INTERIM REPORT JANUARY SEPTEMBER 2017mb.cision.com/Main/14365/2403719/760290.pdf · TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER 2017 4 FINANCIAL DEVELOPMENT KEY FIGURES Q3'17 Q3'16

JUL 1st – SEP 30

th 2017

Net sales amounted to EUR 3 360 thousand (2 842), a

18.3 percent increase

EBITDA of EUR 69 thousand (-373) and EBITDA

margin of 2.1 percent (-13.1)

EBIT of EUR 53 thousand (-384) and EBIT margin 1.6

percent (-13.5)

Profit after tax of EUR 76 thousand (-454).

Cash flow from operating activities amounted to EUR

-355 thousand (-1 193)

JAN 1st – SEP 30

th 2017

Net sales amounted to EUR 10 257 thousand (7 950),

a 29.0 percent increase

EBITDA of EUR 25 thousand (-298) and EBITDA

margin of 0.2 percent (-3.7)

EBIT of EUR -27 thousand (-329) and EBIT margin -0.3

percent (-4.1)

Loss after tax of EUR -229 thousand (-520).

Cash flow from operating activities amounted to EUR

-188 thousand (-1 121)

JULY - SEPTEMBER HIGHLIGHTS

Talkpool reports a net profit (of EUR 76 thousand) for the first time since its IPO

Camouflage signed an important 3,5 years contract with tower company Cellnex in the Netherlands

The subscription period for the new share issue for the financing of LCC Pakistan started 25 September

Talkpool took over the O&M activities in northern Haiti from competitor Camtel

The Deutsche Telekom FTTH project in eastern Germany gained speed and started generating profit

Talkpool Mexico doubled revenue and four-folded the profit compared to Q2

Talkpool with partners won the Vinnova IoT project for digital environmental monitoring in western

Sweden

INTERIM REPORT

JANUARY – SEPTEMBER 2017

TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER 2017 2

THIS IS TALKPOOL

TalkPool builds, maintains and improves

telecommunication networks 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.

CEO COMMENTS The positive trend in terms of revenue, profits and cash flow continued in the third quarter (Q3) of 2017. In spite of extraordinary costs for the share emission and project ramp up in Haiti, Talkpool hereby reports a net quarterly profit (of EUR 76 thousand) for the first time since its IPO. The acquired companies Camouflage and Technetix developed according to our best case scenario. Talkpool´s IoT business transformed in Q3 as costs were reduced and client orders increased.

The revenue growth continued and order intake was much better than expected as many of our markets developed well, with additional contracts and increasing order volumes. Organic growth with network operators in the Caribbean and Germany gained momentum and our acquired companies Camouflage and Technetix continued to perform well in Q3. Camouflage signed an important 3,5 years contract with tower company Cellnex for preventive maintenance of 720 radio sites in the Netherlands. The long-term maintenance contract provides Talkpool with recurring orders and a revenue stream that is valuable for the financial stability and growth of the company. This contract is the first of its kind for Talkpool in the Netherlands and it will create various opportunities for additional maintenance contracts in the country. Thanks to two months of revenue from the new contract and a slight increase in revenue in its core business, Camouflage increased the total revenue with almost 50 percent and increased EBITDA with 35 percent compared to Q2. Technetix in Belgium showed stable sales growth, as the positive order trend from European network operators such as Deutsche Telekom, Belgacom, Vodafone and Orange continued in Q3. Talkpool started the preparations for taking over the O&M activities for Digicel in northern Haiti from competitor Camtel. The profit margins temporarily decreased in Q3 as restructuring and ramp-up costs hit the results immediately whereas revenue growth lagged during the transition period in Q3. After the transition, Talkpool´s responsibility will include support for Access Network and Power and Environment Maintenance on 1,443 BTS sites (previously 950 sites). The transition continued into October when Talkpool took full responsibility for fiber optic maintenance in the north and Fuel Management services across the nationwide network. The positive trend in Mexico continued in Q3 as Talkpool Mexico expanded work with Nokia and Ericsson. The outlook for the Mexican economy in general is positive and there are a number of good opportunities with different customers. Talkpool was selected best ASP for TSS in the Nokia Red Compartida long-term project and the feedback from Ericsson was very positive as well.

