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MERCATOR, d.d., Ljubljana

For Mercator Group, 2014 a year of ownership and financial 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 announces the following:


At today's session, the Supervisory Board of Mercator, d.d., was presented the results of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the year 2014.

This was a watershed year for the Mercator Group as three major projects were carried out in highly negative macroeconomic circumstances: business restructuring, financial restructuring, and change in ownership structure.

In 2014, Mercator Group recorded a positive result from operating activities, amounting to EUR 12.4 million. Revenue amounted to EUR 2.65 billion, which is 4.1% less than in 2013. Lower revenue is a result of closing down of underperforming sales units, decrease in overall retail area, changes in consumer shopping behaviour, and transfer of retail units in the markets of Croatia and Bosnia and Herzegovina to Konzum as a part of the integration process of the Agrokor and Mercator Group in September 2014. The loss of revenue is partly offset by the transfer of Agrokor's Idea units in Serbia to the company Mercator - S, d.o.o., completed in late November 2014.

In 2014, Mercator Group further pursued its plan of business restructuring and operating cost rationalization. It successfully completed the process of financial liability restructuring which has led to financial stabilization that is of key importance for the Group's long-term success. In the second half of 2014, the companies Agrokor, d.d., and Agrokor Investments B.V. acquired the majority interest of 88.10% of the company Poslovni sistem Mercator, d.d., which brought to an end a period of unstable company ownership. Performance of Mercator Group's trade operations gradually improved in the second half of 2014, and this trend continues in 2015.

Mercator Group's result from operating activities in 2014 was positive at EUR 12.4 million. The Group wrapped up the year with a loss of EUR 44.5 million and EBITDA of EUR 100.4 million. A step back in results from operating activities and higher loss for the fiscal year relative to 2013 are mostly an effect of non-recurring events related to the takeover and the financial restructuring process, which includes impairments to real property and equipment, impairments to intangible assets, other contingent or unforeseen costs related to the integration activities carried out with the Agrokor Group, and the delay in the completion of the financial restructuring process. Independently of the integration process, Mercator Group reappraised in 2014 its real property held in respective markets of its operations. The identified decrease in its value brought further negative effect on the results for the fiscal year.

In 2014, Mercator Group continued the restoration of non-core activities. Optimization measures were implemented, which included closing down the underperforming units, reduction in regular operating costs, more efficient management of other costs, and downsizing in number of employees. As of March 31, 2014, Mercator terminated its activities within the Tehnika (technical consumer goods) division. On June 30, 2014, the company Modiana, d.o.o., Slovenia, was merged with the parent company.

Despite the highly competitive environment and challenging processes taking place at the Mercator Group in the course of 2014, Mercator successfully maintained a stable market position and regular operations which continue to improve in 2015.

Mercator is intensifying its focus on the core activity by boosting its marketing activities, while improving its competitiveness in Slovenia by intensive investment into refurbishment of its retail units. Seventeen refurbished stores have been opened in the first four months of this year, all of which have posted positive results.

Pursuant to its business restructuring strategy, Mercator is successfully divesting its non-core activities and non-operating assets in this year. This process also involved divesting the Pekarna Grosuplje in April 2015, which will have a positive effect on the Group's performance. The divestment processes for other non-core activities are in progress as planned.

Mercator has also boosted its investment into wholesale development in this year. Slovenian wholesale market has shown potential for growth and Mercator, d.d., will continue to step up its activities in this channel. Pursuant to this strategic policy, activities of the company Era Good, d.o.o., were acquired in April 2015. In the future, Mercator will intensify its investment into the refurbishment of the cash & carry centres in Slovenia in order to improve its competitiveness in wholesale.

Consistently with the increase of investment into own retail network development in Slovenia and the strategic policy of intensifying the focus on its core activity, Mercator is also planning the construction of a new modern logistics center that will support these development guidelines. The process is currently in the stage of identifying suitable land in the vicinity of the Ljubljana motorway ring.

Following an improvement of terms in the international markets and its financial, ownership, and business stabilization, Mercator has resumed in 2015 the monetization process.

In 2015, Mercator Group will continue to implement the cost optimization measures, the purpose of which is to improve its profitability. Positive effects on Mercator Group profitability in the future are expected from the completed agreement on financial restructuring and new organization of operations, which has included termination of the Group's operations in underperforming markets.


Annual Report of the Mercator Group and the company Poslovni sistem Mercator, d.d., for the year 2014 is attached herewith.



This announcement will be published on the company’s website at www.mercatorgroup.si as of April 21, 2015, and will remain posted for a period of at least five years.

Poslovni sistem Mercator, d.d.,
Management Board
Date: 21.04.2015