Capnor Weasel Bidco Oyj, Financial Statements Bulletin January – December 2024

Financial Statements Bulletin 2024

*  Year 2023 EBITDA, EBIT & Operational Cash Flow included an impact from the IT Salonen transaction and a brand renewal together with
   costs related to iLOQ 20 years anniversary, which have been treated as items affecting comparability. The adjustment related to brand renewal was
   378 thousand euros. The adjustment related to IT Salonen acquisition was 60 thousand and iLOQ 20 years anniversary events 870 thousand
   euros. Q4 2024 and FY 2024 included 1.8 MEUR adjustments related to strategic analysis of iLOQ’s full sales potential together with restructuring costs.
   These costs have been excluded in the Adjusted EBITDA, EBIT and Operational Cash Flow figures above.

Management overview of the fourth quarter

iLOQ Group’s revenue decreased 9 percent compared to the corresponding period of the previous year. Negative market sentiment has persisted in the Nordics throughout the year, primarily due to delays in decision-making within the renovation market, which has impacted overall demand. This is largely driven by economic uncertainties, including recent years of inflation and rising material costs, leading to postponed projects. Market activity in Sweden was particularly slow during this period. The outcome of the US sales did not fully meet expectations as three larger projects that were originally scheduled for Q4 were postponed to Q1. This shift occurred as end customers were optimizing their 2024 cash flows, which led to delays. Similarly, on the Critical Infrastructure side, customers also postponed their decision-making for the same reason. These delays have impacted overall market momentum, resulting in a more cautious and less active environment. However, the worst of the slowdown appears to be behind us, and early signs suggest improving market sentiment, particularly in government or municipalities owned projects and in rental housing.

That said, the market recovery in 2025 is expected to happen gradually. Despite this short-term slowdown, management remains confident in the long-term growth potential of the Nordic market as digital solutions are outgrowing mechanical locking systems. For example, the market sentiment in Finland turned positive during the fourth quarter and iLOQ won a large energy company deal in Austria for S50. Delayed investments are expected to be temporary, and the underlying demand drivers remain intact. iLOQ is well-positioned to continue outperforming the market even during periods of slower activity, leveraging a strong project pipeline, customer relationships, and its focus on innovation. iLOQ invested into its future growth strategy by developing a full potential plan for sales, a new internal sales incentive model, and a revamped partner program.

iLOQ continues to invest in future growth and ramping its entry into the US, an enormous market and opportunity for iLOQ. iLOQ has a local sales organization in place, which has already generated a solid pipeline in the US market. Logistic channels with distribution center in Dallas and partner networks are up and running and the US standard ANSI cylinder products were launched at the year-end in 2023. Naturally, the growth ambitions including the establishment of a team in the US and the expansion of US-relevant product features has resulted in an increasing cost base.

Operational cashflow improved compared to the previous year mainly due to improvement in the net working capital efficiency.

Fourth quarter 2024

Total revenue decreased 9% compared to Q4 2023. Still low activity in the multi-residential new construction and renovation markets in the Nordics, but good performance in the rest of the world continued and international expansion also underpinned the revenue compared to the same period in the previous year.

EBITDA amounted to MEUR 16.2 (20.8), corresponding to a 31% (36%) EBITDA margin.

EBIT amounted to MEUR 12.8 (17.6), corresponding to a 24% (31%) EBIT margin.

Operational cashflow was MEUR 9.3 (12.3).

Full year 2024

Total revenue decreased 9% compared to corresponding period in the previous year.

EBITDA amounted to MEUR 19.6 (31.4), corresponding to a 15% (22%) EBITDA margin. Gross margins have remained unchanged at the historical healthy levels. Continued investments in growth, including costs related to the US market entry, continued to increase opex and impacted EBITDA negatively especially in the first quarter, which in combination with lower delivery volumes resulted in the negative EBITDA development.

EBIT amounted to MEUR 7.2 (20.5), corresponding to a 6% (15%) EBIT margin.

Operational cashflow was MEUR 20.3 (11.2). Improvement was based on lower net working capital.

Capnor Weasel Bidco Oyj successfully priced senior secured floating rate notes of EUR 55 million with a tenor of five years in March. The New Notes have a floating rate coupon of 3 months EURIBOR + 4.00 per cent per annum and final maturity in March 2029. Capnor Weasel Bidco Oyj intends to apply for listing of the New Notes on the corporate bond list of Nasdaq Stockholm. The total amount of different fees related to the transaction amounted to MEUR 1.4.

Quarterly Information

Declaration of the Board

We confirm that, to the best of our knowledge, the condensed financial statements give a true and fair view of the Group’s assets, liabilities, financial position and results of operations for the period. We also confirm, to the best of our knowledge, that the management overview includes a fair review of important events that have occurred during the full year of 2024.

Espoo February 14, 2025

                                                     Heikki Hiltunen                                         Magnus Hammarstöm

                                                  President and CEO                                         Member of the Board

INCOME STATEMENT

BALANCE SHEET

STATEMENT OF CASH FLOWS

*) Other adjustments relates to misstatement in the bonus and commission provision and impairment of intangible assets.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1. Reporting Entity

Capnor Weasel Bidco Oyj (the Company) is domiciled in Finland. These condensed interim financial statements for the quarter ended December 31, 2024 comprise the Company and its subsidiaries (together referred to as the ‘Group’)

2. Accounting Principles

The Group’s Financial Statements Bulletin for January-December 2024 has been prepared in line with IAS 34, ‘Interim Financial Reporting’ and should be read in conjunction with the Group’s financial statements for 2023, published on April 12, 2024. The Group has applied the same accounting principles in the preparation of this Interim Report as in its Financial Statements for 2023. The information presented in this Interim Report has not been audited.

