INTERIM REPORT JANUARY – SEPTEMBER 2016

JUL 1st – SEP 30th 2016

• Net sales amounted to EUR 2 842 thousand (2 741), a 3.7 percent increase
• EBITDA of EUR -373 thousand (145) and EBITDA margin of -13.1 percent (5.3)
• EBITDA excluding extraordinary costs of EUR -212 thousand (145) and EBITDA margin of -7.5 percent (5.3)
• EBIT of EUR -399 thousand (117) and EBIT margin -14.0 percent (4.3)
• Loss after tax of EUR -468 thousand (43).
• Cash flow from operating activities amounted to EUR -1 193 thousand (-204)

JAN 1st – SEP 30th 2016

• Net sales amounted to EUR 7 950 thousand (7 567), a 5.1 percent increase
• EBITDA of EUR -298 thousand (286) and EBITDA margin of -3.7 percent (3.8)
• EBITDA excluding extraordinary costs of EUR 7 thousand (286) and EBITDA margin of 0.1 percent (3.8)
• EBIT of EUR -372 thousand (219) and EBIT margin -4.7 percent (2.9)
• Loss after tax of EUR -562 thousand (-16).
• Cash flow from operating activities amounted to EUR -1 121 thousand (-373)

JULY-SEPTEMBER HIGHLIGHTS

• The acquisition of the Dutch niche company Camouflage
• Many new M&A prospects identified and negotiations ongoing with several candidates
• Increased investments in IoT products and solutions development
• Start of preparations for optical fiber frame agreement with a major German operator
• Ramp up of fiber network capacity in Mauritius and start of network deployment projects for Huawei

CEO COMMENTS

During Q3 TalkPool continued laying the foundation for the future growth (strategy) by investing in the development of IoT products and solutions as well as screening several markets for suitable acquisition candidates and partners within both Network Services and IoT.

Our M&A efforts paid off as we closed our first acquisition deal with the mobile network services niche company Camouflage in Holland. Camouflage is addressing a niche that we can offer our network clients in many markets. We’re also eager to increase our market presence in Europe and this is a step in that direction. The acquisition of Camouflage marks the first step in TalkPool’s previously announced plans of expansion and JV partnerships. 

Historically Q3 has been the busiest quarter of the year with budget spendings and volume orders from our customers in the area of network implementation services as well as in managed services. This year customers in several markets cut both operational and capital expenditures for cost saving reasons and partly due to weak macro economic trends. Short term changes and delays in our customers´ project planning caused fluctuations in the order intake, which reduced sales in general, but our gross margins in particular as short term cost adaptions were only partially possible.

TalkPool continued to invest in the development of our IoT IP in the form of sensors, back-end systems and applications for end-to-end solutions in the areas of Smart Buildings and Cities, Industry, Environment, Tracking etc where we have ongoing customer trial projects or interested customers. The IoT as a service concept was further developed and will be applied as our preferred business model in all verticals. Our plan is to start a separate TalkPool leasing company in order to enable us to offer our customers a fully financed IoT as a Service solution.

IoT is definitely going to revolutionise most industries and our society, but many enterprises still don’t know how to make use of IoT. This opens a business opportunity for TalkPool as a solution enabler and provider, but it also has a somewhat delaying effect on the expected IoT volumes. The market is there and very few companies are better positioned than TalkPool once the volume orders are coming.

The cooperation between TalkPool AB and Tele2 in enabling a dedicated LPWAN IoT network in greater Gothenburg is progressing well. TalkPool has already built a LoRa IoT network covering most of greater Göteborg, which offers connectivity to all interested enterprises and organisations in the region.

Extraordinary costs for M&A consulting services, internal improvement projects and market related activities added significantly to the normal SG&A costs and had a negative impact on the EBIT margin.

In Q4 TalkPool has continued to work on the growth strategy by conducting a new share issue of SEK 10 million to support acquisitions and improve share liquidity.

Recently TalkPool acquired an option to buy Swiss based IoT Sparkzone. Sparkzone has developed a workspace IoT solution that is used by global market leaders as Regus and other office-space providers. The solution allows users to book a room by using an app called Jeckee. The same app enables the user to turn on the projector, start the coffee machine, open the minibar, pay for snacks, manage lights etc.

TalkPool and the City of Gothenburg, have been selected by the strategic innovation program “IoT Sweden” as one of eight "hubs" in Sweden, to become a leader in the use of "IoT for innovative society development". The consortium will invest in digital monitoring of the environment. The project will be using IoT to develop monitoring and visualization of air and water pollution during the construction work of Västlänken (the west link in Gothenburg) and TalkPool will develop the IoT solution.

Our earnings for Q3 were significantly lower than expected and the full year expectations have been negatively impacted by this fact, but our five-year plan remains solid. Hence, TalkPool continues on a growth path with Network Services as our foundation and the emerging IoT business and JV partnering in strategic markets and service areas as drivers of growth.

Erik Strömstedt, CEO

 
FOR FURTHER INFORMATION, PLEASE CONTACT:

Erik Strömstedt, CEO
Telephone: +41 79 790 60 40
erik.stromstedt@talkpool.com

Hanna Rubensson, CFO
Telephone: +46 73 140 48 40
hanna.rubensson@talkpool.com

This information is information that TalkPool AG is obligated to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication through the agency of the contact person set out above at 17.30 CET on November 29 2016

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