy shares in the end of

2021. 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 in the end of 2021. 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 Zurich.

15. SHARES IN ASSOCIATED COMPANIES

1000 EUR

2021 2020

Shares in associated companies

Coronaria Analyysipalvelut Oy 1,104 1,241

evismo AG 157 244

Other associated companies 22 22

Assets total 1,283 1,507

Coronaria Analyysipalvelut Oy

Current assets 1,047 1,525

Non-current assets 1,523 1,216

Non-current liabilites 102 127

Turnover 5,563 5,315

Net profit 578 663

evismo AG

Current assets 775 69

Non-current assets 72 74

Non-current liabilites 1,013 39

Turnover 361 215

Net profit -264 -177

Shares in associated companies

Acquisition cost Jan. 1 1,507 1,661

Translation differences -6 0

Additions during the period 144 99

Disposals during the period -363 -253

Carrying amount at the end of the period 1,283 1,507

128

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 EUR Jan. 1, 2021

Recognized

in the income

statement

Acquisitions

and disposals

of subsidiaries Dec. 31, 2021

Deferred tax assets

Unutilized losses in taxation 526 526

Other items 5,435 784 6,219

Total 5,961 784 0 6,745

1000 EUR Jan. 1, 2021

Recognized

in the income

statement

Acquisitions

and disposals

of subsidiaries Dec. 31, 2021

Deferred tax liabilities

Customer and technology assets 273 -64 0 208

Total 273 -64 0 208

1000 EUR 2021 2020

At 1 January 112 112

Additions

Disposals

At the closing date 112 112

16. OTHER FINANCIAL ASSETS

17. DEFERRED TAX LIABILITIES AND ASSETS

On December 31, 2021 the Group had 69.2 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 13.8 million euros. The aging of these tax losses begins from year 2022.

129

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

On December 31, 2020 the Group had 72.8 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 14.6 million euros. The aging of these tax losses begins from year 2021.

1000 EUR Jan. 1, 2020

Recognized

in the income

statement

Acquisitions

and disposals

of subsidiaries Dec. 31, 2020

Deferred tax assets

Unutilized losses in taxation 526 526

Other items 4,947 488 5,435

Total 5,473 488 0 5,961

1000 EUR Jan. 1, 2020

Recognized

in the income

statement

Acquisitions

and disposals

of subsidiaries Dec. 31, 2020

Deferred tax liabilities

Customer and technology assets 337 -64 0 273

Total 337 -64 0 273

130

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Raw materials and supplies 15,326 13,419

Work in progress 2,145 4,785

Finished products 1,133 2,065

Other inventories 233 669

Total 18,837 20,939

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Non-current receivables 1,081 1,207

Non-current receivables total 1,081 1,207

Current receivables:

Trade receivables 34,536 20,486

Receivables from construction contracts 1,421 2,540

Prepaid expenses and accrued income 2,272 2,047

Other receivables 1,167 1,008

Current receivables total 39,396 26,080

Age distribution of accounts receivable

Current 32,614 18,417

Aged Overdue Amounts

0-3 months 1,770 1,529

4-6 months 107 19

7-12 months 44 218

> 12 months 0 302

Total 34,536 20,486

18. INVENTORIES

19. TRADE AND OTHER RECEIVABLES (CURRENT)

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 0.6 million (EUR 0.0 million 2020).

131

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Interest rate funds

Balance sheet value on Jan. 1 5,689 5,675

Disposals

Changes in fair value 44 14

Balance sheet value at the end of the period 5,732 5,689

Financial assets at fair value through profit or loss total

Balance sheet value on Jan. 1 5,689 5,675

Disposals

Changes in fair value 44 14

Balance sheet value at the end of the period 5,732 5,689

21. CASH AND SHORT-TERM DEPOSITS

Cash and short-term deposits 16,306 18,968

Total 16,306 18,968

Cash and cash equivalents at consolidated cash flow statement consist of:

Interest rate funds 5,732 5,689

Cash and short-term deposits 16,306 18,968

Total 22,039 24,657

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

20. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

132

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 PCS

premium

1000 EUR

Premium

fund

1000 EUR

Invested

non-

restricted

equity fund

1000 EUR

Total

1000 EUR

On December 31, 2020 35,693 12,941 0 25,953 38,894

On December 31, 2021 35,702 12,941 0 25,953 38,894

22. ISSUED CAPITAL AND RESERVES

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 is not in the pos-

session of its own shares.

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 that the

Annual General Meeting resolve to pay

EUR 0,04 per share as dividend based on

the adopted balance sheet for the finan-

cial period of January 1, 2021–December

31, 2021.

