Capnor Weasel Bidco Oyj, Interim Report January - March 2024

CAPNOR WEASEL BIDCO OYJ

Interim Report

January – March 2024

Interim Report for the first quarter of 2024

*  Year 2023 and Q1 2023 EBITDA, EBIT & Operational Cash Flow included an impact from the IT Salonen transaction and a brand renewal together with
   costs related to 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. The adjustment related to IT Salonen acquisition was 60 thousand and iLOQ 20 years anniversary events 870 thousand
   euros. Both took place in Q3 2023. 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 revenue decreased compared to the corresponding period of the previous year. Negative market sentiment in the Nordics in the first quarter of the year was a main driver of this, as continued postponement in decision making in the renovation market affected overall demand. Due to the poorer market sentiment, the anticipated distributor restocking, which is normal this time of the year, did not yet take place at the same scale as previous years, weighing on revenue in Q1 compared to prior years. 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.

Stronger performance continued in the rest of the world compared to the same period in the previous year.iLOQ signed material sized contract in Denmark and got strategically important first multifamily-housing deals in the US. In addition, Everest Infrastructure Partners and iLOQ signed an agreement in April to roll out battery-free smart locks at telecom towers throughout the U.S.

iLOQ continues to invest in future growth and the market entry in the US – an enormous market and opportunity for iLOQ - is on schedule and progressing as planned. iLOQ has a local sales organization in place, which has already generated a solid pipeline in the US market. Logistic channels and partner networks are being built and the US standard ANSI cylinder products were launched at the year-end in 2023. At the ISC West Fair in the US iLOQ introduced its latest smart-locking software and B2B2C offering, consisting of a solution which can be used and managed by the consumer. The new offering aims to enhance the user experience of the people that actually use the products, making it easier for them to move around all their access points using just their cellphone as a key. The solution is enabled by iLOQs complete product portfolio covering the end-to-end opening process, through a combination of its hardware (for example, lock cylinders and padlocks), mobile keys, apps, online readers, administration solutions, portals, and value-adding integrations.

The continued material investments in future growth weighed on profitability in Q1, as operating expenses increased by 19.6%. The organization for future growth is now fully established, and hence ILOQ expects efficiency and margins to improve over the coming quarters.

There are indications of improving market sentiment as in April iLOQ Group revenue increased by 18% compared to the previous year, including improved performance in the Nordics. Management expects iLOQ Group revenue to grow in 2024 over 2023 driven by international expansion.

Operational cashflow improved compared to the previous year driven by receivables collections and inventory levels remaining seasonally on a normal level.

Capnor Weasel Bidco Oyj successfully priced senior secured floating rate notes of EUR 55 million with a tenor of five years in March. The New Notes have a floating rate coupon of 3 months EURIBOR + 4.00 per cent per annum and final maturity in March 2029. Capnor Weasel Bidco Oyj intends to apply for listing of the New Notes on the corporate bond list of Nasdaq Stockholm.

First quarter 2024

Total revenue decreased 37% compared to Q1 2023. Low activity in the multi-residential new construction and renovation markets in the Nordics continued, but good performance in the rest of the world continued compared to the same period in the previous year.

EBITDA amounted to MEUR -3.1 (6.1), corresponding to a -15% (19%) EBITDA margin. Gross margins have remained unchanged at the historical healthy levels. Continued investments in growth, including costs related to the US market entry, continued to increase opex and impacted EBITDA negatively in the quarter, which in combination with lower delivery volumes resulted in the negative EBITDA.

EBIT amounted to MEUR -5.8 (3.5), corresponding to a -29% (11%) EBIT margin. Finance costs include items affecting comparability of MEUR 1.5 related to the refinancing mentioned above.

Operational cashflow was MEUR 10.4 (7.8), underpinned by receivables collections and inventory levels remaining seasonally on a normal level.

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 2024.

Espoo May 14, 2024

                                                     Heikki Hiltunen                                             Magnus Hammarstöm

                                                  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 the IT Salonen transaction, the brand renewal and the iLOQ 20 years anniversary events, which have been treated as items affecting comparability. Year 2023 and Q1 2023 EBITDA, EBIT & Operational Cash Flow included an impact from the IT Salonen transaction and the brand renewal together with costs related to iLOQ 20 years anniversary, which have been treated as items affecting comparability. The adjustment related to brand renewal in Q1 2023 was 378 thousand. The adjustment related to IT Salonen acquisition was 60 thousand and iLOQ 20 years anniversary events 870 thousand euros. Both took place in Q3 2023. These costs have been excluded in the Adjusted EBITDA, EBIT and Operational Cash Flow figures.

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