JAN 1 st SEP 30 th 2017

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1 INTERIM REPORT JANUARY SEPTEMBER 2017 JUL 1 st SEP 30 th 2017 Net sales amounted to EUR 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 1 st SEP 30 th 2017 Net sales amounted to EUR 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

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 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 TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

3 internet service across the country by 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 subproject 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 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 % 2.1% Net sales, MEUR Gross margin EBITDA margin TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

4 FINANCIAL DEVELOPMENT KEY FIGURES Q3'17 Q3'16 9 months'17 9 months'16 FY'16 Sales, thousand Sales growth in % 18,3% 3,7% 29,0% 5,1% 11,8% Gross profit, thousand Gross margin 23,4% 12,2% 22,4% 18,4% 18,5% EBITDA, thousand EBITDA margin 2,1% -13,1% 0,2% -3,7% -3,1% EBIT, thousand EBIT margin 1,6% -13,5% -0,3% -4,1% -3,5% NET SALES July - September Net sales for Q3 amounted to EUR 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 Q January - September For the first 9 months in 2017 net sales amounted to EUR thousand corresponding to an increase of 29.0 percent compared to last year. Camouflage and Technetix contributed with revenue of EUR 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 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 Q the net profit amounted to EUR 76 thousand. A profit is reported for the first time since the IPO in May 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. TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

5 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 Operating cash flow, thousand * 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 thousand (373). Payments in relation to the ongoing rights issue of EUR thousand have increased the bank balance. The solidity amounts to 5.3 percent as per 30 September 2017, a decrease compared to 31 December 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 thousand due to an increase in borrowings. Guarantor loans amounted to EUR thousand and loans converted into shares in Q4 amounted to EUR thousand. TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

6 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 in the Talkpool annual report RISKS For information regarding risks please refer to page in the Talkpool annual report 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 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 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 TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

7 SUMMARY OF FINANCIAL REPORTS CONSOLIDATED INCOME STATEMENT Jul-Sep Jan-Sep Jan-Dec EUR Net revenue from goods and services Cost of sales Gross profit Selling expenses Administrative expenses Other operating income & expenses Operating result Financial net Profit/loss before income taxes Income taxes Net profit/loss Net income attributable to: Stockholders of the parent company Minority interests Other information Average number of shares Earnings per share (no dilutive effects) 0,03-0,17-0,09-0,27-0,31 Number of shares, end of period 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 TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

8 CONSOLIDATED BALANCE SHEET September 30 December 31 EUR ASSETS Current assets Cash Trade receivables Other short-term receivables Inventories and unvoiced services Prepaid expenses and accrued income Total current assets Non-current assets Financial assets Investments in associates and joint venture Property, plant and equipment Total non-current assets TOTAL ASSETS LIABILITIES AND EQUITY Current liabilities Trade payables Short-term interest-bearing liabilities Other short-term liabilities Accrued expenses and deferred income Total current liabilities Non-current liabilities Long-term interest-bearing liabilities Total non-current liabilities Total liabilities Equity Stockholders' equtiy Minority interest in equity of subsidiaries Total equity TOTAL LIABILITIES AND EQUITY 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. TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

9 CONSOLIDATED CASH FLOW STATEMENT Jul-Sep Jan-Sep Jan-Dec EUR Operating activities Net profit/loss / adjustment for items not affecting cash flow / increase/decrease of working capital Net cash flow from operating activities Investing activities purchase of property, plant and equipment +/ inflow/outflow from change of financial assets acquisition of subsidiaries (added cash taken over) Net cash flow from investing activities Financing activities + net proceeds from rights issue / issuance/repayment of liabilities / issuance/repayment of interestbearing liabilities Net cash flow from financing activities Currency translation effects Net change in cash Cash, beginning of period Cash, end of period 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. TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

10 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, Share issue, 24 May Net profit/loss Transactions with minority Foreign currency differences Sep 30, Jan 1, Net profit/loss Transactions with minority Goodwill recognized in equity Foreign currency differences Sep 30, 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. TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

11 SALES BY COUNTRY Jul-Sep Jan-Sep Jan-Dec EUR Haiti Benelux Germany Mauritius Tanzania Uganda Botswana Mexico Kenya Other Total net sales by country 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 Operating result (EBIT), per income statement EBIT margin, % 1,6% -13,5% -0,3% -4,1% -3,5% Theoretical amortization of goodwill Theoretical EBIT after goodwill amortization EBIT margin after goodwill amortization, % ,7% -14,0% -2,6% -4,7% -4,2% Net profit/loss, per income statement Theoretical amortization of goodwill Theoretical net profit/(loss) after goodwill amortization TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

12 IMPACT ON BALANCE SHEET September 30 December 31 EUR Equity as per balance sheet Theoretical capitalization of net book value of goodwill Theoretical equity including net book value of goodwill DEFINITION OF KEY INDICATORS Earnings per share EBITDA EBIT Solidity Adjusted solidity Return on equity Net cash/debt Period net profit/loss in relation to average number of shares for the period Earnings Before Interest Tax Depreciation and Amortization Earnings Before Interest and Tax Equity in percentage of total assets Theoretical equity including net book value of goodwill in percentage of total assets Net profit/loss in relation to equity Net of interest-bearing liabilities minus cash and bank, excluding tax receivables/liabilities TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER

13 FOR FURTHER INFORMATION, PLEASE CONTACT: Erik Strömstedt, CEO Telephone: Hanna Rubensson, CFO Telephone: TALKPOOL Gäuggelistrasse 7 Telephone: CH-7000 Chur Mail: info@talkpool.com Switzerland Web: CALENDAR Year-end report January-December March 2018 Annual Report 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 CET on 30 November TALKPOOL INTERIM REPORT JANUARY-SEPTEMBER