Talkpool Annual Report 2023

Jan 1st - Dec 31st 2023

• Net sales amounted to EUR 15 607 thousand (EUR 25 498 thousand in 2022)
• EBITDA of EUR 1 980 thousand (999) and EBITDA margin of 12.7 percent (3.9)
• EBIT of EUR 1 806 thousand (603) and EBIT margin of 11.6 percent (2.4)
• Net earnings after tax of EUR 788 thousand (1 240) and EAT margin of 5.0 percent (4.9)

Important events during the year

• Revenues decreased due to selling, closing, and ramping down business.
• We signed and ramped-up our largest ever contract, a 5-year frame agreement worth EUR 17.5 million with Deutsche Telekom.
• The departure of the previous managers and consultants in Germany had no negative impact on business activities in 2023. This change in management led to significant cost savings as the German business has been managed from the headquarters.
• The demand for our services in Germany continued to be high, leading to 37% organic growth to EUR 4.2 million revenues.
• All operational business in the US was ramped down and written off in 2023. Talkpool still owns two companies in the USA.
• Our bank KBC in Belgium suddenly closed all our bank accounts in July 2023, triggering an unnecessary bankruptcy as we couldn’t pay salaries or receive payments from clients.
• Talkpool was not able to exercise the option to repurchase the shares in the Swedish building technology company Nordic Propeye
• A settlement was reached to pay USD 220 thousand instead of previously agreed USD 1.2 million as final payment for the purchase of LCC Pakistan in 2017.
• Turbulence in management and board. The authors of this text and Talkpool’s creators, founder Magnus Sparrholm and long-term CEO Erik Strömstedt, both stayed in the company.
• After evaluating different options, a new strategy based on smart network services was established.
• Talkpool received its first-ever patent. The “breathing windows” patent allows energy-efficient ventilation and temperature regulation without opening the windows.
• All investment in innovative products has been stopped as the company no longer develops own software or hardware.
• A decision was made to develop a new business plan based on the successful German business.

Management Comments

Talkpool strengthened its finances and returned to its original focus.
Valuable assets were sold as the business was trimmed.

During the year Talkpool continued to amortize debt while improving profit margins. EBIT has improved for 5 quarters, reaching over 17% in 23Q4, from below -1% in 22Q3. Cashflow was stretched due to debt repayments.

The Corona pandemic crisis was over in 2023, but new global challenges, such as the Russian aggression and political turmoil surged in many countries. Talkpool’s business was streamlined to exclusively focus on operations with good profitability and positive liquidity.

Talkpool has built many communication networks on all continents and intends to improve these crucial networks and the underlaying infrastructure by using smart technology made by partner companies.

2023 was a challenging year for Talkpool as the vision to develop smart solutions for buildings had to be abandoned. We discontinued business with low profit margins or high demand for pre-financing. The discontinued work included a window breathing solution for which Talkpool received its first-ever patent. It wasn’t easy to close fun projects with future potential and unique Intellectual Property, but we believe a shift towards immediate cashflow, and higher profitability is a requirement for creating a slimmer and stronger business.

2024: Reduce to the MAX

We’re continuing the path of improving efficiency, selling assets, cutting costs, tightening, and tidying the business with an intent to create a smaller, simpler and more profitable gem.

We’re in a sales process for the Pakistani and Saudi business with an interested buyer. A binding offer was received in February. The parties have agreed to sign a Sales Purchase Agreement. There’s an intent to execute the sales of the Pakistani business, but there’s still a risk that the negotiations may fail.

We’re pledging to maximize the opportunity to convert weaknesses into strengths. The launch of three long-term schemes have been communicated:

1. A share options scheme to motivate and incentivize staff, from Q2 2024 until mid-2031
2. A share buy-back program, probably from 2025 until 2031
3. Dividends payments to shareholders, probably from 2025

The emerging mid-size business will be tightly controlled and highly focused on cashflow generation. The benefits for shareholders, clients and staff will be highly visible by the end of 2024.
 

Financial Information
Total debt 2022 - 2023 (€)

Total consolidated net debt has reduced from EUR 6.2 million in mid-2022 to EUR 3.0 million at the end of 2022 to EUR 2.0 million at the end of 2023.


EBIT 2022 - 2023 (€)

The operational margin has increased from negative in 22Q3 to 17.4% in 23Q4.
 

• All expensive loans have been fully repaid in the headquarters. This has led to a strong reduction of interest costs from loans in HQ to EUR 88 thousand from EUR 428 thousand a year earlier.
• Talkpool Group has reduced and strengthened its consolidated balance sheet:
• • Equity reached positive territory for the first time in many years. Equity incl. minority interests reached almost EUR 90 thousand, up from EUR -1.2 million in 2022.
  • Total current assets were reduced by 15% to EUR 5.0 million (from EUR 5.9 million a year ago) while the total current liabilities were reduced by 35% to EUR 4.7 million (from EUR 7.2 million a year ago).
• The impact of extraordinary effects on the consolidated group including Goodwill recycling, FX, loss-making operations, asset sales and settlement was EUR 97 thousand in 2023, down from EUR 899 thousand in 2022
• The parent company Talkpool AG made significant write-offs to a total amount of CHF 1.1 million in 2023

 
The complete annual report will be made available on: https://talkpool.com/financial-reports/#investor

For more information, please contact:

Magnus Sparrholm, Interim CEO
Telephone: +41 79 758 15 48
[email protected]

Erika Loretz, Group Reporting
Telephone: +41 79 333 59 71
[email protected]