Bofa Merrill Lynch J.P. Morgan Co-Manager Co-Manager Larrainvial Scotiabank Local Placement Agent Scotia Bolsa

Maestro Perú S.A. U.S.$200,000,000 6.75% Senior Notes due 2019

We are offering U.S.$200,000,000 principal amount of 6.75% Senior Notes due 2019 (the “Notes”). The Notes will mature on September 26, 2019. Interest will accrue on the Notes from September 26, 2012, and be payable on each March 26 and September 26, and the first interest payment date will be March 26, 2013.

Prior to September 26, 2016, we may redeem some or all of the Notes at any time, in whole or in part, at a price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest and additional amounts, if any, to the redemption date, plus a “make-whole” premium. We may also redeem all or part of the Notes on or after September 26, 2016 at the redemption prices set forth herein plus accrued and unpaid interest and additional amounts, if any, to the redemption date. At any time prior to September 26, 2015, we may also redeem on any one or more occasions up to 35% of the aggregate initial principal amount of the Notes using the proceeds of certain equity offerings at the redemption price of 106.75% of the principal amount plus accrued and unpaid interest and additional amounts, if any. We may also redeem the Notes, at any time, upon the occurrence of specified events relating to Peruvian tax law, as set forth in this offering memorandum. See “Description of Notes—Optional Redemption for Changes in Taxes.” Payments in respect of the Notes may be subject to withholding or deduction for or on account of, taxes imposed by the Republic of Peru (“Peru”) or any jurisdiction through which payment is made. Subject to certain exceptions, we will pay such additional amounts as will result in the receipt by holders of such amounts as would have been received had no such withholding or deduction been required. See “Description of Notes—Additional Amounts.” We must offer to purchase Notes if we experience specific kinds of changes of control or sell assets under certain circumstances.

The Notes will rank equally with all of our existing and future senior unsecured obligations (other than obligations preferred by statute or by operation of law) and junior to all of our existing and future secured debt to the extent of the value of the assets securing such debt. The Notes will be guaranteed by all of our subsidiaries existing as of the issue date and by certain of our future direct or indirect subsidiaries.

There is currently no public market for the Notes. Application has been made to admit the Notes to the official list of the Luxembourg Stock Exchange and for the Notes to be traded on the Euro MTF Market of the Luxembourg Stock Exchange; however, the Notes have not yet been listed.

See “Risk Factors” beginning on page 15 for a discussion of certain risks that you should consider in connection with an investment in the Notes.

Neither the Notes nor the guarantees have been nor will be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any other jurisdiction (other than the securities laws of Peru). We are offering the Notes only to qualified institutional buyers under Rule 144A under the Securities Act and to non-U.S. persons outside of the United States in reliance on Regulation S under the Securities Act. For further details about eligible offerees and resale restrictions, see “Notice to Investors.”

Application will be made to register the Notes and this offering memorandum with the Peruvian Securities Markets Superintendency (Superintendencia del Mercado de Valores, or “SMV”) for purposes of offering the Notes to institutional investors in Peru. In Peru, this offering will be considered a public offering that will be directed exclusively to “institutional investors” (as such term is defined under the Seventh Final Disposition of Conasev Resolution No. 141-98-EF/94.10.1, as amended). In addition, application will be made to register the Notes with the Foreign Investment and Derivative Instruments Registry (Registro de Instrumentos de Inversión y de Operaciones de Cobertura de Riesgo Extranjeros) of the Peruvian Banks, Insurance and Private Pension Fund Managers Superintendency (Superintendencia de Banca, Seguros y Administradoras Privadas de Fondos de Pensiones) for Peruvian private pension fund investment eligibility, as required by Peruvian law. The Notes may not be offered or sold in Peru or any other jurisdiction except in compliance with the securities laws thereof.

Issue Price: 100%

We expect that delivery of the Notes will be made to investors in book-entry form through The Depository Trust Company (“DTC”), and through Clearstream Banking, société anonyme (“Clearstream”), and Euroclear Company S.A./N.V., as DTC participants, on or about September 26, 2012. Joint Book-Running Managers BofA Merrill Lynch J.P. Morgan Co-Manager Co-Manager LarrainVial Scotiabank Local Placement Agent Scotia Bolsa

The date of this offering memorandum is September 21, 2012.

Neither we nor the initial purchasers have authorized anyone to provide you with any information other than that contained in this offering memorandum. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the initial purchasers are offering to sell the Notes only in jurisdictions where offers and sales are permitted. You should not assume that the information contained in this offering memorandum is accurate as of any date other than the date on the front cover of this offering memorandum. ______

TABLE OF CONTENTS

NOTICE TO INVESTORS ...... iv AVAILABLE INFORMATION ...... vi ENFORCEMENT OF CIVIL LIABILITIES ...... vii FORWARD-LOOKING STATEMENTS ...... viii PRESENTATION OF FINANCIAL AND OTHER INFORMATION ...... ix SUMMARY ...... 1 RISK FACTORS ...... 15 USE OF PROCEEDS ...... 26 CAPITALIZATION ...... 27 EXCHANGE RATES ...... 28 SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER INFORMATION AND OPERATING DATA ...... 29 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 33 DESCRIPTION OF THE COMPANY ...... 53 DIRECTORS AND SENIOR MANAGEMENT ...... 68 PRINCIPAL SHAREHOLDERS ...... 72 RELATED-PARTY TRANSACTIONS ...... 73 DESCRIPTION OF NOTES ...... 74 BOOK-ENTRY, DELIVERY AND FORM ...... 122 TAXATION ...... 127 PLAN OF DISTRIBUTION ...... 131 TRANSFER RESTRICTIONS ...... 136 LEGAL MATTERS ...... 138 INDEPENDENT AUDITORS ...... 139 GENERAL INFORMATION ...... 140 INDEX TO FINANCIAL STATEMENTS ...... F-1

We are providing this offering memorandum only to prospective purchasers of the Notes. You should read this offering memorandum before making a decision whether to purchase any Notes. You must not:

 use this offering memorandum, or the information it contains, for any other purpose;

 make copies of any part of this offering memorandum or give a copy of it to any other person; or

 disclose any information in this offering memorandum to any other person.

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In this offering memorandum, “Maestro,” the “Company,” the “Issuer,” “we,” “us,” “our” and “our company” refer to Maestro Perú S.A., a corporation (sociedad anónima) incorporated in Peru, and, unless the context otherwise requires or unless specified otherwise, its consolidated subsidiaries.

We, having made all reasonable inquiries, confirm that as of the date on the front cover of this offering memorandum the information contained in this offering memorandum with regard to our company is true and accurate in all material respects, that the opinions and intentions that we express in this offering memorandum are honestly held and that there are no other facts the omission of which would make this offering memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. We accept responsibility accordingly.

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This offering memorandum does not constitute an offer to sell, or a solicitation of an offer to buy, any Notes offered hereby by any person in any jurisdiction in which it is unlawful for such person to make such offer or solicitation. Neither the delivery of this offering memorandum nor any sale made hereunder shall under any circumstances imply that there has been no change in our affairs or the affairs of our subsidiaries or that the information set forth in this offering memorandum is correct as of any date subsequent to the date of this offering memorandum.

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This offering memorandum has been prepared by us solely for use in connection with the proposed offering of the Notes. We reserve the right to reject any offer to purchase the Notes offered by this offering memorandum, in whole or in part, for any reason. J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated will act as initial purchasers with respect to the offering of the Notes. This offering memorandum is personal to you and does not constitute an offer to any other person or to the public in general to subscribe for or otherwise acquire the Notes.

We expect to register the Notes and this offering memorandum with the SMV solely for purposes of offering the Notes to institutional investors in Peru in accordance with the Peruvian Securities Market Law (Ley del Mercado de Valores). As required under the Peruvian Securities Market Law, we have notified the SMV of the offering of the Notes. Such notice has been delivered to the SMV to comply with a legal requirement and for information purposes only. The delivery to and the receipt by the SMV of such notice does not and will not imply any certification as to the investment quality of the Notes, our solvency or the accuracy or completeness of the information included in this offering memorandum.

Distribution of this offering memorandum by you to any person other than those persons retained to advise you is unauthorized, and any disclosure of any of the contents of this offering memorandum without our prior written consent is prohibited. By accepting delivery of this offering memorandum, you agree to the foregoing.

You must (1) comply with all applicable laws and regulations in force in any jurisdiction in connection with the possession or distribution of this offering memorandum and the purchase, offer or sale of the Notes, and (2) obtain any required consent, approval or permission for the purchase, offer or sale by you of the Notes under the laws and regulations applicable to you in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales, and neither we nor the initial purchasers or their agents have any responsibility therefor. See “Transfer Restrictions” for information concerning some of the transfer restrictions applicable to the Notes.

You acknowledge that:

 you have been afforded an opportunity to request from us, and to review, all additional information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained in this offering memorandum;

 you have not relied on the initial purchasers or their agents or any person affiliated with the initial purchasers or their agents in connection with your investigation of the accuracy of such information or your investment decision; and

 no person has been authorized to give any information or to make any representation concerning us or the Notes other than those as set forth in this offering memorandum. If given or made, any such other information or representation should not be relied upon as having been authorized by us, the initial purchasers or their agents.

In making an investment decision, you must rely on your own examination of our business and the terms of this offering, including the merits and risks involved. The Notes have not been recommended by the U.S. Securities and Exchange Commission (“SEC”) or any state or foreign securities commission or regulatory authority. Furthermore, these authorities have not confirmed the accuracy or determined the adequacy of this offering memorandum. Any representation to the contrary is a criminal offense.

The Notes may not be transferred or resold except as permitted under the Securities Act and related regulations and applicable state securities laws. In making your purchase, you will be deemed to have made certain acknowledgements, representations and agreements set forth in this offering memorandum under the caption “Notice to Investors.” You should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time.

We are not providing you with any legal, business, tax or other advice in this offering memorandum. You should consult with your own advisors as needed to assist you in making your investment decision and to advise you whether you are legally permitted to purchase Notes in this offering.

This offering memorandum may only be used for the purpose for which it has been published. Neither the initial purchasers nor any of their agents is making any representation or warranty as to the accuracy or completeness of the information contained in this offering memorandum, and nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Neither the initial purchasers nor any of their agents has independently verified any of such information and assumes no responsibility for the accuracy or completeness of the information contained in this offering memorandum.

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See “Risk Factors,” following the “Summary,” for a description of certain factors relating to an investment in the Notes, including information about our business. None of us, the initial purchasers nor any of our or its representatives is making any representation to you regarding the legality of an investment by you under applicable legal investment or similar laws. You should consult with independent advisors as to legal, tax, business, financial and related aspects of a purchase of the Notes.

iii

NOTICE TO INVESTORS

The distribution of this offering memorandum and the offering of the Notes (and beneficial interests therein) in certain jurisdictions may be restricted by law. Persons who come into possession of this offering memorandum are required by us, Deutsche Bank Trust Company Americas (the “Trustee”) and the initial purchasers to inform themselves about and to observe any such restrictions. This offering memorandum does not constitute an offer to sell or the solicitation of an offer to buy the Notes (or beneficial interests therein) in any jurisdiction in which such offer or solicitation is unlawful. In particular, there are restrictions on the distribution of this offering memorandum and the offer and sale of the Notes (or beneficial interests therein) in Chile, Colombia, Hong Kong, Panama, Peru, Singapore, Switzerland, the United Kingdom and the United States. See “Transfer Restrictions.”

STABILIZATION

In connection with the issue of the Notes, the initial purchasers (or persons acting on behalf of any initial purchaser(s)) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that any initial purchaser (or persons acting on behalf of an initial purchaser) will undertake stabilization action. Such stabilizing, if commenced, may be discontinued at any time and, if begun, must be brought to an end after a limited period. Any stabilization action or over-allotment must be conducted by the relevant initial purchaser(s) (or person(s) acting on behalf of any initial purchaser(s)) in accordance with all applicable laws and rules.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A NOTE IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A NOTE OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, NOTE OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO RESIDENTS OF PERU

The Notes and this offering memorandum are expected to be registered with the SMV in accordance with the procedures set forth in numeral iv of the second section of the Manual for Compliance with the Applicable Requirements for Initial Public Offerings, as set forth under SMV Resolution No. 004-2011-EF/94.01.1, pursuant to Conasev Resolution No. 079-2008-EF/94.01.1, applicable to U.S. offerings in reliance on Rule 144A of the Securities Act with a local Peruvian tranche. If the Notes and this offering memorandum are registered with the SMV for purposes of offering the Notes exclusively to “institutional investors” in Peru (as such term is defined under the Seventh Final Disposition of Conasev Resolution No. 141-98-EF/94.10, as amended), this offering will be considered a public offering in Peru directed exclusively to institutional investors. In addition, the Notes are expected to be registered with the Foreign Investment and Derivative Instruments Registry of the Peruvian Banks, Insurance and Private Pension Fund Managers Superintendency for Peruvian private pension fund investment eligibility, as required by Peruvian legislation. The Notes may not be offered or sold in Peru or any other jurisdiction except in compliance with the securities laws thereof.

The Notes offered hereby in Peru are subject to transfer and resale restrictions and may not be transferred or resold in Peru except as permitted under Conasev Resolution No. 079-2008-EF/94.01.1.

NOTICE TO INVESTORS IN THE UNITED KINGDOM

This offering memorandum is only being distributed to, and is only directed at (i) persons who are outside of the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (iii) high net worth companies, and other persons to whom it may otherwise be lawfully communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). The Notes are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Notes will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this offering memorandum or any of its contents.

AVAILABLE INFORMATION

To permit compliance with Rule 144A under the Securities Act in connection with resales of Notes, we will be required under the indenture under which the Notes are issued (the “Indenture”), upon the request of a holder, for so long as the Notes remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, to furnish to the holder or beneficial owner of such restricted securities and any prospective purchaser of such restricted securities designated by such holder or beneficial owner the information required to be delivered under Rule 144A(d)(4) under the Securities Act if at the time of the request we are neither a reporting company under Section 13 or Section 15(d) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act. As long as we maintain this exemption, we will not be required under the Indenture to deliver information otherwise required to be delivered under Rule 144A(d)(4) under the Securities Act.

Our common shares are registered with the Public Registry of Securities (Registro Público del Mercado de Valores) of the SMV and are listed on the Lima Stock Exchange (Bolsa de Valores de Lima). Accordingly, as long as our common shares are registered and listed therein, we are required to furnish certain information, including quarterly, annual and current reports (hechos de importancia), to the SMV and the Lima Stock Exchange. All such reports will be published in Spanish and are available at www.smv.gob.pe and www.bvl.com.pe. These reports and notices are not incorporated by reference in, and do not constitute part of, this offering memorandum.

ENFORCEMENT OF CIVIL LIABILITIES

We are incorporated as a corporation (sociedad anónima) under the laws of Peru. All of our directors and officers reside in Peru or elsewhere outside of the United States, and a substantial portion of their assets may be, and substantially all of our assets are, located in Peru or elsewhere outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States or elsewhere outside of Peru upon us or upon any of our directors or officers or to enforce against such parties in courts outside of Peru judgments predicated solely upon the civil liability provisions of the federal securities laws of the United States or other foreign regulations. In addition, there is doubt as to whether the courts of Peru would enforce in all respects, to the same extent and in as timely a manner as a U.S. court or foreign court, an action predicated solely upon the civil liability provisions of the U.S. federal securities laws or other foreign regulations.