133

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

23. SHARE-BASED PAYMENT PLANS

Share-based Remuneration of the Board of Directors

Form of the reward Shares

Grant date May 14, 2021

Total amount of the executed shares 8,655

Share price at the grant date, EUR 6.57

Total expenses of the reward, EUR million 0.057

Vesting conditions Ownership of the shares was transferred to the recipients

at once but the recipients have agreed the lock-up undertaking

until the membership in the board have ceased.

Execution In shares

Share-based Remuneration of the Management, PSP 2020–2022

Form of the reward Shares

Grant date March 24, 2021

Total amount of the executed shares 9,098

Share price at the grant date, EUR 6.40

Total expenses of the reward, EUR million 0.1

Vesting conditions Ownership of the shares was transferred to the recipients at once but

the recipients have agreed the lock-up undertaking for two years.

Execution In shares and in cash

Share-based Remuneration of the Board of Directors

During the financial year 2021 the group has paid a part of the total remuneration of the board of directors of Bittium Corporation by the

shares of Bittium. The shares were acquired from the stock exchange. The main terms of the remunaration arrangment are presented

in the table below.

Share-based Remuneration of the Management, PSP 2021–2023

The Management of Bittium group 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 per-

formance 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 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.

Form of the reward Shares

Grant date February 10, 2021

Total amount of the shares at the most 111,900

Share price at the grant date, EUR 6.87

Total expenses of the reward at the most, EUR million 0.8

Execution In shares and in cash

Share-based Remuneration of the Management

During the financial year 2021 the group has paid share-based incentive scheme remunaration for the Management of Bittium Corpo-

ration by the shares of Bittium. The half of the remunation was paid by cash and half by the new shares issued in directed share issue

without consideration. The main terms of the remunaration arrangment are presented in the table below.

134

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

Share-based Remuneration of the Board of Directors

Form of the reward Shares

Grant date May 25, 2020

Total amount of the executed shares 4,776

Share price at the grant date, EUR 5.94

Total expenses of the reward, EUR million 0.028

Vesting conditions Ownership of the shares was transferred to the recipients

at once but the recipients have agreed the lock-up undertaking

until the membership in the board have ceased.

Execution In shares

Form of the reward Shares

Grant date June 26, 2020

Total amount of the executed shares 9,356

Share price at the grant date, EUR 6.41

Total expenses of the reward, EUR million 0.060

Vesting conditions Ownership of the shares was transferred to the recipients

at once but the recipients have agreed the lock-up undertaking

until the membership in the board have ceased.

Execution In shares

Share-based Remuneration of the Board of Directors

During the financial year 2020 the group has paid a part of the total remuneration of the board of directors of Bittium Corporation by the sha-

res of Bittium. The shares were acquired from the stock exchange. The main terms of the remunaration arrangment are presented in the

table below.

Share-based Remuneration of the Management

Share-based Remuneration of the Management , PSP 2020–2022

The Management of Bittium group 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 per-

formance 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 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.

Form of the reward Shares

Grant date March 2, 2020

Total amount of the shares at the most 110 000

Share price at the grant date, EUR 5.63

Total expenses of the reward at the most, EUR million 0.6

Vesting conditions Ownership of the shares was transferred to the recipients at once

but the recipients have agreed the lock-up undertaking for two years.

Execution In shares and in cash

135

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Non-current loans

Non-current loans from financial institutions 20,000 20,000

Finance lease liabilities 1,111 1,391

Total 21,111 21,391

Current loans

Lease liabilities 1,152 1,130

Total 1,152 1,130

Repayment schedule of long-term loans:

2022 761

2023 640 296

2024 20,263 20,171

2025 122 83

Later 86 81

Total 21,111 21,391

25. FINANCIAL LIABILITIES

1000 EUR

Guarantee

provisions

Expected

credit losses Others Total

December 31, 2020 2,379 202 0 2,580

Increase in provisions 1,223 117 1,340

Utilized provisions -168 -168

Reversal of untilized provisions -229 -229

December 31, 2021 3,205 319 0 3,523

Current provisions 3,205 319 0 3,523

Total 3,205 319 0 3,523

24. PROVISIONS

136

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

EUR 21,111 21,391

Total 21,111 21,391

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

EUR 1,152 1,098

MXN 32

Total 1,152 1,130

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

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

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Lease liabilities - Minimum lease payments

Within one year 1,190 1,176

After one year but no more than five years 1,060 1,350

After five years 100 104

Lease liabilities - Present value of minimum lease payments 2,263 2,521

Within one year 1,152 1,130

After one year but no more than five years 1,033 1,311

After five years 78 81

Future finance charges 86 108

Total amount of finance lease liabilities 2,350 2,630

Maturities of the finance lease liabilities:

137

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Non-current liabilities

Other non-current liabilities, non-interest bearing

Non-current advances received

Other non-current liabilities, non-interest bearing 200 281

Total 200 281

Current liabilities

Trade and other payables

Trade liabilities 3,997 6,028

Accrued liabilities, deferred income 10,396 8,434

Other liabilities 8,746 3,669

Total 23,140 18,131

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

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.

