Qt Group Oyj - Interim report (Q1 and Q3)

QT GROUP PLC INTERIM STATEMENT 1 JANUARY 2017–30 SEPTEMBER 2017

Third quarter: Net sales increased by 16.8 per cent

July–September 2017:

  · Net sales increased by 16.8 per cent year-on-year to EUR 8,718 thousand
(7,467)*. At comparable exchange rates, net sales increased by 19.8 per cent.
  · The operating result was EUR -1,302 thousand (-899).
  · The operating margin (EBIT %) was -14.9 per cent (-12.0%).
  · Earnings per share were EUR -0.05 (-0.04).

January–September 2017:

  · Net sales increased by 11.0 per cent to EUR 26,152 thousand (23,550) At
comparable exchange rates, net sales increased by 10.9 per cent.
  · The operating result was EUR -2,505 thousand (-1,430).
  · The operating margin (EBIT %) was -9.6 per cent (-6.1%).
  · Earnings per share were EUR -0.10 (-0.08).

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

Juha Varelius, President and CEO:

As expected, the growth of Qt Group’s net sales picked up speed in the third
quarter. Net sales for the quarter increased by 16.8 per cent year-on-year, to
EUR 8.7 million. License sales and consulting grew by 17.9 per cent and support
and maintenance by 15.0 per cent. The consulting business returned to growth in
the third quarter after a subdued first half of the year.

The recent significant depreciation of the US dollar against the euro is
weighing down on the Group’s year-on-year growth in net sales. In the third
quarter, exchange rates had an effect of EUR -0.2 million on net sales. At
comparable exchange rates, net sales increased by 19.8 per cent year-on-year.

Net sales for the review period amounted to EUR 26.2 million, up 11.0 per cent
year-on-year. License sales and consulting grew by 7.2 per cent and support and
maintenance by 18.0 per cent.

As expected, the operating result for the review period showed a loss. Qt Group
has made investments in growth and recruited new personnel in line with its
growth strategy. The Group had 268 employees at the end of the review period,
compared to 220 at the end of 2016. New employees have been recruited
particularly in sales as part of the planned growth of the sales network. We
have also invested in product management and product development, and we have
particularly strengthened our product offering aimed at the automotive,
pharmaceutical and industrial automation industries.

The automotive industry offers high future growth potential and it has adopted
Qt as one of its basic technologies for implementing digital in-vehicle
entertainment and control software. Qt engages in business and development
activities with many of the world’s leading car manufacturers.

Continued strong demand will enable the Group to maintain robust growth in the
final quarter of the year, in spite of the depreciation of the US dollar
reducing the rate of growth. We estimate that our net sales in 2017 will
increase by approximately 15 per cent year-on-year. Due to investments in line
with our growth strategy, the company’s operating result will show a substantial
loss in 2017.

Other events in the review period

Governance

By virtue of an authorisation granted by the Annual General Meeting, the Board
of Directors of Qt Group Plc decided on 27 September 2017 to continue the
validity of the option scheme for key employees so as to issue the option rights
remaining of the maximum of 2,000,000 stock options allowed under the scheme,
totalling a maximum of 480,000 option rights, to the key employees in accordance
with the terms of the option scheme. The terms of the option scheme remain in
force unchanged in all other respects. The maximum total number of option rights
issued based on the option scheme is thus 2,000,000, and they entitle their
holders to subscribe for a maximum total of 2,000,000 new shares in the company
or existing shares held by the company. In addition, the company’s Board of
Directors decided on 27 September 2017, based on an authorisation granted by the
Annual General Meeting, to allocate a total of 52,348 option rights to key
employees who have already been granted option rights on the basis of the option
scheme. The said additional option rights are granted as a result of a rights
offering decided on by the Board of Directors on 14 March 2017. The said option
rights to be granted as an offering correction were granted to the key employees
free of charge without a separate subscription list immediately upon the
decision by the Board of Directors.

Events after the review period

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

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 particularly focus on embedded
systems in the automotive sector, digital TV and industrial automation. Areas
targeted in product development include value-added features and tools required
for building embedded systems.

Sales growth associated with embedded systems will also reflect on the earnings
logic. Volume-based licence revenue from these sales accumulates over the long
term. Consequently, the company anticipates no major impact from embedded
systems sales growth on consolidated net sales in 2017.

Outlook 2017

Continued strong demand will enable the Group to maintain robust growth in the
final quarter of the year, in spite of the recent significant depreciation of
the US dollar reducing the rate of growth. The Group estimates that its net
sales in 2017 will increase by approximately 15 per cent year-on-year. Due to
investments in line with our growth strategy, the company’s operating result
will show a substantial loss in 2017.

Helsinki, 20 October 2017

Qt Group Plc

Board of Directors

Communications

The company does not hold briefings on interim statements.

The interim statement will be available in the Investors section at www.qt.io
from 8:00 am on 23 October 2017.

Further information

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

DISTRIBUTION
NASDAQ Helsinki
Key media

Attachments:

10206484.pdf