Pursuant to the Rules and Regulations of the Ljubljana Stock Exchange, d.d, and the relevant legislation, the company Poslovni sistem Mercator, d.d., Ljubljana, hereby announces the following:

In the first three quarters of 2017 Mercator Group improved its business performance and efficiency, which is reflected by higher profit and EBITDA. Mercator Group's profit in the period 1−9, 2017 exceeded the figure from the same period of the year before without divested activities by EUR 11.6 million, amounting to EUR 9.9 million. Mercator Group EBITDA in the 1−9, 2017 was at EUR 89.2 million, which is 14.6% higher relative to the same period of the year before. Improved performance is also evident in higher EBITDA margin which rose by 17.8% adjusted for divested activities.

Improved performance

In nine-month period 2017 Mercator Group improved its business performance and efficiency, which is reflected by higher profit and EBITDA. Mercator Group's profit in the period 1−9, 2017 exceeded the figure from the same period of the year before without divested activities by EUR 11.6 million, amounting to EUR 9.9 million; in the same period of the year before, it was at EUR -1.7 million.

Mercator Group EBITDA in the 1−9, 2017 amounted to EUR 89.2 million. In the corresponding period of the previous year, if the divested operations are not accounted for it amounted to EUR 77.8 million. Performance improvement is also evident in higher EBITDA margin which rose by 17.8% relative to the same period of the year before, adjusted for divested activities. Moreover, EBITDA was higher for the company Poslovni sistem Mercator, d.d., amounting to EUR 54.7 million, or EUR 11.2 million more than in the equivalent period prior year without divested activities. For this reason, EBITDA margin is higher by 29.1% relative to the same period of the year before without divested activities.

Therefore, the important aspect is the growth of revenue from core activity, as the decline in revenue by respective markets was mostly a result of divestment of non-core activities of Modiana and Intersport in 2016, and closing down of stores in compliance with the market regulator in Serbia.

Payment terms to our suppliers remain stable in 2017, and Mercator has succeeded in decreasing its net debt to creditor banks. Mercator continues to reliably settle its liabilities and payables to partners and suppliers.

Re-entry into the market of Bosnia and Herzegovina

Mercator has successfully re-entered on the market of Bosnia and Herzegovina. Starting in September, it gradually took over from Konzum BH, d.o.o., the retail operations at 83 stores, and on October 26, 2017, it formally opened its largest stores in Sarajevo and Banja Luka with a festive opening ceremony. Mercator's goal is to offer the local consumers a new store concept as developed by Mercator, and especially a broad assortment tailored as closely as possible to the needs and desires of the customers.

Mercator Group's future development plan

Mercator Group remains a key and decisive retailer in the region. Mercator's Management Board has prepared strategic policies and guidelines for Mercator's development until the year 2021, which shall be the foundation for Mercator Group's business and development plans, as included in the Agrokor Group business sustainability plan, or its five key segments of operations which also include Mercator Group in the retail segment. One of the key assumptions, or preconditions, for Mercator's successful development is deleveraging that will allow Mercator the necessary investment push.

Business Report of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the period 1–9, 2017 is attached herewith.

As of November 15, 2017, 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.