Financial liabilities at fair value through profit or loss

Liabilities based on derivates

Balance sheet value on Jan. 1

Changes in fair value

Balance sheet value at the end of the period 0 0

27. TRADE AND OTHER PAYABLES

1000 EUR Jan. 1, 2021 Cash flows New leases Dec 31, 2021

Lease and financing contracts 22,521 -1,375 1,117 22,263

Total 22,521 -1,375 1,117 22,263

26. CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

138

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

28. FINANCIAL RISK MANAGEMENT

Under its normal business activities, Bittium

Corporation is exposed to several finan-

cial risks. The primary financial risks are fo-

reign exchange rate risk, interest rate risk,

investment risk and default risk. The goal of the

Group’s financial risk management function is

to reduce adverse effects of price fluctuations

and other uncertainties on earnings, balan-

ce sheet and cash flows as well as to ensu-

re sufficient liquidity. In its risk management,

the Group uses financial instruments such

as forward exchange agreements and inte-

rest rate swaps. External professional port-

folio managers are employed for investing

activities.

The Group’s general risk management prin-

ciples are approved by the Board of Directors.

The responsibility for their implementation

lies with the group finance department toget-

her with operational units. The group finan-

ce 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 fo-

reign 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 expo-

sed to transaction risk from foreign exchan-

ge positions as well as to risks due to the

translation of investments in different cur-

rencies to the functional currency of the pa-

rent company. The most relevant curren-

cies for the Group are the Euro and the US

dollar. 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

functional currency or generally used cur-

rencies (EUR, USD) are used as invoicing

currency. Additional information on func-

tional currency and foreign currency con-

version is available in the accounting prin-

ciples section of the consolidated financial

statements.

The Group follows a currency strategy that

aims at securing the margin of business

activities in changing market conditions

by minimizing the effect of fluctuations in

foreign exchange rates. According to the

principles of the currency strategy, surely

considered and the most probable net cash

flow in a particular currency is hedged as

net position. The cash flow is defined based

on the net position of the trade receivab-

les, trade payables, order intake and fore-

casted net currency cash flow. According to

the currency strategy the degree of hedging

can vary from approximately 50% to 100% of

the forecasted net position when net posi-

tion exceeds EUR 1 million. The Group could

also apply hedge accounting as defined in

the IFRS 9 standard. Hedge accounting was

not applied during 2021. At the end of the fi-

nancial period the counter value of the hed-

ged net position was EUR 5.0 million. During

the financial year the amount of the hed-

ged position has been changing between

EUR 0.6–5.0 million.

The Group has hedged the transaction risk

related to its income statement and the

translation risk related to equity on the ba-

lance sheet or economic risk has not hed-

ged. Foreign currencies denominated equi-

ties of foreign subsidiaries on December 31,

2021 was EUR 3.5 million (EUR 2.6 million in

2020) from which dollar denominated equi-

ties of foreign subsidiaries was EUR 3.2 mil-

lion (EUR 2.3 million in 2020).

139

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR 2021 2020

Forward contracts

Market value 21 17

Nominal value 5,000 600

1000 EUR 2021 2020

Long-term assets 0 0

Long-term liabilities 0 0

Current assets 8,688 4,590

Current liabilities 5,439 2,275

Changes in income

statement before tax

Changes in equity

before tax

1000 EUR 2021 2020 2021 2020

EUR appreciates -300 -200 -300 -200

EUR depreciates 400 300 400 300

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:

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

US dollar, 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 fluctuations in

the foreign exchange rate.

140

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

1000 EUR 2021 2020

Fixed interest rate debts 2,263 2,521

2021 2020

Stock shares 0.0% 0.0%

Bonds 46.1% 69.3%

Money market investments 53.9% 30.7%

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, 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

statement before tax

Changes in equity

before tax

1000 EUR 2021 2020 2021 2020

Loan stock January, 1 22 500 22 600

Loan stock December, 31 22 300 22 500

Average loan stock 22 400 22 600

Change 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 exposed

to security price risk of fluctuations in the

stock markets. According to the Group’s

principles, investments related to cash

management are made in liquid and low-

risk money market or bond instruments

and thus have not been hedged using de-

rivatives.

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 been ap-

proximately EUR 5.7 million. At closing date their value was approximately EUR 5.7 mil-

lion. This risk concentration has been managed by investing in well spread and low-risk

money market funds.

