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

Mercator Supervisory Board confirmed at their regular session held on October 18, 2012, the medium-term business plan for the Mercator Group. In the period ahead, Mercator Group will focus further on its core activity in the Group's five top markets, both in terms of contents and geographically. In order to attain the strategic goals laid down, the Group will commit its efforts to the key pillars of its operations: optimization (simplifying organization and processes, attaining target productivity, optimization of all expenses, financial stability), profitability, focus (on the countries with growth potential, on the consumer, and on the core activity) and growth.

Reversing the performance trends already in 2013

Mercator Group is planning to generate EUR 2.9 billion of revenue and EUR 3 million of net profit in 2013, thus reversing the negative trends that have persisted for a while. According to the strategy, operating profit is expected at 4 % of revenue (EBIT margin) in 2016, which would place Mercator Group above the average for this indicator relative to the competition form the industry in recent years. Mercator Group Management Board has therefore adopted several measures which are already being implemented and which will improve the cost efficiency and allow optimization of business activities. This includes a considerable cut in administrative expenses.

Positive effects of the adopted measures and new approaches in marketing will be partly manifest in the operating results for 2013, and more pronouncedly in 2014 and beyond. A part of the savings generated will be shared with our customers as we make or offer even more competitive and further improve their satisfaction.

In the strategy, profit is planned at EUR 77 million for the year 2016.

Curbing expansion

Investment activities in the coming medium-term period will be restricted and focused only on the investments with the highest potential for growth and profit. Thus, Mercator Group is planning to invest a total of EUR 280 million in the period 2013 – 2016.

Mercator Group revenue for 2016 is planned at EUR 3.3 billion, which means that average annual revenue growth rate will amount to 3.5 percent.

Slashing the debt already in 2013

Mercator Group is further pursuing the monetization project in order to reduce its overall debt. The project is scheduled for December 2012. Proceeds from the sale and leaseback of property will be used to reduce the debt. Throughout 2013 and 2014, divestment will also be a priority. Monetization project and divestment of non-core assets will allow the Group to slash its debt by approximately EUR 300 million.

Cutting the costs and optimizing the operations

In early 2013, the entire Mercator Group will be reorganized, which will be followed by centralization of support functions. This will optimize the business processes and improve cost efficiency. The Group is also expecting improvement in performance resulting from Croatia's accession to the European Union in the second half of 2013 as synergies will be reaped in all fields of operation, particularly through reduction of fixed and administrative operating expenses. As the volume of operations rises, the number of employees will be increasing from 2014 on. Thus, Mercator Group is expected to have 24,118 employees at the end of 2016; however, employee productivity will be improved by a target rate of at least 3 percent per year.

In logistics, we shall carry on the processes of optimization of the entire supply chain. In order to attain optimum usage of logistics facilities and to optimize the logistics expenses, we are planning to revise the entire logistics infrastructure in Slovenia and in Croatia in the second half of 2014.

In 2013, we are planning to consolidate the operations of subsidiaries in Slovenia, Serbia, Croatia, and Bosnia and Herzegovina. This will ensure a single and unified approach to the suppliers and allow us to reap the synergies with our basic market (FMCG) program, to optimize administration functions and IT support, and to enjoy other savings.

Mercator Group Medium-Term Business Plan for the Period 2013-2016 is attached.

This announcement will be published on the company’s website at www.mercator.si as of October 18, 2012, and will remain posted for a period of at least five years.