Capnor Weasel Bidco Oyj, Interim Report January – March 2023

Interim Report for the first quarter of 2023

*  Q1 2023 and year 2022 EBITDA, EBIT & Operational Cash Flow included an impact from a brand renewal project and a market study conducted with external companies, which have been treated as items affecting comparability. The adjustment related to brand renewal in Q1 2023 was 378 thousand euros and in FY 2022 market study 488 thousand euros. These costs have been excluded in the Adjusted EBITDA, EBIT and Operational Cash Flow figures above.

Management overview of the first quarter

iLOQ Group’s healthy performance continued also in the first quarter of the year 2023. Revenue growth was 24% compared to the same period in the previous year, despite slightly lower activity in the Nordic built environment market. The strong performance continued across all other regions and segments.

iLOQ continued to successfully mitigate supply-chain disruptions in the market to be able to meet customer demand. These mitigating actions continued the trend of materially higher inventory levels compared to the same period in the previous year. The company is still 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 materials and electronic components shortage. However, there are first signs of improving availability of materials and electronic components and the company continues to follow the global trends closely. Increase in working capital had a material negative effect on the Group’s cash situation despite the normal seasonal cash inflow in the first quarter.

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. Especially the new construction market has been affected, which constitutes only a small part of iLOQ’s revenue base. However, some postponement in decision making in the renovation market has also affected overall demand in the first quarter. Management believes that iLOQ is well positioned to continue to outgrow the market also during periods of softer market activity.

First quarter of 2021 included multiple significant events for iLOQ:

iLOQ signed a global Master Supply Agreement with Honeywell, a global supplier of industry specific solutions in March 2023. Honeywell Building Technologies operates in more than 75 countries and is supported by a global channel partner network. Its solutions and services are used in more than 10 million buildings worldwide. Commercial building owners and operators are dealing with Honeywell Building Technologies to create safe, efficient, and productive facilities.

iLOQ established its US presence by showcasing its battery-free smart locks and keyless cellphone-based solutions at the ISC West Trade show in Las Vegas in March 2023.

iLOQ announced in March 2023 that the Swedish real estate company Neobo had chosen iLOQ as a partner for long-term cooperation. Neobo's ambition is to install iLOQ's S5 system in most of its properties, giving tenants in over 8,000 apartments increased security and more control over their accommodation.

After the review period on 1 April 2023, iLOQ welcomed employee number 300 to its fast-growing team. This is another milestone in a year of milestones as, this year, iLOQ will also be celebrating its 20th anniversary.

First quarter 2023

Total revenue grew 24% compared to Q1 2022. Good performance continued across all regions and segments, but with some initial signs of slightly slower activity in the Nordic built environment sector.

EBITDA amounted to MEUR 6.1 (5.4), corresponding to a 19% (21%) EBITDA margin. The increase in EBITDA was mainly driven by the increased volumes and related operational gearing.

EBIT amounted to MEUR 3.5 (3.1), corresponding to a 11% (12%) EBIT margin.

Operational Cash Flow was MEUR 7.8 (3.5). The strategic decision to continue operating with higher inventories to mitigate any possible global materials and electronic components shortage continued to have a material negative impact on the Operational Cash Flow in the first quarter of 2023. The company is expected to continue having higher than normal inventories until the risks related to possible unforeseen supply-chain disruptions clear away to guarantee its ability to produce and ship iLOQ products to customers.

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 three months of 2023.

Espoo May 14, 2023

                                                     Heikki Hiltunen                                             Karl Petersson

                                                  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 a brand renewal project and a market study conducted with external companies, which have been treated as items affecting comparability. The adjustment related to brand renewal in Q1 2023 was 378 thousand euros and in FY 2022 market study 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, info@iloq.com

For questions concerning this report please contact:

Heikki Hiltunen

CEO and President

Heikki.Hiltunen@iloq.com

Timo Pirskanen

CFO

Timo.Pirskanen@iloq.com