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

 

  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 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

Urvxxv.Uvyghara@vybd.pbz

 

Timo Pirskanen

CFO

Gvzb.Cvefxnara@vybd.pbz

Attachments