2016-03-04 11:50:01 CET
2016-03-04 11:50:01 CET
REGLERAD INFORMATION
Digia Oyj - Company Announcement
DIGIA PUBLISHES QT GROUP PLC'S DEMERGER PROSPECTUS AND CONFIRMS THE FINANCIAL OBJECTIVES, STRATEGIC INITIATIVES, NEAR-TERM OUTLOOK AND CARVE-OUT INFORMATION FOR QT GROUP PLC
Helsinki, 2016-03-04 11:50 CET (GLOBE NEWSWIRE) -- Digia Plc Stock exchange
release, 4 March 2016 at 12:50
DIGIA PUBLISHES QT GROUP PLC'S DEMERGER PROSPECTUS AND CONFIRMS THE FINANCIAL
OBJECTIVES, STRATEGIC INITIATIVES, NEAR-TERM OUTLOOK AND CARVE-OUT INFORMATION
FOR QT GROUP PLC
Today, Digia Plc is publishing a demerger prospectus that has been drafted on
behalf of Qt Group Plc for implementing the partial demerger of Digia and
applying for the listing of Qt Group shares on the Main List of NASDAQ OMX
Helsinki Oy.
On 16 December 2015, the Board of Directors of Digia Plc approved a demerger
plan concerning the partial demerger of Digia. According to the plan, Digia
will be demerged such that all of Digia's Qt segment-related assets, debt and
liabilities will be transferred to the company created in the demerger. The
planned name of the new company is Qt Group Plc. Digia's domestic segment will
remain with Digia.
Digia's Board of Directors proposes that the demerger and the demerger plan be
approved at the Annual General Meeting, which is scheduled for 16 March 2016.
It is expected that the implementation of the partial demerger will be
registered on 1 May 2016 and that trading in the shares will begin on 2 May
2016.
Publication of the demerger prospectus
The demerger prospectus, which has been approved by the Financial Supervisory
Authority, is available as from today on Digia's Internet site at
www.digia.com/jakautuminen. The demerger prospectus is published in Finnish.
This stock exchange release also includes the financial objectives, strategic
initiatives, near-term outlook, and key historical carve-out financial
information for the Qt Group, as confirmed by Digia's Board of Directors, as
well as an overview of the recent development of Qt and significant changes in
its financial position. This information is described in greater detail in the
demerger prospectus.
Financial reporting
Qt Group Plc will publish a bi-annual report for the first six months of each
financial period. In addition, going forward, the Qt Group will release shorter
management reports covering Q1 and Q1-Q3. The decision is based on the
amendment to the Securities Market Act that came into force on 26 November
2015.
The Securities Market Act no longer requires companies to publish an interim
report for the first three and nine months of the financial period.
Digia will publish a separate stock exchange release on Qt’s key figures for
January-March, including comparison figures, in connection with Digia’s Interim
Report January-March on 29 April 2016.
The Qt Group will release its financial reporting calendar after the execution
of the demerger.
Financial objectives
Digia's Board of Directors has set Qt the objective of achieving net sales
growth at least on a par with the growth of the market for software development
tools for embedded devices. In 2014, it was forecast that the market for
software development tools for embedded devices will see annual growth of about
8-10 per cent at least until 2020.
Key strategic initiatives
Qt seeks to achieve its strategic objectives by carrying out the following key
strategic initiatives:
• Investments in boosting efficiency in embedded system development
Qt technology is excellently suited to the development of embedded systems, and
Qt seeks to further hone this competitive edge. The focuses of development
efforts include development tools, support for new software and hardware
technologies and additional functionalities, such as for creating user
interfaces. A major subarea targeted for development is enabling manufacturers
of embedded systems to offer their own application development environments and
create their own application ecosystems.
• Open-source licencing
Qt technology is licenced not only under commercial licences, but also with
open-source licences, which enables the dissemination of the technology to a
wide user base. The open-source licences in use vary somewhat with respect to
different Qt versions and components. Up to Qt version 5.6, most of the
components and tools were licenced under a commercial licence or optionally
under either LGPLv2.1, LGPLv3 or GPLv3 licences. From Qt 5.7 onwards, which is
scheduled for launch in Q2 2016, the available open-source licences will be
changed such that most of the components can be optionally licenced under
LGPLv3, GPLv2 or GPLv3 while the tools and some of the expansion components can
only be licenced under GPLv3.
