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Transmode AB: Interim Report January-June 2014

July 16, 2014

Stockholm, Sweden - 17 July 2014 April-June 2014 * Sales were SEK 250.0 (293.5) m, corresponding to a decrease of 14.8%, and by 19.6% adjusted for exchange rate fluctuations. * Operating profit was SEK 21.9 (49.6) m, corresponding to an operating margin of 8.8% (16.9). * Net profit was SEK 19.1 (40.4) m. * Diluted and basic earnings per share were SEK 0.69 (1.45). * Cash flow from operating activities was SEK 78.5 (-1.8) m. January-June 2014 * Sales were SEK 481.3 (533.8) m, corresponding to a decrease of 9.8%, and by 14.0% adjusted for exchange rate fluctuations. * Operating profit was SEK 43.4 (90.7) m, corresponding to an operating margin of 9.0% (17.0). * Net profit was SEK 37.7 (72.3) m. * Diluted and basic earnings per share were SEK 1.36 (2.60). * Cash flow from operating activities was SEK 80.1 (57.9) m. CEO's Statement: Clear strategy for profitable growth Sales in the quarter were SEK 250 m, down 14.8% on the second quarter of 2013. The decrease affected the operating margin for the quarter, which was 8.8%. Cash flow was strong at SEK 79 m. The lower sales were mainly due to reduced activity amongst several of our largest EMEA customers. However, sales from other customers in EMEA increased, partly due to our sharper focus on partner sales. Sales in the Americas were up slightly compared to the previous quarter and year-on-year. It's pleasing that sales in Mexico increased compared to the previous quarter. Progress in the Americas is now positive and we foresee new business opportunities on this market. I've met with several of our largest customers in EMEA during the quarter and I'm confident that we're in a strong position with them. I see no evidence of lost market share in these accounts and that the decline with several of these customers is due to lower investments in their metro networks at present. They are still increasing network capacity, but there are currently fewer new build- out projects, which has a negative impact on our sales in the short term. In the longer term, I retain a positive view of our market, driven by strong underlying growth in metro network traffic. I've had extensive positive feedback from our customers regarding our recently launched high-density and low-power 10G and 100G solutions, which are optimized for metro networks. It's also pleasing that we've won our first order for our new 100G solution from a European customer in the period, as well as our first order for a iWDM-PON system from a US customer. iWDM-PON is our unique solution for extending WDM technology deeper into access networks, and a good example of the innovative, niche-oriented solutions we use to develop our business and reach new customers. It's very positive that our new products have been well received by existing and potential new customers alike, which inspires me with confidence for the future. Naturally, I'm not satisfied with the sales and profit  for the quarter, and as part of the continuous improvement of operations we're now carefully reviewing our priorities and costs to secure long-term high profitability and ensure our continued focus on product development and market expansion. We have a strong position with our key customers and given our new and competitive products, we continue to be  well positioned in the market as a whole. I remain confident in our strategy for profitable growth focusing on geographical expansion, innovative products and efficient operations. Karl ThedÉen, CEO, Transmode The InterimReport is attached and available via the link at the end of this press release. The information in this announcement is required to be disclosed by Transmode AB under the Swedish Securities Markets Act (Sw. lagen om vÄrdepappersmarknaden). This information was released for publication at 08:00 AM CET on 17 July 2014. This is a translation of the Swedish original. In case of any inconsistency between the Swedish and English version, the Swedish version shall prevail. Invitation to press and analysts conference Transmode AB's Interim Report for January-June 2014 will be published at 08.00 AM CEST, July 17, 2014. The company therefore invites investors, analysts and media to a telephone conference (in English) at 09:00 AM CEST, July 17, 2014 where the Interim Report will be presented by Karl ThedÉen, CEO, and Johan Wilsby, CFO. To access the telephone conference, please call UK +44 207 6602080 alternatively, call the Swedish number +46 8 51999361 a few minutes before the scheduled start. The conference and presentation can also be followed live online, see Transmode's homepage: http://www.transmode.com/en/investors/reports/interim-reports For more information please contact: Ola Elmeland Vice President Marketing & Communications Transmode Systems AB Telephone: +46 8 506 882 71 Email: ola.elmeland@transmode.com About TransmodeTransmode is a global provider of packet-optical networking solutions that enable fixed line and mobile network operators to cost effectively address the capacity needs created by the rapid growth in video and data traffic. These solutions are important building blocks in next-generation high-speed optical networks that support services such as broadband backhaul, mobile data backhaul, video delivery services and cloud computing. Transmode's solutions are designed to increase the capacity, flexibility and functionality of metro and regional networks and are based on Wavelength Division Multiplexing (WDM) and transport technologies such as Ethernet. Transmode's Native Packet Optical 2.0 architecture gives customers key advantages such as cost efficient Ethernet services, ultra-low latency, low power consumption and future proof network design. Transmode is headquartered in Stockholm, Sweden and is listed on the NASDAQ OMX Stockholm Exchange (TRMO). Since 2000 the company has installed more than 40,000 systems for over 500 fixed and mobile network operators, service providers, large enterprises and public institutions in over 45 countries across the globe. For additional information about Transmode, please visit www.transmode.com. Interim Report January-June 2014: http://hugin.info/134733/R/1828150/633620.pdf This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Transmode via GlobeNewswire [HUG#1828150]


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