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Adria Retail & Whole-sale – operational and integration excellence across the region

Investor Days

Zagreb, September 2015

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Disclaimer

This presentation does not constitute or form part of, and should not be construed as,

any offer or invitation to subscribe for, underwrite or otherwise acquire, any securities

of the Company or any member of its group nor should it or any part of it form the

basis of, or be relied on in connection with, any contract to purchase any securities of

the Company or any member of its group or any commitment whatsoever.

This document may not be distributed and may not be reproduced in any manner

whatsoever. Any distribution or reproduction of the attached document in whole or in

part is unauthorized. No representation or warranty, express or implied, is made as to

the fairness, accuracy, or completeness of the information contained herein and no

reliance should be placed on it. None of the Company, their advisers, or any other

person accepts any liability for any loss howsoever arising, directly or indirectly, from

the issue of this document or its contents.

This presentation includes certain forward-looking statements. Actual results could

differ materially from those included in the forward-looking statements due to various

risks and uncertainties, including but not limited to changes in business and economic

and competitive conditions, regulatory reforms, foreign exchange rate fluctuations,

uncertainties in litigation or investigative proceedings and availability of financing.

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Mercator integration

The Adria Retail & Wholesale group that Konzum and Mercator

represent today has taken an impressive development path

Historical development

First store opening 1957

Entire Croatian market coverage

2000

Velpro C&C launch

2001

Private label & loyalty card launch

2002

Web shop launch

2006

180 stores 19,000 m2

3,000 employees 1994

Serbia and BiH market entry

2005

MultiPlusCard introduction 2010

2014

>1,900 stores

~1,000,000 m2

>40,000 employees

3

3,491

2,428

4,374

3,151

2,873

3,303

3,917

4,365

2,824

9,044

6,025

4,736

With this impressive development, we have become a preeminent

retailer in Southeast Europe and the #1 in all our core markets

1 Based on estimated banner sales in 2013 owned or operated by the group including VAT,

franchised operations and partly owned stores / chains, with the exception of Mercator and

Agrokor Retail which are as reported; Source: Planet Retail

2013 sales in SEE1, EUR m

Metro Group

Tesco

Rewe Group

Delhaize Group

COOP Euro

Agrokor Retail + Mercator

Schwarz Group

CBA

Agrokor Retail

Mercator

SPAR

Carrefour

Southeast

Europe (SEE)

Core markets

Key features of core markets

Dynamic market with 18.5 m inhabitants

and GDP of EUR 137 bn

EU integration path driving growth

Fragmented retail market with further retail

grocery market growth expected

Common cultural heritage (consumption

trends, ex-Yugo consumer brands)

Tourism segment growth (Croatia,

Montenegro, in particular)

BOSNIA & H.

SERBIA

CROATIA

SLOVENIA

MNG

4

In our core markets, we serve more than 1,200,000 customers

daily across our diverse retail and wholesale formats

BOSNIA & H. SERBIA

CROATIA

SLOVENIA

MONTENEGRO

EX

AM

PL

E

EX

AM

PL

E

EX

AM

PL

E

EX

AM

PL

E

EX

AM

PL

E

Data of full year 2014

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Retail – we are the leading retail player in the Adriatic region with

a strong footprint across all our countries of operation

BOSNIA & H. SERBIA

CROATIA

SLOVENIA

MONTENEGRO

#1

#1

#1

#1

#1

321 stores

15% market share

Population of 6.9 m

220,000 m2

99 stores

21% market share

Population of 0.7 m

30,000 m2

258 stores

22% market share

Population of 4.6 m

125,000 m2

476 stores

32% market share

Population of 2.1 m

230,000 m2

705 stores

30% market share

Population of 4.3 m

350,000 m2

Data as of June 30, 2015; market shares from GFK (Croatia, Serbia), Valicon (Slovenia) and internal estimates (other countries)

