Strategy and Business Model

Strategy, Business Model and Value Chain (SBM-1)

In line with its strategy in 2024, Bittium has three business segments: Medical, which focuses on the measurement and remote monitoring of biosignals; Defense & Security, which provides products and services for the defense and security markets; and Engineering Services, which provides product development services. In addition to the business segments, the company has Group Functions segment, which includes group administration, strategic projects, and stock market listing related functions, as well as the rental of premises owned by the Group. In addition to this, Group Functions produces common services for the business segments, which are reasonable to be managed centrally.

The customers of the Medical business segment include healthcare professionals, hospitals, health centers and service providers to whom Bittium offers healthcare products and services for biosignal measurement in the areas of cardiology, neurology and sleep apnea testing. At the end of 2024, the company announced that it would launch a device for muscle activation measurement. Products and services are offered globally, taking into account the regulatory approval processes for medical devices in each country.

The Engineering Services business segment focuses on product design, development and maintenance services implemented for customers. The business solutions offered by the contract customers include products and comprehensive solutions aimed at end-users. The services sold can largely be divided into the following categories: IoT/wireless communication, health services and mobile devices and systems. Bittium’s customers are mainly in Europe and North America. The customer portfolio was expanded in 2024 with new customers in the transport, traffic and professional tool markets, among others.

The Defense & Security business segment’s customer categories include the defense forces of different countries, governmental organizations and public authorities, and private mobile network providers. Products and services are offered globally. The products and services, and the tactical communication networks created with them, are managed by software products. In addition, the company sells various accessories that support the use of Bittium’s products and systems. The services sold by Bittium include software and hardware development, product lifecycle services, i.e. maintenance services to support the use of Bittium’s products and systems, as well as the expertise of the company’s specialists in various R&D projects.

At the end of 2024, Bittium had a total of 511 employees in Finland, Germany and the United States. 99% of the company’s employees are based in Finland. Most of the employees are R&D engineers. More information on the personnel is provided in section “S1 Own workforce” in this sustainability statement. Bittium’s operations have impacts on various stakeholders. The most significant stakeholders are investors and shareholders, customers in the private and public sectors, the personnel, partners and other suppliers, and the public authorities.

There were no changes to Bittium’s product portfolio during 2024. Bittium’s products are designed to have long life cycles and to be repairable and recyclable which aims to improve material and energy efficiency. For many products for the defense industry, for example, it is necessary to guarantee operational reliability, delivery reliability and maintenance, including service and updates, for several decades. Material cycles are created in relation to product repairs or returns related to the product life cycle, for example. The information security risks associated with the products must also be taken into account in this context. Bittium disassembles decommissioned products, sorts the components and recycles them appropriately. In production activities, Bittium’s operating practices include ensuring delivery capacity, preparing for the growth of delivery volumes by having access to adequate business premises, and forecasting the volumes of products to be delivered. In addition to reducing the environmental impacts of its own operations, Bittium seeks to actively reduce environmental impacts throughout the value chain. The updated sustainability strategy emphasizes material impacts, risks and opportunities on the basis of the materiality assessment.

Bittium’s value chain extends to several countries. The most significant of the downstream value chain countries are the United States and several European countries. The business premises related to the impacts of Bittium’s value chain consist of component suppliers’ production plants, factories and offices, most of which are located in Asia. Bittium aims to improve transparency in its supply chains in the coming years by acquiring, among other things, a tool for supplier management. The Bittium head office is located in Oulu. In Finland, Bittium also has sites in Espoo, Kajaani, Kuopio and Tampere. All of the premises are mainly offices, in addition to which there are production activities at two of the sites. Most of the environmental impacts of the company’s own operations arise at the two sites with production activities. In line with its transition plan, Bittium aims to switch to renewable energy at all its locations by 2030.

The inputs in Bittium’s business include labor, materials used in products, production and financing. The approach to workforce acquisition, development and retention includes recruitment, training, competitive pay, developing the meaningfulness of work tasks, and subcontracting. With regard to the materials used in products, the approach includes increasing independence from individual suppliers of materials. The approach to financing includes negotiating long maturities for loans, maintaining a sufficiently high equity ratio and adherence to the practices outlined in Bittium’s treasury policy with regard to securing financing.

