Qt Group Oyj - Half Year financial report

Half-Year Report 1 January – 30 June 2020

Qt Group Plc Stock Exchange Release 7 August 2020 at 8:00 a.m.

Second quarter:
Strong growth in net sales continued (up 29.2 percent) and EBIT also grew
substantially (EBIT margin 20.0 percent)


April–June 2020

•    Net sales increased by 29.2 percent to EUR 18,081 thousand (13,995)*. The
effect of exchange rates on the comparison period’s net sales was EUR 255
thousand. At comparable exchange rates, net sales increased by 26.9 percent.
•    The operating result was EUR 3,620 thousand (714).
•    The operating margin (EBIT %) was 20.0 percent (5.1%).
•    Earnings per share were EUR 0.12 (0.03).

January–June 2020

•    Net sales increased by 36.1 percent to EUR 36,437 thousand (26,766). The
effect of exchange rates on the comparison period’s net sales was EUR 550
thousand. At comparable exchange rates, net sales increased by 33.4 percent.
•    The operating result was EUR 5,794 thousand (195).
•    The operating margin (EBIT %) was 15.9 percent (0.7%).
•    Earnings per share were EUR 0.19 (0.00).

* the figures in brackets refer to the comparison period, i.e. the corresponding
period in the previous year.



Business Report


Financial performance:

Qt’s net sales for the second quarter amounted to EUR 18,081 thousand (EUR
13,995 thousand), up 29.2 percent. License sales and consulting grew by 35.0
percent, while maintenance revenue increased by 16.4 percent. The effect of
exchange rates on the comparison period’s net sales was EUR 255 thousand. At
comparable exchange rates, net sales increased by 26.9 percent.

Qt’s net sales for the first half of the year amounted to EUR 36,437 thousand
(EUR 26,766 thousand), up 36.1 percent. License sales and consulting grew by
45.4 percent, while maintenance revenue increased by 16.6 percent. The effect of
exchange rates on the comparison period’s net sales was EUR 550 thousand. At
comparable exchange rates, net sales increased by 33.4 percent.

Qt’s operating result in the second quarter was EUR 3,620 thousand (EUR 714
thousand). The operating result for the first half of the year was EUR 5,794
thousand (EUR 195 thousand). The Group had 351 employees at the end of the first
half of 2020, compared to 331 a year earlier. The increase in the number of
employees has been strongest in the Asian sales and consulting organization.

The Group’s financial position is good, but the development of the situation and
the business forecasts for all of the Group’s operations are being very closely
monitored with regard to the potential impacts of the coronavirus epidemic.



Juha Varelius, President and CEO:

Qt Group’s very strong growth continued in the second quarter of 2020. Growth
was strong in all of the Group’s geographic operating regions in Europe, Asia,
and America. Net sales growth was also accelerated somewhat by the strengthening
of the US dollar against the euro. About two-thirds of Qt’s net sales are USD
-based.

The global coronavirus epidemic has led to a substantial increase in remote work
at Qt and in many of our customer companies, which has reduced the number of
customer meetings and hindered recruitment. The epidemic has also resulted in
many marketing events being cancelled, postponed, or replaced by virtual events.
Nevertheless, the overall impact of the epidemic on the company’s business was
minor during the period under review.

The operating result showed a profit by a clear margin for the second quarter
and the entire first half of the year. The development of the operating result
has been supported not only by the growth of net sales but also lower-than
-planned personnel, marketing and travel expenses, as recruitment activities and
various events and meetings have not been carried out as planned due to the
epidemic.  In spite of the circumstances, we have strived to continue to make
investments in growth and recruited new personnel in line with our growth
strategy, with a particular focus on expanding our global sales and consulting
network.

Our most important customer segments are the automation industry, the medical
industry and the automotive industry. We are continuing to enhance the
performance and resource efficiency of Qt applications in addition to offering
targeted applications to our most important customer segments.  Products
programmed with Qt can be used during free time, at work, at home and in
vehicles. Qt is used, for example, in airplane entertainment systems, as a
platform for digital televisions, in automotive digital cockpits, in the user
interfaces of medical devices and small household electronics.

Our performance in the first half of the year means we are well positioned to
achieve our goals for 2020 and continue the implementation of our growth
strategy.

Future Outlook

Operating environment and market outlook

The company estimates the growth prospects for its business in the next few
years as very promising.

The Group’s business development efforts will focus on desktop applications as
well as embedded systems in the automotive industry, consumer electronics,
medical devices, and industrial automation sectors. Product development efforts
will also focus on the value-added features and tools needed in the development
of embedded systems.

Sales growth associated with embedded systems will also reflect on the earnings
logic. Volume-based distribution license revenue from these sales accumulates
over the long term. Accordingly, it is typical of Qt as a company that quarterly
net sales and growth may vary significantly between quarters.

