Interim Report January - September 2022
Jul 1st – Sep 30th 2022
- Net sales amounted to EUR 5 794 thousand (5 831), a 0.6 percent decrease
- EBITDA of EUR 24 thousand (352) and EBITDA margin of 0.4 % (6%)
- EBIT of EUR negative 82 thousand (285) and EBIT margin of negative 1.4% (4.9%)
- Net earnings after tax of negative EUR 154 thousand (143)
Jan 1st – Sep 30th 2022
- Net sales amounted to EUR 18 693 thousand (17 768), a 5.2 percent increase
- EBITDA of EUR 389 thousand (783) and EBITDA margin of 2.1 percent (4.4)
- EBIT of EUR 75 thousand (523) and EBIT margin of 0.4 percent (2.9%)
- Net earnings after tax of negative EUR 324 thousand (-177)
July – September key developments
- Lower sales than expected due to the global financial situation
- Talkpool Germany overperformed budget and invested for the future
- Talkpool Pakistan beat their revenue and earnings budgets
- Focus on debt reduction and financing through asset realization
- Successful negotiations concerning the sale of Talkpool Netherlands
- Successful new emission in Nordic Prop Tech Investment Services
- Soaring fuel prices in Haiti, but the political turmoil is coming to an end
- Ramp up activities in the USA were temporarily geared down
- Moderate IoT sales during July and August, but picking up again in September
- High fuel and material cost in several countries due to the war in Ukraine
- Talkpool launched its new refrigerant leakage detector
CEO COMMENTS
The third quarter is usually affected by vacations and low investment activity. This year the whole of July, August and even a part of September were slower than normal and sales in the third quarter did not reach expectations.
Talkpool’s German business performed quite well despite the vacation period and training of new staff. Investments in staff, training and tools did temporarily reduce net earnings, but built delivery capacity for the future. The underlying market demand for broadband network services in Germany continued to grow and hence the potential for a continued stable and profitable growth for Talkpool with current and future customers is high.
Furthermore, the persistent IoT sales efforts and business development investments in Germany were starting to show results in Q3. The first orders for sensor solutions were received and the ESG solution air4schools for air quality control in schools and public buildings was tested and promoted in several schools in Germany.
The sales of Talkpool’s shareholding in Pakistan and Saudi Arabia was signed in February, but ZT Group has not paid the USD 3,7m to Talkpool AG and thereby breaching the agreed conditions. No shares have been transferred and Talkpool is hence still majority owner of the shares in Pakistan.
Talkpool’s business in Pakistan has been crisis resilient as it continues to operate with high service quality, strengthening its position as Pakistan’s market leader in telecom network services while generating similar or higher profit margins compared to previous years. In Q3 Talkpool Pakistan overperformed its targets despite the difficult conditions with floods as well as political and financial challenges in country.
Due to the above-mentioned challenges with the sales of the Pakistani entity, we started a process of finding buyers for alternative valuable assets to deleverage the balance sheet of Talkpool AG. Negotiations about a management buy-out with the Dutch co-owners and management progressed well and at the end of September the conditions were basically agreed. The signing of the SPA was announced on October 17. Talkpool AG will use the proceeds to repay loans and due invoices but also to provide working capital for growth.
The growth pace in the USA was temporarily geared down as the expected proceeds from the sale in Pakistan did not materialise. Ongoing projects were carried on whereas the mobilisation of resources for new projects was put on hold. We have built close relations to several customer accounts in the USA throughout the year, and we are well prepared to ramp up again as soon as cash flow admits.
The cost reduction activities in selected areas in the group continued to make the company fit for the future. After the operational costs have been optimize, focus will shift to reducing debts and so cutting financial costs.
In addition to the sale of Talkpool Netherlands with the purpose to realize valuable assets, the planned divestment of non-strategic businesses in development countries continued.
Talkpool is aiming to become a lean and agile tech house with focus on high-speed communication technology and internet-based solutions for real estate and infrastructure. More focus will be put on net earnings and less importance is put on top line growth.
The global effects of the war in Ukraine created challenges also for Talkpool. High energy prices and inflation are increasing the operational costs for Talkpool, but it is also creating business opportunities for energy saving solutions for real estate owners, telecom operators and tower companies.
In Haiti the government finally gained some control over the spiralling violence and access to fuel was again granted.
IoT
The IoT solutions sales in Sweden and other countries was moderate during the summer months.
The financial situation for real estate companies is challenging and the market forecast is uncertain. Risk-avert clients delayed investments despite high energy prices and winter approaching. Demand for our energy saving solutions and electric car charging stations increased.
Nordic Proptech continued to develop its smart building SW platform Propeye to support the new end-to-end smart buildings offering where charging stations now are an integral part of the IMD and local power management solutions.
The primary market driving use cases are submetering in real estate and smart metering by utility companies. Using smart meters for these applications allows for strengthened control of water management systems, including the detection of leakages and the invoicing of consumption, based on real-time insights in actual consumption.
The sale of the smart floor drain and the energy optimization solution developed together with AI partner Myrspoven made progress during the quarter also outside of the Nordic countries.
Talkpool also continued its focused efforts to sell the “air4schools” solution in Germany and Switzerland. The end-to-end solution is optimizing the air quality in classrooms while minimizing the energy cost for heating and ventilation. The solution has been successfully tested at several schools in Germany and Switzerland and further deployments are planned. While initially focusing on schools, the technology can also improve air quality in offices, conference rooms, public buildings, and private homes.
In September Talkpool launched a new sensor that measures the R-32 refrigerant, in close cooperation with Revelop, one of Sweden’s most innovative real estate companies. The sensor can be used to detect leakages in refrigeration- and cooling systems that use R-32 or any other hydrocarbon-based refrigerant. Revelop and Talkpool have installed an early version of the sensor and integrated it with a building management system as part of Revelop’s BREEAM In-Use certification program of their property portfolio. The results are very positive, and the sensor has been approved for BREEAM In-Use. This means that in addition to the obvious health and safety benefits, the refrigerant leak detector also supports a higher score related to BREEAM and similar property certification programs
4th Quarter
Talkpool AG signed a share purchase agreement for the sale of its shares in Talkpool’s profitable Telecom Services subsidiary in the Netherlands. Talkpool’s return on investment, including sales and operational profits since the acquisition in October 2016, exceed 320%. The cash transfer to Talkpool AG after offsets amounts to about EUR 1 100.
In November Talkpool announced the ongoing negotiations regarding repayment of its SEK 24 million Bond loan. Talkpool has proposed a cash payment of SEK 7 million that equals slightly more than half of the payment Talkpool AG received from management buyouts in the Netherlands and Tanzania/Kenya. Talkpool is asking the remaining amount to be repaid in Nordic Prop Tech Investment Services shares at a valuation of SEK 85.8 million. This is an important step in deleveraging the balance sheet, freeing up working capital and reducing the financial costs for Talkpool AG.
For more information, please contact:
Erik Strömstedt, CEO Talkpool
Tel: +41 81 250 2020
[email protected]
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. Talkpool offers end-to-end IoT solutions for smart buildings and cities with focus on environmental control, energy saving and damage prevention. Erik Penser Bank, +46 8 463 80 00, www.penser.se, is Talkpool's Certified Advisor. For more information 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 18, 2022
