Financial Statement Bulletin January – December 2021

CAPNOR WEASEL BIDCO OYJ

Financial Statement Bulletin

January – December 2021

Financial Statement Bulletin 2021

* FY 2020 EBITDA, EBIT & Operational Cash Flow include an impact from goodwill bridge calculation in which there is an inventory fair value adjustment of MEUR -1.2. This adjustment was done in connection with Nordic Capital Fund IX’s acquisition of iLOQ and is an item affecting comparability. This impact has been eliminated in the Adjusted EBITDA

Management overview of the fourth quarter

Following the strong first nine months of 2021, iLOQ was able to continue on its growth path in Q4 2021. For the sixth quarter in a row, the Group’s revenue growth was 30% or higher with Q4 2021 revenue growth being 39%. Despite the comparison quarter Q4 2020 having strong revenue growth partly due to multiple projects being shipped and delivered in Q4 2020 instead of the original schedule of Q2 2020 due to COVID-19, the strong revenue performance proved that iLOQ has been able to continue accelerating its growth path.

The actions to mitigate potential supply chain disruptions continued in Q4 2021. 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. These actions continued the trend of higher inventory levels compared to Q4 2020. The company is likely to continue to hold higher than normal inventory levels in 2022 to mitigate any possible supply chain disruption coming from the global component shortage.

Q4 2021 included the signing of a frame agreement with leading European residential real estate company Heimstaden. Heimstaden’s portfolio consists of approximately 150,000 apartments across ten countries. Their common and global objective is to create friendly homes and proactively work in the years to come to phase out mechanical locking systems by retrofitting existing properties and equipping new builds with the latest iLOQ 5 Series software platform which includes the revolutionary new iLOQ HOME solution launched in January 2022. The cooperation demonstrates that Heimstaden clearly recognizes and understands the benefits of digital access management throughout the housing value chain.

Management believes that the continued strong financial results achieved in Q4 2021 were a result of continuing to execute the Group’s long-term strategic plan which leverages the accelerating penetration rates of digital access management systems in its key markets. By continuing to follow the Group’s long-term strategy, management believes that iLOQ is well positioned to continue executing its long-term growth in 2022, as well as in the coming years.

Fourth quarter 2021

Total revenue grew 39% compared to Q4 2020, driven by strong sales across all regions. Despite the strong comparison quarter, the Group’s revenue growth was 30% or higher for the sixth consecutive quarter. The strong comparison quarter Q4 2020 was partly caused by projects which were postponed from Q2 2020 to Q3 and Q4 2020.

EBITDA amounted to MEUR 11.8 (7.6), corresponding to a 30% (27%) EBITDA margin. The increase in EBITDA was mainly caused by the increased volumes and related operational leverage.

EBIT amounted to MEUR 9.8 (5.6), corresponding to a 25% (20%) EBIT margin. The increase in EBIT was mainly caused by the increased volumes and related operational leverage.

Operational cash flow was MEUR 10.1 (5.4). The increased inventories to mitigate any possible supply chain disruptions continued to have a material negative impact on the Q4 2021 Operational Cash Flow. The company is expected to continue to have higher than normal inventories during 2022 and until the global component situation improves to guarantee its ability to produce and ship iLOQ products to customers. 

Full year 2021

Total revenue grew 39% compared to full year 2020, driven by strong sales across all regions. Management believes that the company has been able to continue taking market share in 2021 and is well positioned to continue the growth momentum in all regions during 2022.

EBITDA amounted to MEUR 22.6 (12.6), corresponding to a 22% (17%) EBITDA margin. The increase in EBITDA was mainly caused by the increased volumes and related operational leverage.

EBIT amounted to MEUR 14.4 (5.1), corresponding to a 14% (7%) EBIT margin. The increase in EBIT was mainly caused by the increased volumes and related operational leverage.

Operational Cash Flow was MEUR 7.3 (8.0). The increased inventories to mitigate any possible supply chain disruptions had a material negative impact on the full year 2021 Operational Cash Flow. The company is expected to continue to have higher than normal inventories during 2022 and until the global component situation improves to guarantee its ability to produce and ship iLOQ products to customers. 

Events after the reporting period

As of 12th of January, iLOQ HOME was introduced, which is a solution that enables residents to have visibility and control of their keys in a ground-breaking way that has never been seen before in the residential sector. As of 1st February, Erja Sankari has been appointed as Executive Vice President and Chief Operating Officer. Erja will also become a member of iLOQ’s Management Team. Before joining iLOQ, Sankari has been working as Vice President of Global Supply Chain at Nokia. She will replace Esa Myllylä who will be retiring in 2022.