We have been advised by Estudio Echecopar, our Peruvian counsel, that any final and conclusive judgment for a fixed and definitive sum obtained against us in any foreign court having jurisdiction in respect of any suit, action or proceeding against us for the enforcement of any of the obligations assumed under the Indenture would, upon request, be deemed valid and enforceable in Peru through an exequatur judiciary proceeding (which does not involve the reopening of the case), provided that: (a) there is in effect a treaty between the country where such foreign court sits and Peru regarding the recognition and enforcement of foreign judgments; or (b) in the absence of such a treaty, the original judgment is ratified by a Peruvian court (Corte de la República del Perú), provided that the following conditions and requirements have been met: (i) the judgment does not resolve matters under the exclusive jurisdiction of Peruvian courts (and the matters contemplated by the Indenture are not matters under the exclusive jurisdiction of Peruvian courts); (ii) the relevant foreign court had jurisdiction under its own conflicts of law rules and under general principles of international procedural jurisdiction; (iii) the defendant was served in accordance with the laws of the place where such proceeding took place, was granted a reasonable opportunity to appear before such foreign court and was guaranteed due process rights; (iv) the judgment has the status of res judicata in the jurisdiction of the court rendering such judgment; (v) there is no pending litigation in Peru between the same parties for the same dispute, which shall have been initiated before the commencement of the proceeding that concluded with the foreign judgment; (vi) the foreign judgment is not incompatible with another judgment that fulfills the requirements of recognition and enforceability established by Peruvian law, unless such foreign judgment was rendered first; (vii) the foreign judgment is not contrary to public policy (orden público) or good morals; and (viii) it is not proven that the court that rendered the foreign judgment has denied enforcement of Peruvian judgments or has engaged in a review of the merits thereof.

We have no reason to believe that any of our obligations relating to the Notes would be contrary to Peruvian public policy (orden público), good morals and international treaties binding upon Peru or generally accepted principles of international law. No treaty exists between the United States and Peru for the reciprocal enforcement of foreign judgments. Peruvian courts, however, have enforced judgments rendered in the United States based on legal principles of reciprocity and comity.

vii

FORWARD-LOOKING STATEMENTS

This offering memorandum contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Our estimates and forward-looking statements are based on our current expectations and projections of future events and trends, which affect or may affect our business and results of operations. Words such as “believe,” “anticipate,” “plan,” “expect,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should,” “aim,” “continue,” “could,” “guidance,” “may,” “potential,” “will,” as well as similar expressions and the negative of such expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying these statements. Examples of forward-looking statements include statements regarding our intent, belief or current expectations with respect to:

 projections of revenues, net income (loss), earnings per share, capital expenditures, dividends, capital structure, other financial items or ratios, taxes and projections related to a business and results of operations;  statements of our plans, objectives or goals, including those relating to anticipated trends, regulation and financing plans;  statements about the availability and cost of products;  statements about expected or anticipated supply and demand for our products;  construction activity levels;  statements about competition, changes in competition and price environments;  statements about changes in consumer spending and saving habits;  statements about potential acquisitions, capital expenditures or expansion plans;  statements about anticipated changes to accounting policies;  statements about exchange controls and fluctuations in interest rates;  statements about the risks associated with the Notes, the Indenture, payments of any judgments against us and any bankruptcy;  explanations about the transferability of the Notes and any trading market for the Notes;  statements about the future economic performance of Peru (including any depreciation or appreciation of the nuevo sol) or other countries;  statements about anticipated political events in Peru;  statements about changes in Peruvian governmental policies, legislation or regulation; and  statements of assumptions underlying these statements.

You should not place undue reliance on forward-looking statements, which are based on current expectations. Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. Because of the risks and uncertainties involved, you should not make any investment decision based on the estimates and forward-looking statements. All forward-looking statements and risk factors included in this offering memorandum are made as of the date on the front cover of this offering memorandum, based on information available to us as of such date, and we assume no obligation to update any forward-looking statement or risk factor.

viii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

General

We are a corporation (sociedad anónima) incorporated in Peru and maintain our financial books and records in Peruvian nuevos soles and prepare our consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the International Accounting Standards Board (“IFRS”).

Financial Information

This offering memorandum includes:

 our audited consolidated financial statements and related auditors’ reports and notes as of January 1, 2010 and December 31, 2010 and 2011 and for the years ended December 31, 2010 and 2011 (the “Annual Audited Consolidated Financial Statements”); and

 our unaudited consolidated financial statements as of June 30, 2012 and for the six-month periods ended June 30, 2011 and 2012 (the “Interim Unaudited Consolidated Financial Statements” and, together with the Annual Audited Consolidated Financial Statements, the “Consolidated Financial Statements”).

Our consolidated financial statements as of January 1, 2010 and December 31, 2010 and for the year ended December 31, 2010 have been audited by Dongo-Soria Gaveglio y Asociados S.C.R.L., member firm of PricewaterhouseCoopers, as stated in its report included elsewhere in this offering memorandum. Our consolidated financial statements as of and for the year ended December 31, 2011 have been audited by Medina, Zaldívar, Paredes & Asociados S.C.R.L., member firm of Ernst & Young, as stated in its report also included elsewhere in this offering memorandum.

Until December 31, 2010, our financial statements were historically prepared in nuevos soles in accordance with accounting principles generally accepted in Peru (“Peruvian GAAP”), issued by the Peruvian Normative Accounting Council (Consejo Normativo de Contabilidad), which differs in certain significant respects from IFRS. As of January 1, 2011, we prepare our financial statements in accordance with IFRS. For comparative purposes, the financial information in and derived from the Annual Audited Consolidated Financial Statements for the year ended December 31, 2010 and as of December 31, 2010 has been restated to reflect the adoption of IFRS. For a description of the principal adjustments made to the Annual Audited Consolidated Financial Statements for the year ended December 31, 2010 and as of December 31, 2010 to transition from Peruvian GAAP to IFRS, see note 2.3 to our Annual Audited Consolidated Financial Statements.

This offering memorandum presents our EBITDA information for the convenience of investors. We define EBITDA as net income, plus financial expenses (less financial income), income tax, net, and depreciation and amortization, minus gain from exchange difference, net. EBITDA is presented because it is a widely accepted indicator of funds available to service debt, although it is not a recognized term under IFRS and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity or performance. Additionally, EBITDA is not intended to be a measure of free cash flow available for management’s discretionary use, as it does not consider certain cash requirements, such as interest payments, tax payments and debt service requirements. We believe that EBITDA, while providing useful information, should not be considered in isolation or as a substitute for net income as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Additionally, our calculation of EBITDA may be different from the calculation used by other companies and therefore, comparability may be affected. For a reconciliation of EBITDA to net income, see “Selected Consolidated Financial Information and Other Information and Operating Data.”

Because the Notes have not been registered and will not be registered with the SEC, our Consolidated Financial Statements contained elsewhere in this offering memorandum do not and are not required to comply with

the applicable registration requirements, rules and regulations adopted by the SEC, which would apply if the Notes were to be registered with the SEC.

Special Note Regarding First-Time Adoption of IFRS

IFRS 1, First-Time Adoption of International Financial Reporting Standards, is the guidance that is applied during preparation of a company’s first IFRS financial statements

With certain exceptions, the key principle of IFRS 1 is full retrospective application of all IFRS standards that are effective as of the closing statement of financial position or reporting date of the first IFRS financial statements. IFRS 1 requires companies to (i) identify the first IFRS financial statements; (ii) prepare an opening statement of financial position at the date of transition to IFRS; (iii) select accounting policies that comply with IFRS and to apply those policies retrospectively to all of the periods presented in the first IFRS financial statements; (iv) consider whether to apply any of the optional exemptions from retrospective application; (v) apply the mandatory exceptions from retrospective application; and (vi) make extensive disclosures to explain the transition to IFRS. Exemptions provide limited relief for first-time adopters, mainly in areas where the information needed to apply IFRS retrospectively may be most challenging to obtain.

For more information in respect of the adoption of IFRS, see note 2.3 to our Annual Audited Consolidated Financial Statements.

Currency Information

Unless otherwise indicated, financial information appearing in this offering memorandum is presented in Peruvian nuevos soles. In this offering memorandum, references to “nuevos soles” or “S/.” are to Peruvian nuevos soles, and references to “U.S. dollars” or “U.S.$” are to United States dollars.

This offering memorandum contains certain figures that have been converted from nuevos soles amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise indicated, references to amounts in U.S. dollars as of and for the year ended December 31, 2011 and as of and for the six-month period ended June 30, 2012 have been converted from nuevos soles at an exchange rate of S/.2.670 per U.S. dollar, the interbank buying exchange rate published by the Central Reserve Bank of Peru on June 28, 2012. The exchange rate conversions contained in this offering memorandum should not be construed as representations that the nuevos soles amounts actually represent the U.S.-dollar amounts presented or that they could be converted into U.S. dollars at the rate indicated. See “Exchange Rates” for information regarding the rates of exchange between the nuevo sol and the U.S. dollar for the periods specified therein.

The translation of amounts expressed in nuevos soles as of a certain date to the then-prevailing U.S.-dollar exchange rate may result in presentation of U.S.-dollar amounts different from the U.S.-dollar amounts that would have been obtained by translating nuevos soles as of a different date to the U.S.-dollar exchange rate prevailing on such different date.

Effect of Rounding

Certain percentages and amounts in this offering memorandum have been rounded for ease of presentation. Unless otherwise stated or the context otherwise requires, all financial information in this offering memorandum is rounded to the nearest one hundred thousand nuevos soles or one hundred thousand U.S. dollars, as applicable, and percentage figures included in this offering memorandum are rounded to the nearest one-tenth of one percent. As a result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Industry and Market Data

Market data and other statistical information used throughout this offering memorandum are based on independent industry publications, government publications, such as publications of the Peruvian Banks, Insurance

and Private Pension Fund Managers Superintendency, the Central Reserve Bank of Peru, the Peruvian Ministry of Economy and Finance (Ministerio de Economía y Finanzas) and the Peruvian National Institute of Statistics and Informatics (Instituto Nacional de Estadística e Informática, or “INEI”), reports by market research firms or other published independent sources. Some data are also based on our estimates, which are derived from our review of internal surveys, such as a study we commissioned Ipsos APOYO Opinión y Mercado (“Ipsos Apoyo”) to perform with regard to, among other things, our customers’ profile, characteristics and shopping behavior, as well as independent sources. Market share information for 12-month periods used throughout this offering memorandum was calculated by adding the average of the market share for each month within such 12-month period and is based on market information gathered from Peruvian suppliers for domestic products and Veritrade for imported products.

Although we believe that these sources are reliable, we have not independently verified the information and cannot guarantee its accuracy or completeness.

In addition, in many cases, we have based certain statements contained in this offering memorandum regarding our industry and our position in the industry on certain assumptions concerning our customers and competitors. These assumptions are based on our experience in the industry, conversations with our principal distributors and consumers and our own investigation of market conditions. We cannot assure you as to the accuracy of any such assumptions, and such assumptions may not be indicative of our position in our industry.

SUMMARY

This summary highlights selected information from this offering memorandum and is qualified in its entirety by, and is subject to, the more detailed information and Consolidated Financial Statements appearing elsewhere in this offering memorandum. This summary may not contain all the information that may be important in deciding whether to purchase the Notes. If you are considering purchasing the Notes, you should read this entire offering memorandum carefully, including the risk factors and Consolidated Financial Statements contained herein, before making an investment decision. Terms not defined in this summary are defined elsewhere in this offering memorandum. As used in this summary, unless otherwise indicated or the context otherwise requires, all references to “Maestro,” the “Company,” the “Issuer,” “we,” “us,” “our” and “our company” refer to Maestro Perú S.A. and its consolidated subsidiaries.

Overview

We are a leading Peruvian retailer of home improvement and construction products with “Maestro” stores in Lima and eight other large cities throughout Peru. We offer our customers project solutions and excellent customer service and advice, which, we believe, generate high levels of customer loyalty. We believe that by targeting both do-it-yourself (“DIY”) and professional customers, we are able to serve a broad array of customers and benefit from the expected continued growth in Peru’s home improvement and construction markets.

Our largest shareholder is Enfoca Inversiones, Peru’s largest private equity fund manager in terms of assets under management. Enfoca Inversiones acquired its first minority equity participation in 2007 and became our controlling shareholder in December 2009, marking the beginning of a period of rapid expansion, including two store openings in 2010, five in 2011 and two in 2012. As of June 30, 2012, we operated 19 stores in Peru, which had an average area of approximately 5,316 square meters, and since June 30, 2012, we have opened one additional store.

We believe that Peru’s strong economic growth and macroeconomic stability in recent years has contributed to the development of the Peruvian middle class and increased the purchasing power of households, reducing poverty. This, together with the low penetration in the modern home improvement retail channel, offers attractive opportunities for growing our business. We estimate that in 2011, the modern home improvement market represented approximately 19% of the total home improvement market while the traditional home improvement market accounted for approximately 81% of the total home improvement market. The traditional home improvement market is highly fragmented and is mainly comprised of small “mom-and-pop” hardware stores, specialty retailers and clusters of hardware sellers in cities. We estimate that there are approximately 3,700 small hardware stores in Lima. We believe that the current structure of the Peruvian home improvement market provides a considerable opportunity for growth of the modern one-stop-shop home improvement and construction retail model.

Our target customers are both DIY and professional customers. DIY customers are typically people who complete home improvement projects themselves or purchase home improvement materials and hire a third-party contractor to complete their projects. Our professional customers are typically individual general contractors (known as “maestros” in Peru), small- and medium-sized contractors and micro-enterprises who complete projects for their clients. According to a study conducted by Ipsos Apoyo in 2011, DIY and professional customers represented approximately 79% and 21% of our total customer base, respectively, and our most active customers were generally lower- and middle-class customers.

In 2011, we had net sales of S/.1,019.4 million (U.S.$381.8 million), net income of S/.42.2 million (U.S.$15.8 million) and EBITDA of S/.91.4 million (U.S.$34.2 million), and our operating and EBITDA margins were 7.7% and 9.0%, respectively. During the six months ended June 30, 2012, we had net sales of S/.568.4 million (U.S.$212.9 million), net income of S/.20.8 million (U.S.$7.8 million) and EBITDA of S/.49.5 million (U.S.$18.5 million), and our operating and EBITDA margins were 7.5% and 8.7%, respectively.

Our Business Model

Our goal is to strengthen our position as a leading supplier in Peru for home improvement and construction projects of all types, particularly in the areas of equipment, installations and attached decoration. The customer experience at Maestro emphasizes the sale of projects rather than products, personalized attention from our sales staff, whom we call “project advisors” (asesores de proyectos), having all products necessary for a project in stock, everyday competitive prices and making customers feel that they are our highest priority. The fundamental elements of our business model are as follows:

 Focus on projects, not products. Our research shows that in 2011, 62% of our customers purchased all of the materials for their projects in our stores, which improves our sales per ticket and margins while enhancing the customer experience. The successful implementation of a project-focused sales strategy requires more than making one-off sales for particular tasks. We have built our business model around the concept of home improvement projects. We train, evaluate and compensate our project advisors to focus on projects when interacting with customers. The layout and merchandising in our stores showcases projects and where to find related products, and the workshops that we offer to our customers focus on completion of projects rather than individual products. These elements, together with the other elements of our business model, are all derived from our project-focused sales strategy.

 Knowledgeable customer service. We call our sales staff “project advisors” because they do not sell products; rather, they advise our customers on projects. Our business model is based on providing excellent advice and service to our customers. We always strive to maintain an adequate number of project advisors with the necessary technical expertise that our customers require in order to complete their projects. We use complex models of sales projections to allocate project advisors according to the models’ estimate of customer traffic. To address our customers’ need for project advisors with specialized expertise, we provide extensive practical and technical project training to our project advisors. Our project advisors’ mastery of these projects is periodically evaluated in order to guarantee a high level of customer service. Finally, the compensation of our project advisors is tied to overall store and product sales, which allows project advisors to focus on improving the customer experience instead of seeking to sell products to collect commissions.

 Right products always in stock. We strive to ensure that our customers find all the products that they need for their projects in a single visit to one of our stores. We view the range and quantity of our stock as key to maintaining our dominance of the modern home improvement retail market. We offer specialized products and brands, we are a leader in most of the product categories that we offer, and, most importantly, we maintain open channels of communication with our customers, who help us ensure that we have the right products in stock. Additionally, our supply chain, together with our inventory management and restocking processes, allow us to maintain key products in stock and to manage our inventory very efficiently.

 Always offer competitive prices. We believe that we have built a relationship of trust with our customers, who know that Maestro always offers competitive prices. In order to achieve this level of trust, we have created a decentralized system to monitor prices for each of our product categories with each of our relevant competitors. In general, we do not offer discounts or promotions that could affect our pricing strategy.