141

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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 remain-ing constant. Financial assets

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

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 sensitivi-

ty 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 in-

vestments and derivatives used in hed-

ging. In it’s deposit, financial investment

and hedging activities Bittium operates

only with well-known partners who have

good credit rating.

About 89% of the Group’s trade receivab-

les are from ten customers. The other trade

receivables are distributed among a wide

customer base and across several geo-

graphical areas. Credit risk is mitigated for

example by documentary credits or bank

guarantees when needed. Default risk con-

centration is mainly assessed as a single

customer’s share of total trade receivab-

les but also according to the receivable’s

date of maturity.

Bittium’s significant default risk concent-

ration is EUR 0.0 million which represents

approximately 0.1% of the total accounts

receivable.

During the past financial year the amount

of recognized credit losses was approxi-

mately EUR 0.6 million (EUR 0.0 million in

2020). The amount of loans granted to af-

filiated companies were EUR 0.0 million at

Changes in income

statement before tax

Changes in equity

before tax

1000 EUR 2021 2020 2021 2020

Interest investments +/- 0 +/- 0 +/- 0 +/- 0

the end of 2021 (EUR 0.0 million in 2020).

Group did not have capital loans granted

outside of the Group at the end of 2021 (EUR

0.0 million in 2020).

The amount of the Group’s counterparty de-

fault risk is consistent with the book value

of financial assets at the closing date. For

the maturity distribution of trade receivab-

les, see note 19.

Liquidity risk

The Group and business segments strive

to continuously evaluate and monitor the

amount of liquid funds needed for business

operations and loan repayments The Group

strives to guarantee the availability and fle-

xibility 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 fa-

cility agreement with Nordea Bank Finland

Plc. 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 fa-

cility agreement with OP Corporate Bank

Plc valid until May 24, 2022. These agree-

ments include customary covenants re-

lated to, among other things, equity ratio,

interest bearing debt to EBITDA, and trans-

ferring property and pledging. These credit

facilities were in use EUR 0.0 million at the

end of the reporting period. For the maturity

distribution of the Group’s debt, see note 25.

Capital structure management

The Group strives to optimize its capital

structure and thus support business acti-

vities 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 moni-

tored the development of the Group’s net

gearing and solvency ratio. The Group’s inte-

rest-bearing net debt at the end of 2021 was

EUR 0.2 million (EUR -2.1 million in 2020)

and net gearing was 0.2% (-1.9% in 2020).

The Group’s solvency ratio at the end of 2021

was 72.4% (73.1% in 2020).

142

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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 below

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.

1000 EUR

Note

Book value

2021

Fair value

2021

Book value

2020

Fair value

2020

Financial assets

Other financial assets 16 112 112 112 112

Deferred tax assets 17 6,745 6745 5,961 5,961

Non-current receivables 19 1,081 1,081 1,207 1,207

Trade receivables and other receivables 19 39,396 39,396 26,080 26,080

Financial assets at fair value

through profit or loss 20 5,732 5,732 5,689 5,689

Cash and cash equivalents 21 16,306 16,306 18,968 18,968

Currency forwards 20 21 21 17 17

Financial liabilities

Bank loans 25 20,000 20,000 20,000 20,000

Finance lease liabilities 25 2,263 2,263 2,521 2,521

Trade payables and other debts 17, 24, 26 2 7, 0 72 2 7, 0 7 2 21,265 21,265

Currency forwards 27 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 7 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

7 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.

Finance Lease Liabilities

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.

143

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

29. ADJUSTMENTS TO NET CASH FROM OPERATING ACTIVITIES

30. OPERATING LEASE AGREEMENTS

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Business transactions without payments

Depreciations 10,452 11,400

Share of profits in associated companies 90 -33

Other adjustments 1,476 690

Total 12,018 12,056

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Not later than one year 34 54

Later than one year and not later than five years

After 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.

144

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Consolidated Financial Statements

31. SECURITIES AND CONTINGENT LIABILITIES

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

Against own liabilities

Floating charges

Guarantee limits 3,032 117

Other contractual liabilities

Falling due in the next year 1,427 2,281

Falling due after one year 1,368 1,175

Mortgages are pledged for liabilities totaled

Other liabilities (guarantees issued)

Material purchase commitments 18,240 11,483

1000 EUR 2021 2020

Associated companies

Net sales 1 121 493

Receivables 1,483 1,458

Debts 250 300

32. RELATED PARTY DISCLOSURES

The Group has the following structure:

Related party transactions and balances:

Country of

incorporation

Owned by

Parent %

Owned by

Group %

Parent

Bittium Oyj Finland

Subsidiaries

Bittium Technologies Oy Finland 100.00 100.00

Bittium Wireless Oy Finland 0.00 100.00

Bittium Safemove Oy Finland 0.00 100.00

Bittium Biosignals Oy Finland 0.00 100.00

Bittium Medanalytics Oy Finland 0.00 100.00

Kiinteistöosakeyhtiö Oulun Ritaharjuntie 1 Finland 0.00 100.00

Bittium Germany GmbH Germany 0.00 100.00

Bittium Mexico S.A. de C.V. Mexico 0.00 100.00

Bittium USA, Inc. USA 0.00 100.00

Bittium Singapore Pte. Ltd. Singapore 0.00 100.00

Information on the associated companies is presented in the Note 15.

