Capnor Weasel Bidco Oyj, Interim Report January – September 2023
Interim Report for the third quarter of 2023
Third quarter highlights
- Revenue decreased by 17% to MEUR 22.9 (27.4)
- EBITDA decreased to MEUR 1.7(4.7), corresponding to a 7% (17%) EBITDA margin
- EBIT decreased to MEUR -0.9 (2.4), corresponding to a -4% (9%) EBIT margin
- Operational Cash Flow was negative at MEUR
-3.6 (-2.4)
Significant events during the quarter
- iLOQ announced in September that it will continue its growth strategy by expanding to Australia. iLOQ currently has sales offices in thirteen countries in Europe, the Middle East, USA and Canada, as well as a comprehensive global partner network.
- iLOQ announced in September that it has received LenelS2 factory certification and joined the LenelS2 OpenAccess Alliance Program (OAAP). LenelS2 is the global leader in advanced physical security solutions, including access control, video surveillance and mobile credentialing.
- iLOQ published its Sustainability Report in July.
|
|
|
Change |
|
|
Change |
|
EUR thousand |
Q3 2023 |
Q3 2022 |
in % |
9M 2023 |
9M 2022 |
in % |
FY 2022 |
Revenue |
22,905 |
27,439 |
-17 % |
84,040 |
81,945 |
3 % |
132,948 |
EBITDA |
1,679 |
4,701 |
-64 % |
10,579 |
14,753 |
-28 % |
31,379 |
EBITDA margin |
7 % |
17 % |
|
13 % |
18 % |
|
24 % |
EBIT |
-948 |
2,414 |
-139 % |
2,899 |
7,902 |
-63 % |
21,853 |
EBIT margin |
-4 % |
9 % |
|
3 % |
10 % |
|
16 % |
Operational Cash Flow |
-3,639 |
-2,358 |
54 % |
-2,779 |
1,520 |
-283 % |
8,568 |
Operational Cash Flow % |
-16 % |
-9 % |
|
-3 % |
2 % |
|
6 % |
Adjusted EBITDA* |
2,609 |
4,701 |
-45 % |
11,887 |
14,753 |
-19 % |
31,867 |
Adjusted EBITDA margin* |
11 % |
17 % |
|
14 % |
18 % |
|
24 % |
Adjusted EBIT |
-18 |
2,414 |
-101 % |
3,277 |
8,390 |
-61 % |
22,342 |
Adjusted EBIT margin |
0 % |
9 % |
|
4 % |
10 % |
|
17 % |
Adjusted Operational Cash Flow |
-2,709 |
-2,358 |
15 % |
-1,471 |
2,009 |
-173 % |
9,056 |
Adjusted Operational Cash Flow % |
-12 % |
-9 % |
|
-2 % |
2 % |
|
7 % |
* Q3 2023, 9M 2023, 9M 2022 and Q2 2022 and year 2022 EBITDA, EBIT & Operational Cash Flow included an impact from a brand renewal project, IT Salonen transaction and a market study conducted with external companies 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, IT Salonen acquisition 60 thousand euros, market study 488 thousand euros 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 declined compared to the corresponding period of the previous year due to low activity in the multi-residential new construction and renovation market in the Nordics. The negative performance in the Nordics was further enhanced by adverse FX effects, primarily due to a weaker SEK. Strong performance continued in the rest of the world compared to the same period in the previous year. Revenue declined 17% compared to the same period in the previous year.
Prevailing geopolitical risks related to Russia’s invasion of Ukraine and the resulting rise in energy prices, together with an increasing interest rate environment have had a negative impact on the real estate sector during 2023. Especially the new construction market has been affected, which constitutes only a small part of iLOQ’s revenue base. However, continued postponement in decision making in the renovation market has also affected overall demand in the third quarter. 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 to the US is on schedule and progressing as planned. An expansion to Australia was announced during the reporting period. iLOQ has a local sales organization in place, which has already generated a solid pipeline and leads in the US. Logistic channels and partner network are being built and final steps of the ANSI cylinder product development are being completed. Management expects the market entry for the US built environment market to take place during the fourth quarter of this year.
iLOQ has been able to successfully mitigate supply-chain disruptions in the market to be able to meet customer demand. However, inventory levels remained high, despite the destocking, as the company is simultaneously preparing its end-product inventory for the normal seasonal volume growth and to meet delivery capability for the current strong pipeline in the critical infrastructure segment. The increase in working capital had a negative effect on the Group’s cashflow in the second quarter.