 Provide access to financing. We also facilitate project sales to our customers by promoting the origination of credit cards and personal loans by CrediScotia Financiera S.A. (“CrediScotia”) through the Maestro-branded Presta, Presta Experto and PrestaFácil brands under an agreement with CrediScotia.

Our Strengths

We believe that the following key competitive strengths differentiate us and are critical to our continuing success:

Leading home improvement retailer in Peru with a highly recognized brand. We believe that we are a leading retailer in the home improvement market in Peru in terms of sales. We estimate that the traditional market accounts for approximately 81% of the home improvement and construction market in Peru. This market is highly fragmented and is mainly comprised of small “mom-and-pop” hardware stores, specialty retailers and clusters of hardware sellers in cities. We estimate that there are approximately 3,700 small hardware stores in Lima alone. In the context of this market, there is considerable opportunity for growth of the modern one-stop-shop home improvement and construction retail model. Given the high level of our brand recognition (according to a study conducted by Ipsos Apoyo in 2011, 28% of DIY consumers and 30% of professional consumers consider Maestro to be one of the first home improvement stores that they think of) and the success of our business model and existing stores across Peru, we believe that we are, relative to our competitors, in a unique position to capitalize on this growth opportunity throughout Peru. During the last decade, the Peruvian economy has experienced sustained economic growth and has been one of the fastest-growing and most stable economies in Latin America. According to data published by the Central Reserve Bank of Peru, in 2010 and 2011, Peruvian gross domestic product (“GDP”) increased at a rate of 8.8% and 6.9%, respectively, and in the first six months of 2012, Peruvian GDP increased 6.1%. This economic growth, together with low inflation, has contributed to, among other key improvements, significant poverty reduction. The percentage of the country’s population living below the poverty line decreased from approximately 48.6% in 2004 to approximately 27.8% in 2011. According to data published by INEI, the construction sector in Peru grew 16.5% in 2008, 6.1% in 2009, 17.4% in 2010, 3.4% in 2011 and 14.7% in the first six months of 2012.

Destination retailer with high customer loyalty in hard-to-replicate locations. We believe that we are a destination for customers completing home improvement and construction projects and have a “customer-first” approach that permeates throughout our project advisors and administrative staff. Rather than offering our customers only home improvement or construction goods, we offer them solutions, support and advice needed to complete home improvement, repair, maintenance or construction projects on which they are working. According to a study conducted by Ipsos Apoyo in 2011, approximately 91% of our customers indicated that they were either satisfied or very satisfied with the service received from our project advisors during their visit to our stores. In addition, based on surveys conducted by Ipsos Apoyo in 2011, 72% of our customers indicated that they made a purchase at a Maestro store at least once each month, which indicates strong customer loyalty. We believe that strategically located stores are key for the success of our business model. Our stores are located in some of the most strategic and desirable locations in Lima and in other principal cities in Peru. Some stores are located in or near busy shopping malls, while others are located near large traditional markets. We have recently opened stores in highly populated areas with rising household income levels and low modern home improvement presence. As of June 30, 2012, we had secured six locations for future store openings in Cajamarca, Comas, Chimbote, Sullana, Surco and Lima (Barrios Altos).

Project-based customer service and product offerings at competitive prices. We strongly believe that knowledgeable home improvement and construction project advisors are fundamental to building a successful project-based shopping experience at our stores. We dedicate significant resources to train our project advisors so that they can better serve our customers and expect each of our full-time project advisors to complete hands-on technical training on a regular basis so that they can provide a superlative experience to our customers, who, we believe, value technical expertise highly. We have developed an internal “University” through which we offer project-based courses. We constantly evaluate our project advisors’ knowledge and modify our training courses to ensure that the latest home improvement techniques and products are included. Our project advisors use this knowledge and experience to sell projects, rather than products, which increases overall sales.

and product quality. Our efficient supply-chain network, supported by continued improvements in SAP-based information technology, allows us to optimize our working capital requirements through high inventory turnover and reduce our inventory-related costs. In addition, our strategically located distribution centers, our logistics system and our purchasing power with suppliers enable us to meet the merchandising demands of our stores. In recent years, we have also made significant investments in technology systems focused primarily on supporting our pricing strategy, customer relationship management systems, workforce management and in-store operational efficiency. We believe that continued upgrading of our operations and technology allows us to further increase efficiency, reduce expenses and provide the necessary customer information to enhance merchandising decisions at our stores.

Proven track record of profitable growth and financial stability. We have achieved increasingly high profit margins as we have expanded our network of stores throughout Peru. In 2011, we had S/.1,019.4 million in net sales, S/.42.2 million in net income and S/.91.4 million in EBITDA, and in 2010, we had S/.797.6 million in net sales, S/.32.9 million in net income and S/.71.4 million in EBITDA. Our accelerated growth has enabled us to achieve favorable economies of scale due to the volume of our purchases of products from suppliers, which allows us to reduce our costs. Additionally, our profit margin has increased steadily due to our efficient management of domestic and international suppliers, the success of our private-brand products and the optimization of our supply chain. Finally, our identification of under-served consumer segments and aggressive expansion by opening 15 stores between 2007 and 2011 enabled us to obtain a return on equity of 17.3% in 2011. These elements have allowed us to reinforce our position as a leading retailer offering competitive prices, giving us a significant competitive advantage.

Experienced management team and strong shareholder group. We employ experienced project advisors and a capable executive management team. Our management team has a proven track record in expanding our markets, growing sales and improving margins, each with vast experience in retail operations. On average, our management team has approximately 15 years of working experience, with most holding advanced degrees from Peruvian and international universities. Our largest shareholder, Enfoca Inversiones, is Peru’s largest private equity fund manager in terms of assets under management.

Consumer financing. We facilitate project sales to our customers by promoting the origination of credit cards and personal loans by CrediScotia through the Maestro-branded Presta, Presta Experto and PrestaFácil brands under an agreement with CrediScotia. Many of our target customers do not have access to the banking system, and these financing solutions are essential for our customers to have access to credit and to finance their home improvement and construction projects. The success of our financing programs is evidenced by average sales per ticket, which are significantly higher for purchases made with Maestro-branded credit cards than other payment methods.

Our Strategy

Our goal is to strengthen our position as a leading supplier in Peru for home improvement and construction projects of all types, specifically in the areas of equipment, installations and attached decoration. In order to achieve this goal, we intend to implement the following strategic initiatives:

Continue expanding our stores in Peru and other markets. In 2011, we opened five new stores in Peru, which was the most stores opened in a single year since our founding, and for the next few years, we plan to maintain this pace of expansion. Thus far in 2012, we have opened two stores and plan to open at least three more stores before the end of the year. We will continue to identify opportunities for growth and expand our geographic reach in Peru, and we intend to expand regionally in the future by taking advantage of expansion opportunities. Due to the popularity and reputation of the Maestro brand, customers at new stores are often already familiar with Maestro, and it is our aim to ensure that each Maestro store maintains the level of quality of products and service that has enabled us to grow significantly in recent years. We believe that there is an opportunity for growth of our modern retail model, as we estimate that traditional sellers currently retain a large majority of the market for home improvement and construction goods. We estimate that in 2011, the traditional market accounted for approximately 81% of the home improvement and construction market. In order to capitalize on the rising penetration level for modern large retail formats and a growing population, we have built a highly qualified team dedicated to identifying, evaluating, negotiating and securing land for future store locations. Of the 16 stores that we opened between 2007 and June 30, 2012, eight are located in seven cities outside of Lima, seven are located in “up-and-coming”

neighborhoods in Lima, and one is located in a more developed neighborhood in Lima. These recent store openings have demonstrated high demand for a modern, high-quality shopping experience throughout Peru.

Enhance our reputation as specialists in specific home improvement and construction categories. In addition to generally offering excellent customer service and advice for customers completing home improvement and construction projects, we intend to increase specialized knowledge of our project advisors in areas in which we have not specialized in the past, such as metal-working. While maintaining our reputation as the leading one-stop- shop retailer for home improvement and construction goods, we believe that we can further increase our sales and operating margin by marketing our specialized expertise in these and other new home improvement and construction categories. In order to achieve this vision, we intend to provide our project advisors with specialized training in these new areas and to encourage a subset of our project advisors to dedicate themselves to a new project category.

Drive loyalty and sales growth through our project-based offering. In order to maintain our position as a market leader in certain of the product categories that we offer to our customers, we have established an extensive network of domestic and international suppliers that allows us to offer our customers a wide range of products of the best domestic and international brands. Imported products represented 24.6% of sales in 2011. Additionally, we have developed private-brand products that are widely recognized for their high value, innovation and quality. In 2011, private-brand products represented 14.0% of sales. The selection of our suppliers and the products that we offer have allowed us to increase our gross margin, which grew from 27.7% in 2010 to 28.3% in 2011. As we continue to pursue an aggressive expansion strategy of opening new stores, we will require greater quantities of goods to stock our stores, making our purchasing strategy essential to our continued success.

Encourage increased use of Presta, Presta Experto credit cards and PrestaFácil personal loans to increase sales. The Maestro-branded Presta, Presta Experto and PrestaFácil credit card and personal loan programs offered under an agreement with CrediScotia have been successful in providing credit to our customers who would not otherwise have access to the banking system and allowing our customers to complete their home improvement and construction projects. The average sales per ticket have historically been substantially higher for purchases made with Presta and Presta Experto cards than for purchases made in cash or other credit cards. We plan to continue to offer exclusive promotions in order to encourage Presta and Presta Experto card holders to make more purchases at our stores. Finally, together with CrediScotia, we are working with other retailers to accept Presta and Presta Experto cards at their stores and to create special programs whereby card holders will be entitled to special promotions at these locations, which we expect will encourage more of our customers to enroll for a card.

Maintain focus on strong customer relationships. We continually seek to improve the customer experience at our stores by ensuring that we have a sufficient number of motivated and highly trained project advisors in each store to help our customers to complete their projects. We will continue to provide extensive training to our project advisors so that they can anticipate customers’ needs and make customers feel that they are the center of our attention when they enter our stores. We also intend to keep our project advisors motivated by providing them with a clear career path and offering attractive wages. We consider our project advisors to be our principal asset and invest significantly in our personnel. We are focused on creating personal relationships with each of our customers. To achieve this goal, in addition to offering and having in stock a large number of products to serve our customers’ needs, we expect to continue to provide extensive training to all of our customers who wish to complete projects for themselves or for their clients. We offer our customers thousands of free training sessions on home improvement and construction projects in our stores each year. We have developed an extensive database with information on loyal customers who are able to complete their projects and improve their home improvement and construction knowledge through our training sessions. This database is complemented by the database that we maintain for financing programs that we offer to our customers, and we use the information that we have collected to offer targeted promotions to our customers.

Our Corporate Structure

Maestro is a corporation (sociedad anónima) that was incorporated under the laws of Peru in 1978 under the name Costa de Marfil S.A. In September 2008, Maestro changed its name to Maestro Home Center S.A., which was subsequently changed to Maestro Perú S.A. in September 2010. We have one wholly owned subsidiary, Inmobiliaria Domel S.A.C. (“Domel”), which owns, directly, substantially all of our real estate assets. Domel has a subsidiary, Industrias Delta S.A. (“Delta”), which owns one real estate asset where one of our stores is located.

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Our principal executive offices are located at Jirón San Lorenzo 881, Surquillo, Lima 34, Peru. Our main telephone number is +51-1-611-1900, and our website is www.maestro.pe. Information contained on, or accessible through, our website is not incorporated by reference in, and shall not be considered part of, this offering memorandum.

SUMMARY OF THE OFFERING

The following summary is provided solely for your convenience. The summary is not intended to be complete. You should read the full text and more specific details contained elsewhere in this offering memorandum. For a more detailed description of the Notes, see “Description of Notes.”

Issuer ...... Maestro Perú S.A., a corporation organized under the laws of Peru.

Securities Offered ...... U.S.$200.0 million aggregate principal amount of 6.75% Senior Notes due 2019.

Maturity ...... September 26, 2019.

Interest ...... 6.75% per annum, paid every six months on March 26 and September 26, with the first payment on March 26, 2013. Interest will accrue from September 26, 2012.

Issue Price ...... 100%

Optional Redemption ...... Prior to September 26, 2016, we are entitled to redeem the Notes, in whole or in part, at a redemption price equal to the principal amount of the Notes plus a make-whole premium and accrued and unpaid interest to the date of redemption. The “make-whole premium” is described under “Description of Notes—Optional Redemption.”

On or after September 26, 2016, we are entitled to redeem the Notes, in whole or in part, at the fixed redemption prices and subject to the conditions set forth under “Description of Notes—Optional Redemption,” plus accrued and unpaid interest to the date of redemption.

Optional Tax Redemption ...... The Notes are redeemable at our option in whole (but not in part) at any time at the principal amount thereof plus accrued and unpaid interest and additional amounts, if any, due thereon if we become obligated (i) to pay additional amounts in excess of those attributable to a withholding tax rate of 4.99% with respect to the Notes or (ii) if additional amounts are payable in respect of value-added tax or if payment of principal, premium, if any, or interest on the Notes is subject to value-added tax and, in each case, such value-added tax no longer results in a tax credit due to an action or event not attributable to the Issuer. See “Description of Notes—Optional Redemption for Changes in Taxes.”

Additional Amounts ...... All payments by us in respect of the Notes, whether of principal or interest, will be made without withholding or deduction for or on account of any applicable taxes and duties, unless required by law, in which case, subject to specified exceptions and limitations, we will pay such additional amounts as may be required so that the net amount received by the holders of the Notes in respect of principal, interest or other payments on the Notes, after any such withholding or deduction, will not be less than the amount that would have been received in the absence of any such withholding or deduction. For a discussion of the tax consequences of, and limitations on, the payment of additional amounts with respect to any such taxes, see “Description of Notes— Additional Amounts” and “Taxation—Certain Peruvian Tax

Considerations.”

Mandatory Offer to Repurchase ...... Upon the occurrence of certain change-of-control events, combined with a rating downgrade, described under “Description of Notes— Repurchase of Notes upon a Change of Control Repurchase Event,” you may require us to repurchase some or all of your Notes at 101% of their principal amount plus accrued and unpaid interest and additional amounts, if any. The occurrence of those events may, however, be an event of default under our debt agreements, and those agreements may prohibit the repurchase of the Notes. Furthermore, we cannot assure you that we will have sufficient resources to satisfy our repurchase obligation. You should read carefully the sections called “Risk Factors—We may not have the ability to raise the funds necessary to finance any change-of-control offer required by the Indenture” and “Description of Notes—Repurchase of Notes upon a Change of Control Repurchase Event.”

Guarantors ...... The Notes will be fully and unconditionally guaranteed on a senior unsecured basis by our existing direct or indirect subsidiaries and certain of our future direct or indirect subsidiaries. See “Description of Notes— Note Guarantees.”

Ranking ...... The Notes and the guarantees will be our and the guarantors’ unsecured unsubordinated obligations and will:

 rank senior in right of payment to any of our and the guarantors’ existing and future subordinated indebtedness;

 rank equally in right of payment with all of our and the guarantors’ existing and future unsecured unsubordinated indebtedness (other than obligations preferred by statute or by operation of law);

 rank effectively junior in right of payment to any of our and the guarantors’ secured indebtedness to the extent of the value of the assets securing such indebtedness; and

 be structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of the non-guarantor subsidiaries.

As of June 30, 2012, on an as adjusted basis after giving effect to this offering and the application of the net proceeds therefrom as described under “Use of Proceeds,” our outstanding senior indebtedness would have been S/.576.3 million (U.S.$215.8 million), including the Notes and including S/.55.8 million (U.S.$20.9 million) of secured indebtedness.

See “Risk Factors—Risks Related to an Investment in the Notes—The Notes will be effectively subordinated to our secured debt and certain claims preferred by statute.”

Certain Covenants ...... The Indenture contains covenants limiting our ability and our subsidiaries’ ability to:

 incur additional debt or issue certain preferred shares;

 pay dividends on or make other distributions in respect of our capital stock or make other restricted payments;

 make certain investments;

 sell certain assets;

 create liens on certain assets to secure debt;

 consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

 enter into certain transactions with our affiliates; and

 designate our subsidiaries as unrestricted subsidiaries.