The broadband network planning project with Deutsche Telekom in Germany gained speed in Q3. Talkpool is now an established provider of broadband network design and project management services to Deutsche Telekom in the big government-sponsored fiber build-out in Germany. The federal government in Germany plans to roll out a gigabit


internet service across the country by 2025. The EUR 100 billion project will focus on bandwidth, security and response times. The development, including virtual reality and the internet of things, will bring huge data growth and the need for more bandwidth, reliable real-time transmission and intelligent networks.

Talkpool Mauritius was struggling to catch up with delays in commissioning in the fiber network project for Huawei. The costs for extra works caused by the delays had a clear negative impact on Talkpool´s revenue and profit in Q3.

Sweden´s innovation agency Vinnova awarded SEK 12 million in July to an IoT project for digital environmental monitoring project in west Sweden. Talkpool has a leading technology providing role in the consortium and we estimate Talkpool’s share to be approximately SEK 2 million out of the total 12 million funding. The consortium partners are developing a new and more efficient system for the gathering of information about air and water quality in cities and the newly developed wireless sensors utilize Talkpool's communication solution. Talkpool leads the sub-project for water monitoring. This IoT solution is based on Talkpool’s technology, which makes it possible to monitor when wastewater is dispersed into the water system and unleashed in nature. This project is an important milestone in Talkpool´s business development plan in the Smart Cities vertical. We don’t believe that there currently are other similar solutions available so this has the potential to generate similar projects in other cities in Sweden and around the world. Talkpool AB has undergone a transformation in Q3 as costs have been reduced and client orders have increased. The company is moving on from performing pilot projects with proof of concept with many clients towards delivering commercial solutions to paying clients. Investments were made in all three focused verticals(Smart Buildings, Smart Cities and Smart Industries)and ongoing promising customer negotiations could soon lead to break through orders.

Talkpool's board of directors worked on an issue of new shares amounting to approximately SEK 32.9 million. This work was finally concluded in October and the proceeds was used to part-finance the acquisition of LCC Pakistan (Pvt) Ltd. The lengthy and complex emission did however require a lot of time from the management team and the significant costs partly hit the profit. Through the acquisition, Talkpool becomes the leading provider of network services in Pakistan and gains a strong hub in the Middle East. LCC Pakistan has a long history of good stability and high profitability; the company generated revenues of approximately EUR 10 million in 2016. Q4 started off well as the new share issue was almost 3 times over-subscribed when the subscription period closed on 9 October. In October Talkpool also signed a 10-year global framework agreement with Digicel Group for the delivery of telecom network operation and maintenance services to all of Digicel's 33 markets throughout world. Furthermore Digicel Haiti signed a five years O&M contract with Talkpool, with the extended scope from 950 mobile sites to 1,450, which encompasses Digicel´s complete network in Haiti. Finally the purchase of 100 percent of the shares in LCC Pakistan was successfully completed on the 9

th of November. This is Talkpool’s biggest and most important acquisition

so far and it contributes substantially to achieving the first phase target in Talkpool’s growth strategy, which states that we’re buying profitable niche companies that are performing Network Services. In the second development phase, Talkpool will leverage its position in network services and focus on growing its IoT business through M&A of promising IoT-companies as well as the development of in-house smart IoT-Solutions. Erik Strömstedt, CEO