The third quarter of 2023 included multiple significant events for iLOQ:
iLOQ announced in September that it continues to pursue its growth strategy by expanding to Australia. iLOQ currently has sales offices in thirteen countries in Europe, the Middle East, USA and Canada, as well as a comprehensive global partner network. Starting operations in Australia will advance iLOQ’s growth strategy and opens up a large new market for the company.
iLOQ announced in September that it has received LenelS2 factory certification and joined the LenelS2 OpenAccess Alliance Program (OAAP). The iLOQ 5 Series access management platform interfaces with the OnGuard® access control system to allow fast, secure and convenient daily management of iLOQ S5 keys and key users. iLOQ has completed the required factory testing at LenelS2 to validate the functionality of its interface to the OnGuard system. LenelS2 is the global leader in advanced physical security solutions, including access control, video surveillance and mobile credentialing.
iLOQ published a Sustainability Report in July. iLOQ takes a holistic 360-degree approach to sustainability. This means looking at all ESG factors, not only in the company’s day-to-day operations but, across the entire supply chain and throughout the lifecycle of its solutions. Continuous development of the circular economy and sustainable performance is a core part of iLOQ’s strategy.
Third quarter 2023
Total revenue declined 17% compared to Q3 2022. The decline was mainly due to low activity in the multi-residential new construction and renovation market in the Nordics. The negative performance in the Nordics was further enhanced by adverse FX effects, primarily due to a weaker SEK. However, the strong performance continued in the rest of the world compared to the same period in the previous year.
EBITDA amounted to MEUR 1.7 (4.7), corresponding to a 7% (17%) EBITDA margin. EBITDA margin was negatively impacted by the decline in revenue. Gross margins have remained unchanged at the historical healthy levels. Continued investments in growth, including costs related to the US market entry, also increased opex and impacted EBITDA negatively in the quarter.
EBIT amounted to MEUR -0.9 (2.4), corresponding to a -4% (9%) EBIT margin.
Operational Cash Flow was MEUR -3.6 (-2.4). Inventory levels remained high as the company is preparing its end product inventory for the normal seasonal volume growth and to meet the required delivery capability for the remainder of the year.
YTD September 2023
Total revenue grew 3% compared to 9M 2022. Revenue declined in the Nordics, while strong performance continued in the rest of the world compared to the same period in the previous year.
EBITDA amounted to MEUR 10.6 (14.8), corresponding to a 13% (18%) EBITDA margin. EBITDA margin was negatively impacted by the low revenue growth and growth investments in the US and Australia market entries.
EBIT amounted to MEUR 2.9 (7.9), corresponding to a 3% (10%) EBIT margin.
Operational Cash Flow was MEUR -2.8 (1.5). Operational cash flow was negatively impacted by low revenue growth and normal seasonal inventory build-up.
Quarterly Information
QUARTERLY INFORMATION |
Q3 2021 |
Q4 2021 |
Q1 2022 |
Q3 2022 |
Q3 2022 |
Q4 2022 |
Q1 2023 |
Q2 3023 |
Q3 2023 |
Revenue |
21,282 |
39,424 |
25,716 |
28,790 |
27,439 |
51,003 |
32,000 |
29,135 |
22,905 |
EBITDA |
3,986 |
11,818 |
5,368 |
4,684 |
4,701 |
16,625 |
6,060 |
2,840 |
1,679 |
EBITDA margin |
19 % |
30 % |
21 % |
16 % |
17 % |
33 % |
19 % |
10 % |
7 % |
EBIT |
1,902 |
9,758 |
3,083 |
2,405 |
2,414 |
13,952 |
3,542 |
305 |
-948 |
EBIT margin |
9 % |
25 % |
12 % |
8 % |
9 % |
27 % |
11 % |
1 % |
-4 % |
Operational Cash Flow |
-859 |
10,114 |
3,451 |
442 |
-2,372 |
16,625 |
7,753 |
-6,893 |
-3,639 |
Operational Cash Flow % |
-4 % |
26 % |
13 % |
2 % |
-9 % |
33 % |
24 % |
-24 % |
-16 % |
Adjusted EBITDA |
3,986 |
11,818 |
5,368 |
5,172 |
4,701 |
16,625 |
6,438 |
2,840 |
2,609 |
Adjusted EBITDA margin |
19 % |
30 % |
21 % |
18 % |
17 % |
33 % |
20 % |
10 % |
11 % |
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 2023.
