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MERCATOR, d.d., Ljubljana

Mercator Group's budget for 2020

Pursuant to the provisions of the Ljubljana Stock Exchange (Ljubljanska borza d.d.) and the relevant legislation, the company Poslovni sistem Mercator d.d., Ljubljana, hereby releases the following announcement:

For 2020, Mercator Group is primarily planning to further pursue its development strategy. The key aspects of this pursuit are attainment of revenue growth and Mercator Group business performance as the best local retailer in all markets of its operations. For 2020, Mercator Group is budgeting revenue of EUR 2.3 billion and normalized EBITDA of EUR 110 million. With 2020 Mercator enters in new investment cycle where the most important investment is the logistics-distribution centre in Ljubljana and investments in logistics capacities and network expansion in Serbia. One of the key characteristic of operations and performance in 2020 will be growth of costs, especially labour force costs, particularly in the Slovenian market where it will result from the changes in legislation that are to come into effect on January 1, 2020.

Mercator Group's normalized EBITDA for 2020 will reach EUR 110 million (excluding the effect of the IFRS 16 Leases). Mercator Group's revenue in 2020 is planned at EUR 2.3 billion.

Mercator Group is also planning further deleveraging. While the net debt to normalized EBITDA ratio in 2016 was at 14.1, Mercator Group is planning to slash this ratio to 4.5 by the end of 2020. This goal will have highly positive effects on business performance and especially further development of the Mercator Group. Mercator Group still owns nearly EUR 1.2 billion worth of real property, after the monetization projects already carried out. In 2020, Mercator will actively continue the project of constructing a new logistics and distribution centre in Ljubljana. According to current plans, it will be completed by the end of 2021 and is the largest investment in Mercator history.

Mercator Group's investments for 2020 are budgeted at EUR 44 million, of which 57% will be allocated to investments in Slovenia. In 2020, Mercator Group is planning to open 28 new stores and refurbish 65 stores in all markets of its operations. Next year, Mercator will strengthen its cooperation with local and regional suppliers, and continue to develop new commercial platforms and new and innovative store concepts, mainly convenient store formats.

As of December 11, 2019, 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.

Poslovni sistem Mercator d.d.
Management Board
Date: 11.12.2019