145

Bittium Annual Report 2021

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1000 EUR 2021 2020

Employee benefits for key management

Salaries and remuneration

Managing director of the parent

Hannu Huttunen 1.1.–31.12.2020, 1.1.–31.12.2021 280 241

Total 280 241

Remuneration of the members of the board of the parent,

the financial committee and the managing directors of the business segments

Erkki Veikkolainen 1.1.–31.12.2020, 1.1.–31.12.2021 30 31

Riitta Tiuraniemi 1.1.–31.12.2020, 1.1.–31.12.2021 21 20

Pekka Kemppainen 1.1.–31.12.2020, 1.1.–31.12.2021 17 18

Petri Toljamo 1.1.–15.6.2020, 14.4.–31.12.2021 14 6

Juha Putkiranta 1.1.–31.12.2020, 1.1.–14.04.2021 5 22

Seppo Mäkinen 1.1.–31.12.2020, 1.1.–14.04.2021 5 20

Veli-Pekka Paloranta 15.6.2020–31.12.2020, 1.1.–31.12.2021 20 10

Total 112 127

Share-based incentives

Board of Directors 174 88

Management 117 0

Total 291 88

Members of the group executive board 1,044 1,064

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

Loans and guarantees to related party

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

146

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

33. KEY RATIOS

IFRS

2021

IFRS

2020

IFRS

2019

IFRS

2018

IFRS

2017

INCOME STATEMENT, MEUR

Net sales, MEUR 86.9 78.4 75.2 62.8 51.6

Net sales change, % 10.8 4.2 19.7 21.7 -19.6

Operating profit/loss, MEUR 3.2 2.1 6.3 2.8 -6.2

% of net sales 3.7 2.7 8.4 4.5 -12.0

Profit/loss for continuing operations before taxes, MEUR 2.5 1.6 5.9 2.7 -5.8

% of net sales 2.9 2.1 7.9 4.3 -11.3

Profit for the year from continuing operations, MEUR 3.3 2.2 7. 6 4.0 -4.8

% of net sales 3.8 2.8 10.2 6.4 -9.2

Profit after tax for the year from

discontinued operations, MEUR 1.7

% of net sales 0.0 0.0 0.0 0.0 3.2

Profit for the year attributable to equity

holders of the parent, MEUR 3.3 2.2 7. 6 4.0 -3.1

% of net sales 3.8 2.8 10.2 6.4 -6.0

BALANCE SHEET, MEUR

Non-current assets 85.9 86.4 80.5 65.9 46.7

Inventories 18.8 20.9 18.2 14.6 10.6

Current assets 61.4 50.7 55.6 51.9 81.1

Shareholders' equity 116.8 114.2 112.3 110.0 116.7

Non-current liabilities 21.5 21.9 22.1 1.9 1.5

Current liabilities 2 7. 8 21.8 19.9 20.5 20.2

Balance sheet total 166.1 158.0 154.2 132.4 138.4

Notes to the Consolidated Financial Statements

147

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

*) Proposal of the Board of Directors for 2021.

