Year-End Report January - December 2020

OCT 1st – DEC 31st 2020

• Net sales amounted to EUR 6 370 thousand (4 895), a 30.1 percent increase
• EBITDA of EUR 484 thousand (-283) and EBITDA margin of 7.6 percent (-5.8)
• EBIT of EUR 297 thousand (-406) and EBIT margin of 4.7 percent (-8.3)
• Net earnings after tax of negative EUR 272 thousand (-1 803)

JAN 1st – DEC 31st 2020

• Net sales amounted to EUR 21 253 thousand (21 233)
• EBITDA of EUR 961 thousand (-594) and EBITDA margin of 4.5 percent (2.8)
• EBIT of EUR 480 thousand (-1 005) and EBIT margin of 2.3 percent (-4.7)
• Net earnings after tax of negative EUR 1 103 thousand (-3 375)

OCTOBER - DECEMBER KEY DEVELOPMENTS

• Nordic Proptech acquisition LOI signed and Due Diligence concluded
• Breakthrough order from Redytel IoT for CO2 sensors for public buildings in the Spanish market
• Klövern signed contract for AI based climate optimisation and energy saving solution
• Talkpool Netherlands and Talkpool Germany continued to show a stable and high performance
• IoT operator Netmore acquired Nordic IoT Networks and signed partner agreement with Talkpool
• Extraordinary positive effect on the Gross Margin in Sweden from the sale of Niot
• A radical appreciation of the Gourde in Haiti and a stronger Swedish Krona caused significant FX losses
• COVID 19 was still hampering business development in some markets
• New IoT Smart Building Strategy set and new CCO hired for the global implementation

 
CEO COMMENTS

In October a second COVID-19 wave took the world by surprise. A faster virus spread than in spring combined with new mutations triggered new lock downs in many countries around the world. Most industries did not collapse the way they did in March and April, but companies that were already struggling were hit hard by the new restrictions. Most large new projects have been put on hold and remain deep frozen since over a year. In spite of this market situation, Talkpool managed to increase its sales and its operative earnings in the fourth quarter. Talkpool staff all around the world untiringly continued to streamline operations in order to save cost and free up resources for new business models in line with the successfully implemented turn-around plan.

In Q4 Talkpool identified its first IoT acquisition target which is intended to become the catalyst for a new growth phase in which Talkpool becomes the digitization partner to real estate owners. The name of the target is Nordic Proptech Investment Services AB (NPT), which is a smart building company specialized in individually measuring and invoicing (IMD) actual water and electricity consumption over IoT. At the end of Q4 the installed base of NPT was over 50’000 homes all over Sweden, which makes it Sweden’s third largest IMD-metering company. A Letter of Intent was signed with the seller in November and a full Due Diligence of the company was successfully conducted in December.For the new growth phase Talkpool has revamped its IoT- as well as its Network Services strategy and merged them into a common digitization strategy for buildings and communication network infrastructure. The end-to-end solutions for energy optimization, indoor climate control and damage prevention in both business areas will be based on a common cloud-based platform and Talkpool will consolidate the market through the acquisition of selected IoT and Smart Network Services companies.

 
Network Services

IT and Telecom companies around the world continued to gain from the massive increase in data traffic and use of information technology for home office, video conferencing, home schooling and ecommerce, caused by COVID-19.

Thanks to the critical importance of the telecom and internet infrastructure, ongoing and planned network services projects were not largely affected by the COVID 19 restrictions, but limitations in material supply and cash flow continued to cause cautiousness among Talkpool’s customers throughout Q4. Hence investments in new infrastructure projects and development of new technologies were clearly hampered also by the second wave. The negotiations regarding important network optimization and Smart Network services solutions projects, that Talkpool initiated in the Middle East already in Q1 were still on hold in Q4 and due to travel restrictions business development activities were suffering. 

Talkpool’s operations in the Netherlands and Talkpool Germany continued to show a stable and high performance. In Germany extra business development efforts were made to boost sales.

The group wide savings efforts continued to show results as group finance costs were reduced with another 20% in Q4. The total reduction of the interest expenses from January to December 2020 amounts to 37%. A radical appreciation of the Haitian Gourde by the government in October together with a stronger Swedish Krona had a temporary but significant negative effect on the net earnings in Q4.

IoT

As Talkpool has communicated in previous interim reports and press releases, the company’s clear strategic IoT focus is from now on the digitization of buildings. A clean and controlled indoor environment in public and private buildings is becoming essential for health, productivity and wellbeing. Through the steering of ventilation and heating based on frequent CO2 measurements the indoor climate can be optimized and significant energy savings can be achieved.

Heating and cooling of buildings is one of the largest contributors to the global warming. And the irony is that the more we pollute our planet, the faster the climate changes, causing heat waves and freeze periods, which in its turn will increase the need for building cooling and heating further. Sustainability is not only an ethical and altruistic matter, it’s also a way for property owner to save cost, increase the value of their buildings and increase tenant satisfaction.

