INTERIM REPORT JANUARY – SEPTEMBER 2017
JUL 1st – SEP 30th 2017
- Net sales amounted to EUR 3 360 thousand (2 842), a 18.3 percent increase
- EBITDA of EUR 69 thousand (-373) and EBITDA margin of 2.1 percent (-13.1)
- EBIT of EUR 53 thousand (-384) and EBIT margin 1.6 percent (-13.5)
- Profit after tax of EUR 76 thousand (-454).
- Cash flow from operating activities amounted to EUR -355 thousand (-1 193)
JAN 1st – SEP 30th 2017
- Net sales amounted to EUR 10 257 thousand (7 950), a 29.0 percent increase
- EBITDA of EUR 25 thousand (-298) and EBITDA margin of 0.2 percent (-3.7)
- EBIT of EUR -27 thousand (-329) and EBIT margin -0.3 percent (-4.1)
- Loss after tax of EUR -229 thousand (-520).
- Cash flow from operating activities amounted to EUR -188 thousand (-1 121)
JULY - SEPTEMBER HIGHLIGHTS
- Talkpool reports a net profit (of EUR 76 thousand) for the first time since its IPO
- Camouflage signed an important 3,5 years contract with tower company Cellnex in the Netherlands
- The subscription period for the new share issue for the financing of LCC Pakistan started 25 September
- Talkpool took over the O&M activities in northern Haiti from competitor Camtel
- The Deutsche Telekom FTTH project in eastern Germany gained speed and started generating profit
- Talkpool Mexico doubled revenue and four-folded the profit compared to Q2
- Talkpool with partners won the Vinnova IoT project for digital environmental monitoring in western Sweden
The positive trend in terms of revenue, profits and cash flow continued in the third quarter (Q3) of 2017. In spite of extraordinary costs for the share emission and project ramp up in Haiti, Talkpool hereby reports a net quarterly profit (of EUR 76 thousand) for the first time since its IPO. The acquired companies Camouflage and Technetix developed according to our best case scenario. Talkpool´s IoT business transformed in Q3 as costs were reduced and client orders increased.
The revenue growth continued and order intake was much better than expected as many of our markets developed well, with additional contracts and increasing order volumes. Organic growth with network operators in the Caribbean and Germany gained momentum and our acquired companies Camouflage and Technetix continued to perform well in Q3. Camouflage signed an important 3,5 years contract with tower company Cellnex for preventive maintenance of 720 radio sites in the Netherlands. The long-term maintenance contract provides Talkpool with recurring orders and a revenue stream that is valuable for the financial stability and growth of the company. This contract is the first of its kind for Talkpool in the Netherlands and it will create various opportunities for additional maintenance contracts in the country. Thanks to two months of revenue from the new contract and a slight increase in revenue in its core business, Camouflage increased the total revenue with almost 50 percent and increased EBITDA with 35 percent compared to Q2. Technetix in Belgium showed stable sales growth, as the positive order trend from European network operators such as Deutsche Telekom, Belgacom, Vodafone and Orange continued in Q3.
Talkpool started the preparations for taking over the O&M activities for Digicel in northern Haiti from competitor Camtel. The profit margins temporarily decreased in Q3 as restructuring and ramp-up costs hit the results immediately whereas revenue growth lagged during the transition period in Q3. After the transition, Talkpool´s responsibility will include support for Access Network and Power and Environment Maintenance on 1,443 BTS sites (previously 950 sites). The transition continued into October when Talkpool took full responsibility for fiber optic maintenance in the north and Fuel Management services across the nationwide network.
The positive trend in Mexico continued in Q3 as Talkpool Mexico expanded work with Nokia and Ericsson. The outlook for the Mexican economy in general is positive and there are a number of good opportunities with different customers. Talkpool was selected best ASP for TSS in the Nokia Red Compartida long-term project and the feedback from Ericsson was very positive as well.