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BOSNIA & H. SERBIA

CROATIA

SLOVENIA

MONTENEGRO

Wholesale – our 55 cash & carry centers reach more than

17,000 customer sales points across the region

55 wholesale centers

17,000+ sales points (retail, HoReCa)

3,000+ dedicated PL products

130,000 m2 sales surface

14 mn Fleet km per

year

1,000,000+

Deliveries every year

350 Transport vehicles

Data as of 30 June, 2015

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Skilled and dedicated employees

Corporate social

responsibility

Customer service and

care

Innovative store

formats d

Leading customer

loyalty ma-nagement

Price perception

focus

Tailored local & regional products

Distinctive private label

Quality focus

CDIS/ logistics con-solidation in

region

Store integration excellence

Operational excellence Rich experience and

expertise, and leading

practitioners across all

core business areas

ensure superior

operations and a unique

customer experience

KEY SUCCESS LEVERS

Across the region, we pride ourselves in operational excellence in

several areas that are key success factors for our business

Leading manage-

ment competencies

Synergies with

Agrokor group

8

Speed and professionalism with which Mercator stores were

taken over and integrated is best practice in European retail

Integration excellence

Speed and rigor with

which Mercator stores

were successfully

integrated is best

practice in European

retail

EXAMPLE

8/9/2014

9/9/2014, 9 am

Operational excellence

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Within just 3 weeks 73 stores have been rebranded and converted

to Konzum systems and operations successfully

Completed ▪ 73 stores

▪ 1 warehouse

▪ 2 wholesale centers

▪ 1.515 employees

▪ 133,953 m²

▪ Turnover EUR 250 m

Activities ▪ Rebranding – in-store

& external

▪ IT systems

▪ Central distribution

▪ Replacement of PL

products

▪ Customer loyalty data

base integration

▪ Education & mentoring

teams

EXAMPLE

Successful, smooth

transition of Pika user

base and loyalty

EXAMPLE

Welcome packs, employee

education, mentoring teams,

inventory teams, IT support teams

3 weeks Kick-off 9/9/2014

71% Users trans-

fered

92% Loyal

customers kept

Operational excellence

Data as of June 30, 2015

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Operational excellence

Aug

May

Apr

Jul

Jun

Jun-

Aug

Mar

Feb

Oct-

Dec

Jan

Performance of reflagged Mercator stores has seen substantial

lift under the new Konzum concept in Croatia

Turnover of ex-Mercator stores L-F-L

Before

integration

After

integration

Turnover uplift L-F-L

Store 1 ++++

Store 2 +++

Store 3 +++

Store 4 ++

Store 5 ++

Turnover uplift L-F-L

Store 1 ++

Store 2 ++

Store 3 ++

Store 4 ++

Store 5 ++

Refu

rbis

hed

Rearr

an

ged

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We have the highest share of central distribution in the region

and keep consolidating further across countries successfully

25,000+ SKUs

3,000+ employees

~7 million transport units picked

and delivered

700+ owned and partner transport vehicles

24+ million km with owned vehicles

~5,500 delivery points

85%

Central distribution

share

279,000 m2

Warehouse area

380 Transport vehicles

Operational excellence

Data of full year 2014

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Highest product quality and standards are our priority and are

continuously monitored and controlled

130+ Manufacturing plants audited

yearly

35,000+ Quality controls

every year

Operational excellence

Data of full year 2014

13

We have the most innovative and highest product quality

standard private label assortment across the region

BOSNIA & H. SERBIA

CROATIA

SLOVENIA

MONTENEGRO

600+ New products

developed every year

7,000+ Private label

products across the region

21%

17%

PL share of turnover

20%+ cheaper than A-brand

Controlled & constant quality

Guaranteed satisfaction

Declaration that can be trusted

Local/regional

Innovative & inspirational

11% 12%

Guaranteed satisfaction

and controlled quality

EXAMPLES

Highlighting benefits

Operational excellence

Data of full year 2014

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We cater to the distinct tastes and requirements of our diverse

local markets through local and regional assortment

BOSNIA & H.

