Transmode AB: Interim Report January-June 2014

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| Source: Transmode Holding AB
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 Transmode
Transmode 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.


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