3.4 Net sales, MEUR

23% Gross margin

2.1% EBITDA margin


FINANCIAL DEVELOPMENT

KEY FIGURES

Q3'17 Q3'16 9 months'17 9 months'16 FY'16

Sales, € thousand 3 360 2 842 10 257 7 950 11 571

Sales growth in % 18,3% 3,7% 29,0% 5,1% 11,8%

Gross profit, € thousand 788 346 2 298 1 460 2 142

Gross margin 23,4% 12,2% 22,4% 18,4% 18,5%

EBITDA, € thousand 69 -373 25 -298 -364

EBITDA margin 2,1% -13,1% 0,2% -3,7% -3,1%

EBIT, € thousand 53 -384 -27 -329 -409

EBIT margin 1,6% -13,5% -0,3% -4,1% -3,5%

NET SALES

July - September

Net sales for Q3 amounted to EUR 3 360 thousand, which is an increase with 18.3 percent compared to the same period last year. Revenue in the Carribbean was relatively low in Q3 as Talkpool ramped up delivery capabilities and hired additional staff through a new contractual scheme. Camouflage and Technetix had a strong quarter, contributing with revenue of EUR 939 thousand. Mexico expanded its work with Ericsson and Nokia resulting in increased revenues. Due to delays in projects, revenue in Mauritius decreased with EUR -357 thousand compared to Q3 2016.

January - September

For the first 9 months in 2017 net sales amounted to EUR 10 257 thousand corresponding to an increase of 29.0 percent compared to last year. Camouflage and Technetix contributed with revenue of EUR 2 277 thousand but also revenue from new contracts in existing business contributed to this growth.

EBITDA AND EBIT

July - September

The EBITDA was positive by EUR 69 thousand for Q3, corresponding to an EBITDA margin of 2.1 percent. Compared to the same period last year, with an EBITDA margin of -13.1 percent, this is a significant improvement. The gross margin has increased from 12.2 percent to 23.4 percent. The newly acquired companies, Camouflage and Technetix, have shown continued strong gross margins of over 30 percent. EBIT for Q3 was EUR 53 thousand with an EBIT margin of 1.6 percent.

January - September

The EBITDA was EUR 25 thousand for the first 9 months 2017, with an EBITDA margin of 0.2 percent.

NET PROFIT/LOSS

July - September

In Q3 2017 the net profit amounted to EUR 76 thousand. A profit is reported for the first time since the IPO in May 2016. The financial net was positive in Q3 mainly due to exchange rate gains related to revaluation of bank accounts in the parent company.

January - September

For the first 9 months 2017 the net loss amounted to EUR -229 thousand.


FINANCIAL POSITION AND CASH FLOW

KEY FIGURES

Q3'17 Q3'16 9 months'17 9 months'16 FY'16

Solidity 5,3% 22,9% 5,3% 22,9% 21,8%

Adjusted solidity* 31,7% 25,4% 31,7% 25,4% 31,7%

Return on equity 19,0% -39,1% -60,9% -44,2% -52,0%

Net cash/debt, € thousand 717 -791 717 -791 -748

Operating cash flow, € thousand -355 -1 193 -188 -1 121 -1 337

* Calculated based on adjusted total assets and equity, as if goodwill was capitalized and amortized.

BALANCE SHEET AND FINANCIAL POSITION

30 September 2017

As of 30 September 2017 the net cash amounted to EUR 717 thousand, with cash amounting to EUR 3 811 thousand (373). Payments in relation to the ongoing rights issue of EUR 2 188 thousand have increased the bank balance. The solidity amounts to 5.3 percent as per 30 September 2017, a decrease compared to 31 December 2016. This is mainly explained by a decrease in equity due to the loss in the period January to September but also due to goodwill related to the acquisition of Technetix which has been accounted for in equity. The solidity calculated based on adjusted total assets and equity, as if goodwill was capitalized and amortized, amounts to 31.7 percent.

CASH FLOW AND INVESTMENTS

July - September

Operating cash flow was negative by EUR -355 thousand, which is manily explained by a negative change in working

capital. The increase in working capital is caused by an increase in accounts receivable, inventories and uninvoiced

services compared to Q2.

No major investements were made in Q3. However, consideration for the acquisition of Camouflage and Technetix was paid in Q3, in total EUR 166 thousand.

January - September

As per 30 September cash flow from operating activities was negative by EUR -188 thousand. The total cash flow for the

period was positive by EUR 3 324 thousand due to an increase in borrowings. Guarantor loans amounted to EUR -1 283

thousand and loans converted into shares in Q4 amounted to EUR -2 188 thousand.