Espoo November 14, 2023
Heikki Hiltunen Karl Petersson
President and CEO Member of the Board
INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT, IFRS |
|
|
|
|
|
EUR Thousand |
Q3 2023 |
Q3 2022 |
9M 2023 |
9M 2022 |
FY 2022 |
|
|
|
|
|
|
Revenue |
22,905 |
27,439 |
84,040 |
81,945 |
132,948 |
Other income |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
Materials and services |
-9,572 |
-12,467 |
-36,971 |
-35,946 |
-56,846 |
Employee benefit expenses |
-5,959 |
-5,927 |
-19,805 |
-18,912 |
-26,191 |
Depreciation, amortisation and impairment losses |
-2,627 |
-2,287 |
-7,682 |
-6,852 |
-9,525 |
Other operating expenses |
-5,695 |
-4,343 |
-16,683 |
-12,333 |
-18,533 |
Operating profit |
-948 |
2,414 |
2,899 |
7,902 |
21,853 |
|
|
|
|
|
|
Finance income |
38 |
100 |
122 |
110 |
122 |
Finance cost |
-1,783 |
-1,146 |
-4,443 |
-3,309 |
-4,599 |
Net financial expenses |
-1,745 |
-1,046 |
-4,321 |
-3,199 |
-4,478 |
|
|
|
|
|
|
Profit (-loss) before taxes |
-2,693 |
1,368 |
-1,422 |
4,703 |
17,376 |
|
|
|
|
|
|
Income taxes |
224 |
-510 |
-243 |
-1,587 |
-3,648 |
|
|
|
|
|
|
Profit (loss) for the financial period |
-2,469 |
857 |
-1,665 |
3,115 |
13,728 |
|
|
|
|
|
|
Items that may be subsequently reclassified to profit or loss |
|
|
|
|
|
Translation differences |
7 |
6 |
15 |
18 |
12 |
|
|
|
|
|
|
Total comprehensive income |
-2,462 |
864 |
-1,650 |
3,134 |
13,740 |
BALANCE SHEET
CONSOLIDATED BALANCE SHEET, IFRS |
|
|
|
EUR Thousand |
Sept 2023 |
Sept 2022 |
Dec 2022 |
|
|
|
|
ASSETS |
|
|
|
Non-current assets |
|
|
|
Intangible assets |
105,392 |
102,155 |
102,774 |
Goodwill |
92,467 |
92,409 |
92,412 |
Property, plant and equipment |
6,921 |
6,909 |
7,334 |
Deferred tax assets |
415 |
381 |
447 |
Total non-current assets |
205,195 |
201,854 |
202,967 |
|
|
|
|
|
|
|
|
Inventories |
36,369 |
28,776 |
26,117 |
Trade and other receivables |
17,943 |
18,151 |
30,022 |
Current tax receivables for the financial year |
1,547 |
0 |
51 |
Cash and cash equivalents |
2,133 |
1,961 |
4,087 |
Total current assets |
57,992 |
48,888 |
60,277 |
|
|
|
|
Total assets |
263,187 |
250,743 |
263,245 |
|
|
|
|
EQUITY & LIABILITIES |
|
|
|
Equity |
|
|
|
Share capital |
80 |
80 |
80 |
Invested unrestricted equity fund |
143,240 |
143,264 |
143,240 |
Translation difference |
22 |
14 |
7 |
Retained earnings |
15,225 |
7,009 |
17,658 |
Total equity |
158,567 |
150,366 |
160,986 |
|
|
|
|
LIABILITIES |
|
|
|
Non-current liabilities |
|
|
|
Financial liabilities |
54,987 |
54,851 |
54,899 |
Non-current lease liabilities |
621 |
1,331 |
1,499 |
Non-current provisions |
816 |
39 |
574 |
Deferred tax liabilities |
16,598 |
17,463 |
17,246 |
Total non-current liabilities |
73,022 |
73,683 |
74,219 |
|
|
|
|
Current liabilities |
|
|
|
Short-term interest-bearing liabilities |
8,365 |
2,167 |
0 |
Account payables and other liabilities |
21,353 |
21,968 |
24,185 |
Current lease liabilities |
1,369 |
1,401 |
1,559 |
Current provisions |
367 |
841 |
704 |
Current tax liabilities |
144 |
316 |
1,593 |
Total current liabilities |
31,598 |
26,693 |
28,040 |
|
|
|
|
Total liabilities |
104,620 |
100,376 |
102,259 |
|
|
|
|
Total equity and liabilities |
263,187 |
