Ermes sells ERA department stores to Gencom, which has assumed all obligations for the nominal sum of €1

Following the recent sale of Superhome Center (DIY), Ermes Department Stores Plc, a subsidiary of the CTC group, has proceeded with the sale of all four ERA department stores, namely ERA Mall of Cyprus Nicosia, ERA Apollon Limassol, ERA Zenon Larnaca and ERA Korivos Paphos.

The stores were sold to Gencom Ltd, with the sale price amounting to the nominal amount of €1.00 (one euro).

Under the agreement, Ermes is transfering to Gencom its obligations from the long-term lease contracts of the department stores, while at the same time Gencom is assuming all obligations in relation to the orders for the spring/summer 2025 season that are pending with suppliers, amounting to approximately €4.5 million.

Additionally, all department store personnel will be transferred to the new owner, while the equipment and furnishings of the department stores, as well as the UNIQUE customer loyalty program, will be transferred to Gencom as is, on the date of completion of the agreement.

Also, the inventory remaining in the department stores on the date of completion of the transaction will be made available to the buyer using the consignment method.

At the same time, under the agreement, Ermes will provide significant services to Gencom, at an agreed price, until the end of 2025.

As stated in a CTC announcement, this decision constitutes an implementation of the group's strategic choice to rationalise Ermes Department Stores Plc and focus on the sectors in which it already operates with significant success.

It is noted that the sale is subject to the approval of the Cyprus Competition Commission and the fulfillment of certain additional conditions relating to the parties.

The announcement states that Ermes Department Stores has been a pioneer in the retail and department store sector in Cyprus for many decades, contributing significantly to the Cypriot economy and creating value for its customers, partners and employees.

The agreement for the disposal of the activities of the ERA department stores, it is emphasised, ensures the continuity of the brand / concept that the company established in the Cypriot market, as well as the continuation of both the employment of the department store staff and the cooperation with several of the department store's existing suppliers.

As further explained, the CTC group made the decision after an extensive assessment of the economic situation and the business environment.

It is added that this action is part of a broader restructuring strategy which, in addition to streamlining the operations of Ermes Department Stores Plc, also aims to strengthen the financial soundness and competitiveness of the Group's other important activities, which include:

• Argosy Trading Co. Ltd. Importer, distributor and manager of fast-moving consumer goods (FMCG), cosmetics and luxury fragrances. Its portfolio includes, among others, the following suppliers: Kellogg (Kellogg's, Pringles), Mars (Mars, Galaxy, Twix etc.), Reckitt Benckiser (Dettol, Finish etc.), Danon (Activia), JDE (Jacobs, L'Or), Mondelez (7days, Lacta, Oreo). Argosy is also a major supplier in the Food Service/HORECA sector.
• Cassandra Trading Ltd. Importer and distributor of Philip Morris tobacco products and new tobacco products (IQOS), as well as managing IQOS stores.
• Artview Co. Ltd. In the cosmetics and perfumes sector, it manages the luxury products of Christian Dior.
• CTC Automotive Ltd. Trades vehicles and heavy machinery such as Volvo Cars, Hyundai, Iveco, Scania, Caterpillar, as well as Michelin tires, Total lubricants, Hilti tools, etc.

These are, it is indicated, companies with excellent growth prospects, which continue to play a dynamic role in the Cypriot market, at the same time as - as noted - CTC also maintains its investment and contribution in Hermes Airports Ltd for the development and management of Larnaca and Paphos airports.

The agreement and the price

It is noted that details regarding the agreement between CTC Group and Gencom Ltd are included in an announcement by the company posted on the CSE.

According to the announcement, Announcement Disposal of the ERA Department Stores Business of Ermes Department Stores Plc to Gencom Ltd The public company Ermes Department Stores Plc (“Ermes”) hereby announces that its Board of Directors has approved the disposal of the business operations of its four ERA department stores, as a going concern, to Gencom Ltd, a company registered under number HE471175, with its registered office at 9 Nicodimou Mylona Street, Nicholson House, 1070 Nicosia (the “Buyer”).

The disposal is subject to the approval of the Cyprus Commission for the Protection of Competition and the fulfillment of certain additional conditions agreed between the parties. The consideration for the Department Stores business is forthe nominal sum of €1.00, based on additional commercial terms as set out below. Specifically, as part of this disposal, Ermes shall transfer to the Buyer its obligations arising from the long-term lease agreements of the Department Stores.

At the same time, the Buyer will assume all outstanding obligations related to supplier purchase orders for the Spring/Summer 2025 season, totaling approximately €4.5 million. Furthermore, all employees of the Department Stores will be transferred to the Buyer. The equipment and furnishings of the Department Stores, as well as the UNIQUE customer loyalty program, will also be transferred to the Buyer on an "as is" basis, as at the transaction closing date.

Any inventory remaining in the department stores at the closing date of the transaction will be provided to the Buyer on a consignment basis. Ermes will also provide certain essential services to the Buyer, for an agreed fee, until the end of 2025. Ermes was incorporated in Cyprus in 2002 and has since been engaged in the retail and wholesale trade in Cyprus through department stores and specialised outlets.

The department store business has been loss-making for the Company, recording operating losses amounting to €1.3 million in the year 2024. Through this disposal, Ermes is released from future obligations , as any attempt to reverse or improve the financial performance of this particular business would require significant investments in infrastructure (renovation and improvement of premises, upgrade of IT systems, etc.) as well as the financing of a substantially increased level of working capital. In determining the value of the transaction, the Board of Directors of Ermes relied on the aforementioned commercial and financial data and, under the circumstances, deemed the transaction and the consideration to be fair and reasonable.

No external advisors or experts were appointed, nor were any related opinions obtained regarding the structuring of the transaction. This transaction does not involve or affect any interests of any Secretary of the issuer or any “designated person,” as defined under Article 137(3) of the Cyprus Securities and Stock Exchange Laws, Law No. 14(I)/1993 as amended. Upon completion of the disposal,

Ermes will recognise an accounting gain of €1 million, primarily due to the reversal of a related provision recorded in the Company's books in accordance with IFRS 16 – Leases. The transaction is considered fair and beneficial to the Company, as it will positively contribute to the rationalisation of its financial position and will be beneficial for CTC Group and its shareholders.

(Source: InBusinessNews)