OTHER DISCLOSURES

ACCOUNTING PRINCIPLES

The consolidated interim report is based on uniform accounting principles for all group companies. The parent company, Talkpool AG, is a Swiss company and is governed by Swiss law and accounting principles. The consolidated interim report has been prepared in compliance with the Swiss Code of Obligations (Art. 957 to 963b CO). As per 31 December 2016, the group changed its goodwill accounting from capitalization and amortization to offsetting against equity. The figures from previous quarters have been restated and adjusted accordingly. The effects of the theoretical capitalization and amortization, including any impairment from valuation assessments are shown in section “Change in accounting principle”. For further information regarding applied accounting principles please refer to page 24-27 in the Talkpool annual report 2016.

RISKS

For information regarding risks please refer to page 10-13 in the Talkpool annual report 2016.

EMPLOYEES

At September 30, the number of staff was 235 (219).

SIGNIFICANT EVENTS AFTER THE PERIOD

TalkPool conducted a new share issue of SEK 37.9 million on Nasdaq First North to support acquisition of LCC Pakistan. The shares were offered at SEK 22 per share, comprising of a total of 1 723 384 newly issued shares. The successful new share issue was announced on 11 October. The acquisition of LCC Pakistan was closed on 9 November. LCC PAK has approximately 1,000 employees and a revenue of EUR 10 million in 2016.

CERTIFIED ADVISOR

Remium Nordic AB is TalkPool’s Certified Advisor.

AUDITOR’S REVIEW

This interim report has not been audited by the company’s auditors. Chur, 30 September 2017 Erik Strömstedt, CEO, TalkPool AG


SUMMARY OF FINANCIAL REPORTS

CONSOLIDATED INCOME STATEMENT

Jul-Sep Jan-Sep Jan-Dec

EUR 2017 2016 2017 2016 2016

Net revenue from goods and services 3 360 200 2 841 518 10 256 522 7 950 088 11 571 073

Cost of sales -2 572 566 -2 495 771 -7 958 970 -6 490 067 -9 428 625

Gross profit 787 634 345 747 2 297 552 1 460 021 2 142 449

Selling expenses -29 276 -63 157 -86 141 -136 199 -327 454

Administrative expenses -585 228 -599 581 -1 919 106 -1 657 803 -2 261 847

Other operating income & expenses -120 388 -67 194 -319 482 5 258 38 250

Operating result 52 743 -384 184 -27 176 -328 722 -408 602

Financial net 56 318 -116 353 -139 560 -257 168 -261 448

Profit/loss before income taxes 109 061 -500 537 -166 736 -585 890 -670 050

Income taxes -33 351 46 720 -62 154 66 281 5 717

Net profit/loss 75 710 -453 817 -228 890 -519 609 -664 333

Net income attributable to:

Stockholders of the parent company 83 317 -467 579 -267 211 -528 746 -693 445

Minority interests -7 607 13 762 38 321 9 136 29 112

Other information

Average number of shares 2 992 222 2 770 000 2 992 222 1 987 033 2 224 566

Earnings per share (no dilutive effects) 0,03 -0,17 -0,09 -0,27 -0,31

Number of shares, end of period 2 992 222 2 770 000 2 992 222 2 770 000 2 992 222

Earnings per share (no dilutive effects) 0,03 -0,17 -0,09 -0,19 -0,23

As per 31 December 2016, goodwill acquired is no longer capitalized and depreciated, but offset against equity. The figures from previous quarters have been restated and adjusted accordingly. For the effects of the change in accounting principle, please see “Change of accounting principle”.

The registered number of shares at the beginning and the end of the period was 2 992 000.


