YEAR-END REPORT JANUARY – DECEMBER 2016

OCT 1st – DEC 31st 2016

• Net sales amounted to EUR 3 621 thousand (2 785), a 30.0 percent increase
• EBITDA of EUR -67 thousand (276) and EBITDA margin of -1.8 percent (9.9)
• EBITDA excluding extraordinary costs of EUR 152 thousand (276) and EBITDA margin of 4.2 percent (9.9)
• EBIT excluding extraordinary costs of EUR 139 thousand (260) and EBIT margin 3.8 percent (9.3)
• Loss after tax of EUR -145 thousand (180).

JAN 1st – DEC 31st 2016

• Net sales amounted to EUR 11 571 thousand (10 353), a 11.8 percent increase
• EBITDA of EUR -364 thousand (562) and EBITDA margin of -3.1 percent (5.4)
• EBITDA excluding extraordinary costs of EUR 159 thousand (562) and EBITDA margin of 1.4 percent (5.4)
• EBIT excluding extraordinary costs of EUR 115 thousand (520) and EBIT margin 1.0 percent (5.0)
• Loss after tax of EUR -664 thousand (204).

OCTOBER-DECEMBER HIGHLIGHTS

• TalkPool’s second new share issue was successfully completed in October.
• TalkPool invested in the IoT company Sparkzone, specialized in Office Management Solutions.
• TalkPool AB and Sigma Technology Solutions AB signed a framework agreement for the supply of competence resources to ensure the development of future Internet of Things (IoT) solutions.
• Our break through FTTx planning project with the major German incumbent operator took off.
• TalkPool founded a new financial leasing company for the provisioning of IoT as a Service solutions.
• TalkPool was selected as a major contributor in the consortium, led by the City of Gothenburg and financed by Vinnova, that invests in digital monitoring of the city environment

CEO COMMENTS

In Q4 2016, we continued laying the foundation for TalkPpool’s future growth strategy by growth in our Network Services business and by investing in the development of IoT products and solutions.

Within Network Services, yet the foundation for most of TalkPool’s revenues and earnings, we managed to generate the highest quarterly revenue since 2012. Group revenue for the fourth quarter 2016 was EUR 3 621 thousand (2 785), an increase with 30 % compared to Q4 2015 and a 27% increase from Q3 2016. Over 90% of the growth was organic, stemming from activities that will continue for long. The reason for this increase was primarily that several delayed key projects finally were initiated by our customers. The most prominent was the strategically important German incumbent operator frame agreement for fibre network services that we announced in a press release in September. Secondly, our Sigfox IoT network deployment project in Germany gained speed again after a slowdown in Q2 and Q3. The third German project, with Nokia and Telefonica, was planned to start in Q2, but did not get up to speed until Q4. A significant order intake in Botswana in Q3 did also show in our books in Q4 and our important quality awarded fibre network project in Mauritius continued to develop very well in Q4. Finally, the revenue from the newly acquired Dutch niche company Camouflage was consolidated in our books from 1 November 2016.

The gross margin increased from 12% in Q3 to 19% in Q4, which is in line with the yearly average of 20% in the last couple of years, despite higher costs for project start-ups and IoT trial projects in Q4 this year. Compared to Q4 2015, the gross profit increased from EUR 564 thousand to EUR 682 thousand. The Adjusted EBITDA reached EUR 152 thousand or 4.2%, which is a substantial improvement compared to Q3 and in line with the levels in H1. The ramp-up in Germany considerably pulled down our profit margins as we hired staff and invested in trainings and tools. We expect profit margins in Germany to increase during 2017. During Q4 the extraordinary costs for mergers and acquisitions, Investor Relations and internal improvement projects increased with 26% compared to Q3 and reached EUR 219 thousand. This is a substantial investment and since the extraordinary costs surpassed the adjusted EBITDA, the EBIT for the period came out negative with EUR -80 thousand. The adjusted EBIT for the period was EUR 139 thousand compared to EUR 260 thousand in Q4 2015. The reason for the higher EBIT in Q4 2015 was primarily a one off extraordinary income in Mexico. In 2017 a significant reduction in extraordinary costs is foreseen.

To enable further growth through acquisitions according to plan and to improve share liquidity, TalkPool conducted a new share issue of SEK 10 million in October. The share issue attracted strong interest among investors and was significantly oversubscribed.  

The M&A efforts continued to pay off as we closed a deal with the IoT based office space management company Sparkzone in Switzerland. Sparkzone, established in 2006, provides sensor & network based M2M and IoT Solutions for Asset-Management, Security, Energy Data Collection, Production & Logistics as well as in the Area of Space Management. With its IoT and mobile solutions Sparkzone address specific needs faced by co-workspace providers who want to rent their available space, release services and offer “pay per use” to business travellers and small-to-medium sized enterprises. Sparkzones Jeckee Manager is the world’s first disruptive Space Management Solution based on Plug&Use Technology and has already been installed by several major co-workspace providers and hotel chains like Regus and Marriott. TalkPool has an option to acquire a majority of Sparkzone’s shares by mid-2017, provided that Sparkzone has reached its agreed targets by then.

In Q4 TalkPool continued to invest in IoT solutions. We focused on the development of IoT 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 continued to expand the number of customer trial projects and customized IoT-solutions.

To meet our customer’s great interest in the "Internet of Things (IoT) as a service" area, Talk Pool started the leasing company TalkPool IoT Services AB in December. This enables us to offer our customers fully financed solutions managed by TalkPool and charged to the customer in the form of a monthly service fee instead of charging for the whole system solution upfront. The managed service offered could e.g. include measurement, distribution and processing of measured values such as temperature, humidity, hot water consumption etc.

TalkPool and the City of Gothenburg, were 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 in Q4 were lower than normal due to high extraordinary costs and investments and the full year earnings expectations have been negatively impacted by this fact, but we have made good progress in building a strong base for future growth and our ambitious five-year plan remains solid. We’re glad that our organic growth picked up steam towards the end of 2016 while we have simultaneously invested heavily in building a future-proof platform.

    
Erik Strömstedt, CEO

  
This information is information that Talkpool is obliged 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 below, at 9:00 CET on 30 March 2016.

THIS IS TALKPOOL
TalkPool builds, maintains and improves telecommunication networks 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.

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