Capnor Weasel Bidco Oyj Interim Report January – September 2022

Interim Report for the third quarter of 2022 

Significant events during the quarter

  • iLOQ acquired Kodinportti / IT-Salonen Ltd’s share capital
  • iLOQ’s geographical expansion continued with expansion to Poland
  • Johanna Wretdal appointed as iLOQ’s Chief Marketing Officer (CMO)
Third quarter highlights

  • Revenue increased by 29% to MEUR 27.4 (21.3)
  • EBITDA increased to MEUR 4.7 (4.0), corresponding to a 17% (19%) EBITDA margin
  • EBIT increased to MEUR 2.4 (1.9), corresponding to a 9% (9%) EBIT margin
  • Operational Cash Flow decreased to MEUR -2.4 (-0.9)

Interim Report for the third quarter of 2022

Change Change
EUR thousand Q3 2022 Q3 2021 in % YTD 2022 YTD 2021 in % FY 2021
Revenue 27,439 21,282 29% 81,945 63,497 29% 102,921
EBITDA 4,701 3,986 18% 14,753 10,771 37% 22,588
EBITDA margin 17% 19% 18% 17% 22%
EBIT 2,414 1,902 27% 7,902 4,624 71% 14,382
EBIT margin 9% 9% 10% 7% 14%
Operational Cash Flow -2,358 -859 175% 1,520 -2,776 -155% 7,339
Operational Cash Flow % -9% -4% 2% -4% 7%
Adjusted EBITDA* 4,701 3,986 18% 15,241 10,771 42% 22,588
Adjusted EBITDA margin* 17% 19% 19% 17% 22%
Adjusted EBIT 2,414 1,902 27% 8,390 4,624 81% 14,382
Adjusted EBIT margin 9% 9% 10% 7% 14%
Adjusted Operational Cash Flow -2,358 -859 175% 2,009 -2,776 -172% 7,339
Adjusted Operational Cash Flow % -9% -4% 2% -4% 7%

*  Q2 2022 EBITDA, EBIT & Operational Cash Flow included an impact from a market study conducted with an external company, which is an item         affecting comparability. The impact of this study included in EBITDA, EBIT and Operational Cash Flow was 488 thousand euros and is not a recurring item. This cost has been excluded in the Adjusted EBITDA, EBIT and Operational Cash Flow figures above.

Management overview of the third quarter

Following a strong H1 2022, iLOQ continued its growth path in Q3 2022. The Group’s revenue growth was 29% year-on-year with strong performance across all regions and segments.

The successful actions to mitigate potential supply-chain disruptions due to the global electronics component shortages continued in Q3 2022. Management successfully continued measures to secure delivery capability and to mitigate possible unforeseen supply-chain disruptions in the third quarter to be able to meet customer demand. These actions continued the trend of higher inventory levels compared to Q3 2021. The company is likely to continue to hold higher than normal inventory levels in the coming quarters to mitigate any possible supply-chain disruption coming from the global component shortage. This increase in working capital had a material negative effect on the Group’s cash situation, but management continues to hold the view that, by strategically prioritizing delivery capability, the Group has been able to continue gaining market share in Q3 2022.

In addition to the global electronics component shortages, the timing of China's COVID-19 restrictions, the increased geopolitical risks related to the crisis in Ukraine and the rising inflation especially in building materials are having a material impact to global supply chains. Despite the above-mentioned uncertainties, iLOQ has been able to continue its strong growth trajectory and management continues to take necessary mitigation actions to secure delivery capability. Management continues to follow and evaluate the impacts the rising energy costs have on the real estate sector and therefore on iLOQ’s customers

Q3 2022 included multiple significant events for iLOQ: iLOQ acquired Kodinportti / IT-Salonen Ltd’s share capital and, through the acquisition, iLOQ will further strengthen its software development capabilities. Under the trade name DreamIt, IT-Salonen specializes in providing a wide range of IT services and various cyber services, including software product development. Kodinportti is a digital user interface for residential and commercial properties. The residents list, the noticeboard, and the reservations lists for common areas of an apartment building are replaced by a single touch-screen panel, and a remote interface that can be used with a computer or mobile phone’s internet browser. “The acquisition will strengthen iLOQ’s digital competence and competitiveness. By bringing DreamIt’s expertise to us, we will be able to develop new features for the iLOQ HOME access management system,” explains Heikki Hiltunen, President and CEO of iLOQ.

iLOQ continued to fulfill its growth strategy by expanding to Poland. Adding Poland to iLOQ’s country portfolio continues to fulfill the company’s growth strategy and allows iLOQ to introduce the benefits of its battery-free digital-locking and mobile-access-sharing technology to a new market. Grzegorz Korzeniowski has been appointed Country Manager in Poland. He will be responsible for building a winning team to establish the company’s commercial activities and developing a strong base of partners and customers.