CONSOLIDATED BALANCE SHEET

September 30 December 31

EUR 2017 2016 2016

ASSETS

Current assets

Cash 3 811 107 373 396 486 928

Trade receivables 2 590 272 1 592 387 2 394 658

Other short-term receivables 537 367 438 709 476 926

Inventories and unvoiced services 2 206 590 1 917 009 1 636 393

Prepaid expenses and accrued income 419 022 188 965 167 061

Total current assets 9 564 358 4 510 466 5 161 965

Non-current assets

Financial assets 576 533 548 517 580 568

Investments in associates and joint venture 67 547 6 791 107 633

Property, plant and equipment 250 940 209 327 253 307

Total non-current assets 895 020 764 636 941 509

TOTAL ASSETS 10 459 378 5 275 101 6 103 474

LIABILITIES AND EQUITY

Current liabilities

Trade payables 1 974 276 1 468 702 1 842 160

Short-term interest-bearing liabilities 1 685 927 256 695 210 024

Other short-term liabilities 3 088 283 511 855 559 676

Accrued expenses and deferred income 1 745 925 770 269 1 046 501

Total current liabilities 8 494 411 3 007 521 3 658 360

Non-current liabilities

Long-term interest-bearing liabilities 1 408 573 1 060 569 1 051 331

Total non-current liabilities 1 408 573 1 060 569 1 051 331

Total liabilities 9 902 984 4 068 090 4 709 691

Equity

Stockholders' equtiy 438 658 1 197 082 1 332 398

Minority interest in equity of subsidiaries 117 736 9 929 61 385

Total equity 556 394 1 207 012 1 393 783

TOTAL LIABILITIES AND EQUITY 10 459 378 5 275 101 6 103 474



CONSOLIDATED CASH FLOW STATEMENT


EUR 2017 2016 2017 2016 2016

Operating activities

Net profit/loss 75 710 -453 817 -228 890 -519 609 -664 333

+/– adjustment for items not affecting cash flow

52 317 11 615 191 592 31 200 117 539

+/– increase/decrease of working capital -482 903 -750 911 -150 254 -632 753 -790 126

Net cash flow from operating activities -354 876 -1 193 113 -187 552 -1 121 162 -1 336 920

Investing activities

– purchase of property, plant and equipment

-21 148 -27 422 -79 563 -131 495 -175 344

+/– inflow/outflow from change of financial assets

- -86 864 -110 792 -86 864 -186 806

– acquisition of subsidiaries (added cash taken over)

-165 500 -23 373 -473 936 -23 373 -508 475

Net cash flow from investing activities -186 648 -137 659 -664 291 -241 732 -870 625

Financing activities

+ net proceeds from rights issue - -40 931 - 806 682 1 817 006

+/– issuance/repayment of liabilities 2 188 689 - 2 188 689 - -

+/– issuance/repayment of interest-bearing liabilities

404 918 131 572 2 034 126 339 333 289 398

Net cash flow from financing activities 2 593 607 90 641 4 222 815 1 146 015 2 106 404

Currency translation effects -19 926 -12 888 -46 792 -5 140 -7 346

Net change in cash 2 032 157 -1 253 019 3 324 180 -222 019 -108 487

Cash, beginning of period 1 778 950 1 626 415 486 928 595 415 595 415

Cash, end of period 3 811 107 373 396 3 811 107 373 396 486 928



CHANGES IN EQUITY

EUR

Share capital

Capital reserves

Cumulative foreign

translation adjustment

Retained earnings

Goodwill recognized

Total equity

excl. minority interests

Share of minority interests

Total equity incl.

minority interests

Jan 1, 2016 71 645 158 601 428 660 440 425 -307 093 792 238 - 792 238

Share issue, 24 May 25 652 766 908 - - - 792 560 - 792 560

Net profit/loss - - - -528 746 - -528 746 9 136 -519 609

Transactions with minority - - - - - - 128 128

Foreign currency differences - - 141 030 - - 141 030 665 141 695

Sep 30, 2016 97 297 925 509 569 690 -88 321 - 1 197 082 9 929 1 207 012

Jan 1, 2017 107 553 1 939 699 483 705 -253 020 -945 540 1 332 398 61 385 1 393 782

Net profit/loss - - - -267 211 - -267 211 38 321 -228 890

Transactions with minority - - - 26 695 - 26 695 23 305 50 000

Goodwill recognized in equity - - - - -662 087 -662 087 - -662 087

Foreign currency differences - - 8 864 - - 8 864 -5 275 3 589

Sep 30, 2017 107 553 1 939 699 492 568 -493 536 -1 607 627 438 658 117 736 556 394