The future outlook involves increased short-term uncertainty due to the
coronavirus epidemic. Many companies around the world have already announced
various negative business impacts of varying degrees caused by the epidemic The
company estimates that, at least if the epidemic is prolonged, its impacts on
the business of the company’s customers will also be reflected — at least to
some extent — on the company’s business. Nevertheless, the negative impacts have
thus far been limited to individual cases and the overall impacts have been
minor. The company estimates that the risk posed to the company by the epidemic
will continue to be mitigated by the breadth of the customer base and Qt’s
operations being distributed over several geographic regions and customer
industries. For the time being, at least, there are no signs that the epidemic
will have a significant negative impact on the company’s business or the growth
of net sales.

Outlook 2020

The company keeps its outlook unchanged and estimates that net sales in 2020
will increase by more than 20 percent year-on-year at comparable exchange rates
and that the operating result will be positive in 2020.

Financial reporting

Net sales and profit performance

Qt’s net sales for the second quarter amounted to EUR 18,081 thousand (EUR
13,995 thousand), up 29.2 percent. License sales and consulting grew by 35.0
percent, while maintenance revenue increased by 16.4 percent. The effect of
exchange rates on the comparison period’s net sales was EUR 255 thousand. At
comparable exchange rates, net sales increased by 26.9 percent.

Qt’s net sales for the first half of the year amounted to EUR 36,437 thousand
(EUR 26,766 thousand), up 36.1 percent. License sales and consulting grew by
45.4 percent, while maintenance revenue increased by 16.6 percent. The effect of
exchange rates on the comparison period’s net sales was EUR 550 thousand. At
comparable exchange rates, net sales increased by 33.4 percent.

Qt’s operating result in the second quarter was EUR 3,620 thousand (EUR 714
thousand). The operating result for the first half of the year was EUR 5,794
thousand (EUR 195 thousand).

The other operating income includes tax-free research and development investment
grants received by the company in Norway, totaling EUR 221 thousand (EUR 351
thousand). The grants concern the applicable personnel expenses related to the
research and development activities of Qt’s Norwegian company, and they will be
paid to the company in the second half of 2020.

The Group’s operating expenses, including materials and services, personnel
expenses, depreciation and other operating expenses, amounted to EUR 30,996
thousand (EUR 27,115 thousand) in the first half of the year, up 14.3 percent
year-on-year. Personnel expenses accounted for 66.7 percent (67.9%) of operating
expenses, or EUR 20,666 thousand (EUR 18,411 thousand).

Qt’s earnings before tax for the first half of the year totaled EUR 5,621
thousand (EUR 124 thousand) and the result was EUR 4,420 thousand (EUR 47
thousand). Taxes for the first half of the year amounted to EUR 1,202 thousand
(EUR 77 thousand).

Earnings per share were EUR 0.19 in the first half of the year (EUR 0.00).

Financing and investments

Cash flow from operating activities was EUR 7,032 thousand (EUR 1,845 thousand)
in the first half of the year due to the positive result.

Qt’s cash and cash equivalents totaled EUR 18,017 thousand (EUR 10,096 thousand)
at the end of the first half of the year.

Qt Group’s consolidated balance sheet total at the end of the first half of the
year stood at EUR 55,278 thousand (EUR 46,508 thousand). Net cash flow from
investments in the first half of the year was EUR -515 thousand (EUR -256
thousand).

The equity ratio was 61.7 percent (58.5%) and gearing was -67.0 percent (
-28.2%). Interest-bearing liabilities amounted to EUR 3,347 thousand (EUR 4,943
thousand) of which short-term loans accounted for EUR 1,679 thousand (EUR 2,195
thousand).

In the first half of the year, return on investment was 25.0 percent (0.9%) and
return on equity was 22.8 percent (0.3%).

Personnel

The number of Qt’s personnel was 344 (323) on average during the first half of
the year and 351 (331) at the end of the quarter. At the end of the review
period, international personnel represented 73 percent (71%) of the total.

Other events in the review period

Governance

Qt Group Plc’s Annual General Meeting held on March 10, 2020, adopted the
company’s annual accounts, including the consolidated annual accounts for the
accounting period January 1‒December 31, 2019, approved the Remuneration Policy
of the company’s governing bodies and discharged the Members of the Board and
the Chief Executive Officer from liability. The general meeting resolved, in
accordance with the Board’s proposal, that no dividend will be paid based on the
balance sheet adopted for the accounting period that ended on December 31, 2019.

The general meeting resolved on the remuneration of the company’s Board of
Directors and auditors, decided that the number of members on the Board of
Directors would be five (5) and elected the company’s Board of Directors. Robert
Ingman, Jaakko Koppinen, Mikko Marsio, Leena Saarinen and Tommi Uhari were re
-elected as members of Qt Group Plc’s Board of Directors. At its organizing
meeting held after the general meeting, the Board of Directors elected Robert
Ingman as its Chairman and Tommi Uhari as the Vice Chairman.