You should read “Description of Notes—Suspension of Certain Covenants” for a description of these covenants.

If the Notes obtain investment grade ratings from two or more of Moody’s Investors Services, Inc., Standard & Poor’s Rating Group or Fitch Ratings Ltd., and no default has occurred and is continuing, the foregoing covenants will cease to be in effect with the exception of covenants that contain limitations on liens and certain limitation on, among other things, our ability to designate subsidiaries as unrestricted subsidiaries and certain restrictions on consolidations, mergers and transfers of assets, for so long as each of the foregoing rating agencies maintains its investment grade ratings.

Book-Entry; Form and Denominations ...... The Notes will be issued in the form of one or more global Notes without coupons, registered in the name of a nominee of DTC, as depositary, for the accounts of its direct and indirect participants including Clearstream, Luxembourg and Euroclear (as each such term is defined under “Book- Entry, Delivery and Form”). The Notes will be issued in minimum denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. The Notes will not be issued in definitive form except under certain limited circumstances described herein. See “Book-Entry; Delivery and Form.”

Listing ...... Application has been made to admit the Notes to the official list of the Luxembourg Stock Exchange and for the Notes to be traded on the Euro MTF Market of the Luxembourg Stock Exchange; however, the Notes have not yet been listed.

Transfer Restrictions ...... Neither the Notes nor the guarantees have been nor will be registered under the Securities Act or any state securities laws. The Notes may not be offered or sold except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. See “Notice to Investors.”

We will not be required to, nor do we intend to, register the Notes for resale under the Securities Act or to offer to exchange the Notes for Notes registered under the Securities Act or the securities laws of any

jurisdiction.

Use of Proceeds ...... We will use the net proceeds from the sale of the Notes, estimated at U.S.$198.4 million, after deducting expenses and fees in connection with this offering, to (i) prepay principal and accrued interests of our short-term debt with banks and other financial institutions in an aggregate amount of U.S.$49.0 million; (ii) prepay principal and accrued interests of our long-term debt with banks and other financial institutions in an aggregate amount of U.S.$52.2 million; and (iii) fund capital expenditures and for other general corporate purposes. See “Use of Proceeds.”

Risk Factors ...... See “Risk Factors” for important information regarding the Notes and the Company. Please read that section carefully before you decide whether to invest in the Notes.

No Established Trading Market ...... The Notes are a new issue of securities with no established trading market. Application has been made to admit the Notes to the official list of the Luxembourg Stock Exchange and for the Notes to be traded on the Euro MTF Market of the Luxembourg Stock Exchange; however, the Notes have not yet been listed. We cannot assure you that an active or liquid trading market for the Notes will develop. If an active or liquid trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected.

Governing Law ...... The Indenture and the Notes will be governed by, and will be construed in accordance with, the laws of the state of New York. We will submit to the non-exclusive jurisdiction of the U.S. federal and state courts located in the Borough of Manhattan in The City of New York in respect of any action arising out of or based on the Notes.

Trustee, Registrar and Paying Agent ...... Deutsche Bank Trust Company Americas.

Luxembourg Listing Agent, Paying Agent and Transfer Agent ...... Deutsche Bank Luxembourg S.A.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA

The following table sets forth our summary consolidated financial data for each of the periods presented. The summary financial data set forth below as of January 1, 2010 and December 31, 2010 and 2011 and for the years ended December 31, 2010 and 2011 have been derived from our Annual Audited Consolidated Financial Statements and notes thereto included elsewhere in this offering memorandum. The summary financial data set forth below as of June 30, 2012, and for the six-month periods ended June 30, 2011 and 2012 have been derived from our Interim Unaudited Consolidated Financial Statements and notes thereto included elsewhere in this offering memorandum. This information should be read in conjunction with the sections entitled “Presentation of Financial Information and Other Information,” “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our Consolidated Financial Statements have been prepared in accordance with IFRS.

As of As of June 30, December 31, 2012 2012 2010 2011 2011 (in millions (in millions (in millions (in millions of S/.) of U.S.$)(1) of S/.) of U.S.$)(2) Statement of Financial Position Data: Cash and cash equivalents ...... S/. 15.6 U.S.$ 5.9 S/. 15.7 S/. 15.8 U.S.$ 5.9 Trade accounts receivable, net ...... 22.0 8.2 17.9 19.5 7.3 Other accounts receivable ...... 17.7 6.6 6.2 3.2 1.2 Inventories, net ...... 216.0 80.9 141.6 244.1 91.4 Prepaid expenses ...... 12.7 4.8 5.3 4.9 1.8 Total current assets ...... 284.0 106.4 186.7 287.5 107.6 Prepaid expenses ...... 2.0 0.7 — 4.3 1.6 Other receivables ...... 15.3 5.7 10.0 16.1 6.0 Investments available-for-sale ...... 0.3 0.1 — 0.3 0.1 Property, plant and equipment ...... 538.7 201.8 370.1 510.0 191.0 Intangible assets, net ...... 5.0 1.9 5.3 4.8 1.8 Total non-current assets ...... 561.3 210.2 385.4 535.5 200.6 Total assets ...... S/. 845.3 U.S.$ 316.6 S/. 572.1 S/. 823.0 U.S.$ 308.2

Short-term debt(3) ...... S/. 171.7 U.S.$ 64.3 S/. 53.8 S/. 124.6 U.S.$ 46.7 Trade accounts payable ...... 181.9 68.1 138.9 209.0 78.3 Current income tax ...... 1.4 0.5 6.3 2.4 0.9 Other accounts payable ...... 26.5 9.9 24.7 24.5 9.2 Deferred income (current) ...... 0.9 0.3 0.8 0.9 0.3 Total current liabilities ...... 382.4 143.2 224.5 361.3 135.3 Financial obligations ...... 153.8 57.6 100.2 173.5 65.0 Trade payables ...... 6.7 2.5 7.2 6.8 2.4 Deferred income tax liabilities ...... 36.2 13.6 35.6 35.6 13.3 Deferred income (non-current) ...... 1.3 0.5 2.5 1.7 0.6 Total non-current liabilities ...... 198.0 74.2 145.6 217.6 81.5 Total liabilities ...... 580.3 217.4 370.1 578.9 216.7 Stockholders’ equity ...... 265.0 99.2 202.0 244.1 91.5 Total liabilities and equity ...... S/. 845.3 U.S.$ 316.6 S/. 572.1 S/. 823.0 U.S.$ 308.2

As of or for the As of or for the Six Months Ended June 30, Year Ended December 31, 2011 2012 2012 2010 2011 2011 (S/.) (S/.) (U.S.$)(1) (S/.) (S/.) (U.S.$)(2) (in millions except for ratios or percentages) Other Financial Information: EBITDA(4) ...... 38.8 49.5 18.5 71.4 91.4 34.2 Total debt(6) ...... N/A 325.5 121.9 154.0 298.1 111.6 Net debt(7) ...... N/A 309.9 116.1 138.3 282.2 105.7 Cash flow from operations ...... 8.7 (0.7) (0.3) 45.8 20.4 13.5 Cash flow from investing activities ...... (48.5) (35.9) (13.5) (37.5) (163.4) (61.2) Cash flow from financing activities ...... 33.2 36.4 13.6 (3.9) 143.2 47.8 Net cash flow(8) ...... (6.6) (0.2) (0.1) 4.4 0.1 5.9 Operating margin ...... 7.1% 7.5% — 7.6% 7.8% — EBITDA margin(4)(9) ...... 8.4% 8.7% — 8.9% 9.0% — Total debt/LTM EBITDA(4)(5)(6) ...... N/A 3.19 — 2.16 3.26 — Net debt/ LTM EBITDA(5)(7) ...... N/A 3.04 — 1.94 3.09 — Interest coverage ratio(5)(10) ...... N/A 4.46 — 5.69 5.67 —

Six Months Ended June 30, Year Ended December 31, 2011 2012 2010 2011 Other Data Average sales per square meter of store space ...... S/. 5,905 S/. 5,628 S/. 10,972 S/. 10,649 Number of stores ...... 15 19 14 18 Total selling space of stores (in square meters) ...... 77,811 101,006 72,694 95,733 Average selling space per store (in square meters) ...... 5,187 5,316 5,192 5,318 Same-store sales growth(11) ...... 11.3% 7.4% 7.6% 10.2% ______(1) Amounts stated in U.S. dollars as of or for the six months ended June 30, 2012 have been translated from nuevos soles at the exchange rate of S/.2.670 = U.S.$1.00 as of June 28, 2012. See “Exchange Rates.” (2) Amounts stated in U.S. dollars as of or for the year ended December 31, 2011 have been translated from nuevos soles at the exchange rate of S/.2.670 = U.S.$1.00 as of June 28, 2012. See “Exchange Rates.” (3) Includes financial obligations and current portion of long-term debt. (4) EBITDA is calculated as net income, plus financial expenses (less financial income), income tax, net, and depreciation and amortization, minus gain from exchange difference, net. EBITDA is presented because it is a widely accepted indicator of funds available to service debt, although it is not an IFRS measure of liquidity or performance. We believe that EBITDA, while providing useful information, should not be considered in isolation or as a substitute for net income as an indicator of operating performance, or as an alternative to cash flow as a measure of liquidity. Additionally, our calculation of EBITDA may be different from the calculation used by other companies and therefore, comparability may be affected. Reconciliation of EBITDA is as follows:

Six Months Ended June 30, Year Ended December 31, 2011 2012 2012 2010 2011 2011 (S/.) (S/.) (U.S.$)(1) (S/.) (S/.) (U.S.$)(2) (in millions) Net income ...... S/. 17.9 S/. 20.8 U.S.$ 7.8 S/. 32.9 S/. 42.2 U.S.$ 15.8 Plus: Financial expenses ...... 6.8 13.1 4.9 12.5 16.5 6.2 Less: Financial income ...... (0.7) (0.4) (0.2) (1.4) (1.5) (0.6) Plus: Income Tax ...... 9.1 9.0 3.4 17.6 22.9 8.6 Less: Gain from exchange difference, net ...... (0.5) (0.1) (0.0) (0.9) (1.1) (0.4) Plus: depreciation ...... 5.3 6.4 2.4 8.8 10.4 3.9 Plus: amortization ...... 1.3 0.6 0.2 1.8 1.9 0.7 EBITDA ...... S/. 38.8 S/. 49.5 U.S.$ 18.5 S/. 71.4 S/. 91.4 U.S.$ 34.2 ______(5) EBITDA was calculated for the last 12-month period. “LTM” means last 12 months. (6) Total debt represents the sum of short-term and long-term debt. (7) Net debt represents total debt less cash and cash equivalents. Reconciliation of net debt is as follows:

As of June 30, As of December 31, 2012 2012 2010 2011 2011 (S/.) (U.S.$)(1) (S/.) (S/.) (U.S.$)(2) (in millions) Long-term debt ...... S/. 153.8 U.S.$ 57.6 S/. 100.2 S/. 173.5 U.S.$ 64.9 Plus: short-term debt ...... 171.7 64.3 53.8 124.6 46.7 Total debt ...... 325.5 121.9 154.0 298.1 111.6

Less: Cash and cash 15.6 5.9 15.7 15.8 5.9 equivalents ...... Net debt ...... S/. 309.9 U.S.$116.1 S/. 138.3 S/. 282.2 U.S.$105.7 ______(8) Net cash flow is the sum of (i) cash flow from operations, (ii) cash flow from investing activities and (iii) cash flow from financing activities. (9) EBITDA margin is the ratio of EBITDA to sales. (10) Interest coverage ratio is the ratio of EBITDA to financial expenses. (11) Same-store sales growth represents the growth in net sales at locations that have been operational for a period longer than 12 months, including relocated and remodeled stores, over the same period of the preceding year.

RISK FACTORS

The following section describes the principal perceived risks from an investment in the Notes but does not describe all the risks of an investment in the Notes. Before making any investment decision, prospective investors should carefully read this offering memorandum in its entirety, including the risk factors set forth below. The order of presentation of the risk factors below does not indicate the likelihood or the scope of any potential impairment that these risks might cause to our business. These risks could occur individually or cumulatively, if at all.

Risks Related to Our Company

Sustained uncertainty regarding current economic conditions and other factors beyond our control could adversely affect demand for our products, our costs of doing business and our financial performance.

Our operations are conducted in Peru. Consumption of construction materials and home improvement products in Peru is highly related to construction levels, which depend significantly on the stability of the housing, residential construction and home improvement markets, as well as general economic conditions in Peru, including changes in gross domestic product. For instance, because a substantial part of our business is selling construction materials to homebuilders, a decrease in housing starts will generally result in a decrease in our sales. Adverse conditions in, or sustained uncertainty about, these markets or the Peruvian economy could adversely affect consumer disposable income or confidence, causing our customers to delay purchasing or determine not to purchase our products. Other factors, including high levels of unemployment, interest rate fluctuations, labor costs, the availability of financing, the credit markets, including mortgages, mortgage loans and consumer credit and other conditions beyond our control, could also adversely affect demand for our products, our costs of doing business and our financial performance.

We have many competitors who could take sales and market share from the Company if we fail to execute our merchandising, marketing and distribution strategies effectively.

We operate in a highly competitive market for construction materials and home improvement products. Our main competitors include small “mom-and-pop” hardware stores, specialty retailers, clusters of hardware sellers and informal stores that primarily compete based on price, their ongoing relationships with members of the local community and convenient locations for their customers. We also compete with other large modern retail home improvement stores, such as Sodimac, owned by the Chilean retailer Falabella, Cassinelli, Decor Center and Promart. We estimate that in 2011, modern retail home improvement stores similar to Maestro represented approximately 19% of the Peruvian home improvement market, whereas local hardware stores, specialty stores and informal stores represented 81% of the Peruvian home improvement market. The competitive environment in which we operate may be more challenging during periods of slow economic growth and high unemployment, during which our competitors may offer significant promotions, rebates and discounts, particularly on discretionary items. We typically do not offer special promotions or discounts because we attempt to maintain competitive prices throughout the year, and therefore, we may find it more challenging to compete in our market during such periods. The principal competitive factors in our industry include price of merchandise, store locations, customer service, product quality, in-stock levels and merchandise assortment and presentation. Our failure to react effectively to competitive pressures and changes in the markets for construction materials and home improvement products could affect our financial performance.

We may have difficulty obtaining enough high-quality merchandise at competitive prices in a timely and efficient manner.

Our future success depends on our ability to select and purchase high-quality merchandise from our suppliers, particularly merchandise with well-recognized brand names, at attractive prices and in a timely and efficient manner. Our ability to access sufficient quantities of high-quality, affordable merchandise could be affected by our failure to identify and develop relationships and strategic alliances with key suppliers, political instability in the jurisdictions where our suppliers operate, the financial instability of suppliers, suppliers’ noncompliance with applicable laws, trade restrictions, tariffs, currency exchange rates, supply disruptions, shipping interruptions or costs and other factors beyond our control. Our ability to obtain merchandise would also be affected if our competitors entered into strategic or exclusive relationships with suppliers, to the extent that such relationships

were to prevent us from obtaining merchandise from those suppliers on mutually agreeable terms. A disruption in the availability of sufficient quantities of high-quality, affordable merchandise in a timely and efficient manner could adversely affect our business and results of operations.

In addition, our success depends on our ability to continue to negotiate competitive prices with our suppliers. Because our prices are generally set by reference to our local competitors, we are limited in our ability to pass along price increases to customers. Although we enter into annual master purchase agreements with our main suppliers to establish certain conditions, such as lead time, rebates, advertising grants, logistics conditions and a minimum fill rate (i.e., the percentage of each purchase order fulfilled on time by the supplier), we have no long- term pricing arrangements with suppliers. The prices at which we purchase products from our suppliers are set at the time that we place an order based on specified price lists, which can be modified by suppliers upon short-term notice. As a result, if our suppliers increase the prices of the products we sell, our gross margins would be lower, which could adversely affect our results of operations.

We may not timely identify or effectively respond to consumer needs, expectations or trends, which could adversely affect our relationship with customers, the demand for our products and services and our market share.

