Annual report 2018

JAN 1st– DEC 31st2018

• Net sales amounted to EUR 24 363 thousand (16 379), a 48.7 percent increase
• EBITDA of EUR 1 068 thousand (359) and EBITDA margin of 4.4 percent (2.2)
• EBIT of EUR 733 thousand (193) and EBIT margin 3.0 percent (1.2)
• Loss after tax of negative EUR 974 thousand (-404)

Significant events during the year

• The revenue and operating profit in 2018 were the highest in Talkpool’s history
• Germany, Netherlands and Tanzania performed strongly and contributed to growth
• Legacy Network Services businesses in non-strategic markets were reviewed and restructured
• IoT software development was insourced to Talkpool Pakistan, to build inhouse know how and capacity
• The development of environment IoT solutions, inhouse and with new partners made good progress
• Talkpool and its partners launched the world’s first smart floor drain for damage prevention in wet rooms
• The Nordic IoT Networks (Niot), was founded by Talkpool together with a group of investors
• Talkpool was awarded the ITSM initiative price 2018 for the project “Luft och Vatten med IoT”
• Talkpool incorporated the blockchain company JoorsChain AG in Switzerland
• LCC Pakistan was fully consolidated and integrated in the group
• Bond market debut, with an oversubscribed SEK 24 million senior note offering in the Swedish market
• Talkpool entered the Saudi Arabian market

CEO comments

In 2018 Talkpool celebrated 18 years in the communications market and 2 years in the stock market. The listing on Nasdaq First North in May 2016 gave Talkpool the boost it needed to enter a new ambitious growth path. We entered 2018 as a much larger corporation than in 2016, with three acquired entities in the Netherlands, Belgium and Pakistan fully consolidated and well integrated in the Group. Throughout 2018 the organic growth continued at a good pace with a view to achieving the targets in 2021. All employees of the worldwide Talkpool-family do their utmost every day to reach those targets and I am proud of their loyalty and willingness to walk the extra mile for the company. All the creativity and hard work they invested show in the growth and the operating results of the company 2018 and will continue to be the foundation for Talkpool’s future success.

The first half of 2018 was the financially strongest period in Talkpool’s history with market units on all continents including Germany, Netherlands and Tanzania contributing to the positive result.

There were also selected markets that did not contribute, so during the second half of 2018 Talkpool conducted a number of internal improvement projects around the world. One of the larger activities was to review and restructure non-strategic and low margin network services business in selected countries in Africa and Latin America. In addition to that, investments were made in the implementation of new service delivery processes, tools and training in our major entities in Haiti and Pakistan. In Haiti a workforce management system together with new work processes were developed and implemented and new staff was hired and trained to increase the efficiency and manage the costs in the local Operation and Maintenance organisation.

Most of these activities were planned, but they took their toll on the net result in the second half of 2018. An improvement of the profit margins could however be registered already in Q4. Not only do these actions free up money for IoT and niche Network Services activities, they also free up management time that is invested in the development of new business in profitable growth areas. This lays the groundwork for a profitable growth acceleration.

IoT

In 2014 when Talkpool entered the IoT market our scope was broad and a number of so called verticals(industries) were addressed. Four years later Talkpool has, based on its experience and the market demand developed a comprehensive competence and portfolio of IoT solutions in the area of smart cities and buildings in general and environmental monitoring in particular. Monitoring and control of indoor air temperature and quality is becoming increasingly important for industries and offices, but also for schools and homes. Money can be saved and quality of life can be improved through increased efficiency, prevention of damages and a healthier environment. Talkpool has expanded its portfolio of solutions for smart buildings and smart cities and has gained a strong position and reputation as one of the leading providers of IoT solutions for indoor and outdoor environment quality control.

During 2018 significant investments and efforts were made to launch new IoT products and solutions for environment monitoring. One of the most promising IoT solutions, the world’s first smart floor drain, is built on wireless water leakage detectors and addresses the global problem with water damages in buildings, in particular wet rooms like bathrooms. Our solution detects moist in the wet seal that can lead to costly damages and it has the potential to create significant values for organizations such as insurance companies and property owners. Only in Sweden the cost for the water damages amounts to 5 billion SEK annually and this can be substantially reduced if leakages are detected early.

In 2018 Talkpool also insourced its IoT software development from the previous subcontractor in India to Talkpool Pakistan. A new development department was set up and new engineers were hired and trained on our products. This measure is part of Talkpool’s strategy to utilize the skilled and efficient staff of Talkpool Pakistan to support the business units and the market units in the group with internal services, product development and service delivery. The investment will pay off in the future and guarantee the access to cost efficient in-house competence and high-quality R&D service.

The next step in our IoT development strategy is to establish a cooperation with Swiss universities in the area of IoT solutions for environmental control. The cooperation with technical faculties at universities has been part of Talkpool’s business model for a long time and we are now planning to make use of this competence source and involve skilled individuals and institutions in our IoT development process to take our solutions to the next level.

Talkpool also broke new technical ground as it co-founded a consortium called “JoorsChain” together with Joors and TrueChain to develop a blockchain platform. The fundamental idea is to create a modern ecosystem for managing micro-transactions involving several different parties in an easy, efficient and transparent way. Blockchains is a complementary technology to our IoT strategy where we use our network and security expertise.

Start of a new year

As earlier stated we believe that 2019 will be a breakthrough year for IoT and the start of the year has confirmed our conviction.

Tele2 and Talkpool transferred the common Gothenburg LoRa network to NIoT, which is a great boost to the total IoT infrastructure that Nordic IoT Networks manages, and it fits well with the company’s shared network strategy. A further step towards collaboration in the area of IoT networks in Sweden was taken as Talkpool started a collaboration with “StadshubbsAlliansen”; a collaboration between municipal urban networks, that promotes sustainable digitalisation of the smart society.

In April B Meters placed a major order worth of EUR 95’000 for Talkpool’s IoT products that are compatible with B Meters’ mechanical water meters. B Meters produces almost 2 million water meters per year, and the trend goes towards making all these water meters smart. B Meters has taken the step to make their products smart with Talkpool technology. Like HP and Dell sell their laptops all over the world with the Intel processor inside, B Meters will sell smart water meters all over the world with Talkpool’s smart IoT-technology inside.

The concept of partnering with leading suppliers of existing “dumb” products and appliances and making them smart is part of Talkpool’s strategy and will be a means of fast growth of our IoT business over the coming years.

 
Erik Strömstedt, CEO

 
For more information, please contact:

Erik Strömstedt, CEO Talkpool
Tel: +41 81 250 2020
erik.stromstedt@talkpool.com 

About Talkpool
Talkpool provides IoT solutions and telecommunication network services 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. FNCA Sweden AB, +46(0)8-528 00 399 info@fnca.se, is Talkpool’s Certified Advisor. www.talkpool.com

This information is insider information that Talkpool AG 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 08.50 CET on April 30, 2019.

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