IFRS

2021

IFRS

2020

IFRS

2019

IFRS

2018

IFRS

2017

PROFITABILITY AND OTHER KEY FIGURES

Return on equity % (ROE) 2.9 1.9 6.9 3.6 -3.9

Return on investment % (ROI) 2.3 1.6 5.0 3.7 -4.5

Interest-bearing net liabilities, (MEUR) 0.2 -2.1 -12.6 -29.4 -61.7

Net gearing, % 0.2 -1.9 -11.2 -26.7 -52.9

Equity ratio, % 72.4 73.1 73.4 84.7 85.6

Gross investments, (MEUR) 9.6 1 7.4 21.3 21.2 20.1

Gross investments, % of net sales 11.1 22.2 28.3 33.8 38.8

R&D costs, (MEUR) 19.8 22.8 25.1 21.6 15.0

R&D costs, % of net sales 22.8 29.1 33.4 34.4 29.1

Average personnel during the period,

parent and subsidiaries 664

673 665 660 614

STOCK-RELATED FINANCIAL RATIOS

Earnings per share from continuing operations, EUR

Basic earnings per share 0.093 0.061 0.214 0.113 -0.133

Diluted earnings per share 0.093 0.061 0.214 0.113 -0.133

Earnings per share from discontinued operations, EUR

Basic earnings per share 0.046

Diluted earnings per share 0.046

Earnings per share from continuing

and discontinued operations, EUR

Basic earnings per share 0.093 0.061 0.214 0.113 -0.087

Diluted earnings per share 0.093 0.061 0.214 0.113 -0.087

Equity per share, EUR 3.27 3.20 3.15 3.08 3.27

Dividend per share EUR *) 0.04 0.03 0.15 0.3

Dividend per earnings, % 43.0 50.9 133.0 -344.6

P/E ratio 56.9 94.8 30.4 6 7. 5 -64.9

Effective dividend yield, % 0.8 0.5 2.0 5.3

Market values of shares (EUR)

Highest 7.8 9 7. 67 8.03 8.10 7.88

Lowest 4.93 3.40 5.91 4.71 5.55

Average 6.18 5.74 6.70 5.98 6.55

At the end of period 5.30 5.79 6.50 7. 61 5.65

Market value of the stock, (MEUR) 189.2 206.7 232.0 271.6 201.7

Trading value of shares

MEUR 83.2 117.9 51.5 75.4 83.1

1000 PCS 13,464 20,557 7, 6 8 9 12,608 12,684

Related to average number of shares % 3 7. 7 5 7. 6 21.5 35.3 35.5

Adjusted number of the shares

at the end of the period (1000 PCS) 35,702 35,693 35,693 35,693 35,693

Adjusted number of the shares

average for the period (1000 PCS) 35,700 35,693 35,693 35,693 35,693

Adjusted number of the shares average for the period

diluted with stock options (1000 PCS) 35,700 35,693 35,693 35,693 35,693

148

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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, %

149

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Number of shares

Number of

shareholders

Percentage of

shareholders

Number

of shares

Percentage of

shares and votes

1 - 100 9,807 45.3 444,749 1.2

101 - 500 6,760 31.2 1,781,239 5.0

501 - 1000 2,172 10.0 1,709,143 4.8

1001 - 5000 2,182 10.1 4,901,504 13.7

5001 - 10000 371 1.7 2,698,400 7. 6

10001 - 50000 302 1.4 5,956,743 16.7

50001 - 100000 32 0.1 2,129,711 6.0

100001 - 500000 30 0.1 7,344,977 20.6

500001 - 999999999999 7 0.0 8,735,798 24.5

Total 21,663 100.0 35,702,264 100.0

Nominee-registered 10 989,609 2.8

Shareholders by shareholder type

Number of

shareholders

Percentage of

shareholders

Number

of shares

Percentage of

shares and votes

Non-financial corporations 514 2.4 3,720,191 10.4%

Financial sector and insurance corporations 22 0.1 2,573,954 7.2%

General government 5 0.0 3,162,817 8.9%

Non-profit institutions 24 0.1 108,824 0.3%

Households 21,010 9 7. 0 25,073,648 70.2%

Foreign owners 78 0.4 73,221 0.2%

Nominee-registered shares 10 0.0 989,609 2.8%

Total 21,663 100.0 35,702,264 100.0%

34. SHAREHOLDINGS AND SHARES

Breakdown of Shares by Shareholding, December 31, 2021

Breakdown of Shareholders by Shareholder Type, December 31, 2021

150

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Number

of shares

Percentage of

shares and votes

Number of shares total 35,702,264 100.0

1. Veikkolainen Erkki, Chairman of the Board 1,741,908 4.9

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. OP-Suomi Mikroyhtiöt Speicial Investment Fund 752,757 2.1