It is difficult to successfully predict the products that our customers will demand. The success of our business depends in part on our ability to identify and respond promptly to evolving trends in demographics, consumer preferences, expectations and needs and industry needs, while also maintaining appropriate inventory levels. We regularly conduct market research to identify evolving trends in demographics, consumer preferences, expectations and needs and industry needs. However, numerous limitations exist on the methods, scope and accuracy of this research. If the results of our research are inaccurate and we are unable to maintain attractive stores and to provide our customers with the appropriate mix and selection of products in a timely manner, the demand for our products and our market share could be adversely affected.

We may not be able to successfully execute our growth strategy, effectively manage our growth or integrate future acquisitions into our existing business.

A major component of our future growth is expected to come from the opening of new stores. Successful execution of our expansion program will require considerable expenditures before any significant associated revenues are generated. Moreover, the successful execution of our strategy depends on a number of factors, including our ability to locate and secure prime real estate locations, risks associated with the development and construction of new stores, such as increased construction costs or failure or delay in obtaining all necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, the hiring and training of qualified personnel, the level of existing and future competition in areas where new stores will be located, the availability of additional capital, our ability to execute our concepts successfully in new markets and favorable financial market and macroeconomic conditions in Peru. We cannot assure you that our future stores will perform as expected or that they will generate revenues and cash flow comparable with those generated by our existing stores.

We expect that our expansion will also place significant demands on our management resources, which could cause us to operate our business less effectively. We will be required to execute our expansion program in order to open new stores on a timely and cost-effective basis while maintaining a high level of quality, efficiency and performance at both existing and newly opened stores. We cannot guarantee that we will be able to obtain and distribute adequate product supplies to our stores at acceptable costs.

Additionally, new stores may have levels of sales and profitability below those of our existing stores and may also divert customers from our existing stores, which could affect our financial performance. Our growth depends on our ability to attract new customers and increase our sales to current customers. If we are not able to increase our customer base and our rate of customer loyalty, our financial performance may be adversely affected. Opening new stores will also require us to maintain increased levels of inventory at acceptable costs to meet the needs of new stores and to hire, train and retain skilled project advisors.

Another element of our growth strategy is to pursue strategic acquisitions and partnerships that tend to expand our geographic footprint. In the future, we may decide to expand by acquiring other companies in Peru or

abroad. Any future acquisitions will depend on our ability to identify suitable candidates, negotiate acceptable terms, obtain financing for the acquisitions and successfully integrate their operations with our existing businesses. Significant acquisitions could change the scale of our business and expose us to new geographic, political, operating and financial risks, such as risks related to the quality of the assets being acquired, difficulties in assimilating the operations and personnel of any acquired companies, potential disruption of our ongoing business, inability of management to maximize our financial and strategic position through the successful integration of the acquired businesses, inability of management to maintain uniform standards, controls, procedures and policies, impairment of relationships with employees, customers and contractors as a result of any integration of new personnel and the potential unknown liabilities associated with acquired assets or businesses. In addition, future acquisitions could increase our financial costs and require us to increase our debt, or could have an impact on our ability to access financial markets and external capital on acceptable terms.

In the event that we are unable to effectively manage and implement our growth strategy and future acquisitions, such failure could have an adverse effect on our business, financial condition and results of operations.

A significant portion of our business is concentrated in the Lima metropolitan area.

Although we have stores in eight other cities throughout the country, the majority of our stores are located in the Lima metropolitan area. In 2011, approximately 64% of our sales were derived from stores in the Lima metropolitan area. While we plan to open other stores outside of Lima, we expect that our business will continue to depend to a large extent on the strong economic conditions in the Lima metropolitan area. In addition, to the extent that natural disasters or adverse economic conditions or increased competition occur in, or disproportionately affect, the Lima metropolitan area, their adverse effects on our financial condition and results of operations are likely to be amplified.

Our success depends upon our ability to attract, train and retain highly qualified sales personnel while also controlling our labor costs.

Our customers expect a high level of customer service and product knowledge from our sales personnel. To meet the needs and expectations of our customers, we must attract, train and retain a large number of highly qualified sales employees while at the same time controlling labor costs. Our ability to control labor costs is subject to numerous external factors, including prevailing wage rates, the impact of legislation or regulations governing labor relations and health and other insurance costs. Because all of our sales employees are salaried, we have limited flexibility to reduce labor costs by reducing the number of hours that our employees work. In addition, we invest significant resources in training and motivating our sales personnel to maintain a high level of customer service. There is no assurance that we will be able to attract or retain highly qualified sales personnel in the future while controlling labor costs.

Failure to achieve and maintain a high level of product and service quality could damage our image with customers and adversely impact our sales, profitability, cash flows and financial condition.

We perform periodic inspections of our key international suppliers in countries including, but not limited to, China, Turkey and Brazil in order to assess the quality of the products that we purchase and our suppliers’ infrastructure, machinery and equipment, procedures and corporate sustainability. However, we cannot assure you that we will not experience problems with product quality in the future, which could result in a negative impact on customer confidence in us and our brand image as a retailer of high-quality products at competitive prices. Additionally, we provide direct warranties for private-brand products and products imported directly by the Company, and under Peruvian law, all products that we sell have an implied warranty. A decline in the quality of those products could result in product recalls, product liability and warranty claims, which would disrupt our operations and adversely affect our financial condition.

Our pricing strategy may not be successful or sustainable in the long term.

Our pricing strategy is to provide our customers at all locations with competitive prices for every product that we sell. We engage in regular comparisons of market prices at a local level to offer our customers prices

comparable to those of our local competitors. Although this pricing strategy has served the Company well historically, we cannot assure you that our processes for such comparison will function correctly or that this strategy will be successful or sustainable in the long term. In addition, certain of our competitors could maintain their low prices for extended periods of time, which could force us to change our pricing strategy and our selection of products and suppliers. In the event prices charged to us by our suppliers increase and we are unable to renegotiate our cost of goods based on the prices we charge our customers, we may experience reduced margins or losses or be forced to change our pricing strategy, which may adversely affect our business, financial condition and results of operations.

Disruptions in our distribution or logistics could adversely impact our business.

In 2011, our distribution centers were responsible for the storage and distribution of a significant percentage of our products. This merchandise was then processed and transported by third-party contractors to our stores. Any natural disaster or other serious disruption to one or more of these facilities due to fire, earthquakes, power shortages or any other cause could damage a significant portion of our inventory, impair our ability to adequately stock our stores and process returns of products to vendors and adversely affect our sales and profitability. In addition, we may be unable to increase our prices in response to an increase in the cost of transportation services, which we generally subcontract to third parties. These, and other disruptions in our supply chain, could adversely affect our results of operations.

A failure of a key information technology system or process could adversely affect our business.

We rely extensively on enterprise-wide SAP and IBM ACE information systems to operate our businesses, including processing transactions, managing inventory, purchasing and selling products on a timely basis and maintaining cost-efficient operations, some of which are managed by third-party service providers. We or our service providers may experience operational problems with our information systems, such as errors, interruptions, delays or cessation of services in key portions of our infrastructure, as a result of system failures, viruses, computer “hackers” or other causes. Any material disruption or slowdown of our systems could cause information to be lost or delayed, which could result in delays in the delivery of merchandise to our stores and our customers and could significantly disrupt our operations and be costly, time-consuming and resource-intensive to remedy, which could ultimately could adversely affect our results of operations.

We may not be able to obtain the funding required to implement future strategies.

Our expansion program will require significant capital expenditures. We cannot assure you that we will generate sufficient cash flow from operations, or that we will have access to external financing sources, to adequately fund such capital expenditures. Our access to external sources of financing will depend on many factors, including factors beyond our control, such as conditions in the global capital markets and investors’ risk perception of investing in Peru and in emerging markets generally. Any equity or debt financing, if available, may not be on terms that are favorable to us. If our access to external financing is limited, we may not be able to execute our strategy, which could adversely affect our business, financial condition and results of operations.

Changes in existing or new laws and regulations (including tax laws) or regulatory enforcement priorities could adversely affect our business.

Laws and regulations at the local, regional and national levels change frequently, and such changes can impose significant costs and other burdens of compliance on our business and our vendors. Any changes in regulations, the interpretation of existing regulations, the imposition of additional regulations or the enactment of any new legislation that affects employment or labor issues, trade, product safety, transportation or logistics, energy costs, health care, taxes or environmental issues could have an adverse effect on our financial condition and results of operations. Changes in enforcement priorities by governmental agencies charged with enforcing existing laws and regulations can increase our cost of doing business.

Also, the Peruvian government from time to time implements changes to tax laws and regulations. Any such changes, as well as changes in the interpretation of tax laws and regulations, may result in increases to our overall tax burden, which would negatively affect our profitability.

In addition, we are subject to municipal regulations that require us to obtain and maintain authorizations, permits and licenses for, among other things, the construction and operation of our stores. Such authorizations, permits and licenses may be subject to periodic renewal and enforcement actions if we fail to comply with applicable municipal laws and regulations, which could result in the imposition of fines, revocation of licenses or suspension of operations with respect to our stores.

Enfoca Inversiones exercises control over our affairs and policies, and its interests may be different from yours.

Enfoca Inversiones, a private equity fund manager, and its affiliated funds own common shares representing 91.85% of our capital stock. We cannot assure you that the interests of Enfoca Inversiones will not conflict with your interests. Enfoca Inversiones has the ability to determine the outcome of substantially all matters submitted for a vote to our shareholders and thus exercises control over our business policies and affairs, including the following:

 the appointment of the majority of our Board of Directors and, as a result, most determinations of our Board with respect to our business direction and policy, including the appointment and removal of our officers;  decisions with respect to acquisitions, sales and dispositions of our assets;  whether dividends are paid or other distributions are made and the amount of any dividends or other distributions; and  the amount of debt financing that we incur.

See “Directors and Senior Management” and “Principal Shareholders.”

We depend on key managers and our Board of Directors.

Our success depends largely on the efforts and strategic vision of our executive management team and our Board of Directors. The loss of key managers and members of our Board of Directors or our inability to attract and retain qualified management personnel could materially and adversely affect the success of our operations. We cannot assure you that we will be able to attract and retain qualified management personnel on acceptable terms.

The Indenture contains, and our future indebtedness may contain, restrictions on our ability to operate our business and to pursue our business strategies, and our failure to comply with these covenants could result in an acceleration of our indebtedness.

The Indenture contains, and our future indebtedness may contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our ability to engage in acts that may be in our best long-term interests. The Indenture includes covenants that, among other things, restrict our ability to:

 incur certain additional debt or issue certain preferred shares;  pay dividends on or make other distributions in respect of our capital stock or make other restricted payments;  make certain investments;  sell certain assets;  create liens on certain assets to secure debt;  consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

 enter into certain transactions with our affiliates; and  designate our subsidiaries as unrestricted subsidiaries.

We may incur other indebtedness in the future with the same and/or additional covenants. We cannot assure you that we will be able to comply with such covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the agent and the lenders and/or amend the covenants.

Any breach of the covenants in the Indenture could result in a default of the obligations under such debt and cause a cross-default under other debt. If there were an event of default under the Indenture or future credit agreements that was not cured or waived, the lenders under our credit agreements could cause all amounts outstanding thereunder to be due and payable immediately. Our assets and cash flow may not be sufficient to fully repay borrowings under future credit agreements and our obligations under the Notes offered hereby if accelerated upon an event of default. If, as or when required, we are unable to repay, refinance or restructure our indebtedness under, or amend the covenants contained in, any future credit agreements, the lenders under the relevant facilities would be able to declare an event of default and thereafter institute foreclosure proceedings against the assets securing borrowings pursuant to the terms of such credit agreements and other related loan documents.

Our business is highly dependent on the availability of working capital financing, and our growth strategy may require additional working capital financing that may not be available on favorable terms, or at all.

We have, in the past, entered into loan agreements and credit facilities for working capital. Our business requires significant working capital, and although we believe that we will increase our reliance on working capital debt going forward, given that we purchase a portion of our product mix from foreign suppliers, who tend to require deposits or other up-front payments for merchandise, the continued incurrence of debt may result in increased debt service obligations and could require us to agree to operating and financial covenants that would further restrict our operations. Working capital financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

The occurrence of natural disasters in the regions where we operate could impair our ability to conduct business effectively and could impact our results of operations.

We are exposed to the risk of natural disasters. On August 15, 2007, for instance, a strong earthquake measuring 7.9 on the Richter scale hit the central coast of Peru, heavily affecting the Ica province in particular. Although we maintain insurance coverage for our fixed assets and inventory, a natural disaster could adversely affect our fixed assets, such as our stores and warehouses, as well as our inventory. In addition, a natural disaster or multiple catastrophic events could have a material adverse effect on consumer demand for our products in the affected region and could result in substantial volatility in our results of operations for any fiscal quarter or year.

In addition, Peru may be affected by El Niño, an oceanic and atmospheric phenomenon that causes a warming of temperatures in the Pacific Ocean, resulting in heavy rains off the coast of Peru and Ecuador and various other effects in other parts of the world. The effects of El Niño, which typically occurs every two to seven years in the Peruvian summertime, include, among other things, flooding and the destruction of fish populations and agriculture and have historically adversely affected Peru’s economy. In addition, Peru has experienced other natural phenomena in the past, such as earthquakes and floods.

If natural disasters, such as El Niño or the August 2007 earthquake in Peru, were to occur again, we may suffer damage to, or destruction of, properties and equipment, which may have an adverse effect on our business.

Future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements against us, which could adversely affect our results of operations and financial condition.

We currently are, and may in the future become, involved in lawsuits, regulatory inquiries and governmental and other legal proceedings arising out of the ordinary course of our business. Some of these

proceedings raise difficult and complicated factual and legal issues and are subject to uncertainties and complexities. The timing of the final resolutions to lawsuits, regulatory inquiries and governmental and other legal proceedings in Peru is generally uncertain. While we do not consider any of the legal proceedings in which we are currently involved, individually or collectively, material, the possible outcomes of, or resolutions to, these proceedings could include adverse judgments or settlements, either of which could require substantial payments.

Risks Related to Peru

Poor economic conditions in Peru could adversely affect our operations.

Substantially all of our operations and customers are located in Peru. As a result, our business, financial position and results of operations are dependent upon economic and social climate in Peru, including price stability, inflation, interest rates, regulations, taxation, social stability, political unrest and other developments in or affecting Peru, over which we have no control.

Moreover, our business is highly dependent upon our customers’ purchasing power, which depends on general Peruvian economic conditions, including levels of unemployment, interest rate fluctuations, the availability of consumer financing and the state of the credit markets.

According to data published by the Central Reserve Bank of Peru, Peruvian GDP grew at a rate of 8.9% in 2007, 9.8% in 2008, 0.9% in 2009, 8.8% in 2010 and 6.2% in 2011. In the first six months of 2012, Peruvian GDP grew by 6.1% as compared to 5.3% in the first six months of 2011. Metals have represented more than 58% of Peru’s exports in each year since 2007, which makes the Peruvian economy vulnerable to a sharp fall in metal commodity prices. If metal prices were to fall, employment, consumer spending and demand for housing would be adversely affected, and as a result, demand for our products could decrease.

A decline in economic activity in Peru, the devaluation of the nuevo sol or increases in inflation or domestic interest rates may reduce our customers’ ability to purchase our products or to construct or improve their homes, which in turn could affect the demand for our products. In the past, Peru has experienced periods of weak economic activity. We cannot assure you that such conditions will not return or that such conditions will not have a material and adverse effect on our business, results of operations, financial condition and ability to repay the Notes.

Political developments in Peru could adversely affect our operations.

Our financial condition and results of operations may be adversely affected by changes in Peru’s political climate to the extent that such changes affect the nation’s economic policies, growth, stability, outlook or regulatory environment.

Peru has, from time to time, experienced social and political turmoil, including riots, nationwide protests, strikes and street demonstrations. Despite Peru’s ongoing economic growth and stabilization, social and political tensions and high levels of poverty and unemployment continue. Future governmental policies to preempt or respond to social unrest could include, among other things, expropriation or nationalization of private assets and property, suspension of the enforcement of creditors’ rights or new taxation policies. These policies could adversely and materially affect the economy and our business.

