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 announces the following:

Mercator Group ended the first quarter of the year with an operating profit of EUR 12.2 million, which is nearly three times more than the result generated in the same period of the year before. This is an effect of higher revenue and lower costs relative to the equivalent period of the previous year. 

Mercator Group revenue in the period 1–3, 2015, reaching EUR 628,721 thousand, was up 0.6% compared to the year before. Despite the improvement of the macroeconomic environment and the resulting recovery of spending, no change in consumer shopping behaviour has been perceived yet. Mercator effectively responded to the structural changes in consumption by focusing on its core activity and the intensive dynamics of marketing activities. In the first quarter of this year, it continued its low price projects, discount coupons, benefits in the Pika card system, local offer, and offer of private label products, thus improving the competitiveness of its offer for the customers.

Moreover, Mercator Group intensified in the period 1–3, 2015, the activities to adapt its store network to the needs and requirements of modern consumers. Investments were more than doubled compared to the corresponding period of last year, allocated primarily to refurbishment of the existing units. Thus, Mercator introduced in the first quarter of this year in the Slovenian market a new concept for a larger store format. It is an upgrade to the neighbourhood store concept successfully implemented by Mercator in 2013 for its smaller stores, focusing on broader and especially deeper offer of fast-moving consumer goods.

The structure of revenue by countries changed notably in the period 1–3, 2015, as a result of consolidation within the Agrokor Group. Following the transfer of Idea retail units to Mercator, the Group generated 35.2% of its total revenue in Serbia. Compared to the equivalent period of the year before, the share of revenue generated by the Group in less profitable markets of Croatia and Bosnia and Herzegovina decreased considerably. Within the corporate group of the new owner following the retail industry consolidation in the region, Mercator Group is thus focusing on more profitable markets, which opens up the potential for further growth.

In 2015, Mercator Group will continue its business restructuring aimed at long-term improvement of Mercator's performance. On the one hand, cost optimization measures will continue; on the other hand, activities to strengthen the Group's market position will take place. Divestment of non-operating assets and non-core activities will continue. Consistently with the plans, the proceeds will be used for deleveraging and investment into further development of core activity, and improvement of competitiveness and appeal for the consumers.

Business Report of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the period 1–3 2015 is attached herewith.

As of May 13, 2015, this announcement will also be posted on the company website at www.mercatorgroup.si where it shall remain available for a period of no less than 5 years.