7. Hilden Kai 658,000 1.8

8. Special Investment Fund Aktia Mikromarkka 500,000 1.4

9. ELO Mutual Pension Insurance Company 500,000 1.4

10. Citibank Europe Plc 479,789 1.3

Total 10,215,587 28.6

Others (incl. nominee-registered shares) 25,486,677 71.4

The Board and CEO

Veikkolainen Erkki, Chairman of the Board 1,741,908 4.9

Kemppainen Pekka, Member of the Board 3,655 0.0

Mäkinen Seppo, Member of the Board until April 14, 2021 0 0.0

Paloranta Veli-Pekka, Member of the Board 3,891 0.0

Putkiranta Juha, Member of the Board until April 14, 2021 0 0.0

Tiuraniemi Riitta, Member of the Board 10,626 0.0

Toljamo Petri, Member of the Board, from April 14, 2021 onwards 1,505 0.0

Huttunen Hannu, CEO 16,142 0.0

1,777,727 5.0

Major Shareholders, December 31, 2021

Notes to the Consolidated Financial Statements

151

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Income Statement, Parent

1000 EUR Notes 2021 2020

NET SALES 1, 2 808 894

Other operating income 3 0 0

Personnel expenses 4 -1,177 -1,293

Depreciation and reduction in value 5 -14 -13

Other operating expenses 6 -823 -767

OPERATING PROFIT -1,205 -1,178

Financial income and expenses 7 1,335 1,398

PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES 131 221

Appropriations 8 0 2,000

PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES 131 2,221

Taxes 9 -3 0

NET PROFIT FOR THE FINANCIAL YEAR 127 2 221

152

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Balance Sheet, Parent

1000 EUR Notes

Dec. 31,

2021

Dec. 31,

2020

ASSETS

Non-current assets

Intangible assets 9 87 93

Tangible assets 10 71 71

Investments 11 39,750 39,750

Non-current assets total 39,908 39,914

Current assets

Receivables

Current receivables 12 98,508 92,939

Receivables total 98,508 92,939

Financing securities 13 5,732 5,689

Cash and bank deposits 9,957 16,243

Current assets total 114,198 114,871

TOTAL ASSETS 154,105 154,785

SHAREHOLDERS’ EQUITY AND LIABILITIES

Shareholders’ equity 14

Share capital 12,941 12,941

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

Retained earnings 91,916 90,806

Net profit/loss for the year 127 2,221

Shareholders' equity total 130,938 131,921

Provisions 15

Provisions, non-current

Provisions, current

Liabilities 16

Non-current liabilities 20,000 20,000

Current liabilities 3,167 2,864

Liabilities total 23,167 22,864

SHAREHOLDERS' EQUITY AND LIABILITIES TOTAL 154,105 154,785

153

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Cash Flow, Parent

1000 EUR 2021 2020

CASH FLOW FROM OPERATING ACTIVITIES

Profit (loss) before taxes +/- 131 2,221

Adjustments

Depreciation according to plan + 14 13

Effects of non-cash business activities 0 -2 136

Financial income and expenses +/- -1,335 -1,398

Cash flow before change in net working capital -1,191 -1,300

Change in net working capital

Change in interest-free short-term receivables 40 94

Change in interest-free short-term payables -68 -109

Cash flow before financing activities -1,219 -1,316

Interest paid - -773 -568

Dividends received + 0 0

Interest received + 2,105 1,966

Net cash from operating activities 113 82

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of tangible and intangible assets - -8 -14

Net cash used in investing activities -8 -14

CASH FLOW FROM FINANCIAL ACTIVITIES

Change in interest-free short-term financial receivables in Group -7, 61 0 -20,674

Change in interest-free short-term financial payables in Group 372 -1,210

Received Group contributions 2,000 11,100

Dividend paid and capital repayment -1,110 0

Net cash used in financial activities -6,348 -10,784

NET CHANGE IN CASH AND CASH EQUIVALENTS -6,243 -10,716

Cash and cash equivalents at beginning of period 21,932 32,648

Cash and cash equivalents at end of period 15,690 21,932

Change in cash and cash equivalents in balance sheet -6,243 -10,716

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

154

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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 deprecia-

tion. Depreciations 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.