250,743 |
263,245 |
STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS, IFRS |
|
|
|
||
EUR Thousand |
|
|
9M 2023 |
9M 2022 |
FY2022 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW FORM OPERATING ACTIVITIES |
|
|
|
|
|
Profit (Loss) for the financial period |
|
|
-1,665 |
3,115 |
13,728 |
Adjustments: |
|
|
|
|
|
Depreciation and amortization |
|
|
7,682 |
6,852 |
9,525 |
Unrealized exchange rate gains and losses |
|
0 |
0 |
38 |
|
Financial Income |
|
|
-122 |
-110 |
-122 |
Financial Expense |
|
|
4,443 |
3,309 |
4,599 |
Taxes |
|
|
243 |
1,587 |
3,648 |
Other adjustments |
|
|
0 |
0 |
0 |
Change in Working Capital: |
|
|
|
|
|
Change in trade and other receivables |
|
|
12,079 |
-1,258 |
-13,341 |
Change in inventory |
|
|
-10,253 |
-8,962 |
-6,303 |
Change in trade and other payables |
|
|
-3,731 |
3,787 |
6,057 |
Change in provisions |
|
|
-94 |
-936 |
-537 |
Interest paid |
|
|
-3,568 |
-2,457 |
-3,356 |
Interest received |
|
|
3 |
0 |
0 |
Income tax paid |
|
|
-3,778 |
-3,257 |
-4,341 |
Other financial items |
|
|
-113 |
-168 |
-294 |
Net cash flow from operating activities (A) |
|
1,126 |
1,502 |
9,302 |
|
|
|
|
|
|
|
Cash flow from investing activities |
|
|
|
|
|
Payments from tangible assets sales |
|
|
18 |
14 |
31.4 |
Investments in intangible assets |
|
|
-8,115 |
-4,518 |
-6,937 |
Investments in tangible assets |
|
|
-1,583 |
-1,346 |
-1,750 |
Business acquisitions |
|
|
0 |
-1,716 |
-1,716 |
Net cash flow from investing activities (B) |
|
-9,680 |
-7,566 |
-10,371 |
|
|
|
|
|
|
|
Cash flow from financing activities |
|
|
|
|
|
Common control merger |
|
|
0 |
0 |
|
Payments of lease liabilities |
|
|
-1,331 |
-1,178 |
-1,697 |
Withdrawals of short-term loans |
|
|
5,000 |
0 |
0 |
Proceeds from short-term liabilities |
|
|
3,365 |
2,167 |
-6 |
Payments of short-tem liabilities |
|
|
-61 |
-6 |
|
Net cash flow from financing activities (C) |
|
6,973 |
983 |
-1,703 |
|
|
|
|
|
|
|
CHANGE IN CASH AND EQUIVALENTS (A+B+C) |
|
-1,582 |
-5,080 |
-2,772 |
|
|
|
|
|
|
|
Cash and cash equivalents, in the beginning of period |
4,087 |
7,536 |
7,536 |
||
Net effect of exchange rate changes on cash and cash equivalents |
|
|
-372 |
-495 |
-677 |
Cash and cash equivalents, at the end of period |
|
2,133 |
1,961 |
4,087 |
Definitions of alternative performance measures
- EBITDA = EBIT before depreciation, amortization and impairments
- 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
- Operational Cash Flow % = Operational Cash Flow / Revenue
- Adjusted EBITDA, Adjusted EBIT & Adjusted Operational Cash Flow = Same as above but excluding an impact from a brand renewal project, a market study, IT-Salonen acquisition and iLOQ 20 years anniversary which have been treated as items affecting comparability. The adjustment related to brand renewal in Q1 2023 was 378 thousand euros, in Q3 2023 IT Salonen acquisition 60 thousand euros and iLOQ 20 years anniversary 870 thousand euros. In FY 2022 conducted market study adjustment was 488 thousand euros. These costs have been excluded in the Adjusted EBITDA, EBIT and Operational Cash Flow figures above.
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
Timo Pirskanen
CFO