3. Seasonality

The Group operates in an industry that sees seasonal changes in revenue. In a typical year, the first three quarters amount to approximately two thirds of the Group’s full-year revenue while the last quarter sees the revenue rise to amount to one third of the full-year revenue. Therefore, in a normalized year, the financial results of the fourth quarter can be expected to be stronger than compared to the first three quarters.

4. Segment reporting

Capnor Weasel Bidco Group is a Finnish group of companies. In addition to the parent company Capnor Weasel Bidco Oyj, iLOQ Group belongs to the Group. Industrial operations are in the iLOQ Group that offers solutions for electronical locking. iLOQ Group operates with a network business model in the manufacture and distribution of products. iLOQ Group’s products are sold through iLOQ’s distribution channel providing professional installation and maintenance services. iLOQ Group has subsidiaries in Sweden, Denmark, Norway, Germany, the Netherlands, Belgium, France, Spain, Poland, Great Britain, Canada, Australia, Singapore, United Arab Emirates and United States. The Group's business operations are managed and monitored as one entity. Subsidiaries are sales organizations and their turnover consists of commission charges from the iLOQ Group's parent company. Based on the similarity of business operations, products, services and production process, the Group has only one operating segment. The Executive Board is iLOQ Group's chief operative decision maker. The Executive Board evaluates the performance of the company and the use of resources as a whole. Composition of the Group's turnover and geographical distribution is presented with the notes related to turnover. The Group has no external customers with net sales over 10% of the Group's total net sales. The Group's most significant non-current assets are located at the domicile state of the parent company.

5. Revenue

The revenue of Capnor Weasel Bidco Group consists of digital locking and access management systems. The Group's products consist of supplied locks and software as well as lock operation and maintenance services. The Group's customers are retailers and partners of locking products. Revenue is recognized when control over the goods or the service is transferred to the customer. Lock deliveries are recognized as revenue when control is transferred on the basis of the delivery of the products, when the risks and benefits have been transferred to retailers. EX Works Incoterms delivery term is generally used on the delivery of products. For one significant customer, performance obligation is satisfied at the time of the delivery, and for these deliveries Delivered Duty Paid Incoterms are applied. Revenue from maintenance and repair services is recognized over time as the customer receives the benefits simultaneously as the service is provided. Sales contracts are made with the regular payment terms. A yearly discount can be granted to customers for products sold.

The Group's revenue by geographical area is presented below.

The classification of revenue according to the timing of product deliveries and service production is presented below.

INTANGIBLE ASSETS

PROPERTY, PLANT AND EQUIPMENT

RELATED PARTY TRANSACTIONS

The Group’s related parties consist of parent company iLOQ Oy and its subsidiaries. In addition, related parties include iLOQ-Group’s Board members as key management personnel, the CEO and members of the Group management, as well as entities that are under the control of key management personnel and their family members.

During the financial year 2024, Capnor Weasel Bidco Oyj received a group grant from its subsidiary iLOQ Oy worth EUR 3,100,919 (EUR 3,015,988 in 2023). In addition, during the financial year 2024, Capnor Weasel Bidco Oyj invoiced administrative services from its subsidiary iLOQ Oy worth EUR 593,705 (EUR 619,042 in 2022). At the end of the financial year, the company had a related party loan of EUR 4,627 thousand from its subsidiary iLOQ Oy.

CONTINGENT LIABILITIES

Definitions of alternative performance measures

1. EBITDA = EBIT before depreciation, amortization and impairments

2. Operational Cash Flow = EBITDA + Change in trade and other receivables + Change in inventory + Change in trade and other payables + Change in provisions + Investments in intangible assets + Investments and Payments in tangible assets. Operational Cash Flow is used internally by the group to follow EBITDA which takes into account investments and change in working capital

3. Operational Cash Flow % = Operational Cash Flow / Revenue

4. Adjusted EBITDA, Adjusted EBIT & Adjusted Operational Cash Flow = Same as above but excluding an impact from the IT Salonen transaction, the brand renewal and the iLOQ 20 years anniversary events, which have been treated as items affecting comparability. Year 2023  EBITDA, EBIT & Operational Cash Flow included an impact from the IT Salonen transaction and the brand renewal together with costs related to iLOQ 20 years anniversary, which have been treated as items affecting comparability. The adjustment related to brand renewal in Q1 2023 was 378 thousand. The adjustment related to IT Salonen acquisition was 60 thousand and iLOQ 20 years anniversary events 870 thousand euros. Both took place in Q3 2023. Q4 2024 and FY 2024 included 1.8 MEUR adjustments related to strategic analysis of iLOQ’s full sales potential together with restructuring costs. These costs have been excluded in the Adjusted EBITDA, EBIT and Operational Cash Flow figures.

CONTACT

Additional information about the company can be found on the corporate website www.iloq.com. The company can be contacted by e-mail, vasb@vybd.pbz

For questions concerning this report please contact:

Heikki Hiltunen

CEO and President

Urvxxv.Uvyghara@vybd.pbz

Timo Pirskanen

CFO

Gvzb.Cvefxnara@vybd.pbz