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:

In the first quarter of 2013, Mercator Group generated revenue in the amount of EUR 658,417 thousand, which is 2.6% below the figure for the first quarter of last year. In the period at hand, Mercator Group stabilized its market share in Slovenia and Croatia and increased it in Serbia and Bosnia and Herzegovina. The Group also successfully continued its process of cost rationalization and saw the actual cost cuts and the resulting savings exceed the plans. For structural reasons and harsh economic conditions on markets of Mercator’s operations, profit margin was lower than planned. The remaining projects that were outlined in the long-term strategic plan are taking place in accordance with the planned timetable. In the first quarter of 2013 Mercator Group recorded EUR 8,634 thousand of loss, which is within the accepted annual plan.

Negative GDP growth, persistence of harsh economic conditions and negative trends in consumption, and restricted access to financing sources continued to affect the operations and performance of the entire Mercator Group in the first three months of the year. The Group wrapped up the first quarter with loss of EUR 8,634 thousand. The loss planned for this period in amount of EUR 7,729 million is lower than in the equivalent period of last year and on comparable basis when it amounted to EUR 9,098 million.

After several years of declining market shares, Mercator Group was able to stabilize them and even improve them in some markets by introducing decisive operating measures. Further stabilisation of operations is carried out by rationalizing the costs and focusing on the core activity and strategic markets in the region, as well as by implementing a number of measures to improve Mercator’s performance by strengthening our competitive edge. In the first three months of this year, the results of cost rationalization exceeded the plans. Strategic measures set in the long-term strategic plan are also carried out in accordance with the planned timetable. Negative results in the first quarter were anticipated in the business plans for this period. Due to unfavourable macroeconomic situation and the complexity of the restructuring process, it is impossible to see positive effects in the short run. With further measures Mercator will continue the restructuring process and will prepare new measures to respond the worsening economic situation. It is planned that results of efforts will be manifest in positive business performance by the end of the year.

By implementing the measures that include marketing activities, real estate management, cost rationalization, and management of long-term financing structure, Mercator Group succeeded in curbing the negative effects of the current economic conditions. Strategic measures which have been set in the long-term strategic plan are carried out in accordance with the planned timetable. Thus, the Mercator Group withdrew from the Albanian market, in addition, optimization in number of employees is in process according to the plan. The Group also achieved stabilization of its market share, increased in number of Pika card holders, and is improving among the consumers the perception of Mercator's competitive advantages such as the breadth of offer, varied choice of local produce, friendliness of employees, quality of fresh products, and – especially in Slovenia – convenience afforded by the proximity of neighbourhood stores.

Mercator Group will continue to implement the policy of cost rationalization in all segments, and strategic restructuring. Moreover, further marketing activities will be adapted to the severe economic conditions. This especially involves adjusting the store formats and providing the right offer to meet our customers' daily needs, emphasis on local produce that is actually in demand, further development of private label lines, and upgrade of the Pika customer loyalty system that allows additional benefits and considerable savings.

Attached you can find the Business Report of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the period 1-3 2013.

This announcement will be published on the company’s website at www.mercator.si as of May 14, 2013, and will remain posted for a period of at least five years.