QT GROUP PLC INTERIM STATEMENT 1 JANUARY 2016–30 SEPTEMBER 2016

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QT GROUP PLC STOCK EXCHANGE RELEASE, 24 OCTOBER 2016 at 8:00

Qt Group Plc will publish interim statements for the first three and nine months of the year instead of interim reports. The information presented in interim statements has not been audited.

THIRD QUARTER: GROWTH CONTINUED, AS EXPECTED, AT A MORE MODERATE RATE THAN IN THE FIRST HALF OF THE YEAR

January–September 2016:
– Net sales increased by 20.5 per cent year-on-year to EUR 23,550 thousand (19,551)*.
– Comparable operating profit was EUR 389 thousand (1,776), comparable operating margin (EBIT %) was 1.7 per cent (9.1).
– The comparable operating profit for 2015 includes restructuring costs totalling EUR 76 thousand, while the comparable operating profit for 2016 includes non-recurring costs totalling EUR 1,820 thousand arising from fees paid to external service providers in relation to the demerger as well as costs associated with Digia’s share-based remuneration system.
– The operating result was EUR -1,430 thousand (1,700), operating margin (EBIT %) was -6.1 per cent (8.7).
– Earnings per share were EUR -0.08.

July–September 2016:
– Net sales increased by 11.8 per cent year-on-year to EUR 7,466 thousand (6,678).
– Comparable operating profit was EUR -791 thousand (656), comparable operating margin (EBIT %) was -10.6 per cent (9.8).
– The comparable operating profit for 2015 includes restructuring costs totalling EUR 40 thousand, while the comparable operating profit for 2016 includes non-recurring costs totalling EUR 108 thousand arising from fees paid to external service providers in relation to the demerger.
– The operating result was EUR -899 thousand (616), operating margin (EBIT %) was -12.0 per cent (9.2).
– Earnings per share were EUR -0.04.

* Unless otherwise noted, the figures in brackets refer to the comparison period, i.e. the corresponding period last year.

Qt has applied the ESMA (European Securities and Markets Authority) guidance on Alternative Performance Measures. The guidance entered into effect on 3 July 2016.

Juha Varelius, President and CEO:

The past year has been a period of strong growth for the Qt Group. As anticipated, the rate of growth slowed down in the third quarter compared to that of the first half of the year. This was due to the seasonal fluctuations that are typical for the business.

The rate of growth compared to the previous year has been especially strong considering the fact that, in the first nine months of 2015, the Qt business recorded approximately EUR 1.4 million in net sales, of which approximately EUR 0.5 million was recognised in the third quarter, based on an exceptional licensing deal made with Nokia Corporation in 2012. Starting from the final quarter of 2015, the deal in question has not generated any net sales.

As expected, the operating result for the third quarter showed a loss due to investments necessary for growth and the setting up of independent Group functions. The Group’s operational efficiency has not deteriorated. The result for the third quarter included non-recurring costs totalling EUR 0.1 million arising from fees paid to external service providers in relation to the Digia demerger.

FUTURE PROSPECTS

Operating environment and market outlook

Considering the time of year and general market situation, demand for the Group’s services is at a moderate level, and the long-term business outlook is 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 2016.

Outlook 2016

The company estimates that its business will continue to grow, but the rate of growth is expected to be more moderate in the remainder of 2016 compared to the first half of the year. The company estimates that full-year net sales for 2016 will show year-on-year growth of more than 15 per cent.

Digia's demerger and the resulting establishment of Qt as an independent public listed company involve considerable expenses that weigh down on the Group’s profitability, particularly compared to the previous year. Furthermore, the company’s strategic policy is, for the time being, to strive to maximise the growth potential presented by the market environment and invest the proceeds from business operations to support growth, which will have a negative impact on profitability. Due to these reasons, the company estimates that its reported operating profit will remain in the red in 2016.

Financial reporting

Qt Group Plc will publish its financial statements for 2016 on Thursday, 16 February 2017.

Helsinki, 24 October 2016

Qt Group Plc

Board of Directors

BRIEFING

The company does not hold briefings on interim statements.

The interim statement will be available in the Investors section at www.qt.io from 11:00 am on 24 October 2016.

FURTHER INFORMATION

Juha Varelius, CEO, tel. +358 400 855 849

DISTRIBUTION
NASDAQ Helsinki
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