Bittium’s health technology products deliver indirect benefits through improved quality of life. In addition, the products of Bittium’s Defense & Security business segment deliver benefits through improved information security. Benefits also arise from the quality, safety and durability of Bittium’s products.

Bittium’s value chain includes suppliers, partners, public authorities, the company’s own employees, shareholders and customers. Bittium operates in a highly regulated operating environment, which is why cooperation with the public authorities plays a significant role. Suppliers of goods in the upstream value chain are of central importance to Bittium’s business operations. Most of them engage in the manufacturing of components required for production operations, their transport, or primary production activities that are indirectly linked to the components. Bittium’s value chain also includes people working in outsourced services and seasonal additional workforce acquired through outsourced services, such as consultants. Bittium’s downstream value chain includes customers, most of which are retailers that sell the products to end-users, as well as product suppliers.

Bittium’s Value Chain

Interests and Views of Stakeholders (SBM-2, S1 SBM-2)

Bittium’s operations affect a wide range of stakeholders. Understanding the views and expectations of stakeholders is important for the company’s operations and success. Open dialogue with the stakeholders helps to develop Bittium’s operations, products, and solutions, as well as a goal-driven approach to finding solutions to social challenges.

Bittium works in cooperation with national as well as international stakeholders. The major stakeholders include Bittium’s employees, customers, various suppliers, cooperation partners, authorities and other parties regulating the operations, shareholders and investors, students and educational institutions, as well as various communities.

Bittium employs 511 specialists in its field, and investments in personnel well-being and competence development are seen as one component of the value creation model. Bittium’s approach to taking human rights into consideration is discussed in section S1-1.

The double materiality assessment investigated stakeholder views concerning sustainability priorities. To determine the material topics, information was collected on a selective basis from customers, partners, investors, the personnel, the management, and other stakeholders. The materiality assessment process is described in more detail under disclosure requirement IRO-1.

After establishing the priorities of the identified material aspects, the final outcome of the analysis was a materiality matrix confirmed by the Management Group and the Board of Directors. The matrix outlines the views of the company’s internal and external stakeholders regarding Bittium’s material aspects of sustainability as well as the company’s impacts and areas of development.

The views of stakeholders have been taken into account in Bittium’s sustainability strategy through information obtained from the materiality assessment process. Following the materiality assessment, a plan of measures has been drawn up for the years 2025-2030, the implementation of which will be monitored annually. Interaction with stakeholders is described in more detail in the table on the next page.

Bittium’s stakeholder engagement is guided by good governance practice as well as the company’s values and Code of Conduct. The Board of Directors reviews the investor relations strategy and the results of personnel surveys and customer satisfaction surveys once a year.