SALES BY COUNTRY


EUR 2017 2016 2017 2016 2016

Haiti 1 364 409 1 576 883 4 104 546 4 666 790 6 333 441

Benelux 939 089 - 2 277 381 - 96 868

Germany 414 094 285 839 1 166 003 731 303 1 394 592

Mauritius 93 731 450 410 740 866 654 831 1 170 970

Tanzania 173 377 204 973 779 376 913 916 1 166 369

Uganda 169 124 237 565 424 997 510 885 726 138

Botswana 41 709 13 704 232 529 169 733 292 144

Mexico 144 310 14 386 267 536 59 163 89 892

Kenya - - 8 436 161 636 162 918

Other 20 358 57 758 254 852 81 831 137 739

Total net sales by country 3 360 200 2 841 518 10 256 522 7 950 088 11 571 073

The performance of the group is monitored on a country and region basis. The Board of Directors and management assess the business performance from a geographical point of view based on the country of each business operation, independent on legal entities. These segments are the basis of strategic decisions.

CHANGE OF ACCOUNTING PRINCIPLE From 2016, and with previous years restated and adjusted, goodwill is recognized directly in equity at the time of purchase of a subsidiary or an investment in an associated company. The theoretical capitalization of goodwill, based on a useful life of 5 years, would have the following impact on equity and net income:

IMPACT ON INCOME STATEMENT

Jul-Sep Jan-Sep Full-year

EUR 2017 2016 2017 2016 2016

Operating result (EBIT), per income statement

52 743 -384 184 -27 176 -328 722 -408 602

EBIT margin, % 1,6% -13,5% -0,3% -4,1% -3,5%

Theoretical amortization of goodwill -75 724 -14 455 -234 670 -43 315 -81 062

Theoretical EBIT after goodwill amortization

-22 981 -398 638 -261 846 -372 037 -489 664

EBIT margin after goodwill amortization, %

-0,7% -14,0% -2,6% -4,7% -4,2%

Net profit/loss, per income statement 75 710 -453 817 -228 890 -519 609 -664 333

Theoretical amortization of goodwill -75 724 -14 455 -234 670 -43 315 -81 062

Theoretical net profit/(loss) after goodwill amortization

-14 -468 272 -463 560 -562 924 -745 395


IMPACT ON BALANCE SHEET

September 30 December 31

EUR 2017 2016 2016

Equity as per balance sheet 556 394 1 207 012 1 393 783

Theoretical capitalization of net book value of goodwill 1 188 552 178 529 787 116

Theoretical equity including net book value of goodwill 1 744 946 1 385 541 2 180 899

DEFINITION OF KEY INDICATORS Earnings per share Period net profit/loss in relation to average number of shares for the period EBITDA Earnings Before Interest Tax Depreciation and Amortization EBIT Earnings Before Interest and Tax Solidity Equity in percentage of total assets Adjusted solidity Theoretical equity including net book value of goodwill in percentage of total assets Return on equity Net profit/loss in relation to equity Net cash/debt Net of interest-bearing liabilities minus cash and bank, excluding tax

receivables/liabilities


FOR FURTHER INFORMATION, PLEASE CONTACT: Erik Strömstedt, CEO Telephone: +41 79 790 60 40 [email protected] Hanna Rubensson, CFO Telephone: +46 73 140 48 40 [email protected]

TALKPOOL Gäuggelistrasse 7 Telephone: +41 81 250 20 20 CH-7000 Chur Mail: [email protected] Switzerland Web: www.talkpool.com

CALENDAR

Year-end report January-December 2017 30 March 2018 Annual Report 2017 4 May 2018

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 09.00 CET on 30 November 2017.

Documents

INTERIM REPORT JANUARY SEPTEMBER 2017mb.cision.com/Main/14365/2403719/760290.pdf · TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER 2017 4 FINANCIAL DEVELOPMENT KEY FIGURES Q3'17 Q3'16