Rapporter | 30 May 2023 | TalkPool

TalkPool AG: Annual report 2022

Jan 1st – Dec 31st 2022

•       Net sales amounted to EUR 25 498 thousand (24 502), a 4.1 percent increase

•       EBITDA of EUR 999 thousand (1 223) and EBITDA margin of 3.9 percent (4.9)

•       EBIT of EUR  603 thousand (727) and EBIT margin of 2.4 percent (3.0)

•       Net earnings after tax of EUR 1 240 thousand (-334)

Significant events during the year

• All-time high group revenue of EUR 25 498 thousand
• Group net earnings of EUR 1 240 thousand
• Organic growth of over 60% to EUR 3 077 thousand in Talkpool Germany
• Repayment of 36.3% of interest-bearing loans on group level and 80% on Talkpool AG level
• Full repayment of the Nord SEK 24 million bond loan in cash and NPTIS shares
• Sale of NPTIS shares generated EUR 1 385 thousand profit
• Sale of Camouflage B.V. (Netherlands) shares generated EUR 681 thousand profit
• Total debt reductions of over EUR 2 599 thousand
• Total yearly interest cost reductions of EUR 500 thousand from 2023
• Focus on debt reduction and financing through asset realization

CEO Comments

In 2022 Talkpool Group reached an all-time high revenue of EUR 25 498 thousand and an all-time high net profit of EUR 1 240 thousand. The increase in net earnings of EUR 254 thousand compared to the unaudited Year-End report stems from adjustments made to the calculations of the gains on sales of the Netherlands and shares in Nordic Proptech.

During the year Talkpool also made a giant leap in reducing debt, as 80% of all major interest-bearing loans were paid back either in cash or shares in subsidiaries. Not only does this reduce interest costs for partly very costly loans, but it also reduces risks and dependencies in a radical way.  Furthermore, significant financial gains were achieved as the highly valued assets were realised.

Covid 19 never had a significant impact on Talkpool’s Network Services business, but it created an uncertainty among our customers that hampered and delayed business decisions. A good portion of resilience and hard work took us through two years of global pandemic and the most significant remining effect from the Corona period is the use of home office and video conferencing, which both have increased the need for fast and stable internet
connections.

The global effects of the war in Ukraine then created new challenges. High energy prices and inflation were increasing the operational costs for Talkpool, but also this crisis created new business opportunities for energy saving solutions for real estate owners, telecom operators and tower companies. Ongoing customer negotiations and planned projects were delayed during the beginning of the year, but the high sales activity and the demand for energy-saving solutions clearly showed in our books during the latter part of the year.

In October Talkpool AG signed a share purchase agreement for the sale of its shares in Talkpool Netherlands. Talkpool acquired the Dutch company, specialized in camouflaging mobile antenna sites, in October 2016 and developed the business towards towers and mobiles sites implementation and maintenance services.
The full year revenue 2021 had grown from EUR 900 thousand in 2016 to EUR 3 730 thousand with 11% EBITDA. The transaction had a value of about EUR 1 250 thousand, which makes Talkpool’s return on investment, including sales and operational profits since the acquisition exceed 320%. Talkpool AG used the proceeds to repay loans and provide working capital.

In December Talkpool AG paid back the outstanding bond loan of SEK 24 000 thousand plus interest to Nord. Talkpool performed a cash payment of SEK 7 million, that equals slightly more than half of the payment Talkpool AG received from the sale of its holding in the Netherlands. The remaining amount was repaid in Nordic Prop Tech Investment Services shares at a company post-valuation of SEK 86.3 million.

The total annual costs were reduced substantially when loans amounting to about EUR 2.6 million were repaid to the lenders, and assets worth of EUR 3.6 million were sold. These transactions, including the repayment of loans, were important steps in Talkpool’s medium-term strategy to deleverage and concentrate on growth areas which offer an attractive bottom line.

Network Services

Despite the slowdown in the global economy, Talkpool AG continued to receive sizable requests for services and orders from prominent customers in Europe and the USA, markets with a significant demand for 5G and Glass Fibre Network services.

Major network deployment projects in the USA create a high demand for communication networks expertise and services. In December 2021 Talkpool signed a contract with Ericsson USA for a 5G roll out services project in Puerto Rico and in January 2022 Talkpool initiated the first service deliveries. Mid-year the growth pace in the USA was slowed down when the expected proceeds from the sale in Pakistan did not materialise. Ongoing projects continued whereas the mobilisation of resources for new projects was held back. We built relations to several new customer accounts in the USA throughout the year, and we will take care of strategic and profitable opportunities as far as the financing capacity admits.

Talkpool has a long history of delivering mobile network services to vendors and operators in the Americas, and we are glad to be back and work with the latest technology in the region. We have long term plans to invest and grow in this expansive market again and we know that our services are in high demand.

