RIGA - ELKO Group, a distributor of IT products and household appliances, has signed an agreement to sell all of its shares in all subsidiaries in Russia and is starting a separation of operational and technical business processes, the company announced to the Nasdaq Riga Stock Exchange.
ELKO Group has received permission from all parties involved to divest two subsidiaries in Russia - Elko Rus and retail building Absolut. The change of ownership was officially registered on April 25, 2022.
Since the beginning of the war in Ukraine, ELKO Group has stopped supplying goods to the Russian market. Following the imposition of international sanctions, and as a result of public pressure, several leading IT manufacturers have also announced that they too will leave the Russian market, the company informs.
Along with the change of ownership of ELKO Group's subsidiaries in Russia, the transfer of the respective assets and the separation of business processes has started on both an operational and systems level. A transition period has been set for this process, and it will be implemented in several stages over a period of one year.
The risks related to the Russian market will decrease as a result of this transaction, and it will also improve the capitalization of the balance sheet of ELKO Group. The Group's equity and interest coverage ratios are expected to improve, the share of borrowed funds will decrease, the Russian ruble currency exchange rate risk will be eliminated and total operating expenses will go down. This creates the opportunity for continued business development in other markets, the company goes on to say.
The ELKO Group is one of the region's largest distributors of IT and consumer electronics products and solutions, representing 400 IT manufacturers. The company provides a wide range of products and services to more than 10 000 retailers, local computer manufacturers, system integrators and enterprises within various sectors in 11 countries in Europe.
As reported, in 2021 Elko Grupa turned over EUR 1.853 billion in preliminary turnover, a decrease of 3.2 percent on 2020, as the company's profit increased by 30.4 percent to EUR 39.429 million.
Joint-stock company Elko Grupa was registered in May 1993 and has a share capital of EUR 9.901 million. Elko Group bonds are listed on Nasdaq Riga alternative market First North.