Affected Stakeholders

Personnel	The personnel expect Bittium to offer interesting and meaningful work, as well as opportunities for professional growth.	Bittium engages with its personnel on a continuous basis through various channels, including an annual personnel survey, a semi-annual pulse survey, an equality survey and a satisfaction survey concerning the orientation training process. Bittium also organizes many events for its personnel each year to provide opportunities for open dialogue and presenting questions directly to the company’s management. Bittium surveys employee perceptions of the company before new recruits start their work, and after they have started work, by means of a separate survey. An exit interview is organized for people who resign from Bittium. Bittium’s most recent equality survey was carried out in 2023. The next equality survey will take place in 2025.
Customers	Our customers value competitive and reliable products and services as well as our sustainable and real-time approach to our operations.	Customers feedback is received on a continuous basis, primarily by means of frequent communication and through various annual surveys. In 2024, surveys were conducted as online surveys. Feedback is collected from various levels of customer organizations, ranging from project personnel to senior management. Customers were invited to participate in the double materiality assessment conducted in 2024. Bittium’s significant customers are leading international players in their respective fields, and they are also consulted in various meetings. Product and project reviews and approvals, in particular, are easier to carry out face-to-face.
Suppliers and partners	Suppliers and partners expect fair and sustainable operations and long-term cooperation from Bittium.	When it comes to our suppliers and other partners, we have often worked with them in close cooperation for a long time following established rules and ways of working. Bittium aims to verify the compliance of key suppliers as carefully as possible by means of supplier surveys, self-assessments, supplier visits and audits carried out by Bittium or a third party. Supplier cooperation will be developed further in 2025.
Local cooperation	Bittium is expected to participate in the work of educational institutions to enable students to familiarize themselves with the company (traineeships, thesis writing). Bittium is expected to actively cooperate and share its broad expertise in development projects that create common good.	Bittium regularly supports educational institutions and schools to provide young students – and teachers – to familiarize themselves with working life. This cooperation increases awareness of Bittium among students, which may attract them to work for Bittium after graduation. R&D cooperation with companies and research institutes supports the broadening and sharing of expertise in both directions, and it also enables the collaborative advancement of technological development, for example. Research cooperation is carried out in the national context through the Seamless and Secure Connectivity project, for example, which is a Leading Company project led by Bittium. Bittium is also involved in numerous international programs, and the company also engages in active cooperation locally with the City of Oulu, among other entities.
Shareholders and investors	Shareholders, investors and analysts expect that Bittium provides long-term value and acts in a sustainable manner.	The Annual General Meeting provides shareholders with the opportunity to meet the company’s management and Board of Directors and have discussions with them. The company’s representatives also participate in events organized for various institutional investors. Bittium meets regularly with analysts who follow the Group. Bittium is committed to engaging in discussions with retail investors on a moderated forum aimed at investors. The aim is to maintain open dialogue with private investors.
Authorities	The public authorities expect Bittium to comply with laws and regulations in a sustainable manner and to engage in effective cooperation.	Bittium maintains a regular line of communication with the authorities, for example, with regard to export control and information security issues. The Group monitors compliance with laws and regulations, and applying them to the Group’s business operations requires open and ongoing interaction with various public authorities.

Material Impacts, Risks and Opportunities and Their Interaction with Strategy and Business Model (SBM-3)

Bittium’s material impacts, risks and opportunities on the environment and people, as well as financial effects, were identified in the double materiality assessment. During the year under review, Bittium incorporated these into its strategy, business model and operations and updated its sustainability strategy to correspond to the identified topics.

In 2025, Bittium will continue to integrate impacts, risks and opportunities into its business strategies in accordance with the ESRS standards.

Bittium’s double materiality assessment identified the following types of impacts, risks and opportunities within the scope of the ESRS:

Environmental impacts, risks and opportunities mainly arise from procurement and production activities related to Bittium’s business operations.
Impacts, risks and opportunities related to Bittium’s own workforce and consumers and end-users mainly arise from the company’s own operations.
Impacts, risks and opportunities related to value chain workers mainly arise through the procurement of components.
Impacts, risks and opportunities related to governance mainly arise in Bittium’s own operations through management and decision-making, as well as in the value chain through procurement activities.
All of the impacts related to components and the supply chain are material through Bittium’s business relationships. The impacts, risks and opportunities related to the Group’s personnel are material through Bittium’s own business operations.
The impacts related to Bittium’s downstream value chain and sold products are material through Bittium’s own operations.

Bittium will develop its processes related to supplier requirements by increasing and specifying its requirements during 2025. Bittium aims to increase visibility to the value chain by developing the scale, scope and consistency of information, for example.

Bittium has incorporated the risks identified in the double materiality assessment to its risk management system and, during 2025 the company will incorporate metrics that are aligned with the material impacts, risks and opportunities into its business strategies.

Bittium has identified several risks and uncertainties related to business operations, markets and the economy. These risks and uncertainties may affect the level of sales and profit. Global geopolitical instability has caused various risks related to supply and demand, and it has increased uncertainty. In the Defense & Security business, geopolitical instability has had a positive impact on the growth of demand for communication solutions for defense forces. The general awareness of information security risks has increased the sales of information security solutions. The weaker development of product development services has been influenced by the cost pressures experienced by customers, which have resulted in cuts to new product development projects and the postponement of project starts. In the Medical business, growth in the sales of biosignal measurement devices has been slowed down by the long approval processes for medical devices.

Bittium has not identified any risks or opportunities that would have a direct financial impact on the company’s financial position, results or cash flows. Bittium has also not identified any risks or opportunities that would involve a significant risk that a material adjustment would have to be made to the carrying amounts of assets and liabilities reported in the financial statements in the next financial year.

