Interim Report January - March 2023

January 1st – March 31st 2023

• Net sales amounted to EUR 3 672 thousand (6 136)
• EBITDA of EUR 162 thousand (64) and EBITDA margin of 4.4 % (1.0%)
• EBIT of EUR 128 thousand (-38) and EBIT margin of 3.5 % (-0.6%)
• Net earnings after tax of EUR 247 thousand (-276) and net EAT margin of 6.7% (-4.5%)

January ­– March key developments

• EBITDA and net earnings overperform in Germany
• High performance in Haiti
• Talkpool Belgium made a EUR 75k loss due to low orders intake
• Expensive convertible loans of around EUR 900k including interest were paid back
• EUR 900k repayments of loans reduced debts and financial costs of Talkpool further and generated a capital gain of EUR 228 thousand.
• The repayment of loans was partly made in Nordic Propeye shares and partly in cash
• New convertible loans worth of EUR 430 thousand were signed in February. Magnus Sparrholm and Erik Strömstedt contributed with more than half of the loan amount.
• Negotiations of a long-term frame agreement with Deutsche Telekom in progress
• Talkpool assigned a new sales agent, called Quadrillion, for the sale of Talkpool Pakistan

CEO COMMENTS

The new Talkpool that entered 2023 was a leaner and more agile company. Interest-bearing loans in the mother company Talkpool AG were reduced with 80% already in 2022 and in Q1 the focused work with deleveraging and cutting cost continued.

In March Talkpool AG signed an agreement to pay back convertible loans of EUR 800 thousand plus EUR 100 thousand interest. The loan was repaid in Nordic Prop Tech Investment Services shares at a post-value of SEK 86.3 million. This transaction reduces the remaining debts and financial costs of Talkpool significantly and generates a capital gain of EUR 228 thousand. Talkpool has the right to buy back the Nordic Propeye AB shares at the same valuation until the 1st of August 2023

In January a 2-year convertible loan with 8% annual interest rate and an option to convert the loan to shares at SEK 6 per share valuation was launched. Four convertible loan contracts, totaling approximately EUR 430 thousand were signed in February and the funds have been fully received. Talkpool’s Chairman Magnus Sparrholm and CEO Erik Strömstedt contributed with more than half of the loan amount. The received cash from the convertible loan will mainly be used to amortize other loans according to existing agreements.

In March 2022 an SPA for the sale of Talkpool’s shareholding in Pakistan and Saudi Arabia was signed, but later not honored by the buyer, ZT Group. Due to the challenges with the buyer of the Pakistani entity, Talkpool chose to sell shares in the Netherlands and Sweden assets to free up tied capital. In Q1 2023 Talkpool assigned an agent to actively search for a new investor or buyer of Talkpool Pakistan. The proceeds will be used to fuel a new growth phase in Talkpool Group with investments in organic growth as well as acquisitions of communication high tech companies, primarily in Europe and the USA. If the sale of Talkpool Pakistan will be closed before August 1, Talkpool is considering using its option to buy back shares in Nordic Propeye in Sweden.

Network Services

Talkpool’s German entity continued to overperform the expectations in Q1. The German business unit has Deutsche Telekom, Europe’s largest telecom network operator, as key customer. The services delivered are primarily optical fibre planning services, which has become Talkpool’s core business in Germany. The planning and deployment of optical fibre networks will continue over many years in the whole world and on the back of the expanded bandwidth and network access, new technology and services will generate new network expansion- and upgrade opportunities for Talkpool in the future.

During Q1 the negotiations of a new 5-year agreement with Deutsche Telekom made good progress. This agreement would secure significant order volumes for Talkpool Germany for the coming 5 years and would also provide a platform for growth and diversification into new geographical areas and services.

In Haiti Talkpool has supported Digicel in providing the Haitian society with reliable internet connections and telecom services for 17 years. Talkpool was involved in building the mobile network for Digicel and is since then servicing the country wide mobile and transmission network. Haiti is a developing country that is fighting against poverty, natural disasters, diseases, and criminality. To succeed with this challenge the local economy must develop and a prerequisite for this is access to communication infrastructure and services. Despite all Talkpool and Digicel have succeeded in keeping the network availability and service level high over the years and we intend to continue doing so going forward as well. In Q1 Talkpool Haiti performed better than expected and we are confident that the positive trend will continue.

Because of the focus on debt reduction and cash management, the fuelling of the growth in the US market has been held back and we are evaluating the new opportunities carefully before we commit to additional service delivery projects. The demand continues to be high, and our target is to establish Talkpool as a value-added services provider. 

IoT

Talkpool continues to take interest in smart technologies with focus on telecom infrastructure and real estate. In the US market several new opportunities are making progress and the sales of sensors for smart buildings is gaining speed. Talkpool’s holding in Nordic Propeye temporarily shrunk as loans were paid back with Nordic Propeye shares. Talkpool’s mid- to long-term strategy is to continue investing in Nordic Propeye and similar tech companies in Europe and the USA. The Swiss development of smart air quality control solutions for buildings is continuing and will be actively scaled up as soon as the products are industrialized, and investment capital has been secured.

2nd Quarter

Talkpool USA was appointed approved service provider by the Latin American telecom operator Claro. Talkpool has been working with Claro’s network through Ericsson before, but with the new status, Talkpool USA can deliver services directly to Claro. Negotiations about first projects is ongoing and service delivery can be started as soon as the conditions have been agreed.

The preparation of the Talkpool Pakistan sale showed results as the sales agent Quadrillion presented an investment memorandum and contacted the first potential investors. Feedback from approached candidates indicated an interest in a partial or complete acquisition of Talkpool AG’s shares in Talkpool Pakistan.

The negotiation of a new long-term optical fiber network planning services contract with Deutsche Telecom continued and the preparations for increased order volumes in the second quarter are running. Talkpool Germany finalized the first phase of the development of a customized data base for automized delivery, administration, and billing of our network planning services. The new tool will admit handling of large services volumes and increase the efficiency and the quality of the delivery and improve the financial control.

For more information, please contact:

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

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

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 08.30 CET on May 31, 2023

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