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:

Mercator Group's Corporate Budget for the year 2021 includes growth of revenue and normalized EBITDA relative to 2020, further successful deleveraging, and further execution of the Group's development strategy. Mercator Group revenue for 2021 is budgeted at EUR 2.217 billion, which is 2.4% more than the 2020 estimate. Revenue of the company Poslovni sistem Mercator d.d. is budgeted to grow by 2.1%. Normalized EBITDA is budgeted at EUR 169.2 million.

In 2021, Mercator Group will continue the construction project for the new logistics and distribution centre in Ljubljana. Capital expenditure will total at EUR 39.8 million, of which 65.8% is allocated to investments in Slovenia. The Group's ultimate goal is further deleveraging. According to the 2021 budget, the net-financial-debt-to-EBITDA ratio (including IFRS 16) will be at 4.9.

Tomislav Čizmić, President of the Management Board at Mercator Group, highlighted: "Mercator Group is already successfully pursuing the strategy of merging and integrating its sales channels into a uniform ecosystem that offers customers what they want, where they want, when they want. In 2021, we shall prove once more that this is an effective and successful strategy that brings us competitive advantages and leads to better business efficiency."

One notable development in the year 2021 will be the increase of labour and other costs; therefore, Mercator Group has already planned a number of activities to control the cost growth.

According to the budget, Mercator Group will strengthen and consolidate its position of the leading retailer in all markets of its operations. It will boost activities in the wholesale market, retain its role of a technological innovator, and continue to invest in the processes of understanding the desires and needs of its customers, based on the largest customer loyalty system in Slovenia and the broader region. Mercator Group activities shall remain focused on local and regional supplier brands and activities that pave the way for their stable and successful growth.

As of December 16, 2020, 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.