Preparing for disruptions to normal operating conditions is part of Bittium’s continuity management. Risks to the company’s business operations and their continuity are assessed on an ongoing basis. Bittium’s guidelines that support continuity management include a continuity management plan, rescue plan, crisis communication instructions and recovery plans for information systems and premises. Members of the Bittium organization participate in exercises and drills focused on crisis response and recovery. Internal and external audits and related drills are carried out. Bittium has an ISO 27001 certified information security management system, which has continuity management as one of its components. The resilience of Bittium’s business models and strategy was assessed in 2024 in relation to physical risks and transition risks related to climate change which is described in more detail in Chapter E1, Section ESRS 2 SMB-3.

Aside from the physical risks and transition risks related to climate change, Bittium’s resilience has not been assessed relative to the impacts, risks and opportunities.

Material Impacts, Risks and Opportunities

E1. Climate Change

Sub-topic	Description and materiality	Negative/ Positive/ Risk/ Opportunity	Stage of the value chain affected	Time horizon	Impact in relation to strategy, business model, value chain and decision*
Climate change adaptation	Potential supply chain disruption due to extreme weather phenomena, which may affect component availability, for example, and thus lead to operational costs.	Actual financial risk	Upstream Own operations Downstream	All	Bittium’s business operations are dependent on component suppliers, and disruptions in the supply chain have an impact on Bittium’s ability to deliver products to customers. Due to the nature of the business, the availability of special components and the technologies used, ensuring both contract manufacturing and the component supply chain are critical for delivery capability.
	Climate change can cause costs and changes in, for example, the durability of devices and products under special circumstances, as well as increase energy consumption associated with the cooling of data centers, for instance.	Potential financial risk	Own operations Downstream	Medium- to long-term	To maintain competitiveness, it is essential to take into account the minimization of the energy consumption of Bittium’s own operations and products.
	The growing demand for products and solutions that support the green transition and are energy efficient will contribute to the reduction of the in-use emissions of products and the reduction of customers’ emissions.	Actual opportunity	Downstream	All	Energy efficiency reduces the manufacturing costs of products, and energy-efficient products support growth. Eco-friendliness is a source of competitive advantage and growth potential.
Climate change mitigation	Growing regulation increases the need to allocate resources to monitoring, interpretation, the implementation of changes, and reporting.	Actual financial risk	Upstream Own operations Downstream	Short- to medium-term	The cost effects of adapting to the physical and transition risks related to climate change may be larger in scope (all operations) and duration than the default estimates, and thus affect the profit performance and development of the business.
Energy	Transitioning the company’s own business premises to renewable energy and improving energy efficiency through ecological product design, which reduces the in-use emissions of products.	Actual positive impact	Own operations Downstream	All	Energy efficiency reduces costs, and energy-efficient products offered by the company can support the growth targeted in the strategy.

E5. Circular Economy

Sub-topic	Description and materiality	Negative/ Positive/ Risk/ Opportunity	Stage of the value chain affected	Time horizon	Impact in relation to strategy, business model, value chain and decision *
Resources inflows, including resource use	Engaging the commitment of manufacturing partners to production that is aligned with circular economy principles, material efficiency and regulatory compliance may reduce environmental impacts and improve stakeholder perceptions.	Actual opportunity	Upstream Own operations	All	Strategic contract manufacturers and component suppliers play a key role in Bittium’s business operations. Long product life cycles require long-term cooperation from partners and customers. Promoting material efficiency in the supply chain reduces costs and increases efficiency, which are strategic targets for Bittium.
Resources outflows related to products and services	Competition risk if competitors are able to respond to product development in a more agile manner, or if competitors have more sustainable products through sustainable design, such as longer functional life or repairability.	Potential financial risk	Own operations Downstream	Medium- to long-term	The redevelopment of products with long life cycles would require significant R&D investments. Failures in R&D projects increase costs and reduce competitiveness.
Waste	Extending the lifetime of products, ensuring serviceability and appropriate recycling instructions reduce the amount of waste.	Actual positive impact	Own operations Downstream	All	Sustainability has been taken into consideration as an enabler of business operations in Bittium’s growth strategy. In the development and design of products and solutions, Bittium takes into account conformity with requirements throughout the entire life cycle of the solution, which improves the competitiveness of the products and increases demand for them.