Bittium Oyj

Good morning everyone. My name is Carolina Malmi and I'm happy to be able to welcome you all to this press conference on Bittium Corporation's Financial Statements 2024. I'm here today with our CEO, Johan Vestermark, and he will walk you through our topics today. At the end of the presentation, we have reserved some time for Q&A, and you should find a box to type your questions on the bottom of the screen. But without further ado, I will let Johan to start.

Thank you, Carolina. And good morning to everybody. Let's first start with a few statements. Some of these statements made in this material relating to future circumstances by the nature of forward-looking statements involve risk and uncertainty and Bitium Corporation disclaims all obligations to update such forward-looking statements. Then let's start with the summary of 2024. First, we can see that net sales grew, operating results and cash flow improved significantly. Net sales for the full year 24 were 85.2 million euros, which was 13.2% year-on-year growth. Net sales in Q4, 24, were 33.2 million euros, increase of 29.2% year on year. Operating profit in 24 was 8.6, representing 10.1% of net sales. operating profit for Q4 was 6 million, representing 18% of net sales. And cash flow improved significantly in 24, and I will get back to that later in the presentation. And then on our journey from an R&D house towards a profitable growth company is proceeding as planned. And we're looking to the different business segments, defense and security. We had a good strong growth last year in this defense and security business segment. Medical business segment was still affected by extended schedules in regulatory approval process. But at the same time, we have done our homework. We have strengthened the regulatory organization to meet these new requirements better. And today we are in much better shape than we were a year ago. Engineering services business affected by the challenging market situation. R&D investments decreased year on year, and order grew significantly, was 45.1 million euros, increase of 63.4% year on year. And we have the growth strategy in place, which we are now implementing. And let's take the next slide and have a look at the growth strategy. And the four basic pillars in our growth strategy are strengthening sales and commercialization to enable growth. Ensure the delivery capability to enable scalability. Three, focusing R&D investments on further increasing the competitiveness of our offerings and services. Four, continue to strengthen our core competence, secure embedded technology, and this is where we want to continue to be the best in the world. And then financial review. First, let's have a look at the group annual financial development. And last year, we were able to change the few previous years we have been declining in the top line. We saw growth, which was 13.2% year on year, ending up in 85.2%. And operating results improved significantly, being 8.6 million euros and being 10.1% of net sales. And then let's have a look at the quarterly development. Q4 last year was strong for us. We had a growth of almost 30% year on year, and also the operating result grew significantly, being 6 million euros and being 18% of net sales. R&D investments decreased, being 13.5 million euros equaling to 15.9% of net sales. 5.6 million was capitalized. Depreciations for R&D investments were 5.6 million. And total R&D costs and depreciations in the P&L was 13.5 million euros. And our focus in R&D was according to the strategy, improving our competitiveness and mainly focus on tactical communication systems and radios and medical technology products and software. Cash flow, which improved significantly compared to last year. Net profit plus minus adjusted accrual basis items 18.9 million euros, change in net working capital 7.1, interests and taxes minus 1.5, net cash from operating activities 24.4, net cash from investing activities minus 6.7, net cash from financing activities minus 4.3. Net change in cash and cash equivalents, 13.4 million euros. Then asset and liabilities. Assets, non-recurring assets, 82.8. million euros, which included property, plant and equipment for 17, capitalized development costs 50.5 and other assets 15.3. Current assets 82.4, which included inventories 24.8 million euros. Trade and other receivables, 35.8 million euros. Cash and liquid assets, 21.8 million euros. Equity and liabilities. Equity, 112.8 million euros. Liabilities, 52 0.3 million euros, which included trade and other receivables, 25.6 million euros interest-bearing debt, 20.9 million euros other liabilities, 5.8 million euros, and we had a net gearing of minus 0.7, which is on a really good level. And equity ratio 69.9%. Next, we will go through the development of business segments, and we will start with the defense and security business segments. The whole year, there was a really good development with the defense and security. Growth was 42.3% year on year. And if we look at the quarterly development, last quarter Q4 last year was strong for us, which was 47.3% higher than year on year. Several product deliveries were made in the last quarter. This business, the geopolitical uncertainty, is something that has led the states to increase the monetize the defense forces, which is good for our business. Partnership agreement with Finnish defense forces was signed last year. Finnish defense forces started the serial procurements of Bitium Tough SDR radios. Internationalization strategy is proceeding as planned. Demand for our ultra secure phone, Bithium Tough Mobile increased. And then our software solution, Bithium SafeMove Mobile VPN is now quantum safe. And then let's move to the next business segment, medical business segment. Here we see the top line, it was a decrease. compared to last year, 12.6 percent. And quarterly results, quarterly turnover, we can see that there was a growth in Q4, which was a positive signal, and that was 2.3 percent year-on-year. And what was impacting our medical business segment was the stricter requirements in regulatory approvals. And this is something that is really going forward and this approval requirements are are tightening significantly and has been tightening, but we have done our homework, we have strengthened our regulatory affairs organization, and we are today, as I mentioned earlier, in a much better situation to get this done as fast as possible. Cooperation with Boston Scientific Cardiac Diagnostics continued well. Respiro sales, we have clearly focused on getting it out on the European market first. And then we have a new version of EMG device developed. And this is based on a device that we have modified to meet for these EMG requirements. Engineering service business segment. Here we see the tough market. We had a decline 15.6% year on year. Last quarter was a bit better. It was still lower than last year, but we saw a little bit more positive sign in the last quarter last year. So net sales decreased, however, operating result remained positive. And I think that is really good work from the business segment. Customers are cautious to start new development projects due to the challenging market situation. And we expect this challenging market situation to continue the first half of this year. Part of the engineers in this engineering services were allocated to defense and security business segment to support the strong growth in the defense business segment. Despite the current challenging market situation, we see that 5G implementation, IoT solutions is there and it will grow, so the underlying market should be there. We want new customers in telecom and industrial markets. Then the outlook for 2025. We are on track towards profitable growth. We have the growth strategy in place and the implementation is in full speed. We have a strong customer base, satisfied customers, and these work as a strong reference supporting our growth. We have world-class solutions and we will focus on further improving their competitiveness. We have committed high skilled people And we will continue to strengthen the organization to make sure we are the best in the world in secure embedded technology. And then we have the megatrends supporting the growth. In defense, the geopolitical uncertainty, which I mentioned earlier, in medical business, the aging population, remote diagnostics opportunities, So this is what we see as an underlying trend that supports our business. And then we have the 5G and IoT development supporting the engineering services. So we are on track towards profitable growth. And our financial outlook for 2025 is net sales between 95 and 105 million euros. and operating results between 10 and 13 million euros. And more information about it can be read on the company's internet pages. And the investor calendar will come out with annual report, 15th of April, We will have Q1 results coming out 29th of April, AMG 7th of May, Q2 August 8, Q3 October 24th. And now it's a time for questions and answers. Carolina.

Thank you. Thank you. Johan, there are a few questions and the first one is about the segment-based reporting structure. Has that had any effect on the internal decision-making or how you allocate the resources?