Of the available Qt open-source licences, the one that is currently most
frequently used is LGPLv2.1, which permits users to develop their own software
without being obligated to share the source code. The LGPLv2.1 licence permits
users to choose which type of licence to use for their own software, provided
that they ensure that they comply with the requirements of LGPLv2.1. LGPLv3 is
a newer version of the licence, in which the rights of the user to make use of
open-source components are regulated more precisely and strictly than under
LGPLv2.1.
With Qt 5.7, open-source licencing will change such that LGPLv2.1 licencing
will be discontinued. It is expected that LGPLv3 will become the most
significant open-source licence. In the view of Digia's Board of Directors,
this licencing change is necessary because LGPLv3 clarifies aspects that were
open to interpretation under LGPLv2.1. This change in licencing will clarify
the rules of the use of open-source code: when distributing devices that
utilise open-source code, the distributor must provide the user with a real
opportunity to update the functionalities of the open-source code after
deploying the device. Patent-related procedures will also become clearer. That
is, those who use open-source code commit themselves to not making any patent
claims in order to limit the utilisation of open-source code-based software
under the terms of LGPLv3. Digia's Board of Directors believes that this
licencing change will serve to support sales of Qt's commercial licences as
many industrial players will in the future re-evaluate the suitability of
open-source code for their operations. The change has no effect on previous
versions of Qt.
• Enlarging the sales network
Qt seeks to expand its sales network by increasing the number of its own
business locations and resellers. With respect to its own business locations,
Qt intends to have geographical coverage in its largest markets, which are
currently the United States, Germany, China, Korea and Japan. Qt seeks to
expand its reseller network, particularly in countries that have smaller
business potential or where local operating methods or the market differ
substantially from Qt's current operating methods or markets. Efforts will also
be made to expand the reseller network to include technology partners that
either operate globally on their own or which have their own distribution
network.
Qt also seeks to enhance the efficiency of the sales network by stepping up
online distribution. At present, however, Digia's Board of Directors considers
that the self-service sales channel is of limited significance to business
operations.
Qt's near-term outlook
Digia's Board of Directors estimates that demand for the services of Qt is at a
reasonable level, considering the time of year and general market situation.
The Board expects that Qt will see continued growth in demand in the large
customer market as well. However, contract turnaround times in these markets
are very long, typically around 6–18 months, which can cause significant
fluctuation in quarterly net sales and, particularly, profitability.
Qt's business development efforts in the near future will focus particularly on
embedded systems in the automotive industry, digital TVs and industrial
automation. Product development is also targeting value-added features and
tools required for building embedded systems. The sales growth associated with
embedded systems is also reflected on the earnings logic. Licencing income from
embedded system-related sales is accumulated over the longer term, rather than
representing a one-time licencing payment.
Digia's Board of Directors estimates that embedded system-related sales growth
will start to have an effect on Qt's net sales trend from 2018 onwards in
particular. Digia’s Board of Directors estimates that Qt net sales will be
moderate in 2016 and that growth will slow down from the previous year. In
2015, Qt's net sales rose by about 32.0 per cent, supported by foreign exchange
rate changes. Excluding the impact of these currency movements, year-on-year
growth was about 25.5 per cent. Changes in foreign exchange rates, particularly
between the US dollar and the euro, may continue to have a significant impact
on the trend in Qt's net sales. That said, Digia's Board of Directors estimates
that such impacts in 2016 will be smaller than in the previous year.
Digia's demerger and the resulting establishment of Qt as an independent public
listed company involves considerable expenses, some non-recurring and others
continuing. These will tax the profitability of the Qt business in the future.
Digia's Board of Directors estimates that Qt's operating profit in 2016 will be
clearly in the red, but that it will improve after 2016, driven by net sales
development. However, investments in sales work and thereby in better growth
opportunities will continue to affect profit performance in the future.
Qt's carve-out financial information
Accounting policy
The Qt Group's carve-out financial statements for the financial years ending on
31 December 2015 and 31 December 2014 have been prepared by consolidating
(”carve-out”) the income statements, statements of comprehensive income,
balance sheets and cash flows of the legal entities and business units that
were part of the Qt segment in Digia's consolidated financial statements and
which will be demerged from Digia to form the Qt Group. They also include
certain income, expenses, debts and cash flows of Digia Plc and Digia Finland
Ltd that will either be transferred to Qt or which were allocated to Qt when
preparing the carve-out financial statements.
