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AR-58/14

MERCATOR, d.d., Ljubljana

Mercator Group reaches major financial restructuring agreement with bank lenders; 2013 a year of stabilization

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 Group Supervisory Board was presented today the Group's Annual Report for 2013 and the progress of long-term restructuring of the Group's financial liabilities. Despite the challenging economic conditions and increasingly harsher competitive environment, Mercator Group succeeded in stabilizing the key aspects and indicators of its operations in 2013, stopped the trend of declining profitability, stabilized its market position, deleveraged, and exceeded its cost optimization plans. Furthermore, Mercator Group reached a financial restructuring agreement with its creditor banks, which is an important step towards greater stability of its operations in the future. The said agreement is also a clear signal of strong support to Mercator Group on the part of the creditors.

In 2013, Mercator Group revenue amounted to EUR 2,766 million, which is 3.7% less than in 2012. The decrease in revenue is primarily a result of increasingly harsh economic conditions in all markets of the Group's operations, increasingly stringent competition, and withdrawal from the markets of Bulgaria and Albania. Mercator Group wrapped up the 2013 fiscal year with an operating profit of EUR 36 million, or 8.9% above the last year's figure excluding write-offs. In 2013, its EBITDA reached EUR 109,708 thousand, exceeding the expectations despite the aggravated conditions in key markets.

Mercator Group improved its store area productivity in 2013. After years of declining gross cash flow from operating activities per square meter of store area, this indicator rose by 3.2 percent in 2013.

Mercator Group has adapted to its business environment by carrying out numerous marketing and cost management measures in 2013.

With consistent implementation of cost optimization measures and rationalization of operations the costs were slashed by nearly EUR 35 million, which is well ahead of the cost optimization plan for the second consecutive year.

Extensive marketing measures in 2013 among other included introduction of a new neighbourhood store format in the Slovenian and Croatian market, called Mercator NEIGHBOUR. After refurbishment, the performance trend for these stores is positive. A broad revision of the Mercator Pika card customer loyalty system was carried out in all Mercator Group markets last year; in addition, all companies of the Group paid close attention to offer from local suppliers.

In 2013, Mercator Group decreased its net debt by 4.5%, bringing it to under EUR 1 billion for the first time after 2010 which has led to notable improvement of the debt indicators.

Moreover, Mercator Group hereby announces that it has received from all required bank lenders signed statements of commitment to the implementation of the proposed financial restructuring of the Group. This means that detailed legal and commercial terms of restructuring have been negotiated and agreed upon with all these lenders.

This is an important milestone in Mercator Group's long-term restructuring process. The bank lenders have shown solid support to Mercator Group and provided support and stability for the final implementation of the financial restructuring plan.

Based on the statements of commitment, Mercator Group will prepare, in cooperation with its consultants, all required financial documentation for the financial restructuring.

 

Please find the Annual Report of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the year 2013, attached.

 

 

This announcement will be published on the company’s website at www.mercator.si as of April 25, 2014, and will remain posted for a period of at least five years.

Poslovni sistem Mercator, d.d.,
Management Board
Date: 25.04.2014