Peru’s current president, Ollanta Humala of the Gana Perú political coalition, has been in office since July 28, 2011. The election of President Humala initially generated a climate of political and economic uncertainty. However, President Humala’s administration ratified Julio Velarde to continue in his role as president of the Central Reserve Bank of Peru and appointed Luis Castilla, the Vice-Minister of Treasury under the previous administration, as Minister of Economy and Finance. In his first year in office, President Humala has substantially maintained the moderate economic policies of former president Alan García, whose administration was characterized by business- friendly and open-market economic policies that sustained and fostered economic growth, while controlling the inflation rate at historically low levels. However, we cannot assure you that the current or any future administration will maintain business-friendly and open-market economic policies or policies that stimulate economic growth and

social stability. Any changes in the Peruvian economy or the Peruvian government’s economic policies may have a negative effect on our business, financial condition and results of operations.

In addition, because in the most recent election for congress no single party obtained a clear majority, government gridlock and political uncertainty may occur. We cannot provide any assurances that political or social developments in Peru, over which we have no control, will not have an adverse effect on Peru’s economic situation and on our business, results of operations, financial condition and ability to repay the Notes.

The Peruvian economy could be adversely affected by economic developments in regional or global markets.

Real estate and securities markets in Peru are influenced by economic and market conditions in regional and global markets. Although economic conditions vary from country to country, investors may perceive that events occurring in one country are related to the markets in other countries, including Peru. For example, the Peruvian economy was adversely affected by the political and economic events that occurred in several emerging economies in the 1990s, including in Mexico in 1994, which affected the market value of securities in many markets throughout Latin America. The crisis in the Asian markets beginning in 1997 also negatively affected markets throughout Latin America. Similar adverse consequences resulted from the economic crisis in Russia in 1998, the Brazilian devaluation in 1999 and the Argentine crisis in 2001. In addition, Peru continues to be affected by events in the economies of its major regional partners. Furthermore, the Peruvian economy may be affected by events in developed economies that are trading partners of Peru or that affect the global economy.

The 2008 global economic crisis, principally driven by the sub-prime mortgage market in the United States, substantially affected the international financial system, including Peru’s securities market and economy. Additionally, the recent economic crisis in Europe, beginning with the financial crises in Greece, Spain, Italy and Portugal, may reduce the confidence of foreign investors, which may cause volatility in the securities markets and affect the ability of companies to obtain financing in the global capital markets. This could have a material adverse effect on Maestro’s business, economic and financial condition and results of operations. Likewise, the recent earthquake in Japan had a negative impact on the capital markets and the world’s economies.

The United States and the world’s other major economies showed signs of recovery and confidence in the financial system following the 2008 global economic crisis during the early months of 2011. However, fiscal problems in the United States due to difficulties and delays in increasing the government debt ceiling, culminating in the downgrade of the U.S. long-term sovereign credit rating by Standard & Poor’s on August 6, 2011, added to an already highly risk-averse environment. Meanwhile, renewed doubts about the pace of global growth, particularly in the United States, contributed to already weak international growth in the first half of 2011 and there is continuing uncertainty in some global markets. An interruption to the recovery of developed economies, the continued effects of the current crisis or a new economic and/or global financial crisis could affect Peru’s economy and, consequently, materially and adversely affect our business, economic and financial condition or results of operations.

Depreciation of the nuevo sol relative to the U.S. dollar could adversely affect our financial condition and results of operations.

Substantially all of our revenues and assets are denominated in nuevos soles. While the nuevo sol has appreciated relative to the U.S. dollar from S/.2.697 per U.S. dollar as of January 2, 2012 to S/.2.670 per U.S. dollar as of June 28, 2012, a sudden reversal of this trend or a sharp depreciation of the nuevo sol relative to the U.S. dollar would increase both the nuevo sol cost of U.S. dollar-denominated merchandise that we acquire for sale and the nuevo sol cost of serving our debt obligations denominated in U.S. dollars, including those with respect to the Notes. As a result, a devaluation of the nuevo sol against the U.S. dollar would increase our cost of sales, which in turn would decrease our net income if we are not able to increase our prices, and may limit our ability to satisfy our U.S. dollar-denominated debt service obligations, including those with respect to the Notes. As of September 21, 2012, the exchange rate was S/.2.600 to U.S.$1.00. See “Exchange Rates” for historical data on the nuevo sol–U.S. dollar exchange rate.

The re-implementation of certain laws by the Peruvian government, most notably restrictive exchange rate policies, could have an adverse effect on our business, financial condition and results of operations.

Since 1991, the Peruvian economy has undergone a major transformation from a highly protected and regulated system to a free-market economy. During this period, protectionist and interventionist laws and policies have been gradually dismantled to create a liberal economy dominated by private sector and market forces. The Peruvian economy has, in general, responded well to this transformation, growing at an average annual rate of over 6.8% during the period from 1994 to 2010, according to the Central Reserve Bank of Peru. Exchange controls and restrictions on remittances of profits, dividends and royalties have ceased. Prior to 1991, Peru exercised control over the foreign exchange markets by imposing multiple exchange rates and placing restrictions on the possession and use of foreign currencies. In 1991, the Fujimori administration eliminated all foreign exchange controls and consolidated exchange rates. Currently, foreign exchange rates are determined by market conditions, with periodic intervention from the Central Reserve Bank of Peru in the foreign exchange market in order to reduce volatility in the value of Peru’s currency against the U.S. dollar. We cannot assure you that the Peruvian government will not institute restrictive exchange rate policies in the future. Any such restrictive exchange rate policy could affect our ability to engage in foreign exchange activities and could also have a material adverse effect on our business, results of operations, financial condition and ability to repay the Notes.

Inflation could adversely affect our financial condition and results of operations.

As a result of reforms initiated in the early 1990s, Peruvian inflation has decreased significantly in recent years from triple-digit inflation during the 1980s. The inflation rate was 3.9% in 2007, 6.7% in 2008, 0.2% in 2009, 2.1% in 2010, 4.7% in 2011 and 1.56% in the first six months of 2012, in each case as measured by the Peruvian Consumer Price Index, which is calculated by INEI and measures variations in prices of a selected group of goods and services typically consumed by Peruvian families. We cannot assure you, however, that inflation will remain at these levels.

The Central Reserve Bank of Peru establishes a target inflation rate for each fiscal year and announces this target rate in order to shape market expectations. The target annual inflation rate since 2007 has been 2.0%, plus or minus 1.0%. If Peru experiences substantial inflation in the future, our costs may increase, and, if not accompanied by a corresponding increase in the price of our products, our operating and net margins may decrease, which may adversely affect our business and results of operations.

Inflationary pressures may also curtail our ability to access foreign financial markets and may lead to further government intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the Peruvian economy. Our operating results and the value of our securities, including the Notes, may be adversely affected by higher inflation.

The perception of higher risk in other countries, especially in emerging economies, may adversely affect the Peruvian economy, our business and the market price of Peruvian securities issued by Peruvian issuers, including the Notes.

Emerging markets like Peru are subject to greater risks than more developed markets, and financial turmoil in any emerging market could disrupt business in Peru and adversely affect the price of the Notes. Economic instability in Peru and in other emerging-market countries has been caused by many different factors, including high interest rates, changes in currency values, high levels of inflation, exchange controls, wage and price controls, changes in economic or tax policies, the imposition of trade barriers and internal security issues. Any of these factors, as well as volatility in the markets for securities similar to the Notes, may adversely affect the value of the Notes. Moreover, financial turmoil in any important emerging-market country may adversely affect prices in stock markets and prices for debt securities of issuers in other emerging-market countries as investors move their money to more stable, developed markets. An increase in the perceived risks associated with investing in emerging markets could dampen capital flows to Peru and adversely affect the Peruvian economy in general and investors’ interest in our Notes, in particular. We cannot assure you that investors’ interest in Peru, and in our Notes, will not be adversely affected by events in other emerging markets or the global economy in general.

Risks Related to an Investment in the Notes

Our obligations under the Notes will be subordinated to certain statutory liabilities.

Under Peruvian bankruptcy law, our obligations under the Notes are subordinated to certain statutory preferences. In the event of our liquidation, such statutory preferences, including claims for salaries, wages, secured obligations, social security, taxes, court fees and expenses related thereto, will have preference over any other claims, including claims by any investor in respect of the Notes.

The Notes will be effectively subordinated to our secured debt.

The Notes will be our unsecured unsubordinated obligations and will rank equal in right of payment with all of our other existing and future unsecured unsubordinated indebtedness. The payment of principal and interest on the Notes will be effectively subordinated in right of payment upon our bankruptcy to all of our secured indebtedness, which as of June 30, 2012, was S/.194.9 million (approximately U.S.$73.0 million). As of June 30, 2012, after giving pro forma effect to this offering and the application of a portion of the net proceeds to repay certain debt, including certain secured indebtedness, our secured indebtedness would be S/.55.8 million (approximately U.S.$20.9 million). If we become insolvent or are liquidated, or if payment in respect of our secured indebtedness is accelerated, our secured lenders will be entitled to exercise the remedies available to a secured lender under applicable law, in addition to any remedies that may be available under the financing arrangements relating to that secured indebtedness, and we cannot assure you that there will be sufficient assets remaining to pay amounts due on the Notes. As a result, you may receive less, ratably, than the lenders of our secured indebtedness.

There is no existing market for the trading of the Notes, and we cannot assure you that you will be able to sell your Notes in the future.

There is no existing market for trading of the Notes, and we cannot assure you that in the future a market for the Notes will develop, or that you will be able to sell any Notes you have purchased, or that any such Notes may be sold for any particular price. Although application has been made for the Notes to be admitted to the official list of the Luxembourg Stock Exchange and to be traded on the Euro MTF Market of the Luxembourg Stock Exchange, the Notes have not yet been listed nor accepted for trading and we cannot assure you that a trading market will develop. The initial purchasers have advised us that they currently intend to make a market in the Notes but they are not under any obligation to do so, and any market-making with respect to the Notes may be discontinued at any time without notice at the sole discretion of the initial purchasers.

In addition, trading or resale of the Notes (or beneficial interests therein) may be negatively affected by other factors described in this offering memorandum arising from this transaction or the market for securities of Peruvian issuers generally. As a result, we cannot assure you the level of liquidity of any trading market for the Notes and, as a result, you may be required to bear the financial risk of your investment in the Notes indefinitely.

We cannot assure you that the credit ratings for the Notes will not be lowered, suspended or withdrawn by the rating agencies.

The credit ratings of the Notes may change after issuance. Such ratings are limited in scope and do not address all material risks relating to an investment in the Notes but rather reflect only the views of the rating agencies at the time the ratings are issued. An explanation of the significance of such ratings may be obtained from the rating agencies. We cannot assure you that such credit ratings will remain in effect for any given period of time or that such ratings will not be lowered, suspended or withdrawn entirely by the rating agencies if, in the judgment of such rating agencies, circumstances so warrant. Any lowering, suspension or withdrawal of such ratings may have an adverse effect on the market price and marketability of the Notes.

Enforcing your rights as a noteholder in Peru may prove difficult.

Your rights under the Notes will be subject to the insolvency and administrative laws of Peru, and we cannot assure that you will be able to effectively enforce your rights in such bankruptcy, insolvency or similar

proceedings. In addition, the bankruptcy, insolvency, administrative and other laws of Peru may be materially different from, or conflict with, each other, including in the areas of rights of creditors, priority of third-party and related-party creditors, treatment of intercompany debt, ability to obtain post-bankruptcy filing loans or to pay interest and the duration of proceedings. The laws of Peru may not be as favorable to your interests as the laws of those jurisdictions with which you are familiar. The application of these laws, or any conflict among them, could call into question what and how Peruvian laws should apply. Such issues may adversely affect your ability to enforce your rights under the Notes in Peru or limit any amounts that you may receive.

The Notes are subject to certain restrictions on transfer.

The Notes have not been and will not be registered under the Securities Act or any U.S. state securities laws. You may not offer the Notes in the United States except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws, or pursuant to an effective registration statement. It is your obligation to ensure that your offers and sales of the Notes within the United States and other countries comply with applicable securities laws. See “Notice to Investors.”

Different disclosure and accounting principles in Peru and the United States may provide you with different or less information about us than you expect.

Securities disclosure requirements in Peru differ from those applicable in the United States. Accordingly, the information about us available to you may not be the same as the information available to security holders of a U.S. company. There may be less publicly available information about us than is regularly published about companies in the United States and certain other jurisdictions. We are not subject to the periodic reporting requirements of the Exchange Act and, therefore, are not required to comply with the information disclosure requirements that it imposes.

We may not have the ability to raise the funds necessary to finance any change-of-control offer required by the Indenture.

In the event of any change of control repurchase event (as defined in the Indenture), we may need to refinance large amounts of our debt, including the Notes. If a change of control occurs and is followed by a ratings downgrade resulting in a change of control repurchase event, we must offer to buy back the Notes for a price equal to 101% of the principal amount of the Notes, plus any accrued and unpaid interest. We cannot assure you that there will be sufficient funds available for us to make any required repurchases of the Notes upon a change of control. If we fail to repurchase the Notes in that circumstance, we will go into default under the Indenture. Any future debt that we incur may also contain restrictions on repayment upon a change of control. If any change of control repurchase event occurs, we cannot assure you that we will have sufficient funds to satisfy all of our debt obligations. The buyback requirements may also delay or make it harder for others to effect a change of control. See “Description of Notes—Repurchase of Notes upon a Change of Control Repurchase Event.”

The ability of investors to enforce civil liabilities under U.S. securities laws may be limited.

None of our directors or executive officers are residents of the United States. All or a substantial portion of our assets and those of our directors and executive officers are located outside of the United States. As a result, it may not be possible for investors in our securities to effect service of process within the United States upon such persons or to enforce in U.S. courts or outside of the United States judgments obtained against such persons outside of the United States.

We are a company organized and existing under the laws of Peru, and there is no existing treaty between the United States and Peru for the reciprocal enforcement of foreign judgments. It is not clear whether a foreign court would accept jurisdiction and impose civil liability if proceedings were commenced in a foreign jurisdiction predicated solely upon U.S. federal securities laws. See “Enforcement of Civil Liabilities.”

USE OF PROCEEDS

The net proceeds from the sale of the Notes, after payment of applicable fees and expenses, are expected to be approximately U.S.$198.4 million. We intend to use the net proceeds from the sale of Notes to (i) prepay principal and accrued interests of our short-term debt with banks and other financial institutions in an aggregate amount of U.S.$49.0 million; (ii) prepay principal and accrued interests of our long-term debt with banks and other financial institutions in an aggregate amount of U.S.$52.2 million; and (iii) fund capital expenditures and for other general corporate purposes.

CAPITALIZATION

The following table sets forth our consolidated capitalization and indebtedness in accordance with IFRS as of June 30, 2012, on an actual basis and as adjusted to give effect to receipt of approximately U.S.$198.4 million in net proceeds from the sale of the Notes as if such sale had occurred on June 30, 2012. This table should be read in conjunction with the information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Use of Proceeds” and our Consolidated Financial Statements included elsewhere in this offering memorandum:

As of June 30, 2012 Actual As Adjusted for this Offering(1) (unaudited) (unaudited) (S/.) (U.S.$)(2) (S/.) (U.S.$)(2) (in millions) Cash and cash equivalents ...... S/. 15.6 U.S.$ 5.9 S/. 275.5 U.S.$ 103.2 Short-term debt and current portion of long-term debt:(a) ...... 171.7 64.3 13.5 5.1 Short-term debt ...... 130.6 48.9 — — Current portion of long-term debt: ..... 41.1 15.4 13.5 5.1 Long-term debt, excluding current portion:(b) ...... 153.8 57.6 576.3 215.8 Notes offered hereby ...... 534.0 200.0 Total stockholders’ equity(c) ...... 265.0 99.2 265.0 99.3 Total capitalization(3) ...... S/. 590.5 U.S.$ 221.1 S/. 854.8 U.S.$ 320.1 ______(1) As adjusted to give effect to the application of the net proceeds of this offering as described under “Use of Proceeds.” (2) Amounts stated in U.S. dollars as of June 30, 2012 have been translated from nuevos soles at the exchange rate of S/.2.670 = U.S.$1.00 as of June 28, 2012. See “Exchange Rates.” (3) Total capitalization is equal to (a) + (b) + (c).

