Company profile

Mercator Group Content

• Business Strategy and General Information • Business Operations & Marketing Projects • Business Performance Analysis

TOGETHER AT EVERY STEP Business Strategy and General information

TOGETHER AT EVERY STEP History of the Company

1949: Establishment of the »Živila « wholesale company, the predecessor of Poslovni sistem Mercator, d.d.

1953: »Živila Ljubljana« is renamed to »Mercator«

1993: Start of privatization with an initial public offering of shares, the largest privatization project in

1995: Privatization of company is completed, with the ownership taken over by national funds and some 63,000 minority shareholders end of 1995: Mercator, d.d., is listed on the Ljubljana Stock Exchange

TOGETHER AT EVERY STEP Vision and Mission

Mercator will be the largest, the most successful and the most efficient retailer in the region.

Mission:  A satisfied customer recognizes us as the best retailer that offers everything a discount store can offer, and much more.  Employees with smiles on their faces and sparkles in their eyes are our key competitive advantage. They will be able to develop their potential in a stable environment.  We are striving towards a stable ownership structure that will support the company development based on merit and results.  Mercator is striving to win the confidence of all stakeholders.

TOGETHER AT EVERY STEP Principles of corporate governance

TOGETHER AT EVERY STEP Four pillars based strategy

Optimization Focusing • Simplify the organization and • Region: focus on countries with processes growth potential and short-term profitability • Achieving the target productivity • Consumer: to return trust and • Optimization of total costs satisfaction, increase understanding • Investing part of savings in the of the needs, constantly adapting market and employees • Activities: the core activity • Financial stability Strategy Profitability Growth • We have to ensure profitable • The size is important in our industry, business so we need to continue to grow, • Adequate return for shareholders mainly organically and through targeted smaller acquisitions

TOGETHER AT EVERY STEP Strategic business fields

Other business Fast-moving Home products Real estate activities consumer goods

87.1 % of 6,0 % of 6.9 % of revenue revenue revenue TOGETHER AT EVERY STEP Overview by markets

CROATIA 12.1% of revenue 242 business units 3,602 employees 20.4% of revenue 209 business units 4,771 employees 57.0% of revenue 932 business units 11,720 employees 0.2% of revenue Exit from the 1 business unit* market planned 57 employees for 2013

BOSNIA AND HERZEGOVINA 6.9 % of revenue 111 business units 1,984 employees

ALBANIA Exit from the market at the end of 2012 3.4% of revenue 84 business units 1,349 employees TOGETHER AT EVERY STEP * unit in Bulgaria was closed as of July 1, 2013. Group composition as at June 30, 2013

MERCATOR GROUP

MERCATOR OPERATIONS SLOVENIA AND OTHER OPERATING ACTIVITIES

Poslovni sistem Mercator, d.d., Slovenia Intersport ISI, d.o.o., Slovenia (100.0%) Mercator - H, d.o.o., Croatia (99.9%) • Intersport S-ISI, d.o.o., Serbia (100.0%)*****

M - Tehnika, d.d., Slovenia (100.0%)*** • Intersport H, d.o.o., Croatia (100.0%)**** • Mercator centar tehnike d.o.o. za trgovinu i • Intersport BH, d.o.o., usluge, Croatia (100.0%)**** (100.0%) Mercator IP, d.o.o., Slovenia (100.0%) Modiana, d.o.o., Slovenia (100.0%) M - Energija, d.o.o., Slovenia (100.0%) • Modiana, d.o.o., Serbia (100.0%)***** M.COM, d.o.o., Slovenia (100.0%)* • Modiana, d.o.o., Croatia (100.0%)**** • Modiana, d.o.o., Bosnia and Herzegovina MERCATOR OPERATIONS SOUTHEASTERN EUROPE (100.0%) Mercator - Emba, d.d., Slovenia (100.0%) Mercator - S, d.o.o., Serbia (100.0%) Mercator - BH, d.o.o., Bosnia and Herzegovina MERCATOR REAL ESTATE (100.0%) M - BL, d.o.o., Bosnia and Herzegovina (100.0%) Mercator - Optima, d.o.o., Slovenia (100.0%)** Mercator - CG, d.o.o., Montenegro (100.0%) M - nepremičnine, d.o.o., Slovenia (100.0%) Mercator - B, e.o.o.d., Bulgaria (100.0%) Investment Internacional, d.o.o.e.l., Macedonia Mercator - A, sh.p.k., (100.0%) (100.0%)* Mercator Makedonija, d.o.o.e.l., Macedonia (100.0%)* Mercator - K, l.l.c., Republic of Kosovo (100.0%)**

* The company does not conduct business operations. ** The company is in the liquidation proceedings. *** The company was merged with the company Poslovni sistem Mercator, d.d., as of July 1, 2013. ****TOGETHER The company was merged AT EVERY with the company STEP Mercator - H, d.o.o., as of July 5, 2013. ***** The company was merged with the company Mercator - S, d.o.o., as of August 15, 2013. Mercator Group Management Board

MERCATOR GROUP

MERCATOR, d.d.

