EFORE PLC        Stock Exchange Release             July 31, 2019 at 10.00 a.m. 


Efore to sell telecom operations to Chinese Kexin – Approving the offer made cancels previous joint venture plans


Efore Board of Directors has 31.7.2019 accepted the offer made by Shenzhen Kexin Communication Technologies Co. Ltd to acquire Efore Telecommunications business. Accepting the offer discontinues the ongoing Joint Venture negotiations with another Chinese power supply partner.

Acquisition covers the entire Efore Telecommunications business including current product portfolio and Efore brand and name. Following the acquisition 73 Efore employees in Finland, China and Sweden will move to the buyer as old employees. The purchase price on a cash and debt free basis (Enterprise Value) is EUR 6,0 million and the estimated purchase price for the shares is EUR 3,5 million. Purchase price will be paid in cash.

The acquisition will be closed during the second half of this year. The acquisition is conditional among others to the completion of moving all Efore Telecom business to Telecom subgroup, Kexin shareholder meeting acceptance and receiving all required authority approvals. This acquisition, if realized, is expected to result in EUR 0-1 million onetime capital loss for the group and will reduce equity of the parent company.

Telecommunication net sales in 2018 was EUR 18,7 million and result negative. Efore total 2018 net sales was EUR 52,4 million.

This deal gives Efore an opportunity to remarkably renew its business. “Efore has started from Telecommunications business and this has been part of Efore during its entire history. This deal will substantially change the company structure and future. We are developing new strategy, new financial targets and also a new name. We will communicate more about these later. Company future is now developed under the project name “Efore 2.0” and it will focus on two customer centric business lines: Digital Power Systems, which provides digital power supply systems for industry and e.g. rail transport, and Digital Power & Light, which provides power supplies for among others test and measurement equipment, industrial measurement, healthcare and lighting solutions. 2018 end acquisition of Powernet International Oy, company developing power supply systems, was already part of this new strategy under development. Both of these business lines have positive future outlook and the divestment of the telecommunications business brings needed additional resources into the active development of both business lines,” explains Vesa Leino, President and CEO of Efore.

“During the last few years, Efore Telecommunications business has been challenging despite of employee’s strong competences, solid experience and long customer relationships. This deal will be very good for both the employees, customers, subcontractors, buyer’s and seller’s point of view”, Leino continues.

Efore has 21st November 2018 communicated that Efore financial targets for 2019 are to achieve net sales of over EUR 70 million, clearly positive EBITDA (adjusted for non-recurring items) and positive cash flow from business operations. The ongoing operations (Efore excluding Telecommunications business) updated financial targets for 2019 are clearly positive EBITDA (adjusted for non-recurring items) and net sales of EUR 43-47 million.

Founded in 2001, Shenzhen Kexin Communication Technologies is a technology company that supplies technology for 5G mobile networks, IoT and data centres.

“Together with Efore can help us Kexin to develop telecommunications power supply business, expand our business boundaries, and seize the new opportunities in 5G industry. We can also achieve global expansion of our brand, capacity and market, improve the competitiveness of our existing products and realize differentiated pricing of similar products in the competition”, says Mr Yuyi Zhao, Head of Research Institute from Kexin.

Telecommunications business pro forma financial information

Telecommunications business has not been a separately reported segment in Efore financial reporting but Kexin who is purchasing this business will publish following financial information in their own announcement. These financials are based on carve out -calculations and do not include IFRS 16 adjustments and have not been audited.   

Telecommunications business
pro forma financial information EUR million
1-5/20191-12 / 2018
Net Sales10,518,7
EBITDA-0,2-1,6
EBIT-0,8-3,3
   
Assets9,610,2
Liabilities7,76,1
Receivables2,12,9
Net assets1,94,0

Additional information:
Vesa Leino
President and CEO, Efore
telephone: +358 (0)40 759 8956
e-mail: vesa.leino@efore.com

Efore Group is an international company that designs and manufactures power electronics products. The Group’s head office is based in Finland and its sales, marketing and R&D functions are located in Europe and China. The Group also has a sales and marketing unit in the United States. In the financial year ending 31 December 2018, consolidated net sales totalled EUR 52.4 million and the number of Group personnel averaged 406. The parent company's share is quoted on the Nasdaq Helsinki Ltd. www.efore.com