69 Cities covered

across 10 administrative

units

~9,600 Local traditional

SKUs

Example Bosnia &

Herzegovina

Operational excellence

Data of full year 2014

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5,000 products are on

promotion every

day, delivering

high customer

value

Price perception is one of our key focus areas and supported

through well-designed and targeted customer promotions

Very high brand awareness

across the region (Konzum,

Mercator, Idea, Roda)

Aggressive leaflet distribution

75% of shoppers use leaflet as

primary source of information

Operational excellence

Data of full year 2014

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Our distinctive loyalty card offering is our comparative advantage

vs. other retailers in the region

2,900,000+ Members to our loyalty system

Great source of insight about

our customers

63% turnover covered by

loyalty card

12,000,000+ mailings every year

Strong coalition partners

1m

1m

+180%

2014 2012

0.4m

3m

Thereof

awarded

per quarter

Operational excellence

Data of full year 2014

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We continuously innovate new store formats and features to

ensure continuously improving experience for our customers

Operational excellence

▪ Regular screening of global

format trends and best practices

▪ Ongoing customer research for

format demands

▪ Cross-country co-operation in

new format development

Example small store

format "Neighbour"

(Slovenia)

Cross-country

Format innovation and development

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We offer distinctive customer service and care, adding to

innovative service models for our customers

Self-check-out

Gas stations

Utility fees payment

Web shop

Cash advance

Lottery service

Konzum app

2,800+ Customers talked to every day (by phone, e-mail,

Facebook) 5 hours

Average reaction time to customer’s

complaints

Operational excellence

Data of full year 2014

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Operational excellence

We take responsibility in the well-being of our local environments

and use unique approaches of local co-operation and support

30+ CSR

initiatives across the

region

Initiatives Covering local &

regional development, and social,

environment and sports

Examples Slovenia Example Serbia

Belgrade, new

town IDEA

Niš in your

heart

At the heart of

Banata

Sports – Red

Star

Basketball Federation of Serbia

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Skilled and dedicated employees are our strength, so we coach

and develop several thousand employees every year

Operational excellence

▪ Business

aligned hard &

soft skills training

▪ Succession

planning through

talent pool man-

agement tools

▪ Test store,

IT lab

35.000+ Participants

trained in 2014

THEY

DEVELOP

THEY

DEPLOY

THEY

DELIVER

Knowledge Challenge Execution

How our

people

learn Best business

schools

IMD IEDC

Best partners

and consultants

Internal know-

ledge academy

How our

people

operate

Our employees are the most

valuable part of our company.

They are our key market

advantage and the main initiators

of all our achievements

Ivica Todorić

President, Agrokor Group

We encourage

our teams in taking chances & making opportunities and

mistakes, not to wait and watch for outcomes

Every year we onboard high potentials & give

them opportunities to learn and trust to develop and

execute

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Continuous improvement We continuously develop

our product and service

offering further,

leveraging cross-country

talent, innovation, and

best practices

KEY FOCUS AREAS

Across the region, we continuously strive for excellence and

operational improvements

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Continuous product and service improvements –

Project “Vukovarska”

▪ New „business & family center”

in Zagreb

▪ 5.100m² sales area refurbished in

line with highest world standards

▪ Innovative interior design and a

completely new shopping experience

▪ Integrated pharmacy in retail space

▪ Largest toy department in Zagreb

along with playground

& diaper change room ▪ Sushi bar, pizza bar, pasta

bar, grill bar, fish bar,

coffee bar, salad bar,

dessert bar

▪ Shop & Touch buying

system

▪ New assortment range

▪ Attractive center tenants

Continuous improvement

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▪ Food & near food assortment

▪ 5.400m² of warehouse area

▪ Developing new webpage

design

▪ Customer satisfaction

– Freshness

– Service level

– Ordered – delivered

– On time

Continuous product and service improvements –

Project “Konzum Online”

Continuous improvement

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Adria Retail & Whole-sale – operational and integration excellence across the region

Investor Days

Zagreb, September 2015