Toni Balažič

Management Board President

MERCATOR OPERATIONS MERCATOR OPERATIONS FINANCE AND IT SOUTHEASTERN EUROPE SLOVENIA AND CROATIA

Stanka Pejanović Igor Maroša Drago Kavšek

Senior Vice President Senior Vice President Senior Vice President

TOGETHER AT EVERY STEP Corporate Governance

Shareholders Assembly

currently consists of 14,331 shareholders

Supervisory Board

4-year term, 6 members appointed by shareholders, 3 members appointed by employees,

Management Board

5-year term. Consists of 4 members

TOGETHER AT EVERY STEP Key Information for the Shareholders

Movement of closing price per MELR Key information for the shareholders: share in the period 1-6 2013, compared to the SBITOP index Dec 31, 2012 June 30, 2013 Index Number of shares registered in Court Register 593,841 437,453 73.7 Number of treasury shares 500,879 646,883 129.1 Market capitalization (in EUR) 5,269 3,250 61.7 Market value of share (in EUR) 1,099,989 1,087,586 98.9 Book value per share (in EUR) 38,012 36,999 97.3 Minimum close rate in the period (in EUR) 1 77 7,712.0 Maximum close rate in the period (in EUR) 1,069 1,057 98.9 Average close rate in the period (in EUR) 52,873 59,047 111.7

As at June 30, 2013, the share in the company Poslovni sistem Mercator, d.d., held by foreign investors amounted to 25.27 percent, which is 1.78 percentage point more than at the end of 2012.

TOGETHER AT EVERY STEP Business Operations & Marketing Projects

TOGETHER AT EVERY STEP Private label lines and Pika card

Current private label lines and their presence on Mercator's markets:

BOSNIA AND SLOVENIA CROATIA SERBIA MONTENEGRO BULGARIA ALBANIA We launched the revised Pika card customer HERZEGOVINA loyalty system on February 1, 2013, in all countries we are operate. Results in first months after the launch: • over 100,000 new Pika card holders, • increase in number of Pika card holders who shopped

at least once in a month (SLO 17%, other markets more than 60 %, • increase in share of revenue generated with Pika card for 11 percentage points.

The development of private label lines and the year of the entry in foreign markets of Mercator's operations with the offer of private labels:

Slovenia Croatia Serbia Bulgaria TOTAL NUMBER Montenegro OF PRIVATE 12 11 10 7 5 4 7 BiH Albania LABEL LINES TOGETHER AT EVERY STEP Mercator Group retail network consists of 1,579 units

BOSNIA AND COUNTRY SLOVENIA SERBIA CROATIA MONTENEGRO BULGARIA* MERCATOR GROUP HERZEGOVINA Banner Mercator Mercator Roda Mercator Getro Mercator Drvopromet Mercator Roda Roda Number of Number Number Number Number Number Number of Number Number Number of Number Gross sales Net sales ACTIVITY units of units of units of units of units of units units of units of units units of units area area Hypermarkets 23 3 15 12 1 6 1 1 1 1 64 294,342 192,772 129 - 47 27 3 19 13 1 7 - 246 269,261 173,675 Neighbourhood stores 334 - 54 42 18 3 45 2 68 - 566 200,177 116,741 Comfort stores 1 1 - 1 - 1 - - - - 4 8,521 5,070 Convenience stores 1 ------1 159 83 Cash & Carry 13 - 5 - 16 - - - 1 - 35 115,841 79,586 Hard discount stores 5 ------5 3,223 2,276 Restaurants 22 9 - - - 2 - - - - 33 9,428 6,446 TOTAL FMCG program 528 13 121 82 38 31 59 4 77 1 954 900,952 576,649 Home program 52 14 - 13 ------79 111,086 71,150 Furniture program 3 ------1 - - 4 4,761 3,038 TOTAL home program 55 14 - 13 - - - 1 - - 83 115,847 74,188 Clothing program and drugstores 79 14 - 34 - 12 - - - - 139 66,083 55,048 Clothing program 64 8 - 34 - 8 - - - - 114 63,185 52,573 Drugstores and perfumeries 15 6 - - - 4 - - - - 25 2,898 2,475 Intersport 33 11 - 27 - 9 - 2 - - 82 53,134 40,604 M holidays 13 ------13 242 242 TOTAL specialised programs 125 25 - 61 - 21 - 2 - - 234 119,459 95,893 TOTAL retail units under 708 52 121 156 38 52 59 7 77 1 1,271 1,136,259 746,730 management Franchise stores 224 - 36 48 ------308 58,385 38,515 TOTAL 932 52 157 204 38 52 59 7 77 1 1,579 1,194,644 785,245

TOGETHER AT EVERY STEP Business Performance Analysis

TOGETHER AT EVERY STEP In the period 1-6 2013 revenue dropped by 3.3% compared to the equivalent period last year

EUR 1,356.4 mn revenue Mercator Group generated in the firs half of 2013, whichEUR is 658. 3.3 %4 less mn than revenue in coresponding period last year. Group reaches 46.8 % of the year plan.

TOGETHER AT EVERY STEP Revenue in Serbia and Bosnia and Herzegovina as a percentage of total revenue is rising constantly

TOGETHER AT EVERY STEP Non-urgent investments stopped, divestments accelerated

EUR 10,2 mn was total CAPEX in the period 1-6 2013.

TOGETHER AT EVERY STEP EBITDAR

EUR 82.7 mn Gross cash flow from operating activities before rental expenses (EBITDAR) the Mercator Group generated in the period 1-6 2013 which represents 41.4% of the plan for year 2013. 250,0

200,0

150,0

100,0 198,2 190,6 204,8 202,3 199,7 171,8 167,2

EBITDAR (EUR mn) (EUR EBITDAR 50,0 91,3 82,7

0,0 2007 2008 2009 2010 2011 2012 1-6 2012 1-6 2013 Plan 2013 restated comparable

TOGETHER AT EVERY STEP Despite savings realized under cost rationalization the Group records a negative result

Despite large measure of cost rationalization, the net profit of the Mercator Group in the period 1-6 2013 amounted to EUR -15.1 mn.

TOGETHER AT EVERY STEP Thank you for your interest!

Additional information available at: http://www.mercator.si http://seonet.ljse.si/

TOGETHER AT EVERY STEP