Talkpool has been well established on the German Telecom Network Services Market for many years, but the positive development of the company during 2022 is unprecedented. The growth of over 60% year on year makes it the fastest growing and the third biggest company in the Talkpool group. Many new broadband planners were hired and trained, and the geographical footprint of our planning services was expanded to cover most of eastern and southern Germany. Investments in recruitment, staff competence development and software tools to increase the fibre network planning capacity and quality were done without service delivery interruption or earnings reduction. On the contrary operational costs were reduced through reorganisation and outsourcing. The steady increase in business volume, service areas and geographic footprint in Germany is the fruit of a long and close partnership between Germany’s largest Telecom Network Operator, Deutsche Telekom and Talkpool. The German market’s general demand for optical fiber planning and deployment services is bound to continue for many years to fulfill the political commitments and Talkpool is determined to continue growing to one of the major broadband Network Expert companies in the market.

Caribbean mobile network provider Digicel remained one of Talkpool’s most important clients in 2022. Talkpool has been Digicel’s preferred service partner company for operation and maintenance of its mobile and optical fibre transmission network since 2006 and amid the cumbersome security situation in country, Talkpool could continue supporting Digicel in maintaining a high grade of service in the countrywide network throughout 2022.

Pakistan is the world’s fifth-most populous country, with a population of almost 243 million people. Talkpool’s Pakistan operations continued to operate with high service quality, strengthening its position as Pakistan’s market leader in telecom network services while generating higher profit margins compared to previous years.

IoT

The high inflation continued to create challenges in several countries. High energy prices are increasing the operational costs for Talkpool and its customers, but it is also creating new opportunities for energy saving solutions for real estate owners, telecom operators and tower companies.

The IoT solutions sales in Sweden soared in the fourth quarter and revenue reached an all-time high as the demand for Nordic Proptech’s energy saving solutions and electrical car charging stations increased. For the full year 2022 the merged Swedish IoT company achieved a significant sales increase resulting in over SEK 48 million revenue and positive Earnings before Tax. This financial performance can not only be attributed to the surge of energy prices but also to the launch of a new data collection platform and the establishment of new and strengthened partnerships with prominent industry players such as HSB, Myrspoven, Fastighetsägarna, and KEBA. Furthermore, the competitive IoT device technology and knowledge around LoRa Radio Access, made the submetering solutions more cost competitive.

The primary IoT market driving use cases are still submetering in real estate and smart metering by utility companies. Using smart meters for these applications allows for strengthened control of power- and water management systems, including the detection of leakages and the invoicing service.

The sale of the energy optimization solution, developed together with AI partner Myrspoven, gained speed again also outside of the Nordic countries.

Outside of Sweden, Talkpool’s market units, on the US and European markets in particular, were pursuing local IoT opportunities and initial orders started materialising.

1st Quarter 2023

In January 2023 a 2-year convertible loan with 8% annual interest rate and an option to convert the loan to shares at SEK 6 per share valuation was launched.  Four convertible loan contracts, totalling approximately to EUR 430 thousand were signed in February and the funds have been fully received. Talkpool’s Chairman Magnus Sparrholm and CEO Erik Strömstedt contributed with more than half of the loan amount. The received cash from the convertible loan will mainly be used to amortize other loans according to existing agreements.

In March Talkpool AG signed an agreement to pay back an existing convertible loan of EUR 700 thousand plus interest to Matthias Winter. The whole amount will be repaid in Nordic Prop Tech Investment Services shares at a post-value of SEK 86.3 million. This transaction reduces the remaining debts and financial costs of Talkpool further and generates a significant capital gain.

In March 2022 an SPA for the sale of Talkpool’s shareholding in Pakistan and Saudi Arabia was signed, but later not honoured by the buyer, ZT Group. Due to the challenges with the sale of the Pakistani entity, Talkpool started a process of finding buyers for alternative valuable assets to free up tied capital. In Q1 2023 Talkpool assigned an agent to actively search for a new investor or buyer of Talkpool Pakistan. The proceeds will be used to fuel a new growth phase in Talkpool Group with investments in organic growth as well as acquisitions of communication tech companies, primarily in Europe and the USA. If the sale of Talkpool Pakistan will be closed before August 1, Talkpool is considering using its option to buy back shares in Nordic Propeye in Sweden.

After a period of focus on deleveraging and strengthening the company financially, the management and the board of Talkpool are now looking ahead, revamping the strategy for an exciting future for Talkpool.

The complete report is available on: https://talkpool.com/financial-reports/#investor

For more information, please contact:

Erik Strömstedt, CEO Talkpool
Tel: +41 81 250 20 20
erik.stromstedt@talkpool.com

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. 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 ( http://www.talkpool.com/ )