Talkpool Year-end report January-December 2018

OCT 1st – DEC 31st 2018

• Net sales amounted to EUR 6 908 thousand (6 123), a 12.8 percent increase
• EBITDA of EUR 329 thousand (333) and EBITDA margin of 4.8 percent (5.4)
• EBIT of EUR 230 thousand (220) and EBIT margin 3.3 percent (3.6)
• Loss after tax of negative EUR 687 thousand (-175)

JAN 1st – DEC 31st 2018

• 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)

OCTOBER - DECEMBER KEY DEVELOPMENTS

• Revenue and operational profit back on track again
• Clean-up of legacy Network Services business and increased focus on niche business
• Good progress in the development of environment IoT solutions, inhouse and with new partners
• USD 5 million contract signed between Ericsson and Talkpool Saudi Arabia
• Talkpool and its partners launched the world’s first smart floor drain
• First IoT pilot installation in a Saudi Arabian hospital
• JoorsChain listed on cryptocurrency exchange based on Talkpool technology
• IoT test installation for Shell on a floating oil platform outside the Norwegian coast

CEO COMMENTS

In the fourth quarter Talkpool returned to its growth path and generated an all-time-high Revenue of EUR 6.9 million as several market units overperformed on their sales target, among them Sweden, Netherlands and Uganda. This a 13% increase compared to Q4 2017 and 18% increase compared to Q3 2018. In most markets Gross Margin returned to the levels of Q1 and Q2 2018 and the group reached an average Gross Margin of 23,1%. The Selling, General and Administration costs were still relatively high due to restructuring activities, but sunk compared to Q3. The good progress in several markets allowed for an overall operational result (EBITDA) of EUR 0.3 million. Restructuring costs and write offs in some of our low performing countries combined with extraordinary currency losses and financing costs resulted in net earnings of negative EUR 0.7 million.

IoT
Talkpool’s position and reputation as one of the leading providers of IoT solutions for indoor and outdoor environment quality control was proven in several customer projects in Q4. Not only were several of our Smart buildings and Smart Cities solutions industrialized and put into commercial service in live customer projects in Sweden. The first steps towards an IoT breakthrough in the Middle Eastern market were also taken as Talkpool made a pilot installation of an indoor environment control solution in a hospital in Saudi Arabia.

As already communicated in Q3, Talkpool has insourced its IoT server software development Talkpool Pakistan in line with our plan to utilize the skilled 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 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. 

In December Talkpool launched the world’s first smart floor drain. The IoT solution is built on wireless water leakage detectors and addresses the 5 billion SEK annually cost from water damages in Sweden that can be substantially reduced if detected early. 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.

The smart floor drain has been developed in co-operation with three strategic partners. The leading manufacturer of sanitaryware for bathrooms and kitchens, Sweden’s leading company in building environment services and one of Sweden’s largest insurance companies. On average, the water damages that are addressed with this solution cost insurance companies 70.000 SEK per case. This cost will be significantly reduced if the damage is detected early. After pilot installations in buildings during Q4 2018 and Q1 2019, Talkpool and partners will industrialize the solution and target a commercial launch during 2019.

In 2016 Talkpool invested in the Swiss workspace management company Sparkzone. The company had developed an IoT based solution for office space management aiming at customers like Regus and Hotel chains. As it gradually turned out that Sparkzone’s solution did not develop in the same direction as Talkpool’s overall IoT strategy, Talkpool decided to cut further investments in Sparkzone. In Q4 we decided to definitely write off our stake in Sparkzone, which had a negative impact on our net profit.

Network Services
As Talkpool communicated in its 5 years Grand Master plan the target is to increasingly focus on niche services in the area of Network Services and gradually move out of the network installation volume business. In particular from development countries where the price competition is fierce and competence and quality is secondary. Throughout the second half of 2018 Talkpool conducted a number of internal improvement projects around the world, including restructuring and divestment of non-profitable or non-strategical projects and companies.

These activities took their toll on the net result in the second half of 2018, but the improvement of the profit margins could be registered already in Q4 and not only will these actions free up money for IoT and niche Network services activities, they will also free up management time that will be invested in the development of new business in profitable growth areas.

In October Talkpool Saudi Arabia signed a major deal with Ericsson Saudi for deployment and integration of the mobile networks in KSA. There was little initial activity in Q4, but the project will continue over several years.

Q1 2019
The expansion of the Nordic IoT (NIoT) LoRa Network in Sweden made good progress when Tele2 and Talkpool transferred the common Gothenburg LoRa network to NIoT. The addition of the Tele2/Talkpool Gothenburg network is a great boost to the total IoT infrastructure that Nordic IoT Networks manages, and it fits well with the company’s new Shared Network Operators (SNO) strategy. A further step towards collaboration in the area of IoT networks in Sweden was taken as Talkpool started a collaboration with “StadshubbsAlliansen”. StadshubbsAlliansen is an initiative by Öresundskraft, which, through collaboration between municipal urban networks, promotes sustainable digitalisation of the smart society.

As earlier stated we believe that 2019 will be a breakthrough year for IoT and we are confident that we will be able to continue delivering on our projected growth targets for 2021.
  
  
Erik Strömstedt, CEO
  
    
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TALKPOOL

THIS IS TALKPOOL

Talkpool enables the IoT ecosystem byoffering professional services and solutions,comprising a comprehensive range of design,creation and realization of IoT solutions and products. Talkpool’s core competences include telecom, radio and security and Talkpool has geographical reach in Europe,Latin America, the Middle East and Africa.
   
  
This information is inside 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 08:55 CET on March 29, 2019.

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