Financial Statements Bulletin January – December 2020

Interim report for the fourth quarter of 2020


Fourth quarter highlights (iLOQ Oy consolidated, FAS)

  • Revenues increased by 30% to MEUR 28.4 (21.8) in Q4

  • Gross margin improved to 58% (57%) in Q4
  • Adjusted EBITDA increased by 30% to MEUR 7.5 (5.8) in Q4
  • Operational cash flow increased to MEUR 6.4 (3.1) in Q4


Significant events during the quarter

  • Long-term framework agreement signed with Cellnex Telecom

  • First subsidiary opened outside of Europe in Canada to target the critical infrastructure segment
  • Actions in place to protect employee safety
  • Actions to mitigate possible supply chain disruptions from COVID-19 continued successfully


Capnor Weasel Bidco Group, in 1,000 EUR (IFRS)

Oct-Dec2020 Oct-Dec2019* Change% Jan-Dec2020 Jan-Dec2019* Change%
Revenue 28,440 7,112       n.m 74,125 7,112   n.m
Gross profit 16,627 3,806       n.m 40,336 3,806    n.m
Gross margin 58 % 54 %       n.m 54 % 54 % n.m
EBITDA 7,644 -3,544       n.m 12,635 -3,544    n.m
EBITDA margin 27 % -50 %       n.m 17 % -50 % n.m
Operational cash flow 5,427 -3,808       n.m 8,017 -3,808 n.m
Operational cash flow% 71 % n.m       n.m 63 % n.m n.m

* Capnor Weasel Bidco Group founded on December 11, 2019

Comments on financial results

The results of operations of iLOQ Oy are included in the consolidated financial statements of the Group from the date of acquisition, December 11, 2019. To provide meaningful information on the operational development, the financial comments refer to the financial performance of the underlying business of iLOQ Oy and its subsidiaries (together referred to as “iLOQ Oy Consolidated”). The financials of iLOQ Oy Consolidated have been prepared using Finnish Accounting Standards, FAS. Starting from 2021 Q1 report, the comments on financial result will refer to Capnor Weasel Bidco Group

Management overview of the fourth quarter

Following a strong Q3, iLOQ was able to continue catching up towards its target growth level during Q4. For the second quarter in a row, the company’s revenue growth was above 30%. After a challenging first half of the year, the strong fourth quarter proved that iLOQ has been able to continue on its growth path even in these unprecedented times. The successful actions to mitigate potential risks of possible supply chain disruptions due to COVID-19 continued in Q4. Management successfully continued measures to secure delivery capability and to mitigate possible unforeseen supply chain disruptions in the fourth quarter to be able to meet customer demand. This resulted in higher inventory levels compared to 2019 and the company is likely to continue to hold higher than normal inventory levels in the coming quarters as well.During Q4, iLOQ signed a long-term framework agreement with Cellnex Telecom. iLOQ was chosen as one of the favored priority suppliers of access management for Cellnex Telecom’s network of telecom masts and datacenters. Cellnex Telecom is the main infrastructure operator for wireless telecommunication in Europe and the number two telecom tower operator in the world, providing services in Italy, the Netherlands, the United Kingdom, France, Switzerland, Ireland, Portugal and Spain. The agreement is yet another demonstration of the significant customer benefits iLOQ’s market-leading technology can provide. It is a significant milestone for the iLOQ S50 mobile access product line.To support its growth strategy, in Q4, iLOQ established its first subsidiary outside Europe in Canada. Long-time industry veteran, Frank Hayes, assumed the role of Country Manager, Canada. Initially, the business in Canada will focus on the critical infrastructure segments  which the NFC technology, used by the iLOQ S50 product line, is highly suited to. Operating out of Toronto, Frank will be responsible for building a winning team to establish the local commercial activities and develop a strong base of dealers and customers.Management believes that the strong financial results achieved in Q4 are a result of keeping the organization fully employed and active during Q2 and Q3. During this time, a significant focus was directed to supporting and virtually training our partner network in these unprecedented times. Due to these and many other actions completed during Q4, iLOQ is well positioned to continue executing its long-term growth strategy in 2021, as well as in the coming years.

