Interim report January-September 2019

JUL 1st – SEP 30th 2019

• Net sales amounted to EUR 5 186 thousand (5 830), an 11.0 percent decrease
• EBITDA of negative EUR 274 thousand (-144) and EBITDA margin of negative 5.3 percent (-2.5)
• EBIT of negative EUR 405 thousand (-198) and EBIT margin of negative 7.8 percent (-3.4)
• Net earnings after tax of negative EUR 418 thousand (-382)

JAN 1st – SEP 30th 2019

• Net sales amounted to EUR 16 339 thousand (17 455), a 6.4 percent decrease
• EBITDA of negative EUR 310 thousand (738) and EBITDA margin of negative 1.9 percent (4.2)
• EBIT of negative EUR 644 thousand (503) and EBIT margin of negative 3.9 percent (2.9)
• Net earnings after tax of negative EUR 1 572 thousand (-286)

JULY - SEPTEMBER KEY DEVELOPMENTS

• Reduced sales due to delays in project deployments, but turning point for the order intake
• Operating earnings negative, driven by increased costs due to political unrest in Haiti
• Net loss decreased to EUR -418 thousand
• Managed Services contract signed with major vendor for Pakistan’s largest operator
• Smart building contract signed with Sweden’s biggest real estate company
• Development of new environment IoT products and solutions met set milestones
• Talkpool Mauritius sold as part of simplifying the corporate structure
• New senior country manager hired for Talkpool Germany

CEO COMMENTS

Talkpool is working on simplifying the group structure and further increasing the focus on the IoT portfolio and strategic markets.  Increased focus and the ongoing negotiations related to the significant opportunity in the Middle East, that was disclosed earlier in October, provide Talkpool a strong position to return to a profitable growth track in 2020 despite the current pressure on earnings.

As part of the simplification program, operations with low profit contribution, that can be more valuable within someone else’s business have been identified and discussions with potential buyers have been initiated. Talkpool Mauritius was one of the operations identified as subscale and non-strategic that has been sold.

Network Services
In Pakistan several new important customer contracts were signed and orders booked increased. The revenue did however come down compared to Q2 due to delays in some of the planned project deployments. In July it was communicated that Talkpool Pakistan won a contract with the world’s largest telecom vendor for maintaining one of the major mobile networks in Pakistan. The order value amounts to approximately EUR 620 thousand per year with an initial contract of EUR 360 thousand for the first six months. This was the first Managed Services contract for Talkpool in the Middle East / Pakistan region and it will generate a sustainable revenue stream.

In Q2 a significant refurbishing project with a new organization, processes and tools was initiated in Haiti and it is expected to last until the end of the year. The project made good progress in July and August and a major insourcing of the Operations and Maintenance services in Port au Prince and the South of Haiti were launched in August. In the middle of August, major demonstrations against the Haitian government and the rising fuel prices were ignited by the political opposition. Demonstrations are not unusual in Haiti and we have seen similar movements in e.g. France, Chile and Iraq lately. Mostly demonstrations in Haiti only last for a few days, but civil unrest has now lasted for over three months. The impact of the unrest on the daily operations during Q3 was significant and the local organization was under hard pressure to maintain the service level under very challenging conditions. Additional teams were brought in to support our customer in a critical situation and to offload our own organization. This investment put additional pressure on the already stressed operating profit margins in Haiti which led to a substantial force-majeur loss in Q3.

IoT
In July Talkpool won an important contract with one of Sweden’s leading real estate companies for providing smart building solutions with several types of sensors to a new major development in Stockholm. The initial contract is worth approximately EUR 100 thousand. Potential add on orders for the complete property portfolio of this client will be significant.

This deal adds to a long list of contracts with important real estate and construction companies and it positions Talkpool as one of the leading Smart Buildings/Property Tech solutions providers in Sweden. Talkpool’s smart building solutions make it possible to measure and manage a range of different things in the building, from the consumption of energy, to the water consumption, air quality and heating. This allows the landlord to control and distribute costs, but also to maintain a certain level of service quality to the tenants, by making sure that e.g. ventilation and heating works the way it should. Talkpool has a strong portfolio of IoT-based real estate management solutions and works with both end-customers and solution integrators to deploy these solutions worldwide.

Customers such as Danish DS Energy and French Homey use Talkpool's technology to evaluate the energy efficiency of buildings. Read more under: https://talkpool.io/multi-tenant-landlords-use-iot-solutions-in-building-management/

4th Quarter 2019
In October Talkpool Pakistan signed a frame agreement for the provisioning of Solar hybrid solutions with one of the largest mobile operators in Pakistan. This contract which is initially for a period of 3 years has an indicative value of USD 3 - 3.5 millions. Talkpool Pakistan has been a front runner in solar based and other alternative energy deployments for a long time and has recently concluded a large contract with Telenor Pakistan with hundreds of sites.

Since several months Talkpool is in negotiation for a large project in the Middle East. If Talkpool wins the contract, a separate company will be established and several thousand people will be employed. The project, which includes distribution, connectivity and operation of a new media network, is estimated to run for a period of at least 5 years. The yearly revenue from the new business is expected to exceed all Talkpool Group's other revenues combined. 

In November a Swiss private investor with extensive experience within the global IT and Telecoms market agreed to grant Talkpool a EUR 2 million Euros convertible loan. The loan carries zero percent interest during the first two years and ten percent interest during the third and final year. The loan gives both the lender and the borrower the right to trigger a conversion as Talkpool’s traded share reach SEK 20 over 10 trading days. A first down-payment of EUR 200 thousand will be made on the first of December 2019 and the remaining EUR 1.8 million will be paid in latest by mid-February 2020.

In spite of the challenges Talkpool’s business has been facing during 2019, we are convinced that 2020 will be a year of significant growth both for IoT and for Network Services and we are still confident that we will reach the projected target of EUR 40 million revenue and 8-12 percent EBIT in 2021. 

For more information contact:

Erik Strömstedt, CEO Talkpool
Phone: +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 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 November 27, 2019.

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