Year-end report January-December 2019
OCT 1st – DEC 31st 2019
Net sales amounted to EUR 4 816 thousand (6 908), a 30.0 percent decrease
EBITDA of negative EUR 238 thousand (329) and EBITDA margin of negative 4.9 percent (5.4)
EBIT of negative EUR 360 thousand (230) and EBIT margin of negative 7.0 percent (3.3)
Net earnings after tax of negative EUR 1 664 thousand (-687)
JAN 1st – DEC 31st 2019
Net sales amounted to EUR 21 154 thousand (24 363), a 13.2 percent decrease
EBITDA of negative EUR 547 thousand (1068) and EBITDA margin of negative 2.6 percent (4.4)
EBIT of negative EUR 1 005 thousand (733) and EBIT margin of negative 4.7 percent (3.0)
Net earnings after tax of negative EUR 3 236 thousand (-974)
OCTOBER - DECEMBER KEY DEVELOPMENTS
A EUR 2M convertible loan was signed with a new investor in December
The delivery of the first phase of the Smart building (submetering) project with Atrium Ljungberg was initiated
Talkpool launched two new IoT sensors for the optimization of energy and air quality in buildings
Talkpool Pakistan signed a 3 years Solar hybrid contract worth of USD 3,0 - 3,5M
Talkpool Saudi Arabia signed a 1 year contract extensions with Airbus and Indra
The Haitian market stabilized after several months of civil unrest and fuel crisis
Talkpool AG divested the majority of its shares in Talkpool Mauritius
Precautious one-off impairments and write offs were causing a significant net loss in Q4
Talkpool’s turnaround program continued throughout the fourth quarter and the results started showing in the operational efficiency and quality. The effects of the increased sales efforts and the cost reductions also became visible in the sales pipeline and operating financial performance at the end of the quarter. Precautious financial impairments and write offs related to the restructuring did however have a significant negative impact on the financial results in Q4
The Telecom Network Services market has been under price pressure for several years as network operators have reduced budget and spending on their telecom networks. Instead budgets have increasingly been spent on marketing and customer relations. The build-out of the last network technology generation (4G) is since long completed in most markets and the investments in next generation (5G and fiber) technology has not yet taken off. Talkpool is well positioned as one of the few international providers of quality network services and we will continue to defend this position. In order to improve profit margins the coming years, a shift towards assisting clients more with their sales and not just with their costs is planned. The transformation involves increasing work in high-margin niches, distribution of 3rd party products and a broader offering of solutions connected to the internet.
The civil unrest and fuel shortage in Haiti continued to cause significant disturbances to the daily operation in October and November, but the situation calmed down in December. After many months of challenging conditions and extraordinary efforts our local organisation could return to reasonably normal conditions again. During 2018 and 2019, Talkpool invested in fuel management tools and fuel rescue staff, hence increasing costs to manage the fuel crisis in Haiti. The increased costs combined with reduced extra work led to collapsing profit margins for Talkpool during the second half of 2019. As Talkpool reduced its emergency staff while receiving increased extra work, profit margins started recovering at the end of 2019.
The refurbishing project that was started in Q2 and was put on hold during the crisis, has now been resumed. The project was originally planned to last until the end of 2019, but due to the disturbances it will continue at least until the end of Q1 2020.
On group level Talkpool has cut costs by closing the worst performing markets. The management is continuously cutting staff costs in our local markets and considering closing further markets altogether.
In October Talkpool Pakistan signed a frame agreement for the provisioning of Solar hybrid solutions with one of the largest mobile operators in Pakistan. The contract which is initially for a period of 3 years has an indicative value of USD 3 - 3.5 million. Talkpool Pakistan based and other alternative energy deployments for a long time and did among others recently conclude a large contract with Telenor Pakistan with hundreds of sites.
Talkpool has been offered a very large media 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 negotiations have been halted due to political reasons and are expected to resume in spring 2020.
In November a Swiss private investor with extensive experience within the global IT and Telecoms market granted Talkpool a EUR 2 million convertible loan. A first down-payment of EUR 200 thousand was made in December 2019 and the remaining EUR 1.8 million were paid mid-February 2020. Of the EUR 2 million convertible loan EUR 0,6 million were sent to Talkpool AB. Spending on IoT sales and integration in Talkpool’s markets has been increased.
