General meeting 2021

General Meeting 2021

(Updated April 14, 2021)

Bittium’s Annual General Meeting was held on April 14, 2021 at 1.00 pm at the company’s headquarters in Oulu, Finland. Shareholders and their proxy representatives could participate in the meeting and exercise their rights only by voting in advance and by making counterproposals and presenting questions in advance. The meeting could not be attended on-site. The Annual General Meeting was arranged in accordance with an exceptional meeting procedure based on the temporary legislation to limit the spread of the Covid-19 pandemic (677/2020) approved by the Finnish Parliament.

Decisions of Bittium Corporation´s Annual General Meeting

– The Annual General Meeting adopted the financial statements for the financial year 2020, discharged the company’s management from liability and resolved to support the remuneration report for governing bodies.

– Based on the shareholder vote concerning minority dividend, the Annual General Meeting decided in deviation from the proposal of the Board of Directors that a minority dividend corresponding to half of the profit for the financial period shall be paid in accordance 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 distributed by the Annual General Meeting based on the adopted balance sheet for the financial period of January 1, 2020 – December 31, 2020. The total amount of the minority dividend to be distributed is EUR 1,110,327.74, corresponding to EUR 0.0311 per share.

– The dividend shall be paid to shareholders who on the dividend record date April 16, 2021 are registered in the company´s shareholders´ register held by Euroclear Finland Oy. The dividend shall be paid on April 23, 2021. All the shares in the company are entitled to the dividend with the exception of shares possibly held by the Company on the dividend record date.

– 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 Tiuraniemi (Chairman of the committee), Mr. Petri Toljamo and Mr. Veli-Pekka Paloranta were elected as members of the Audit Committee.

– The Annual General Meeting resolved that the following monthly remuneration shall be paid to the members of the Board of Directors: to the chairman of the Board of Directors EUR 3,150 and to the other members of the Board of Directors EUR 1,800 each. In addition, the members of the Board of Directors are entitled to compensation for attending Board meetings as follows: the chairman of the Board EUR 875 for each meeting and other members EUR 500 for each meeting. In addition, the members of the Board of Directors are entitled to compensation for attending Committee meetings as follows: the chairman of the Committee EUR 600 for each meeting and other Committee members EUR 400 for each meeting. Travel expenses of the members of the Board of Directors shall be reimbursed in accordance with the Company’s travel policy. The General Meeting also decided that 50 percent of the total amount of the monthly remuneration of the members of the Board of Directors will be paid at once as Bittium Corporation’s shares acquired for the price formed in public trading, through share issue or, in special circumstances if share based remuneration cannot be paid for some reason, in money. The shares will be acquired according to the share purchase program of the company. A member of the Board of Directors may not transfer the shares received as remuneration before his/her membership in the Board of Directors has ended.

– Ernst & Young Oy, authorized public accountants, was re-elected auditor of the company for a term of office ending at the end of the next Annual General Meeting. Ernst & Young Oy has notified that Mr. Jari Karppinen, APA, will act as responsible auditor. It was decided that the remuneration to the auditor shall be paid against the auditor’s reasonable invoice.

– The Annual General Meeting authorized 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 issuance of shares and special rights entitling to shares.

Read more: The decisions of the Annual General Meeting 2021 (stock exchange release, April 14, 2021)

(translation from Finnish)

Shareholders’ Questions to the Annual General Meeting

1. How does Bittium intend to tackle the barrier that the company is relatively small in the world? How do you get reassurance for SDR radio deals when your competitors are 100x bigger companies?

Bittium is looking for partners in all its target countries, either local or global integrators, who combine Bittium products and solutions for their own and/or third-party products and provide this competitive package to clients.

Cooperation with a large global or locally known company complements Bittium’s small size and helps to create a more favorable sales situation.

On the other hand, Bittium’s small size and flexible business models add value to customers compared to large competitors. Bittium is often able to offer more flexible solutions than its competitors, for example, the customization of a local solution and the smooth coordination of products from different parties into a functional entity. Such agility and flexibility form often a significant competitive advantage over large players.