The broadband network planning project with Deutsche Telekom in Germany gained speed in Q3. Talkpool is now an established provider of broadband network design and project management services to Deutsche Telekom in the big government-sponsored fiber build-out in Germany. The federal government in Germany plans to roll out a gigabit internet service across the country by 2025. The EUR 100 billion project will focus on bandwidth, security and response times. The development, including virtual reality and the internet of things, will bring huge data growth and the need for more bandwidth, reliable real-time transmission and intelligent networks.
Talkpool Mauritius was struggling to catch up with delays in commissioning in the fiber network project for Huawei. The costs for extra works caused by the delays had a clear negative impact on Talkpool´s revenue and profit in Q3.
Sweden´s innovation agency Vinnova awarded SEK 12 million in July to an IoT project for digital environmental monitoring project in west Sweden. Talkpool has a leading technology providing role in the consortium and we estimate Talkpool’s share to be approximately SEK 2 million out of the total 12 million funding. The consortium partners are developing a new and more efficient system for the gathering of information about air and water quality in cities and the newly developed wireless sensors utilize Talkpool's communication solution. Talkpool leads the sub-project for water monitoring. This IoT solution is based on Talkpool’s technology, which makes it possible to monitor when wastewater is dispersed into the water system and unleashed in nature. This project is an important milestone in Talkpool´s business development plan in the Smart Cities vertical. We don’t believe that there currently are other similar solutions available so this has the potential to generate similar projects in other cities in Sweden and around the world. Talkpool AB has undergone a transformation in Q3 as costs have been reduced and client orders have increased. The company is moving on from performing pilot projects with proof of concept with many clients towards delivering commercial solutions to paying clients. Investments were made in all three focused verticals(Smart Buildings, Smart Cities and Smart Industries)and ongoing promising customer negotiations could soon lead to break through orders.
Talkpool's board of directors worked on an issue of new shares amounting to approximately SEK 32.9 million. This work was finally concluded in October and the proceeds was used to part-finance the acquisition of LCC Pakistan (Pvt) Ltd. The lengthy and complex emission did however require a lot of time from the management team and the significant costs partly hit the profit. Through the acquisition, Talkpool becomes the leading provider of network services in Pakistan and gains a strong hub in the Middle East. LCC Pakistan has a long history of good stability and high profitability; the company generated revenues of approximately EUR 10 million in 2016.
Q4 started off well as the new share issue was almost 3 times over-subscribed when the subscription period closed on 9 October. In October Talkpool also signed a 10-year global framework agreement with Digicel Group for the delivery of telecom network operation and maintenance services to all of Digicel's 33 markets throughout world. Furthermore Digicel Haiti signed a five years O&M contract with Talkpool, with the extended scope from 950 mobile sites to 1,450, which encompasses Digicel´s complete network in Haiti. Finally the purchase of 100 percent of the shares in LCC Pakistan was successfully completed on the 9th of November. This is Talkpool’s biggest and most important acquisition so far and it contributes substantially to achieving the first phase target in Talkpool’s growth strategy, which states that we’re buying profitable niche companies that are performing Network Services. In the second development phase, Talkpool will leverage its position in network services and focus on growing its IoT business through M&A of promising IoT-companies as well as the development of in-house smart IoT-Solutions.
Erik Strömstedt, CEO
FOR FURTHER INFORMATION, PLEASE CONTACT:
|Erik Strömstedt, CEO
||Telephone: +41 79 790 60 40|
|Hanna Rubensson, CFO||Telephone: +46 73 140 48 40|
This information is inside information that Talkpool AG (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 09.00 CET on 30 November 2017.
THIS IS TALKPOOL
TalkPool builds, maintains and improves telecommunication networks globally. Through its cutting-edge technical expertise, long experience and agile business model, TalkPool offers global telecom vendors and operators high-quality services on short notice no matter the location. Moreover, TalkPool is one of few companies with actual solutions and contracts in place in the exciting IoT-market.