Fourth quarter 2020 (iLOQ Oy Consolidated, FAS)

Total revenue grew 30% compared to Q4 2019, driven by strong sales across all regions. The management’s decision to keep the sales organization fully up and running during the slower Q2 has proven to be the right decision and the benefits of the work done to support the continuously growing partner network can be seen with the strong performance in Q4. Management believes that the company has been able to continue taking market share in Q4 and is well positioned to continue the growth momentum in all regions during 2021.Gross profit amounted to MEUR 16.5 (12.4), an increase of 33% compared to the same period last year. The gross margin amounted to 58% (57%). Management’s decision during Q2 to strengthen iLOQ’s own assembly capability in its Oulu HQ and, with that, ensure the production capability in the case of unforeseen COVID-19-related production issues, continued to contribute negatively to the gross profit development. This negative impact was offset by continued productivity improvements and a positive sales mix development.Adjusted OPEX grew by 35% in Q4 y-o-y to MEUR 9.0 (6.7). The OPEX increase was driven by investments in all functions. Despite the Q4 2020 OPEX still having COVID-19related impacts, e.g. lower traveling, and reduced sales and marketing events multiple geographies temporarily lowered the COVID-19 related restrictions which allowed the company to catch up on critical investments to secure future growth. Q4 2020 Adjusted OPEX did not include any adjustments for items affecting comparability.Adjusted EBITDA amounted to MEUR 7.5 (5.8), corresponding to 26% (26%) EBITDA margin, an increase of 30% compared to the same period last year.Adjusted Operational cash flow was MEUR 6.4 (3.1). The improvement was mainly caused by increased EBITDA and improvements in net working capital. The company is expected to continue to have higher than normal inventories during the COVID-19 pandemic to guarantee our ability to produce and ship iLOQ products to our customers. These higher inventory levels may have a negative impact on the operational cashflow in 2021.

Full financial year 2020 (iLOQ Oy Consolidated, FAS)

Revenue increased by 21% compared to YTD December 2019, driven by strong sales across all regions. Despite COVID-19 having a negative impact during H1 2020, all regions were able return close to targeted growth levels in H2 2020. Especially for Central and Southern Europe, H2 2020 was a success, and management believes that the company is well positioned to continue gaining market share in these important geographies in 2021 as well.

Gross profit amounted to MEUR 41.2 (33.6), an increase of 23% compared to the same period last year. The gross margin amounted to 56% (55%). Despite the decisions to prioritize delivery capability, and therefore having negative gross margin impacts, the continuous product cost-saving actions were able to offset these negative impacts.

Adjusted OPEX grew by 16% in YTD December y-o-y to MEUR 27.6 (23.8). The OPEX increase was mainly driven by increased R&D expenses related to the iLOQ S5 launch. Other contributing factors to the increased OPEX were continued investments in sales and marketing activities and an overall increased headcount from year end 2019 of 152 to year end 2020 of 184.

Adjusted EBITDA amounted to MEUR 13.6 (9.8), corresponding to 18% (16%) EBITDA margin, an increase of 39% compared to the same period last year.

Adjusted Operational cash flow was MEUR 7.4 (4.1). The improvement was mainly caused by increased EBITDA and improvements in net working capital. The increased operational cashflow was partly offset by higher inventories to mitigate potential unforeseen COVID-19-related supply chain difficulties. The company is expected to continue to have higher than normal inventories during the COVID-19 pandemic to guarantee our ability to produce and ship iLOQ products to customers.

Events after the reporting period

In January 2021, iLOQ announced that it would extend its operations also to the United Kingdom. Ulf Jonasson will assume the role of Country Manager, UK. Mr. Jonasson has an extensive background on several executive positions in different industries including ten years in the access management business.  Operating out of London, Mr. Jonasson will be responsible for building a winning team to establish the local commercial activities and develop a strong base of partners and customers.

Key Figures

1.1.-31.12.2020 4.10.-31.12.2019
Financial key figures
Revenue (EUR 1,000) 74,125 7,112
Operating profit (EUR 1,000) 5,089 -3,992
Operating profit (%) 6,9 % -56,1 %
Return on equity (%) (ROE) 0,4 % -62,2 %
Equity ratio (%) 60,3 % 61,0 %
Other key figures
Wages, salaries and fees (EUR 1,000) 12,680 661
Pension expenses (EUR 1,000) 1,613 87
Other personnel expenses (EUR 1,000) 1,181 60
Total (EUR 1,000) 15,474 808
Average number of employees for the financial period 170 152

Quarterly Information

QUARTERLY INFORMATION Q1 2020 Q2 2020 Q3 2020 Q4 2020
Revenue 14,040 15,234 16,411 28,440
Gross profit 6,414 8,058 9,239 16,627
Gross margin 46 % 53 % 56 % 58 %
EBITDA -116 1,435 3,672 7,644
EBITDA margin -1 % 9 % 22 % 27 %
Operational Cash Flow 25 -125 1,459 5,427
Operational Cash Flow % -21 % -9 % 40 % 71 %

Declaration of the board

We confirm that, to the best of our knowledge, the condensed financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ and 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 fourth quarter 2020.

Espoo February 12, 2021

Heikki Hiltunen                                Karl Petersson

President and CEO                         Member of the Board