2. What kind of cooperation does Bittium have with Nokia? Nokia reserved a building plot next to Bittium’s headquarters, what do you comment on this?

Bittium provides Nokia with R&D services for the development of radio network products and software. The Company cannot clarify the content of the cooperation more specifically due to the confidentiality agreement between the companies.

Bittium is looking forward to Nokia as a possible neighbor in Oulu. The company believes that this can further bring the already close cooperation of enterprises closer together.

3. Does Bittium still have opportunities to sell tacwin or sdr in Germany? Apparently, the military has already made decisions there and Bittium has not been mentioned in those contexts.

The German Armed Forces Communication System Modernization and Digitization Program (D-LBO project) is delayed and still in its early stages due to the corona pandemic.

There are many different sections in the project that are targeted for different performances and these will be procured as their own entities over a longer period.

Based on earlier decisions outside the Program, Armed forces units also make smaller additional purchases for their existing product families. Bittium’s tactical communication system and products are easily compatible with other existing products and systems.

4. Top management and CEO have received hundreds of thousands of performance bonuses but the dividend was reset, meaning investors did not receive anything. How do you comment?

The bonuses paid in 2020, presented in the Company’s Remuneration Report 2020, are based on results of the 2019. With regards to the targets set for 2019, the required minimum level was reached, on the basis of which the bonuses were paid.

The year 2020 was a difficult year due to the Covid-19 pandemic, and the Company’s management did not achieve the earnings criteria set for 2020, only in some small parts. This will also be reflected in the rewards paid in 2021.

Bittium follows the Remuneration Policy presented to the Company’s Annual General Meeting held on June 15, 2020. The principles of the Remuneration Policy guide the Company’s incentive structure and the criteria for earning incentives. Remuneration of the Company is designed to harmonize the interests of employees and shareholders and at the same time support remuneration based on the Company’s performance. The purpose of the Company’s incentive programs is to implement the Company’s strategy and to develop long-term sustainable growth in line with the increase in shareholder value.

In order to strengthen the Company’s investment capacity in accordance with its strategy to enable future growth, Bittium Corporation’s Board of Directors decided on November 27, 2020 (pursuant to the authorization of the Annual General Meeting held on June 15, 2020) not to pay dividends from the Company’s distributable funds.

5. The release of Company’s Annual Report was brought forward by a few days. In the press release, the Company said that the reason was that by releasing the Report few days in advance, investors would be better able to familiarize themselves with the financial statements before the Annual General Meeting. The financial statements have been available for days, so this cannot be the case. In addition, shareholders cannot even attend the Annual General Meeting. How do you comment?

In order to prevent the spread of the Covid-19 pandemic, it was decided to hold the 2021 Annual General Meeting under the Provisional Act (677/2020), which allows shareholders and their proxies to attend and exercise shareholder rights only by voting in advance and making counterproposals and asking questions in advance. At the same time, Bittium brought forward the publication of the 2020 Annual Report to give shareholders a little more time to familiarize themselves with the Company’s financial statements as a whole (including all notes to the financial statements) to form an overall picture before important deadlines related to the Annual General Meeting.

The company’s Financial Statements will be published in full only in the Company’s Annual Report. In addition to the Financial Statements, the Annual Report includes the Report by the Board of Directors’, the Corporate Governance, and the Sustainability Report. The Financial Statement bulletin, published on February 11, 2021, contains only a part of the information of the full Financial Statements. The Annual Report therefore contains a lot of additional information that is not presented in the financial statements bulletin.

When preparing the financial calendar, important dates related to the Annual General Meeting are always taken into account. That the Annual General Meeting would be organized under the interim law was not considered in the financial calendar when it was published in 2020. At that time, the schedule for the publication of the Annual Report had been dimensioned so that the Annual General Meeting would have been held normally, as a face-to-face meeting.