Key figures

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 financial year 2021.

Espoo February 13, 2022

                                                     Heikki Hiltunen                                             Karl Petersson

                                                  President and CEO                                         Member of the Board

INCOME STATEMENT

BALANCE SHEET

STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Notes to the interim consolidated financial statements

1. Reporting Entity

Capnor Weasel Bidco Oyj (the Company) is domiciled in Finland. These condensed interim financial statements for the quarter which ended on December 31, 2021 comprise the Company and its subsidiaries (together referred to as the ‘Group’)

2. Accounting Principles

The Group’s Financial Statement Bulletin for January–December 2021 has been prepared in line with IAS 34, ‘Interim Financial Reporting’ and should be read in conjunction with the Group’s financial statements for 2020, published on April 30, 2021. The Group has applied the same accounting principles in the preparation of this Interim Report as in its Financial Statements for 2020. The information presented in this Interim Report has not been audited.

Revenue from IFRS IC finalized in April 2021 its agenda decision Configuration or Customization Costs in a Cloud Computing Arrangement (IAS 38 Intangible Assets). In this agenda decision, IFRS IC considered whether, applying IAS 38, the customer recognizes an intangible asset in relation to configuration or customization of the application software, and, if an intangible asset is not recognized, how the customer accounts for the configuration or customization costs.  IFRIC agenda decisions have no effective date, so they are expected to be applied as soon as possible. As the Group has cloud computing arrangements in place, it analyzed if this agenda decision had an impact on the accounting policies applied to implementation costs in cloud computing arrangements. The Group undertook this analysis during the fall 2021, and the possible impacts have been implemented retrospectively in the financial statements 2021 with no significant material impacts.

3. Seasonality

The Group operates in an industry that sees seasonal changes in revenue. In a typical year, the first three quarters amount to approximately two thirds of the Group’s full-year revenue while the last quarter sees the revenue rise to amount to one third of the full-year revenue. Therefore, in a normalized year, the financial results of the fourth quarter can be expected to be stronger than compared to the first three quarters.

4. Segment reporting

Capnor Weasel Bidco Group is a Finnish group of companies. In addition to the parent company Capnor Weasel Bidco Oyj, iLOQ Group belongs to the Group. Industrial operations are in the iLOQ Group that offers solutions for electronical locking. iLOQ Group operates with a network business model in the manufacture and distribution of products. iLOQ Group’s products are sold through iLOQ’s distribution channel providing professional installation and maintenance services. iLOQ Group has subsidiaries in Sweden, Denmark, Norway, Germany, Benelux, France, Spain, the United Kingdom and Canada.

The Group's business operations are managed and monitored as one entity. Subsidiaries are sales organizations, and their turnover consists of commission charges from the iLOQ Group's parent company. Based on the similarity of business operations, products, services and production processes, the Group has only one operating segment. The Executive Board is iLOQ Group's chief operative decision maker. The Executive Board evaluates the performance of the company and the use of resources as a whole.

Composition of the Group's turnover and geographical distribution is presented with the notes related to turnover. The Group has one external customer with net sales over 10% of the Group's total net sales. The Group's most significant non-current assets are located at the domicile state of the parent company.

5. Revenue

The revenue of Capnor Weasel Bidco Group consists of digital locking and access management systems. The Group's products consist of supplied locks, software as well as lock operation and maintenance services. The Group's main customers are retailers and partners of locking products, except one major end customer in the Critical Infrastructure segment with a signed frame agreement.

Revenue is recognized when control over the goods or the service is transferred to the customer. Lock deliveries are recognized as revenue when control is transferred on the basis of the delivery of the products, when the risks and benefits have been transferred to retailers. EX Works Incoterms delivery term is generally used on the delivery of products. For one significant customer, performance obligation is satisfied at the time of the delivery, and for these deliveries Delivered Duty Paid Incoterms are applied. Revenue from maintenance and repair services is recognized over time as the customer receives the benefits simultaneously as the service is provided. Sales contracts are made with the regular payment terms. A yearly discount can be granted to customers for products sold.

The Group's revenue by geographical area is presented below. 

The classification of revenue according to the timing of product deliveries and service production is presented below

INTANGIBLE ASSETS

PROPERTY, PLANT AND EQUIPMENT

RELATED PARTY TRANSACTIONS

The Group’s related parties consist of parent company iLOQ Oy and its subsidiaries. In addition, related parties include iLOQ-Group’s Board members as key management personnel, the CEO and members of the Group management, as well as entities that are under the control of key management personnel and their family members. There were no related party transactions during the reported period.

CONTINGENT LIABILITIES  

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 + Net cash flow from investing activities (C). 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

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