Pursuant to relevant legislation, the company Poslovni sistem Mercator, d.d., hereby informs the shareholders and the public of the following:


Mercator Group Performance in the First Quarter of 2010 Stable and Consistent With Plans

Economic circumstances brought about by the global financial crisis remained harsh and unpredictable in the first quarter of 2010. In addition to the changes in the composition and volume of consumption, credit risk, particularly risk of payment defaults, has increased, which in turn affected wholesale revenues. Furthermore, foreign exchange risk remains high particularly in Serbia.

Despite the strenuous environment, Mercator Group generated EUR 637 million of revenue in the first quarter of 2010. Assuming constant exchange rates, this would have been a 3.9 percent growth over the corresponding period of last year; accounting for the actual exchange rate changes, revenue rose by 3.2 percent. As much as 36 percent of the Group's total revenue was generated in foreign markets. The takeover of trade operations of the company Getro, d.d., in Croatia, and last year's investments into retail network positively affected the revenue growth at the Group level. On the other hand, a drop in wholesale revenues due to increased credit risk, adverse trends in sales of hardware and electronics, and textile program, and the changes in the Serbian dinar exchange rate had a negative effect on the Group’s revenue growth.

Mercator Group EBITDAR in the first quarter of 2010 reached EUR 51.9 million. This is a 2.7 percent growth assuming fixed exchange rates, and 1.7 percent growth when actual exchange rates are accounted for. The figure also amounts to 25.6 percent of the annual EBITDAR planned for this year. Stable generation of cash flows from operating activities points to solid financial power and development capacity of the Group, despite economic hardship.

In the first quarter of 2010, Mercator's development and investment activities proceeded as planned. In the period, the Group invested EUR 32.8 million into property, plant, and equipment. This included activating a total of 122,712 square meters of gross trade area through leases and investments in all markets. Of this figure, the major part represents the strategic combination with the Croatian trade company Getro.

The Group's financial operations also proceeded smoothly in the first quarter, progressing as planned. Harnessing its financial power, solid liquidity, and favorable access to short-term financing sources, the Group settled many of its payables to suppliers prematurely in the first quarter of the year, thus improving the liquidity in the markets, as well as making use of the early payment discounts to further enhance its performance.

The Business Report of the company and the Mercator Group for the first quarter of this year was also presented to the Supervisory Board of the company Poslovni sistem Mercator, d.d., at their meeting, held on May 11th 2010. Please find the interim report attached.

The Supervisory Board formulated and adopted the agenda of the ordinary shareholder’s meeting, which will be convened by the Management Board presumably in the first half of July.


This announcement will be published on the company’s website at www.mercator.si as of May 12th 2010, and will remain posted for a period of at least five years.