The development of Internet of Things end-to-end solutions at larger scale was delayed last year in order to avoid additional pressure on overall profit margins. Investment in a software platform that collects and analyses the data was affected by this savings measure, but with the new cash injection, software development activities will be geared up again. The investments in software is focused on creating algorithms for structuring and using the large data streams that flow through Talkpool’s software to provide innovative solutions to its business clients.
In Q3 Talkpool won an important first contract with one of Sweden’s leading real estate companies, Atrium Ljungberg, for providing smart building solutions with several types of sensors to a new major business and housing area in Stockholm. The initial contract was worth approximately EUR 100 thousand. Potential add on orders for the complete property portfolio of this client will be significant.
The sub metering IoT solution order from Atrium Ljungberg was the first commercial volume IoT order for Smart Buildings. Another of the solutions in Talkpool’s Smart Buildings Suite uses CO2 sensors combined with artificial intelligence (AI) to save energy by reducing ventilation in unused rooms while improving air quality in busy rooms by increasing ventilation.
Talkpool’s smart building solutions make it possible to measure and manage a range of other important parameters in buildings that 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 launched a range of IoT products, primarily in the Smart Buildings area, during the past years. Approximately 10’000 sensors with “Talkpool inside” technology have been sold and over 100 million data packages have been sent through Talkpool’s software platform.
Initially Talkpool focused on selling IoT products in Sweden and Scandinavia, but the sales effort expanded to Europe and the Middle East at the end of 2019. The strategy behind starting an IoT development business within Talkpool’s network services business was to enhance Talkpool’s global platform of local companies with local customer relations, market knowledge and access to technical experts. Our IoT R&D Lab gains a competitive advantage by having international distribution and service organisations selling its products clients internationally and for Talkpool’s local country management, this results in improved financial results, more interesting work and less dependence on staff compared to the existing network business.
1st Quarter 2020
The remaining Euro 1,8 million of the Convertible loan hit TP AG’s Account in February as planned which gave Talkpool Group a healthy cash injection. Particularly important was the Euro 0,6 million that were directly invested in the development and delivery of smart building solutions.
In February Talkpool signed a larger framework agreement with Atrium Ljungberg, for the supply of end-to-end solutions for smart buildings. The agreement initially covers a five-year period and includes solution deployment, measurement value collection, data integration, technical support and system monitoring. Solutions are used for sub metering, energy efficiency and environmental certification of properties. Projects are currently in progress in the Sickla, Kista and the Slakthus areas.
A Smart Construction-as-a-Service IoT contract that was signed with leading Swedish construction company NCC in March. NCC, with high competence in sustainability and digitalization, strengthens their IoT position with Talkpool’s offering of wireless LoRaWAN sensors, data collection and data processing. The smart sensors provide a cost-efficient way to ensure the building quality, by monitoring temperature and humidity in roof constructions or other sensitive construction elements.
A new country manager was hired in Talkpool Haiti in January 2020. The new manager has a long history with our customer Digicel and had several important positions in Digicel Haiti, among other the CTO role. This recruitment has had a very positive effect on the performance of Talkpool Haiti in the first months of 2020.
The worldwide Corona outbreak has so far had no negative effects on Talkpool’s business, and we expect limited implications going forward. Reliable telecom and internet communication access is becoming increasingly important for all societies throughout and after this crisis. As countries invest more in remote communication and internet-connected solutions Talkpool expects an increasing interest in its technical solutions.
2019 was a challenging but also a rewarding year for Talkpool. We began to see the results of our hard restructuring work at the end of 2019. Several important IoT contracts and several new opportunities in the Middle East have surfaced within both Network Services and IoT. This makes us confident that the restructuring work has been effective and that we now can continue to build future value for our customers and shareholders.
For more information contact:
Erik Strömstedt, CEO Talkpool
Phone: +41 81 250 2020
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 email@example.com, 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 17.45 CET on March 17, 2020.