Capnor Weasel Bidco Oyj, Half Year Financial report January – June 2024

CAPNOR WEASEL BIDCO OYJ

Half Year Financial report

January – June 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 in
   378 thousand euros. The adjustment related to IT Salonen acquisition was 60 thousand and iLOQ 20 years anniversary events 870 thousand
   euros. These costs have been excluded in the Adjusted EBITDA, EBIT and Operational Cash Flow figures above.

Management overview of the second quarter

iLOQ Group’s revenue decreased 3 percent compared to the corresponding period of the previous year. Negative market sentiment has prevailed throughout the year in the Nordics as continued postponement in decision making in the renovation market has affected overall demand. However, the worst slowdown seems to be behind in the Nordics and there are first signs of improving market sentiment. iLOQ’s Build Environment market in the Nordics is not, however, expected to materially improve in 2024. Management is confident that the long-term growth potential and drivers in the market remain intact despite a short-term slowdown, due to delayed investments by customers, and that iLOQ is well positioned to continue to outgrow the market also during periods of softer market activity.

iLOQ continues to invest in future growth and the market entry in the US, an enormous market and opportunity for iLOQ, is on schedule and progressing as planned. iLOQ has a local sales organization in place, which has already generated a solid pipeline in the US market. Logistic channels and partner networks are being built and the US standard ANSI cylinder products were launched at the year-end in 2023. Everest Infrastructure Partners and iLOQ signed an agreement in April to roll out battery-free smart locks at telecom towers throughout the U.S. iLOQ announced in June to join forces with Carson Living. Carson Living is a leader in the multifamily industry providing cutting edge, user friendly software (mobile and web apps) that streamlines buildings operations by integrating property management software, building hardware such as access control, intercoms, smart locks (and more) and a 24/7 live remote doorman team.

Gross margins remained unchanged at the historical healthy levels. The organization for future growth is now fully established and hence the quarter-on-quarter volume growth related operational gearing improved EBITDA materially compared to the previous quarter.

Management reiterates its expectation of iLOQ Group revenue to grow in 2024 over 2023 driven by international expansion.

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

Second quarter 2024

Total revenue decreased 3% compared to Q2 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 4.0 (2.8), corresponding to a 14% (10%) EBITDA margin.

EBIT amounted to MEUR 1.0 (0.3), corresponding to a 3% (1%) EBIT margin.

Operational cashflow was MEUR -0.5 (-6.9). Improvement was based on improved EBITDA and lower net working capital.

First half 2024

Total revenue decreased 20% compared to H1 2023.

EBITDA amounted to MEUR 0.9 (8.9), corresponding to a 2% (15%) 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 -4.9 (3.9), corresponding to a -10% (6%) EBIT margin.

Operational Cash Flow was MEUR 9.9 (0.9). Improvement was based on increased net working capital efficiency.

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.

Events after the reporting period

iLOQ announced to create customized mobile-key-based solution to provide secure access to DFMG's rooftop sites. After the roll-out at the rooftop sites, DFMG will implement the intelligent, secure, and sustainable solutions from iLOQ for its radio towers in Germany. Founded in 2002 (as a subsidiary of Deutsche Telekom), Deutsche Funkturm (DFMG) is a key player in developing infrastructure for German mobile network operators, broadcasters, operators of radio relays, and the radio networks of authorities and other institutions. With more than 35,000 antenna sites, it is the largest operator of radio infrastructure in Germany and the 3rd largest in Europe.

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 first half of 2024.

Espoo August 14, 2024

                                                     Heikki Hiltunen                                             Magnus Hammarstöm

                                                  President and CEO                                         Member of the Board

INCOME STATEMENT

BALANCE SHEET

STATEMENT OF CASH FLOWS

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 June 30, 2024 comprise the Company and its subsidiaries (together referred to as the ‘Group’)

2. Accounting Principles

The Group’s Interim Report for January-June 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, France, Spain, Poland, Great Britain, Canada, Australia 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. There were no related party transactions during the reported period.

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. 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, info@iloq.com

For questions concerning this report please contact:

Heikki Hiltunen

CEO and President

Heikki.Hiltunen@iloq.com

Timo Pirskanen

CFO

Timo.Pirskanen@iloq.com

Attachments

• Capnor Weasel Bidco Oyj Interim Report January_June 2024 (pdf)