Carve-out financial statements do not necessarily describe what the results,
financial positions and cash flows of the consolidated functions would have
been if Qt and its subsidiaries had been an independent legal group as from 1
January 2014 and had thereby presented the financial information for said
financial years as a separate group. Furthermore, the carve-out financial
statements are not intended to demonstrate what Qt's income and expenses,
financial position or cash flows will be in the future.
The carve-out financial statements have been prepared based on the continuity
of operations and original acquisition costs, as earlier reported in Digia's
consolidated financial statements.
The Qt Group's carve-out financial statements have been drafted in line with
the International Financial Reporting Standards (IFRS) endorsed for use in the
EU. As IFRS does not include guidelines on preparing carve-out financial
statements, certain methods that are commonly used to produce historical
financial information have been applied in preparing the carve-out financial
statements included in the prospectus. The application of these carve-out
methods is described in the prospectus under "Description of carve-out
principles." In addition to the particular carve-out methods affecting the
presentation of the financial statements, the section of the prospectus
entitled "Accounting policies requiring consideration by management and crucial
factors of uncertainty associated with estimates" deals with matters that
either require great consideration or in which the estimates and assumptions
used have a significant effect on the carve-out financial statements.
Key carve-out financial information
1 Jan. - 31 Dec. 2015 1 Jan. - 31 Dec. 2014
(audited)(EUR 1,000) (audited)(EUR 1,000)
----------------------------------------------------
Net sales 26,934 20,406
Operating result 1,786 -2,001
Profit before taxes 1,591 -2,255
Net profit 981 -2,061
Balance sheet total 23,869 22,883
Interest-bearing liabilities 1,364 1,668
Gearing, % -25 -15
Equity ratio, % 55 55
Personnel, 31 Dec. 195 186
Average personnel 192 191
FORMULAS FOR THE INDICATORS
Equity ratio = (Shareholders' equity + minority interest) x 100
(%)
-------------------------------------------------------------
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Balance sheet total - advances received
Gearing (%) = (Interest-bearing liabilities - cash and cash equivalents) x
100
-------------------------------------------------------------
-------------------------------------------------------------
Shareholders' equity
Recent development and significant changes in financial position
With the exception of a financial arrangement made by Digia on behalf of Qt
with Ilmarinen Mutual Pension Insurance Company, a Digia shareholder, no
significant changes happened in Qt's financial or business position between 31
December 2015 and the date of the demerger prospectus.
The financial arrangement concerns a loan granted by Ilmarinen Mutual Pension
Insurance Company, a Digia shareholder, to the newly demerged Qt on 29 February
2016. The loan is contingent on the implementation of the demerger. It is a
bilateral loan secured with collateral, with a principal of EUR 6.0 million and
fixed annual interest of 7.75 per cent. Qt must pay a 2.5 per cent reservation
fee for any undrawn amounts of the loan. The collateral for the loan consists
of a corporate mortgage on Qt's mortgageable assets, the shares outstanding in
the Qt subsidiary The Qt Company Oy, which is expected to be transferred into
the direct ownership of Qt on the day of the demerger, and a corporate mortgage
on the mortgageable assets of The Qt Company Oy. In addition, The Qt Company Oy
will give a directly enforceable guarantee for the loan. Qt may not pay
dividends if loan repayments or interest payments have fallen due and remain
unpaid. If some other party gains controlling interest in Qt, the loan must be
repaid if the creditor so demands. In addition to the terms presented above,
the loan is subject to other special terms and conditions customary to
financial agreements.
Note
The distribution of this stock exchange release and the demerger prospectus in
certain countries, such as Australia, the Republic of South Africa, Hong Kong,
Japan, Canada and the United States, may be subject to legal restrictions. The
information in this release and the demerger prospectus may not be construed as
an offer to sell, or an invitation to purchase, Qt shares in Australia, the
Republic of South Africa, Hong Kong, Japan, Canada and the United States or in
any other country where such an offer would be restricted by law. This release,
the demerger prospectus or materials concerning the demerger may not be
distributed or published in any country without complying with the laws and
regulations of the country in question. Neither this release nor the demerger
prospectus constitutes an offer to issue Qt shares to any person in any country
where making said offer is restricted by law.
Helsinki, 4 March 2016
Digia Plc
Board of Directors
Additional information:
President and CEO Juha Varelius,
tel. +358 10 313 3000
Distribution:
NASDAQ OMX Helsinki
Principal media
APPENDICES:
Demerger prospectus in Finnish
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