Johanna Wretdal has been appointed as iLOQ’s Chief Marketing Officer from 15.8.2022, and she will also become a member of the Management Team. Prior to joining iLOQ, Johanna was the CMO for Silo AI. Johanna is equipped with two decades of global experience, ranging from local startups to internationally listed, leading organizations. She will take overall responsibility for the company’s marketing and communications agenda, along with playing a key role in ensuring an end-to-end brand development that ultimately supports the organization’s strategy.

Third quarter 2022

Total revenue grew 29% compared to Q3 2021, driven by strong sales across all regions and segments. iLOQ continues to rapidly gain market share with its leading self-powered digital solutions. To date, iLOQ has had no delivery issues despite the negative supply-chain disruptions affecting the industry.

EBITDA amounted to MEUR 4.7 (4.0), corresponding to a 17% (19%) EBITDA margin. The increase in EBITDA was mainly caused by the increased volumes.

EBIT amounted to MEUR 2.4 (1.9), corresponding to a 9% (9%) EBIT margin.

Operational Cash Flow was MEUR -2.4 (-0.9). The decision to continue having increased inventories to mitigate any possible global component shortage situation related to supply chain disruptions continued to have a material negative impact on the Q3 2022 Operational Cash Flow. The company is expected to continue having higher than normal inventories until the global component situation improves to guarantee its ability to produce and ship iLOQ products to customers. 

YTD September 2022

Total revenue grew 29% compared to YTD September 2021, driven by strong sales across all regions and segments. In addition to iLOQ’s strong product offering, the strong revenue and delivery performance can be partly credited to the management’s decision to strategically increase short-term inventory levels to mitigate any possible supply-chain disruptions and therefore be able to gain market share due to high delivery capability.

Adjusted EBITDA amounted to MEUR 15.2 (10.8), corresponding to a 19% (17%) EBITDA margin. The increase in EBITDA was mainly caused by the increased volumes and operating leverage.

Adjusted EBIT amounted to MEUR 7.9 (4.6), corresponding to a 10% (7%) EBIT margin.

Adjusted Operational Cash Flow was MEUR 2.0 (-2.8). The increase was mainly caused by increased profitability, partly offset by the continued higher inventory levels.

Quarterly Information

QUARTERLY INFORMATION Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022
Revenue 16,412 28,440 19,043 23,172 21,282 39,424 25,716 28,790 27,439
EBITDA 3,669 7,644 2,494 4,291 3,986 11,818 5,368 4,684 4,701
EBITDA margin 22% 27% 13% 19% 19% 30% 21% 16% 17%
EBIT 2,011 5,606 492 2,230 1,902 9,758 3,083 2,405 2,414
EBIT margin 12% 20% 3% 10% 9% 25% 12% 8% 9%
Operational Cash Flow 1,509 5,428 -3,194 1,277 -859 10,114 3,451 442 -2,372
Operational Cash Flow % 9% 19% -17% 6% -4% 26% 13% 2% -9%
Adjusted EBITDA 3,669 7,644 2,494 4,291 3,986 11,818 5,368 5,172 4,701
Adjusted EBITDA margin 22% 27% 13% 19% 19% 30% 21% 18% 17%

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 nine months of 2022.

Espoo November 14, 2022

                                                     Heikki Hiltunen                                                     Karl Petersson

                                                  President and CEO                                             Member of the Board

INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT, IFRS
EUR Thousand Q3 2022 Q3 2021 YTD 2022 YTD 2021 FY 2021
Revenue 27,439 21,282 81,945 63,496 102,921
Other income 0 0 0 0 0
Materials and services -12,467 -9,640 -35,946 -28,127 -44,459
Employee benefit expenses -5,927 -4,756 -18,912 -15,456 -22,072
Depreciation, amortization and impairment losses -2,287 -2,084 -6,852 -6,147 -8,207
Other operating expenses -4,343 -2,900 -12,333 -9,143 -13,802
Operating profit 2,414 1,902 7,902 4,624 14,382
Finance income 100 -1 110 37 73
Finance cost -1,146 -967 -3,309 -2,892 -3,947
Net financial expenses -1,046 -968 -3,199 -2,854 -3,874
Profit (-loss) before taxes 1,368 934 4,703 1,769 10,507
Income taxes -510 -327 -1,587 -762 -2,014
Profit (loss) for the financial period 857 607 3,115 1,008 8,493
Items that may be subsequently reclassified to profit or loss
Translation differences 6 -5 18 -4 -19
Total comprehensive income 864 602 3,134 1,004 8,474