The general meeting granted the following authorizations to the Board of
Directors of Qt Group Plc:

Authorizing the Board of Directors to decide on repurchasing the company’s own
shares and/or accepting them as collateral

The general meeting authorized the Board of Directors to decide on the
repurchase and/or acceptance as collateral of a maximum of 2,000,000 of the
company’s own shares by using funds in the unrestricted equity.

According to the authorization, the Board will decide on how these shares are to
be purchased. The shares may be repurchased in a proportion other than that of
the shares held by the current shareholders. The authorization also includes the
acquisition of shares through public trading organized by Nasdaq Helsinki Ltd in
accordance with its and Euroclear Finland Ltd’s rules and instructions, or
through offers made to shareholders.

Shares may be acquired in order to improve the company’s capital structure, to
finance or carry out acquisitions or other arrangements, to implement share
-based incentive schemes, to be transferred for other purposes, or to be
cancelled.

The shares shall be repurchased for a price based on the fair value quoted in
public trading. The authorization is valid for 18 months from the issue date of
the authorization, i.e. until September 10, 2021, and it replaces any earlier
authorizations on the repurchase and/or acceptance as collateral of the
company’s own shares.

Authorizing the Board of Directors to decide on a share issue and the granting
of special rights entitling to shares

The general meeting authorized the Board to decide on a share issue and the
granting of special rights pursuant to Chapter 10, Section 1, of the Companies
Act, subject to or free of charge, in one or several tranches on the following
terms.

The maximum total number of shares to be issued by virtue of the authorization
is 2,000,000.
The authorization concerns both the issuance of new shares and the transfer of
shares held by the company. By virtue of the authorization, the Board of
Directors is entitled to decide on share issues and the granting of special
rights waiving the pre-emptive subscription rights of the shareholders (directed
issue).

The authorization may be used in order to finance or carry out acquisitions or
other arrangements, to carry out the company’s share-based incentive schemes and
to improve the capital structure of the company, or for other purposes decided
by the Board of Directors.

The authorization includes the Board of Directors’ right to decide on all terms
relating to the share issue and granting of special rights including the
subscription price, its payment, and its entry into the company’s balance sheet.

The authorization is valid for 18 months from the issue date of the
authorization, i.e. until September 10, 2021, and it replaces any earlier
authorizations on the granting of shares or special rights entitling to shares.

Flagging notifications

On May 19, 2020, Qt Group Plc received the following notification of a change in
shareholding:
The overall holding of Qt Group Plc’s shares and voting rights managed by
Ilmarinen Mutual Pension Insurance Company crossed below the 10% flagging
threshold. Ilmarinen Mutual Pension Insurance Company holds 2,252,633 shares in
Qt Group Plc, corresponding to 9.43 percent of Qt Group Plc’s shares and votes.
The change in shareholding took place on May 19, 2020.

Events after the review period

The company had no other significant events deviating from normal business
operations after the end of the review period.

Risks and uncertainties

The company’s short-term risks and uncertainties are related to potential
significant changes in the company’s business operations as well as the
retention and recruitment of the personnel required for business development.
Furthermore, the prolongation of the coronavirus epidemic may slow down the
growth of the business and affect the valuation of assets. The epidemic has not
affected the valuation of assets thus far.

Exchange rate fluctuations, particularly between the US dollar and euro, may
have a large impact on the development of the company’s net sales. Another
factor contributing to considerable fluctuation in quarterly net sales and
profitability in particular is the contract turnaround times which, in the major
customer segment, are very long at up to 18 months.

The company’s business risks and preparations for them are also described on the
company website at www.qt.io.

Helsinki, August 7, 2020
Qt Group Plc
Board of Directors

Communications

Qt Group will hold a briefing on this half-year report for analysts on Friday, 7
August 2020 at 11:00 am, in the Akseli cabinet of Hotel Kämp, Pohjoisesplanadi
29, 00100 Helsinki, Finland. Welcome!

The half-year report and CEO’s presentation will be available in the Investors
section at www.qt.io from
11:00 am on 7 August 2020.

Further information
Juha Varelius, CEO, tel. +358 9 8861 8040

DISTRIBUTION

NASDAQ Helsinki
Key media


About The Qt Company
Qt Group (Nasdaq Helsinki: QTCOM) is a global software company with a strong
presence in more than 70 industries and is the leading independent technology
behind millions of devices and applications. Qt is used by major global
companies and developers worldwide, and the technology enables its customers to
deliver exceptional user experiences and advance their digital transformation
initiatives. The company's net sales in 2019 totaled 58,4 MEUR, and it employs
some 340 people. To learn more, visit http://qt.io. To learn more, visit
http://qt.io.

Attachments:

08066915.pdf

Qt Half Year Report.pdf