6. The market value of Bittium is very low despite the defense business, medical side products, letters of intents, etc. Have you thought about listing Medical into a separate company, where the Medical’s income does not drown under the whole. For example, Medical listed on the NYSE, its market value alone would be higher than that of Bittium as a whole now on the Helsinki Stock Exchange. Wouldn’t that be in the best interest of shareholders?

Bittium always acts for the benefit of shareholders. One of the tasks of the Board of Directors is to decide on various mergers and acquisitions and significant matters concerning the organization.

Possible topics related to the development of the Company’s structure the Company cannot comment without complying with the disclosure regulations. Should such significant projects related to the Company’s structure or its development be planned, they should be treated as an insider project and communicated simultaneously to everyone in accordance with the rules set for listed company disclosure Finland and the EU.

7. Why was Timo Hildén not able to participate in the work of the Board of Directors of Bittium?

Mr. Timo Hildén informed the Company that he is not available as a member of the Company’s Board of Directors. The company could have mentioned in its press release that it was his decision.

8. Capital-intensive product development years are starting to be behind you. Will there be productive jobs for all those R&D experts?

Bittium’s expertise is very diverse and wide-ranging, and skilled personnel are the Company’s greatest asset. Bittium offers its employees challenging and inspiring jobs and is committed to supporting their development and investing in their well-being. The company always assesses the need for the number of employees according to the development of the business.

9. Product development capitalizations was more than EUR 44 million. Is there still time to take advantage of everything in taxation starting from the oldest ones? Are there any lost activations? Is there enough income?

In accordance with the accounting principles of the consolidated financial statements, the company assesses at each balance sheet date weather an asset is impaired to the extent that an impairment loss should be recognized. No such indications have been noted for R&D assets. R&D assets are deducted in income tax in accordance with the annual depreciation made in the accounts.

10. How much is invested in product marketing? Should you invest more?

Bittium operates in the B2B and B2G markets. The company’s marketing measures are targeted at customers and organizations operating in these segments and do not appear in the consumer market. Bittium invests significantly in marketing and actively markets its products and services. Marketing investments are constantly measured and developed, and they are increased as the business develops.

11. What are the company’s concrete plans in the short term to create a clearer visibility for Medical and thus positive shareholder value (differentiation, etc.)?

Bittium is constantly striving to improve its communication and transparency towards shareholders. In 2020, the Company increased its reporting and, in addition to semi-annual reporting, began publishing business reviews from the first and third quarters of the year.

In the 2020 Financial Statements Bulletin, Bittium opened for the first time a breakdown of product revenue, broken down into medical technology products and other products, in order to improve transparency.

12. How do you assess the impact of Boston Scientific’s Preventice acquisition on the strategic partnership with Bittium and the short- and medium-term business outlook for biosignals (eg 1-3 years)?

The collaboration between Bittium and Preventice began in 2018, when the companies signed a supply agreement, according to which Bittium will supply Preventice with customized BodyGuardian® MINI ECG measuring devices. In autumn 2020, Bittium and Preventice signed an extension agreement for the supply of these measuring equipment, which will last until 2024. Bittium has no information that the Boston Scientific’s Preventice acquisition would have a material effect on the cooperation between Bittium and Preventice.

13. Does the company have any plans to strengthen the business expertise of the Medical business on the company’s Board of Directors and executive management?

The Medical Technologies business has developed well, and the Company has strengthened the business management and sales organization of the Medical Technologies team over the past year and will continue to strengthen the team as the business develops.

14. What is the estimated timing of the depreciation of product development costs of almost EUR 50 million capitalized in the balance sheet and is there a risk of material write-down associated with the capitalized amount?

Capitalized R&D expenses are depreciated over their useful lives. The realization of return expectations on capitalized product development investments involves normal operational business risk.

15. Will capitalization of R&D expenses continue in the current financial year and in the next few years, and if not, will R&D expenses decrease accordingly?

The level of R&D investments in relation to net sales started to decrease as planned last year, and the Company aims to further reduce the amount of investments during 2021. Part of the R&D costs incurring in 2021 will be capitalized in the balance sheet in accordance with the IFRS standard.