Annual report 2020

 JAN 1^st – DEC 31^st 2020

• Net sales amounted to EUR 21 221 thousand (21 233)
• EBITDA of EUR 957 thousand (-593) and EBITDA margin of 4.5 percent (-2.8)
• EBIT of EUR 467 thousand (-1 055) and EBIT margin of 2.2 percent (-4.9)
• Negative earnings after tax of negative EUR 986 thousand (-3 376)

Significant events during the year

• Talkpool achieved a significant turn-around as costs were reduced, unprofitable operations were discontinued and sales of profitable niche services was increased

• Business development was stalled and IoT sales took a hit as negotiations were halted due to COVID
• However, the demand for digital infrastructure soared throughout the pandemic, and
• The awareness of the health effects of indoor air quality increased rapidly
• Smart building contract with leading real estate company Atrium Ljungberg signed in February
• Smart Construction-as-a-Service contract with major construction company NCC signed in March
• Our turn around target, to reach net profit in the second half of 2020, was achieved in September
• A radical appreciation of the Gourde in Haiti and a stronger Swedish Krona caused FX losses in Q4
• New IoT Strategy in place, focusing on the digitisation of buildings
• IoT operator Netmore acquired Nordic IoT Networks and signed partner agreement with Talkpool
• Home Solutions acquisition LOI was signed after completed Due Diligence in December
• Breakthrough order from Redytel IoT for CO2 sensors for public buildings and transport in Spain
• Klövern signed contract for AI based climate optimisation and energy saving solution

CEO comments

2020 will go to history as one of the most challenging years for the global society and the global economy since World War II. In spite of the challenges Talkpool made a successful turnaround and started delivering on phase two of its digitization and growth strategy as the first IoT acquisition target company was secured. COVID-19 caused many problems, but it also created new behaviors and needs. The demand for digital infrastructure soared and the awareness of the health effects of indoor air quality spread quickly.
 

After Q1 2020 we summarized that the COVID effects on Talkpool’s business had been limited, but the insecurity made several of our customers put their investments and orders on hold. This reduced revenues in Q1 and clouded the outlook for Q2 and Q3.

In Q2 the global situation escalated rapidly and industries and societies all over the world were affected in a way that no one could have imagined. Lock downs combined with the uncertainty about the future, caused significant damage to many industries. The Telecom and IT industry was somewhat spared but many of our customers halted their projects and revenue plunged in most of our markets while costs remained high. During May and June, we saw a recovery, but some of the revenue loss caused by the delays was hard to recover.

In spite of all the negative COVID-19 effects, Talkpool managed to continue on a positive path and some of our market units got financial support from governments, like interest free loans and short-term work compensation. This support combined with active amortizations and repayments of loans showed in improving profit margins.

One of the financial targets in our turn around plan was to reach net profit during the second half of 2020 through business restructuring and consequent cost saving activities. Thanks to hard work by our staff this important break-even target was reached already in September. This was an important milestone and the start of a new growth phase for Talkpool.

For the new growth phase Talkpool worked hard on the development of a new strategy. The IoT- as well as the Network Services strategy were revised and merged into a common overall digitization strategy for buildings and communication network infrastructure. Our end-to-end solutions for energy optimization, indoor climate control and damage prevention in both business areas will be based on a common cloud-based platform.

In October a second COVID-19 wave hit the world and many countries were badly affected. Talkpool managed to increase its sales and its operative earnings in the fourth quarter despite delayed orders and operational Covid-related challenges. The operative net result in Q4 excluding financial costs was clearly positive, but an unexpected radical appreciation of the Gourde in Haiti and a stronger Swedish Krona caused significant extraordinary currency losses of EUR 450 thousand in Q4.

In Q4 Talkpool also identified its first IoT acquisition target, Nordic Proptech Investment Services AB(NPTIS), which is a smart building company specialized in individual measuring and invoicing (IMD) of actual water and electricity consumption over IoT. At the end of 2020 the installed base of NPTIS, which owns Home Solutions was over 50 000 homes all over Sweden. This makes Home Solutions Sweden’s third largest IMD-metering company.

The group wide savings efforts continued to show results as group finance costs were reduced with another 20% in Q4. The total reduction of the interest expenses from January to December 2020 amounts to 37%.

Network Services

After a turbulent 2019 in Haiti, the situation stabilized at the beginning of 2020. The overhaul of the Haiti operations reinforced the company. A new country manager was hired and accelerated the cost saving and efficiency programs further.

A clear trend in Network Services in Pakistan was the build out of solar power capacity on cell sites and in solar parks. Operators are looking for alternate energy solutions to save operational cost and solar is an attractive technology. This trend fits well with Talkpool’s new Network Services strategy shifting towards helping customers saving energy and reducing CO2 emission.

Energy management and environment control are also important pillars in our new Smart Network Services strategy using IoT technology to gather information about the health and the efficiency of the equipment by collecting real time data about temperature, humidity, power consumption, fuel levels etc. Based on this data we can improve site asset visibility and increase the uptime of the network, minimize the operating costs and maximize asset utilization. Adding Artificial Intelligence, we can read out patterns and predict events, which helps our customers to control and optimize the use of their equipment and prevent faults.

In June Talkpool Netherlands signed a renewal and extension of the existing contract with leading tower company Cellnex for a period of 2 years, until the end of 2022. Whereas the camouflage and rollout business in the Netherlands was low in 2020, Talkpool increased its tower operations in the country with key customer Cellnex and continued to show a stable and high performance.

Talkpool Germany had a positive development in 2020 with good order intake and high planning resource utilization generating solid operational earnings throughout the year. Extra business development efforts were made to boost sales in Germany and customer discussions progressed well.

