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:

Ljubljana, April 7, 2016 – Today, the companies Mercator and Slovenian Railways (Slovenske železnice) signed a real estate purchase agreement for the property on which a new Mercator logistics and distribution centre (LDC) is to be built. The property is located at the freight railway station Ljubljana–Moste (BTC Letališka).

Transaction value amounts to EUR 17 million, while total investment is estimated at EUR 100 million, which makes it one of the largest investments in Slovenia in recent years. The event is a major milestone in Mercator's development as the new LDC means the fulfilment of one of the most important strategic development projects in the company's history. The modern logistics and distribution centre will notably improve the service for the customers and provide new jobs.

The project of construction of modern logistics and distribution centre is one of the most important Mercator's plans for nearly a decade and now it is finally placed the first fundation in Mercator's key investment activities. The purpose of construction of the logistics centre is to centralize the warehousing activity, optimize the operating costs, successfully compete with other retailers, and modernize operations. The need to build the LDC has been even stronger since the devastating fire at Mercator's Zalog warehouse in May last year.

Mercator was selected as the best bidder for the land spanning 114,636 square metres at the location freight railway station Ljubljana–Moste (BTC Letališka) in a public tender announced by the Slovenian Railways early this year. The land will be used by Mercator to build a new modern logistics and distribution centre.

Anticipated start of construction is in the second half of 2017, or after the Detailed Municipal Spatial Plan is adopted. Construction of Mercator LDC will presumably be completed by the end of 2018. Complete with offices, the centre will span approximately 88,000 square metres. The purpose of the new centre is to centralize Mercator's warehouse operations and, as a result, optimize logistics operations from the aspect of expenses and supply of Mercator's retail network. The new logistics and distribution centre represents one of the major investments in recent years in Slovenia and is an important step in the modernization of Mercator's operations and in building its competitive edge.

"After we have successfully turned the performance indicators into a positive direction in 2015 and updated our retail network, modernizing our logistics and distribution is now among our top priorities. Today's signing of the agreement is the major strategic step in the project of building a new logistics and distribution centre, which has been in progress at Mercator for nearly a decade. This sets the foundations for the start of works on one of the most important strategic development projects in Mercator's history," commented Toni Balažič, President of the Management Board at Mercator, upon today's signing of the agreement with the Slovenian Railways.

This announcement will be published on the company’s website at www.mercatorgroup.si as of April 7, 2016, and will remain posted for a period of at least five years.