EXCHANGE RATES

Exchange rates for the nuevo sol have been relatively stable in recent years. The following table sets forth the Central Reserve Bank of Peru’s period-average and period-end buying rates for U.S. dollars for the indicated dates and periods.

S/. per U.S.$

Year Ended December 31, High Low Average(1) Period End 2007 ...... 3.199 2.968 3.128 2.995 2008 ...... 3.141 2.690 2.922 3.139 2009 ...... 3.258 2.852 3.010 2.888 2010 ...... 2.880 2.786 2.824 2.806 2011 ...... 2.832 2.693 2.754 2.696 2012 January ...... 2.697 2.689 2.692 2.689 February ...... 2.689 2.676 2.683 2.676 March ...... 2.675 2.667 2.670 2.667 April ...... 2.667 2.638 2.656 2.638 May ...... 2.709 2.636 2.669 2.709 June ...... 2.709 2.641 2.671 2.671 July ...... 2.643 2.620 2.635 2.629 August ...... 2.629 2.610 2.617 2.610 September (through September 21) ...... 2.612 2.600 2.608 2.600 ______Source: Central Reserve Bank of Peru: Interbank Buying Exchange Rate. (1) Calculated using daily averages.

SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OTHER INFORMATION AND OPERATING DATA

Our Consolidated Financial Statements have been prepared in accordance with IFRS.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our Consolidated Financial Statements and notes thereto included elsewhere in this offering memorandum, and the sections entitled “Selected Consolidated Financial Information and Other Information and Operating Data” and “Presentation of Financial and Other Information.” Certain amounts (including percentage amounts) that appear herein have been rounded for ease of presentation. Percentage figures included herein have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts may vary from those obtained by performing the same calculations using the figures in our Consolidated Financial Statements. Certain other amounts may not sum due to rounding.

This offering memorandum contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this offering memorandum, particularly in the sections entitled “Forward-Looking Statements” and “Risk Factors.” In addition to the other information in this offering memorandum, investors should consider carefully the following discussion and the information set forth in the section entitled “Risk Factors” before evaluating the Company and our business.

Overview

We are a leading Peruvian retailer of home improvement and construction products, with operations throughout Peru. Accordingly, our results of operations are related to our cost structure, demand for our products and competition. See “Description of the Company.” In addition, our results of operations are related to the economic conditions of Peru, where our stores are located, including GDP, employment, inflation, interest rates, bank penetration levels (i.e., the percentage of the population that uses banking services), home-ownership levels and levels of construction activity.

Peruvian Economy

GDP, Employment, Inflation and Poverty

Most of our operations and customers are located in Peru. Accordingly, our financial condition and results of operations are highly dependent on the performance of the Peruvian economy, particularly the construction sector, and on social and political conditions in Peru.

According to data published by the Central Reserve Bank of Peru, Peru’s GDP grew at an average annual rate of 7.0% between 2006 and 2010. In 2010, Peruvian GDP grew at a rate of 8.8% due to increased activity in the non-primary sectors, principally non-primary manufacturing, construction and commerce. In 2011, Peruvian GDP increased at a rate of 6.9% due primarily to increased activity in the fishing and manufacturing sectors and non- primary sectors highly linked with domestic demand, such as commerce and services. In the first six months of 2012, Peruvian GDP increased 6.1% as compared to the first six months of 2011. According to the Central Reserve Bank of Peru, the Peruvian economy is projected to grow at a rate of 5.8% in 2012.

According to data published by INEI, unemployment has been relatively steady in Peru, increasing slightly between 2008 and 2009 from 8.0% to 8.5%, and decreasing to 8.0% in 2010 and 7.7% in 2011.

According to data published by the Central Reserve Bank of Peru, inflation reached 6.7% during 2008. During 2009, inflation was only 0.25%, due partially to the contraction of the economy resulting from the global economic crisis. Inflation was 2.1% in 2010, 4.7% in 2011, and 1.56% as of June 30, 2012.

This economic growth, together with low inflation, has contributed, among other key improvements, to significant poverty reduction, with a decrease in the percentage of the country’s population living below the poverty line from approximately 48.6% in 2004 to approximately 27.8% in 2011.

Construction GDP

According to data published by INEI, the construction sector grew 16.5% in 2008, 6.1% in 2009, 17.4% in 2010, 3.4% in 2011 and 14.7% during the first six months of 2012. The growth in construction in recent years has been associated with increases in private investment in the housing, mining and manufacturing sectors, as well as public work projects, such as road construction, infrastructure renovation and government-sponsored housing programs, such as the Mivivienda and Techo Propio programs, which are intended to develop social housing in Peru by reducing the cost of private mortgage financing through government guarantees and subsidies.

Interest Rates

The Central Reserve Bank of Peru has maintained a 4.25% interest rate since May 2011, which is the highest Central Reserve Bank of Peru reference interest rate since mid-2009. Since the first quarter of 2010, the Central Reserve Bank of Peru has increased the reference interest several times but has never decreased it.

Factors Affecting our Results of Operations

Number of Stores

Our revenues are affected by the opening of new stores. During 2010 and 2011, we opened two and five new stores, respectively. In the first six months of each of 2011 and 2012, we opened one store. It has historically taken up to 36 months following a store’s opening for the store to reach maturity. As a result, the increasing maturity of newly opened stores may need to be taken into consideration when comparing period-to-period store sales.

The following table sets forth the evolution of our stores’ sales area and selected productivity and performance metrics:

Six Months Ended June 30, Year Ended December 31, 2011 2012 2010 2011 Number of stores ...... 15 19 14 18 Total selling space of stores (in square meters) ...... 77,811 101,006 72,694 95,733 Average selling space per store (in square meters) ...... 5,187 5,316 5,192 5,318 Same-store sales growth(1) ...... 11.3% 7.4% 7.6% 10.2% ______(1) Same-store sales growth represents the growth in net sales at locations that have been operational for a period of longer than 12 months, including relocated and remodeled stores, over the same period of the preceding year.

Foreign Currency

Because all of our revenues are in nuevos soles, our cost of sales, selling costs and administrative costs are affected by fluctuations in the exchange rate between nuevos soles and U.S. dollars, which is the currency in which we purchase certain goods, particularly imported goods, and pay for certain leases. See “Exchange Rates.”

Employees’ Profit Sharing

We are required by Peruvian law to pay our employees, in addition to their agreed compensation and benefits, employees’ profit sharing in an aggregate amount equal to 8% of our pre-tax profits, which is recorded as a labor expense in cost of sales, administrative expenses or sale expenses, depending on the work performed by each employee.

Critical Accounting Policies

Financial Instruments: Initial Recognition and Subsequent Measurement

(a) Recognition and Measurement of Financial Assets

Recognition and Initial Measurement

Pursuant to International Accounting Standard 39 (“IAS 39”), financial assets are classified as financial assets at fair value through profit or loss, loans and accounts receivable, investments held-to-maturity, financial investments available-for-sale, or as derivatives designated as hedging instruments with an effective hedge, as appropriate. We have financial assets classified as loans and accounts receivable and investments available-for-sale. We determine the classification of our financial assets at the time of initial recognition. Assets not classified at fair value through profit or loss are initially recognized at fair value plus the transaction costs that are directly attributable to the asset. Sales or purchases of financial assets that require the transfer of the asset within a time period established by market norm or practice will be recognized at the negotiation date, i.e., the date that we commit to the sale or purchase of the asset. Our financial assets include cash and cash equivalents, commercial accounts receivable, diverse accounts receivable and investments available-for-sale.

 Loans and Accounts Receivable. Loans and accounts receivable are non-derivative financial assets with fixed or variable payments that are not quoted in an active market. After the initial recognition, these financial assets are measured at amortized cost using the effective interest rate method (“EIR”) minus any impairment. The amortized cost is calculated taking into account any discount or acquisition premium and the commissions or costs that are an integral part of EIR. The amortization of EIR is recognized in the consolidated statement of comprehensive income as financial income. Losses resulting from impairment are are shown in the consolidated statement of financial position as a provision. For information regarding the calculation and registration this provision, see “Impairment of Financial Assets” below.

 Financial Investments Available-for-Sale. Investments classified as available-for-sale are those not classified as financial assets at fair value through profit or loss or as financial assets held-to- maturity. Financial investments available-for-sale include equity securities. After initial recognition, financial investments available-for-sale are measured according to their fair value, and the unrealized profit or losses are recognized as “Other Comprehensive Income” in the available-for-sale investments reserve until the the investment is derecognized. The accumulated profit or loss is then recognized as a profit or loss, or is considered to be impaired, in which case the accumulated loss is reclassified to the consolidated statement of comprehensive income as a financial expense and is eliminated from the corresponding reserve.

Impairment of Financial Assets

At the end of each reporting period, we evaluate whether any objective evidence exists that the value of a financial asset or a group of financial assets has been impaired. A financial asset or a group of financial assets is considered to have been impaired only if there is objective evidence of the impairment as a result of one or more events that occurred after the initial recognition of the asset (the “event that causes the loss”), the event impacts the future estimated cash flows generated by the financial asset or the group of financial assets, and the impact can be measured in a reliable manner. Evidence of impairment could include indications, for instance, that the debtors or group of debtors is facing significant financial difficulties or a default or arrears in payments of principal or interest.

Our principal financial assets are carried at amortized cost. Consequently, we first evaluate if there is objective evidence for financial assets that are individually significant, or at a collective level for the financial assets that are not individually significant. If it is determined that there is no objective evidence of impairment for an asset evaluated individually, regardless of its importance, that asset is included in a group of financial assets with similar credit risk characteristics, and they are evaluated collectively to determine if there is impairment. Assets evaluated individually for which a loss due to impairment is recognized or continues to be recognized are not included in the

collective evaluation of impairment. For this purpose, our management conducts monthly evaluations of the adequacy of these estimates through an aging analysis of accounts receivable and loyalty scores kept by the Company in the last three years. The allowance for doubtful accounts receivable is recorded with a charge to the consolidated income of the period.

The carrying amount of the asset is reduced through the use of a provision account, and the carrying amount of the loss is recognized in the statement of consolidated income.

(b) Financial Liabilities

Recognition and Initial Measurement

Pursuant to IAS 39, financial liabilities are classified as financial liabilities at fair value through profit or loss, loans and accounts payable, or as derivatives designated as hedging instruments with an effective hedge, as appropriate. We determine the classification of financial liabilities at the time of the initial recognition. As with loans and accounts payable carried at amortized cost, all financial liabilities are initially recognized at fair value plus the transaction costs directly attributable to the liability. Our financial liabilities include accounts payable and other financial liabilities.

Subsequent Measurement

All of our liabilities are carried at amortized cost. After the initial recognition, financial obligations are measured at amortized cost using EIR. The profits and losses are recognized in the consolidated statement of comprehensive income when the liabilities are derecognized and through the amortization of EIR. The amortized cost is calculated taking into consideration any discount or premium in the acquisition or commissions or costs that form an integral part of EIR. The amortization of EIR is recognized as a financial expense in the consolidated statement of comprehensive income.

At each closing date for the reporting period, the fair value of the financial instruments negotiated in the active markets is determined based on quoted market prices (purchase price for long positions and sales price for short positions) without deducting transaction costs. For financial instruments that are not negotiated in active markets, fair value is determined using valuation techniques. These techniques can include the use of recent market transactions between interested parties that are appropriately informed to act in conditions of mutual independence, reference to the fair value of other essentially similar financial instruments, the analysis of values discounted from cash flows and other valuation models.

For information about the fair value of financial instruments and greater detail as to how those values were calculated, see note 25.6 of our Audited Consolidated Financial Statements.

Properties, Furniture and Equipment

Properties, furniture and equipment are presented at net cost of the accumulated depreciation and/or the accumulated impairment losses, if any. The initial cost of an asset consists of the purchase or construction price, including duties and non-refundable purchase taxes and any additional cost required to start operations of the asset, the initial estimate of the restoration costs and the financing costs for long-term construction projects to the extent that all the prerequisites for recognition are met. The cost of the asset also includes the present value of the payments expected for any necessary decommissioning, removal of equipment or restoration of the physical location where it is located, when these costs are obligations incurred under certain conditions. For the significant components of properties, furniture or equipment that must be replaced periodically, we recognize such components as individual assets, with their specific useful lives and their respective depreciations in value. Similarly, when a large-scale inspection or repair is performed, its costs are recognized as a replacement of the carrying amount of the facility and equipment if all the prerequisites for recognition are met.

An item or a significant component of a fixed asset is derecognized from our consolidated statement of financial position at the moment of its disposition or at the moment when there is no expectation of economic benefit from its future use or disposition. Any profit or loss resulting from derecognizing the fixed asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the consolidated statements of comprehensive income of the year in which the asset is derecognized from our consolidated statement of financial position. The residual value, the useful life and the depreciation methods are revised and adjusted at the end of each year as needed.

Works in progress include disbursements for the construction of assets, financial interests and other costs directly attributable to such works accrued during the construction process. Works in progress are capitalized when they are completed and their depreciation is calculated at the moment they are put into operation.

Depreciation is calculated using the straight-line method, taking into consideration the following useful lives:

Years Leasehold improvements ...... 20 to 30(1) Facilities and other supplementary works ...... 10 Transport units ...... 5 Furniture and fixtures ...... 10 Miscellaneous equipment ...... 10 Computers ...... 4 ______(1) Leashold improvements are depreciated over the lesser of (i) useful life or (ii) duration of the lease.

Given the particular characteristics of our assets (not easily reusable and resaleable at the end of their useful life), our management and our technical department have determined that the residual value of these assets is not significant; it is therefore considered zero.

Income Tax

Our income tax and our subsidiaries’ income tax is determined based on the non-consolidated financial statements of each company and the taxable income determined for taxing purposes.

(a) Current Income Tax

Current income tax for the current period is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted at the reporting date.

(b) Deferred Income Tax

Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which deductible temporary, and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date.

The deferred assets and liabilities are offset if there is a legal right to offset them and the deferred taxes are related to the same entity and the same tax authority.

Employees’ Profit Sharing

Pursuant to legal regulations, employees’ profit sharing is computed on the same basis used to compute the current income tax, and it is presented in the consolidated statement of comprehensive income within the “Cost of sales,” “Administrative expenses” and “Selling expenses” captions, as appropriate.

Stock-Based Payment Plan for Executives

Certain of our executives are included in our benefits plan. These benefits include the granting of stock appreciation rights that may only be redeemed in cash. According to the terms of these plans, a redemption price for stock options is established. This price is equivalent to the price at the date on which the benefit is granted plus an increase based on reference interest rates. The benefits from this plan result from the difference between the value stipulated at the start of the plan and the valuation stipulated at the date the option is exercised, as explained in note 12(b) of our Audited Consolidated Financial Statements.

The costs of the stock-based payment plans incurred by the Company are measured during each period at the fair value, which is determined by a binomial option-pricing model. The fair value of virtual stock is recognized as an expense during its maturity period and until its vesting against a corresponding liability.

The liability is again measured at each reporting date, including the date of settlement, recognizing the differences in its fair value in the section “Other Expenses” of the consolidated statement of comprehensive income. When the price or terms of the benefits plan are modified, any resulting additional expense is registered in the consolidated statement of comprehensive income.

Contingencies

Contingent liabilities are registered in the consolidated financial statements when it is considered probable that they will be confirmed in time and can be reasonably estimated. Otherwise, the contingency is only disclosed in notes to the consolidated financial statements, unless the possibility of an outflow of resources embodying economic benefits is remote, in which case no disclosure is required. Contingent assets are not recognized in the consolidated financial statements, but they are disclosed in notes when their degree of contingency becomes probable.