The Network Services business remained mission-critical to keep economies moving through COVID-19. Many IT and Telecom companies around the world gained from the massive increase in data traffic and use of information technology for home office, video conferencing, home schooling and ecommerce, caused by COVID-19.

Network Operations and Maintenance services projects in particular were not very affected by COVID-19 as they are crucial to maintain a high network availability and service quality. Thanks to this Talkpool’s important recurrent revenue stream from O&M projects around the world remained largely uninterrupted.

Within Network Services Talkpool has managed to build a strong reputation as a reliable provider of Managed Services for Telecom infrastructure. In the new Network Service Strategy we leverage on this market position and our upgraded inhouse IoT solution for remote telecom infrastructure monitoring to form our future as a Smart Network Services and Solutions provider.

IoT

In Talkpool’s revised IoT strategy it was decided to focus all efforts on Smart Buildings. IoT technology for real estate is one of the most promising business areas in IoT. Talkpool has proven success with numerous existing “proptech” products, resources and customer projects. Talkpool will leverage on its strong position in commercial buildings sub metering, energy optimisation and damage prevention to become a one stop shop for smart-buildings-as-a-service, offering a complete eco-system for the digitisation of buildings.

The strategy review also identified Talkpool’s core “DNA” and a path to increased synergies between the two business units IoT and Network Services. We are convinced to have found our sweet spot in the digitization of Buildings and Infrastructure for both telecom customers and real estate owners with the help of wireless IoT solutions.

Talkpool’s cooperation with Myrspoven in developing Smart Building solutions for energy savings and improved air quality to prime real estate companies became more and more relevant as COVID-19 continued to spread around the world. Being able to improve health and wellbeing through the control of indoor air quality has become more important than ever to real estate owners and tenants. Through the steering of ventilation and heating based on frequent CO2 measurements the indoor climate can be optimized and significant energy savings can be achieved.

In May Talkpool and Myrspoven released the results of their jointly developed Smart Building solutions for energy savings and improved air quality to prime real estate companies. The results from the first commercial installation showed energy savings in the range of 10-20% and clearly improved indoor climate. Myrspoven provides advanced analytics and control with their Artificial Intelligence (AI)-based optimization solution that overrides existing heating and ventilation systems. The advanced analytics both models the building behavior, as well as taking the weather and energy price parameters into the calculation. Based on the analysis of all input parameters the solution is constantly optimizing air quality, temperature and power consumption in all areas of the building.

In November Talkpool and Myrspoven received an order from Klövern AB, one of Sweden’s largest real estate companies, for an energy and climate optimisation solution for 100 000 m² office space in Stockholm. The solution is expected to generate improved indoor climate and energy savings worth approximately SEK 1.8 million per year and also help preventing the spread of Covid -19 in the buildings. Most buildings in the world are not optimized and the innovative solution with self-learning optimization is ground-breaking.

Individual metering and cost distribution (IMD) of water and electricity in apartments and commercial buildings is one way to save energy by creating control and awareness about the actual consumption.

In November Talkpool signed a Letter of Intent for the acquisition of Nordic Proptech (NPT) that owns Home Solutions.  NPT measures consumption of water and electricity in homes all over Sweden and is offering additional digitisation solutions such as indoor air quality, alarms and sustainable environmental services to existing and new customers. At the end of Q4 the installed base of NPT was over 50 000 homes all over Sweden, which makes Home Solutions Sweden’s third largest IMD-metering company.

At the end of December Talkpool AB sold the IoT network company Nordic IoT Networks AB (NIOT) to Netmore Group AB. Talkpool and Netmore will continue in a partnership relation whereby Netmore assumes the network operator role (providing national coverage in Sweden) and Talkpool provides smart building solutions and network services. The collaboration also provides increased opportunities to sell Talkpool's world-leading sensors for CO2-, particle- and radon measurement to other solution suppliers.

In November Spanish Redytel IoT placed an important order for IoT CO2 sensors from Talkpool. The IoT sensors have been installed in public buildings in Spain to monitor the ventilation and provide insights into CO2 levels and hence the risk of COVID-19 spread to the public. The project has been widely covered on Spanish national television. https://redyteliot.info/prensa/. This is a groundbreaking solution and a breakthrough order for Talkpool, with a good possibility of follow-up orders.

Start of a new year   

In January Talkpool signed a cooperation agreement with SmartFront, for the delivery of end-to-end solutions for smart buildings.

On January 25 Talkpool finalized the negotiations and signed an agreement to acquire Nordic Proptech Investment Services AB, which owns 100% of the shares in Home Solutions www.homesolutions.se and the transaction was completed on March 5. Home Solutions provides a strong customer base, 20 years of experience and track record in residential properties automation and a strong sales organisation. Talkpool contributes with leading edge technology knowledge, own IoT products and prime commercial real estate customers to the co-operation. Together the two companies will merge to a market leading high-tech Smart Building company with a strong sales force offering a complete eco-system for the digitisation of buildings.

Investors have shown an increasing interest in Talkpool’s business model. As a consequence of this, a total of EUR 5 million financing was secured in the past months.

Talkpool’s smart building business has now reached approximately EUR 5 million revenue on an annual basis. The critical size combined with sustainable technology offering gives Talkpool a strong position in the maturing Buildings digitisation market and allows for fast scaling. This will pivot Talkpool to a leading Smart Buildings company.

Erik Strömstedt, CEO

The complete report is available on: https://talkpool.com/financial-reports/#investor

For more information, please contact:
Erik Strömstedt, CEO Talkpool
Tel: +41 81 250 20 20
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. Talkpool offers end-to-end IoT solutions for smart buildings and cities with focus on environmental control, energy saving and damage prevention. Erik Penser Bank, +46 8 463 80 00, www.penser.se, is Talkpool's Certified Advisor. For more information www.talkpool.com

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