BALANCE SHEET

CONSOLIDATED BALANCE SHEET, IFRS
EUR Thousand Sep 2022 Sep 2021 Dec 2021
ASSETS
Non-current assets
Intangible assets 102,155 101,238 101,313
Goodwill 92,409 91,672 91,672
Property, plant and equipment 6,909 4,728 4,983
Deferred tax assets 381 490 494
Total non-current assets 201,854 198,128 198,461
Inventories 28,776 19,765 19,804
Trade and other receivables 18,151 14,783 16,826
Cash and cash equivalents 1,961 1,785 7,536
Total current assets 48,888 36,333 44,165
Total assets 250,743 234,461 242,626
EQUITY & LIABILITIES
Equity
Share capital 80 80 80
Invested unrestricted equity fund 143,264 142,980 143,240
Translation difference 14 19 -5
Retained earnings 7,009 -3,568 3,949
Total equity 150,366 139,511 147,264
LIABILITIES
Non-current liabilities
Financial liabilities 54,851 54,354 54,400
Non-current lease liabilities 1,331 690 680
Non-current provisions 39 933 807
Deferred tax liabilities 17,463 18,107 17,919
Total non-current liabilities 73,683 74,085 73,805
Current liabilities
Short-term interest-bearing liabilities 2,167 2,535 0
Account payables and other liabilities 21,968 16,235 18,132
Current lease liabilities 1,401 942 933
Current provisions 841 735 1,009
Current tax liabilities 316 418 1,484
Total current liabilities 26,693 20,866 21,557
Total liabilities 100,376 94,950 95,362
Total equity and liabilities 250,743 234,461 242,626

STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CASH FLOWS, IFRS
EUR Thousand Q3 2022 Q3 2021 H1 2022 H1 2021 FY 2021
CASH FLOW FROM OPERATING ACTIVITIES
Profit (Loss) for the financial period 857 608 3,115 1,008 8,493
Adjustments:
Depreciation and amortization 2,288 2,084 6,852 6,147 8,207
Unrealized exchange rate gains and losses 0 0 0 0 9
Financial Income -100 1 -110 -37 -73
Financial Expense 1,147 968 3,309 2,892 3,947
Taxes 510 327 1,587 762 2,014
Other adjustments 0 0 0 0 0
Change in Working Capital:
Change in trade and other receivables -942 89 -1,258 -2,664 -4,651
Change in inventory -5,890 -4,586 -8,962 -9,519 -9,557
Change in trade and other payables 2,106 963 3,787 2,666 4,528
Change in provisions -303 41 -936 183 330
Interest paid -932 -766 -2,457 -2,290 -3,181
Interest received 0 0 0 0 12
Income tax paid -944 -348 -3,257 -2,446 -2,868
Other financial items -62 -62 -168 -152 -200
Net cash flow from operating activities (A) -2,265 -681 1,502 -3,450 7,012
Cash flow from investing activities
Payments from tangible assets sales 14 14
Investments in intangible assets -1,443 -1,090 -4,518 -3,224 -4,406
Investments in tangible assets -602 -262 -1,346 -988 -1,495
Business acquisitions -1,716 0 -1,716 0 0
Net cash flow from investing activities (B) -3,746 -1,352 -7,565 -4,212 -5,900
Cash flow from financing activities
Common control merger 0 0 0 0 6
Payments of lease liabilities -367 -289 -1,178 -848 -1,204
Proceeds from short-term liabilities 2,167 2,535 2,167 2,535 0
Payments of short-term liabilities -6 0 -6 0 0
Net cash flow from financing activities (C) 1,794 2,246 983 1,687 -1,198
CHANGE IN CASH AND EQUIVALENTS (A+B+C) -4,217 213 -5,080 -5,975 -87
Cash and cash equivalents, in the beginning of period 6,297 1,666 7,536 8,013 8,013
Net effect of exchange rate changes on cash and cash equivalents -119 -94 -495 -253 -391
Cash and cash equivalents, at the end of period 1,961 1,785 1,961 1,785 7,536

Definitions of alternative performance measures

  1. EBITDA = EBIT before depreciation, amortization and impairments
  1. 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
  1. Operational Cash Flow % = Operational Cash Flow / Revenue
  1. Adjusted EBITDA, Adjusted EBIT & Adjusted Operational Cash Flow = Same as above, but excluding the impact from a market study conducted in Q2 2022 with an external company, which is an item affecting comparability. The impact of this study included in EBITDA, EBIT and Operational Cash Flow was 488 thousand euros and is not a recurring item.

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

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