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:

Despite the harsh operating environment, Mercator Group succeeded in reversing the trend of falling profitability, stabilizing its market share and market position, deleveraging, and completing a cost optimization effort with results that exceed the expected figures. Moreover, a draft long-term debt restructuring agreement was reached for the Mercator Group companies. Completion of sale process with the deadlines specified in relevant contracts is of key importance for further stabilization and return to growth.

Mercator Group revenue in 2013 amounted to EUR 2.8 billion, which is 3.7 percent less than in the year before. The drop in revenue is a result of lower household expenditures as a response to the economic crisis, structural changes in consumer shopping behaviour, and implementation of the previously planned decisions within the operations restructuring process, including withdrawal from the markets of Bulgaria and Albania, closing down of underperforming units, and decreasing the overall retail area in all markets of Mercator's operations.

In 2013, Mercator Group Gross cash flow from operating activities (EBITDA) amounted to EUR 107.4 million, which means that the Group succeeded in reversing the downward trend from the previous years. The EBITDA is on a par with the last year's figure; adjusting for non-recurring (extraordinary) expenses related to the processes of sale, debt and operations restructuring, EBITDA in 2013 would have substantially exceeded the 2012 figure. Moreover, the EBITDA for the year means that Mercator Group has honoured its commitment, or covenant, agreed upon during the sale process.

In 2013, Mercator succeeded in stopping the negative market share trend in Slovenia; after several years of decline, the share has been stabilized. Furthermore, the company repaid EUR 50.9 million of its financial liabilities last year, reducing its net debt to below EUR 1 billion. In addition, Mercator Group improved in 2013 its ratio of net financial debt to EBITDA: at the end of 2012, it amounted to 9.27; by 2013 year end, it had been driven down to 8.91. Despite the extraordinary expenses related to the processes of sale, Mercator Group slashed its costs in 2013 by over EUR 30 million, thus topping its cost optimization plan.

In 2013, an agreement in principle on long-term restructuring of financial liabilities of Mercator Group companies was reached with a lenders steering committee. The draft agreement is a solid base for the company's further financial stability.

Considering unaudited business results Mercator Group closed financial year 2013 with a loss of EUR 26.8 million.

In an extraordinarily challenging year 2013 Mercator succeeded in stabilizing the key performance indicators and achieved a draft agreement on long-term restructuring of financial liabilities, thus laying the foundations for the company's financial stability. In 2014, we shall continue to pursue the business restructuring strategy laid down. We shall carry on the implementation of measures aimed at optimization and focus, paying the most attention to improvement of profitability and generation of growth. In order to successfully implement our strategy and to return to growth, it is of key importance that the process of sale of the company by completed as soon as possible, consistently with the deadlines specified in the underlying contracts and agreements, as this will allow Mercator to focus more intensively on its core activity and the consumers.

Mercator Group brief business report for 2013 is attached.

This announcement will be published on the company’s website at www.mercator.si as of January 30, 2014, and will remain posted for a period of at least five years.