In November Talkpool and Myrspoven received an order from Klövern AB, one of Sweden’s largest real estate companies, for an energy and climate optimisation solution for 100’000 m2 office space in Stockholm. Talkpool provides sensors, connectivity and data handling, and Myrspoven provides Artificial Intelligence-based HVAC control. The solution is expected to generate improved indoor climate and energy savings worth approximately SEK 1.8 million per year and also help preventing the spread of Covid -19 in the buildings. Most buildings in the world are not optimized and the innovative solution with self-learning optimization is ground-breaking.

Individual metering and cost distribution (IMD) of water and electricity in apartments and commercial buildings is another way to save energy by creating control and awareness about the actual consumption.

In November Talkpool signed the LOI for the acquisition of Nordic Proptech (NPT).  NPT measures consumption of water and electricity in homes all over Sweden and is offering additional digitisation solutions such as indoor air quality, alarms and sustainable environmental services to existing and new customers. At the end of Q4 the installed base of NPT was over 50’000 homes all over Sweden, which makes it Sweden’s third largest IMD-metering company.

At the end of December Talkpool AB sold the IoT network company Nordic IoT Networks AB (NIOT) to Netmore Group AB. Talkpool and Netmore will continue in a partnership relation whereby Netmore assumes the network operator role (providing national coverage in Sweden) and Talkpool provides smart building solutions and network services. The partnership can and will lead Talkpool to use Netmore as supplier for connectivity to buildings in Sweden. The roles can also be swapped whereas Netmore will use Talkpool and network service supplier for 5G agreements with large multinationals.

The deal is part of the streamlining of Talkpool's operations with a focus on solutions and sensors for the insurance and real estate industry, including IMD, environmental certification and energy efficiency. The collaboration also provides increased opportunities to sell Talkpool's world-leading sensors for CO2-, particle- and radon measurement to other solution suppliers.  The booking of the sale had a positive extraordinary effect on the Revenue and the Gross Margin in Q4.

In November Spanish Redytel IoT placed an important order for IoT CO2 sensors from Talkpool. The IoT sensors will be installed during Q1 2021 in public buildings in Spain to monitor the ventilation and provide insights into CO2 levels to the public. 

CO2 levels give a strong indication of air quality status, as it is a residue from human breath. In crowded or not well-ventilated indoor spaces, CO2 levels increase which indicates bad air quality and this increases the risk of COVID-19 spread. The CO2 values are measured by Talkpool’s wireless sensors and sent to the cloud. The data is made accessible to the public by the placement of a QR code next to the device, which gives access to a dashboard upon being scanned. The project has been widely covered on Spanish national television, some clips of this can be found on Redytel IoT’s homepage: https://redyteliot.info/prensa/. 

This is a groundbreaking solution and a breakthrough order for Talkpool, with a good possibility of follow-up orders coming in in 2021.

The IoT Strategy revision work was finalized in Q4 and the project manager, Aurelius Wosylus, was appointed to manage the global strategy implementation and business development in his new role as Group Chief Commercial Officer.

 

1st Quarter 2021

In January Talkpool signed a cooperation agreement with SmartFront, for the delivery of end-to-end solutions for smart buildings. The agreement initially spans a three-year period and includes, project management, installation and delivery of sensors/meters, IoT networks and meter collection, data integration, technical support and system monitoring. SmartFront is a former customer of Talkpool and solutions are used for measuring temperature, moisture and carbon dioxide. Projects are currently underway in Södertälje. SmartFront also uses Talkpool's moisture sensors to verify the moisture content of the façade in real time, which verifies the moisture content inside the façade and gives the customer peace of mind.

On January 25 Talkpool finalized the negotiations and signed an agreement to acquire Nordic Proptech Investment Services AB, which owns 100% of the shares in Home Solutions www.homesolutions.se and the transaction was completed on March 5.

NPT provides a strong customer base, 20 years of experience and track record in residential properties automation and a strong sales organisation. Talkpool contributes with leading edge technology knowledge, own IoT products and prime commercial real estate customers to the co-operation. Together the two companies will merge to a market leading high-tech Smart Building company with a strong sales force offering a complete eco-system for the digitisation of buildings.

Investors have shown an increasing interest in Talkpool’s business model. As a consequence of this, a total of EUR 5 million financing was secured in the past months.

Talkpool’s smart building business has now reached approximately EUR 5 million revenue on an annual basis. This size combined with a mature technology offering and market positioning. Investors have therefore requested the company to evaluate unlocking potential large shareholder values by spinning off the promising smart building business.

The network services business has stabilized around EUR 20 million revenue and offers good potential for organic growth from 2021 when the projects that are put on ice due to Corona start thawing.
 

For more information contact:
Erik Strömstedt, CEO Talkpool
Phone: +41 81 250 2020
[email protected]

 
About Talkpool
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 protected], 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 08.30 CET on March 10, 2021.