Capnor Weasel Bidco Oyj, Interim Report January – September 2024

Interim Report for the third quarter of 2024

Third quarter highlights

• Revenue increased by 21% to MEUR 27.8 (22.9)
• Adjusted EBITDA decreased by 4% to MEUR 2.5 (2.6), corresponding to a 9% (11%) EBITDA margin
• Adjusted EBIT decreased to MEUR -0.7 (0.0), corresponding to a -2% (0%) EBIT margin
• Operational Cash Flow improved to MEUR 1.1 from MEUR -3.6 in the previous year

Significant events during the quarter

• iLOQ signed a global framework agreement with leading European residential real estate company, Heimstaden Bostad with a portfolio of approximately 160,000 apartments across nine countries
• iLOQ signed an agreement with Telia Towers Norway for the deployment of its innovative battery-free and keyless smart-locking system across the company’s more than 1000 tower sites
• iLOQ announced after the review period that operations at its new North American distribution center (iLOQ NAM DC) have been ramped up and the first customer deliveries have now been sent out

*  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 third quarter

iLOQ Group’s revenue increased 21 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 inflation and rising material costs, leading to postponed projects. However, the worst of the slowdown appears to be behind, and early signs suggest improving market sentiment, particularly in government or municipalities owned projects and in rental housing.

That said, the market is not expected to experience a significant recovery in 2024, with growth remaining gradual. 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. 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 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. Naturally, the growth ambitions including the establishment of a team in the US as well as expansion of product features has resulted in an increasing cost base. iLOQ announced after the review period that operations at its new North American distribution center (iLOQ NAM DC) have been ramped up and the first customer deliveries have now been sent out.

While a significant part of Q4 is still to be seen, management expects to see strong double digit growth also in the fourth quarter, building on the step-change in growth momentum seen in Q3.

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

Third quarter 2024

Total revenue increased 21% compared to Q3 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 2.5 (1.7), corresponding to a 9% (7%) EBITDA margin.

EBIT amounted to MEUR -0.7 (-0.9), corresponding to a -2% (-4%) EBIT margin.

Operational cashflow was MEUR 1.1 (-3.6). Improvement was based on improved EBITDA and lower net working capital.

YTD September 2024

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

EBITDA amounted to MEUR 3.4 (10.6), corresponding to a 4% (13%) 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 -5.6 (2.9), corresponding to a -7% (3%) EBIT margin.

Operational cashflow was MEUR 11.0 (-2.8). 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 first half of 2024.

Espoo November 14, 2024

                                                  Heikki Hiltunen                                            Magnus Hammarstöm

                                                  President and CEO                                         Member of the Board

INCOME STATEMENT

BALANCE SHEET

STATEMENT OF CASH FLOWS

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, 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

Attachments

• Capnor Weasel Bidco Oyj Interim Report January September 2024 (pdf)