155

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Financial Statements

of the Parent Company

1000 EUR 2021 2020

1. NET SALES BY SEGMENTS

Other functions 808 894

Total 808 894

2. NET SALES BY MARKET AREAS

Europe 691 809

Americas 117 85

Asia

Total 808 894

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 7 8

Total 7 8

Number of personnel at the end of the year 7 8

Personnel expenses *

Management salaries 320 241

Board of Directors 169 214

Other salaries and wages 551 678

Total 1,040 1,133

Pension expenses 117 140

Other social expenses 20 20

Total 1,177 1,293

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

5. DEPRECIATION AND REDUCTION IN VALUE

Intangible rights 14 13

Other capitalized long-term expenditures 0 0

Machinery and equipment 0 0

Total 14 13

156

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Financial Statements

of the Parent Company

1000 EUR 2021 2020

6. OTHER OPERATING CHARGES

IT equipment and SW expenses 42 78

Premises expenses 17 17

Administrative services 292 263

Travel expenses 14 21

Voluntary staff expenses 14 13

Other business expenses 444 376

Total 823 767

Auditor's charges

Auditing 28 23

Tax advice 0 2

Other services 2 0

Total 30 25

7. FINANCIAL INCOME AND EXPENSES

Income from investments

From Group companies

From others 48 143

Total 48 143

Other interest and financial income

From Group companies 2,005 1,717

From others 43 107

Total 2,048 1,824

Other interest and financial expenses

To Group companies 0 0

To others 761 569

Total 761 569

Reduction in value of investment 0 0

Net financial income and expenses 1,335 1,398

Net financial income and expenses including exchange gains and losses -13 -24

8. APPROPRIATIONS

Received Group contributions 0 2,000

157

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

9. INTANGIBLE ASSETS

Intangible rights

Acquisition cost Jan. 1 334 320

Investments during the period 6 14

Disposals during the period

Acquisition cost at the end of the period 340 334

Accumulated depreciations Jan. 1 -241 -228

Depreciation for the period -14 -13

Book value at the end of the period 86 93

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 depreciations Jan. 1 -6 -6

Depreciation for the period

Book value at the end of the period

Intangible assets total

Acquisition cost Jan. 1 340 340

Investments during the period 6 14

Acquisition cost at the end of the period 347 354

Accumulated depreciations Jan. 1 -247 -247

Depreciation for the period -14 -13

Book value at the end of the period 86 94

158

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Notes to the Financial Statements

of the Parent Company

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

10. 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 depreciations Jan. 1 -5 -5

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 depreciations Jan. 1 -5 -5

Depreciation for the period 0 0

Book value at the end of the period 71 71

11. 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

159

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

12. CURRENT RECEIVABLES

Accounts receivable

From Group companies 1 27

Total 1 27

Other receivables

From Group companies 98,455 90,845

From others 25 15

Total 98,480 90,860

Prepaid expenses and accrued income

From Group companies 0 2,000

From others 27 51

Total 27 2,051

Current receivables total 98,508 92,939

13. FINANCING SECURITIES

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

Financial assets at fair value through profit or loss 5,732 5,689

14. 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 91,916 90,806

Dividend distribution 0 0

Net profit for the period 127 2,221

Retained earnings at the end of the period 92,044 93,026

Distributable earnings at the end of the period 117,997 118,980

Shareholders’ equity total 130,938 131,921

160

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

15. PROVISIONS

Provisions

Provisions, current

Total

16. LIABILITIES

Current liabilities

Accounts payable

To Group companies 7 0

To others 30 77

Total 37 77

Other short-term liabilities

To Group companies 2,822 2,450

To others 33 35

Total 2,854 2,485

Accrued expenses and deferred income

To others 276 303

Total 276 303

Current liabilities total 3,167 2,864

Notes to the Financial Statements

of the Parent Company

161

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

17. SECURITIES AND CONTINGENT LIABILITIES

On behalf of Group companies

Guarantee limits 3,032 117

of which guarantees in use total

Leasing liabilities

Falling due in the next year 1,113 1,133

Falling due after one year 1,072 1,318

Rental liabilities

Falling due in the next year 9 8

Contractual liabilities

Falling due in the next year 13 32

Falling due in 1–5 years

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

1000 EUR

Dec. 31,

2021

Dec. 31,

2020

18. NOMINAL VALUE OF CURRENCY DERIVATES

Foreign exchange forwards

Market value 21 17

Nominal value 5,000 600

162

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Erkki Veikkolainen Pekka Kemppainen Veli-Pekka Paloranta

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

Riitta Tiuraniemi Petri Toljamo Hannu Huttunen

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, 2022

Ernst & Young Oy

Authorized Public Accountant Firm

Jari Karppinen, Authorized Public Accountant

According to the parent company’s balance

sheet at December 31, 2021, the distribut-

able assets of the parent company are EUR

117,996,832.83 of which the profit of the fi-

nancial year is EUR 127,479.11.

The Board of Directors proposes that the

Annual General Meeting to be held on April

6, 2022 resolve to pay EUR 0.04 per share

as additional dividend based on the adopted

balance sheet for the financial period of

January 1, 2021–December 31, 2021.

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 9, 2022

163

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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, 2021. 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 aisa 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.

164

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

Responsibilities of the Board

of Directors and the Managing

Director for the Financial

Statements

The Board of Directors and the Managing Di-

rector are responsible for the preparation of

consolidated financial statements that give

a true and fair view in accordance with In-

ternational 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 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:

• ldentify 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 materialmisstatement 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

Revenue Recognition

We refer to the Group’s accounting policies and to the note 3

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

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

portion of the consolidated net sales. ln the financial statements

2021 the revenue recognized from these projects was 9.2 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;

• analytical procedures on revenue and

• tests of the notes of revenue recognized.

165165

Bittium Annual Report 2021

Report by the Board of Directors and Financial Statements

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

20 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, 2022

Ernst & Young Oy

Authorized Public Accountant Firm

Jari Karppinen

Authorized Public Accountant

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