TELESTE CORPORATION INSIDER INFORMATION 2 October 2020 AT 22:00 EET
TELESTE HAS SIGNED AN AGREEMENT TO SELL ITS SERVICES BUSINESS IN GERMANY TO CIRCET
Teleste has signed an agreement to sell its services business in Germany to Circet Deutschland GmbH, a company of the Circet Group. Circet is the leading European telecom network service provider with activities in France, Ireland, the UK, Spain, Germany and Morocco. Circet provides a wide range of construction, installation and maintenance services for fixed and mobile networks. In 2019, the revenue of Circet was EUR 1.4 billion and the group employed 6300 employees.
Teleste published a stock exchange release on 14 May 2020, according to which as part of its revised strategy and focus on technology business operations and the services of higher added value supporting them, the company has decided to divest its services business in Germany. Teleste has classified the services business of the Germany-based Cableway companies according to IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations” and has reported it according to the standard as from its first quarter 2020 interim report.
The preliminary net purchase price is EUR 8.0 million, which will be paid in cash at the closing. The final purchase price depends on the net working capital and the net debt at the closing date. The closing is subject to approval of the Federal Cartel Office in Germany. We estimate the closing to take place during the fourth quarter of 2020.
By divesting the German services business Teleste will safeguard its capability to invest in growth areas of the technology and the product businesses and improve the financial position. Closing of the share purchase agreement is estimated to increase financial assets of Teleste Group approximately by EUR 7 million and increase the equity ratio by 1 percent point. Teleste will recognize an estimated impairment loss on disposal of the discontinued operations of EUR 6-8 million in its third quarter 2020 interim report. The impairment will be recognized in the net result of the discontinued operations in the profit and loss statement. The extraordinary loss will significantly decrease parent company equity, which is estimated to be EUR 27 million after the divestment.
In 2019, the net sales of the German services operations, classified according to IFRS 5 standard, was EUR 70.1 million, 29.8% of the consolidated net sales of Teleste Group. The net result was EUR -1.3 million in 2019. At the end of 2019 the Cableway companies employed approximately 470 employees.
Board of Directors
CEO Jukka Rinnevaara, phone +358 2 2605 611