Income Statement Data

Six Months Ended June 30, Year Ended December 31, 2011 2012 2012 2010 2011 2011 (in millions (in millions (in millions (in millions of S/.) of U.S.$)(1) of S/.) of U.S.$)(2) Sales ...... S/. 459.5 S/. 568.4 U.S.$ 212.9 S/. 797.6 S/. 1,019.4 U.S.$ 381.8 Cost of sales...... (333.8) (417.7) (156.5) (576.8) (731.0) (273.8) Gross profit ...... 125.7 150.7 56.4 220.9 288.5 108.1 Administrative expenses ...... (25.0) (25.3) (9.5) (61.1) (56.2) (21.1) Selling expenses ...... (72.8) (88.9) (33.3) (120.7) (161.1) (60.3) Other income (expenses), net ...... 4.7 5.9 2.2 21.7 7.9 2.9 Operating income ...... 32.5 42.4 15.9 60.7 79.0 29.6 Financial expenses...... (6.8) (13.1) 4.9 (12.5) (16.5) (6.2) Financial income ...... 0.7 0.4 0.2 1.4 1.5 0.6 Gain from exchange difference, net ...... 0.5 0.1 — 0.9 1.1 0.4 Income before taxes ...... 27.0 29.8 11.2 50.4 65.1 24.4 Income tax ...... (9.1) (9.0) (3.4) (17.6) (22.9) (8.6) Net income ...... S/. 17.9 S/. 20.8 U.S.$ 7.8 S/. 32.9 S/. 42.2 U.S.$ 15.8 ______(1) Amounts stated in U.S. dollars as of or for the year ended December 31, 2011 have been translated from nuevos soles at the exchange rate of S/.2.670 = U.S.$1.00 as of June 28, 2012. See “Exchange Rates.” (2) Amounts stated in U.S. dollars as of or for the six months ended June 30, 2012 have been translated from nuevos soles at the exchange rate of S/.2.670 = U.S.$1.00 as of June 28, 2012. See “Exchange Rates.”

Discussion of Line Items

Our income statement consists of the following line items:

 Sales. Revenues from sales consist of sales of hardware, construction materials and finished goods and, to a minor extent, payments for installation services provided to customers. Sales income is recognized at the time the product sold is delivered to the customer or when the service is provided. Our sales figures are presented net of discounts provided to customers.

 Cost of Sales. The principal components of our cost of sales are the cost of goods purchased, including ancillary costs, such as transportation and storage costs, and costs related to the provision of installation services. Costs of sales are recognized at the same time the corresponding sale is recognized.

 Gross Profit. Gross profit is equal to our sales less cost of sales.

 Administrative Expenses. Our administrative expenses primarily include salaries and other compensation of management, accounting and administrative personnel, the cost incurred in leasing administrative office space and space for stores that are not yet operational, miscellaneous operational expenses and municipal taxes and permit fees related to land that we own and use for our administrative offices. These expenses also include utility and other costs related to properties that we have leased to third parties, who reimburse us for these utilities and other costs in accordance with their lease agreements.

 Selling Expenses. Our selling expenses primarily include salaries and other compensation expenses of sales employees. All of our sales employees receive fixed compensation and bonuses based on their performance relative to their store’s and their division’s sales target. Our selling expenses also include rental costs for our stores located in leased space, third-party services provided (such as maintenance

and cleaning, transportation of cash, travel, leases of forklifts and cash registers), impairment of inventory, advertising and municipal taxes and permit fees related to land that we own and use for our stores.

 Other Income (Expenses), Net. Other income (expenses), net, primarily consists of income that we derive from leasing unutilized properties to third parties and our share of the profits generated by our agreement with CrediScotia.

 Operating Income. Operating income is our gross profit less administrative and selling expenses.

 Financial Expenses. Financial expenses primarily include accrued interest on the debt that we have incurred and other financing-related costs.

 Financial Income. Financial income consists primarily of interest that we charge on accounts receivable relating to construction costs that we bill to owners of leased land where some of our stores are located, which are offset against lease payments, as well as interest earned on our bank accounts and investments.

 Gain from Exchange Difference, Net. Gain from exchange difference, net, consists of the gains and losses resulting from the conversion of profits or losses from transactions conducted in a currency other than the nuevo sol, calculated at year-end.

 Income Before Taxes. Income before taxes is our operating income less non-operating expenses, net.

 Income Tax. We pay taxes on our net income in Peru. The Peruvian corporate income tax rate for 2010 and 2011 was 30%.

 Net Income. Net income is income before taxes less income taxes. In order to comply with applicable Peruvian corporate laws, each of our subsidiaries is required to be owned by at least two shareholders; as a result, a nominal amount of shares of each of our subsidiaries is owned by Mr. Jesus Zamora León, a member of our Board of Directors, and Domel owns 99.99% of the shares of Delta. The following table shows the percentage of our subsidiaries directly owned by Mr. Zamora:

As of As of December 31, June 30, 2010 2011 2012

Domel ...... 0.01% 0.01% 0.01% Delta(1) ...... 0.01% 0.01% 0.01%

______(3) Domel owns 99.99% of the shares of Delta.

Results of Operations

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

Six Months Ended June 30, Six Months Ended June 30, 2011 2012 2011 2012 (in millions of S/.) % Change % of Sales Sales ...... S/. 459.5 S/. 568.4 23.7% 100% 100% Cost of sales...... (333.8) (417.7) 25.2% (72.6%) (73.5%) Gross profit ...... 125.7 150.7 19.9% 27.4% 26.5% Administrative expenses ...... (25.0) (25.3) 1.0% (5.4%) (4.4%) Selling expenses ...... (72.8) (88.9) 22.1% (15.8%) (15.6%) Other income (expenses), net ...... 4.7 5.9 26.1% 1.0% 1.0% Operating income ...... 32.5 42.4 30.3% 7.1% 7.5% Financial expenses...... (6.8) (13.1) 93.3% (1.5%) (2.3%) Financial income ...... 0.7 0.4 (44.6%) 0.2% 0.1% Gain from exchange difference, net ...... 0.5 0.1 (78.4%) 0.1% 0.0% Income before taxes ...... 27.0 29.8 10.5% 5.9% 5.2% Income tax ...... (9.1) (9.0) (1.0%) (2.0%) (1.6%) Net income ...... S/. 17.9 S/. 20.8 16.3% 3.9% 3.7%

Sales

Our sales were S/.568.4 million for the six months ended June 30, 2012, an increase of S/.109.0 million, or 23.7%, from S/.459.5 million for the six months ended June 30, 2011. This increase was due primarily to a 5.6% growth in same store sales, the operation of four stores in the first six months of 2012 that were not operational in the first six months of 2011 and an increase in the average sales per ticket.

Cost of Sales

Our cost of sales was S/.417.7 million for the six months ended June 30, 2012, an increase of S/.84.0 million, or 25.2%, from S/.333.8 million for the six months ended June 30, 2011. This increase was due primarily to an increase in goods purchased (in response to increased sales) and an increase in inventory as of June 30, 2012 as compared to our inventory levels as of June 30, 2011.

The following table sets forth the components of our cost of sales for the first six months of 2011 and 2012:

Six Months Ended June 30, 2011 2012 (in millions of S/.) Inventory as of January 1 ...... S/. 133.7 S/. 203.7 Purchase of merchandise ...... 342.5 405.6 Inventory losses ...... 2.0 2.9 Inventory as of June 30 ...... (148.9) (209.0) Cost to sell merchandise ...... 329.3 403.3 Cost to sell services ...... 4.5 14.4 Total cost of sales ...... S/. 333.8 S/. 417.7

Gross Profit

Our gross profit was S/.150.7 million for the six months ended June 30, 2012, an increase of S/.25.0 million, or 19.9%, from S/.125.7 million for the six months ended June 30, 2011. This increase was due

primarily to a 23.7% increase in sales, offset by a 25.2% increase in cost of sales. Our gross margin was 26.5% for the six months ended June 30, 2012, a decrease of 1.1% from 27.4% for the six months ended June 30, 2011.

Administrative Expenses

The following table sets forth the components of our administrative expenses for the first six months of 2011 and 2012:

Six Months Ended June 30, Six Months Ended June 30, 2011 2012 2011 2012 (in millions of S/.) % Change % of Administrative Expenses

Personnel expenses(1) ...... S/. 14.4 S/. 16.8 16.7% 57.5% 66.4% Services provided by third parties(2) ...... 3.2 3.7 14.2% 13.0% 14.7% Miscellaneous operational expenses ...... 1.8 0.3 (80.7%) 7.1% 1.4% Amortization of intangible assets ...... 1.0 0.6 (37.8%) 3.9% 2.4% Electricity(3) ...... 1.0 0.6 (37.7%) 4.1% 2.5% Miscellaneous services ...... 0.4 0.1 (82.5%) 1.6% 0.3% Taxes...... 0.9 0.7 (19.3%) 3.6% 2.8% Depreciation ...... 0.4 0.8 73.7% 1.7% 3.0% Surveillance and security ...... 0.4 0.4 (8.1)% 1.6% 1.4% Miscellaneous fees ...... 1.5 1.3 (13.8%) 6.0% 5.1% Administrative expenses ...... S/. 25.0 S/. 25.3 1.0% ______(1) Includes severance indemnities. (2) Includes mainly the lease of printers, maintenance, repairs and professional fees. (3) Corresponds to electricity related to properties that we leased to third parties, which electricity is entirely rebilled to those third parties to recover the expenses and accounted for in “Other income (expenses), net.”

Our administrative expenses were S/.25.3 million (4.5% of sales) for the six months ended June 30, 2012, an increase of S/.0.3 million, or 1.0%, from S/.25.0 million (5.4% of sales) for the six months ended June 30, 2011. This increase was due primarily to a 16.7% increase in personnel expenses related to increased overhead in connection with the opening of new stores.

Selling Expenses

The following table sets forth the components of our selling expenses for the first six months of 2011 and 2012:

Six Months Ended June 30, Six Months Ended June 30, 2011 2012 2011 2012 (in millions of S/.) % Change % of Selling Expenses Personnel expenses ...... S/. 32.4 S/. 38.2 17.9% 44.5% 42.9% Services provided by third parties ...... 6.6 8.9 34.8% 9.1% 10.0% Advertising ...... 11.0 13.3 21.5% 15.1% 15.0% Lease of buildings ...... 6.9 7.4 6.7% 9.5% 8.3% Depreciation ...... 4.9 5.7 17.1% 6.7% 6.4% Credit card commissions ...... 3.1 3.7 19.0% 4.3% 4.1% Miscellaneous operational expenses ...... 2.4 4.1 70.0% 3.3% 4.6% Utilities ...... 1.9 2.3 22.0% 2.6% 2.6% Security ...... 1.5 2.4 64.4% 2.0% 2.7% Maintenance of fixed assets ...... 1.8 2.3 28.4% 2.5% 2.6% Permits and governmental fees ...... 0.4 0.5 46.3% 0.5% 0.6% Selling expenses ...... S/. 72.8 S/. 88.9 22.1%

Our selling expenses were S/.88.9 million (15.6% of sales) for the six months ended June 30, 2012, an increase of S/.16.1 million, or 22.1%, from S/.72.8 million (15.8% of sales) for the six months ended June 30, 2011, due primarily to (i) a 17.9% increase in labor expenses derived from an increase in our sales personnel as a result of the operation of four stores in the first six months of 2012 that were not operational in the first six months of 2011, (ii) a 21.5% increase in advertising, due to an increase in marketing campaigns and to the operation of four stores in the first six months of 2012 that were not operational in the first six months of 2011, (iii) a 70.0% increase in miscellaneous operational expenses mostly due to increased expenses relating to the closing of one store and (iv) a 64.4% increase in security due to the operation of four stores in the first six months of 2012 that were not operational in the first six months of 2011 and security expenses related to land plots acquired to develop new stores.

Other Income (Expenses), Net

Our other income (expenses), net, was S/.5.9 million for the six months ended June 30, 2012, an increase of S/.1.2 million, or 26.1% from S/.4.7 million for the six months ended June 30, 2011. This increase was due primarily to an increase of S/.1.9 million in income related to our share of the profits generated by our agreement with CrediScotia during the first six months of 2012.

Financial Expenses

Our financial expenses were S/.13.1 million for the six months ended June 30, 2012, an increase of S/.6.3 million, or 93.3%, from S/.6.8 million for the six months ended June 30, 2011. This increase was due primarily to an increase in the amount of outstanding debt during the first six months of 2012 as compared to the first six months of 2011 to finance the opening of new stores and acquisition of land.

Financial Income

Our financial income was S/.0.4 million for the six months ended June 30, 2012, a decrease of S/.0.3 million, or 44.6%, from S/.0.7 million for the six months ended June 30, 2011. This decrease was due primarily to non-recurring income of S/.0.4 million received during the first six months of 2011 in connection with discounts received from our suppliers for anticipated payments that we did not receive in the first six months of 2012.

Gain from Exchange Difference, Net

Our gain from exchange difference, net, was S/.0.1 million for the six months ended June 30, 2012, a decrease of S/.0.4 million, or 78.4%, from S/.0.5 million for the six months ended June 30, 2011. This decrease was due primarily to a decrease in our U.S. dollar-denominated liabilities as of June 30, 2012.

Income Tax

Our income tax was S/.9.0 million for the six months ended June 30, 2012.

As of June 30, 2012, the income tax credit, net of income tax payable, amounted to approximately S/.4.0 million (the provision for current income tax payable, net of advanced payments, amounted to approximately S/.1.5 million).

Net Income

Our net income was S/.20.8 million for the six months ended June 30, 2012, an increase of S/.2.9 million, or 16.3%, from S/.17.9 million for the six months ended June 30, 2011. This increase was due primarily to a 23.7% increase in sales and a 26.1% increase in other income (expenses), net, which more than offset lower increases in cost of sales, administrative expenses and selling expenses.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

Year Ended December 31, Year Ended December 31, 2010 2011 2010 2011 (in millions of S/.) % Change % of Sales Sales ...... S/. 797.6 S/. 1,019.4 27.8% 100% 100% Cost of sales ...... (576.8) (731.0) 26.7% (72.3%) (71.7%) Gross profit ...... 220.9 288.5 30.6% 27.7% 28.3% Administrative expenses ...... (61.1) (56.2) (8.0%) (7.7%) (5.5%) Selling expenses...... (120.7) (161.1) 33.4% (15.1%) (15.8%) Other income (expenses), net ...... 21.7 7.9 (63.8%) 2.7% 0.8% Operating income ...... 60.7 79.0 30.1% 7.6% 7.8% Financial expenses ...... (12.5) (16.5) 31.7% (1.6%) (1.6%) Financial income ...... 1.4 1.5 9.1% 0.2% 0.1% Gain from exchange difference, net ..... 0.9 1.1 26.0% 0.1% 0.1% Income before taxes ...... 50.4 65.1 29.1% 6.3% 6.4% Income tax ...... (17.6) (22.9) 30.5% (2.2%) (2.2%) Net income ...... S/. 32.9 S/. 42.2 28.4% 4.1% 4.1%

Sales

Our sales were S/.1,019.4 million for the year ended December 31, 2011, an increase of S/.221.8 million, or 27.8%, from S/.797.6 million for the year ended December 31, 2010. This increase was due primarily to the opening of five new stores in 2011 and, to a lesser extent, an increase in our average sales per ticket in 2011.

Cost of Sales

Our cost of sales was S/.731.0 million for the year ended December 31, 2011, an increase of S/.154.2 million, or 26.7%, from S/.576.8 million for the year ended December 31, 2010. This increase was due primarily to an increase in goods purchased (in response to increased sales) and an increase in the inventory at the beginning of 2011 as compared to the beginning of 2010.

The following table sets forth the components of our cost of sales for 2010 and 2011:

Year Ended December 31, 2010 2011 (in millions of S/.) Inventory as of January 1 ...... S/. 99.0 S/. 129.3 Purchase of merchandise ...... 590.0 776.4 Inventory losses ...... 2.9 3.8 Inventory as of December 31 ...... (129.3) (203.7) Cost to sell merchandise ...... 562.6 705.7 Cost to sell services ...... 14.1 25.2 Total cost of sales ...... S/. 576.8 S/. 731.0

Gross Profit

Our gross profit was S/.288.5 million for the year ended December 31, 2011, an increase of S/.67.6 million, or 30.6%, from S/.220.9 million for the year ended December 31, 2010. This increase was due primarily to a proportional increase in sales and cost of sales. Our gross margin was 28.3% for the year ended December 31, 2011, an increase of 0.6% from 27.7% for the year ended December 31, 2010.

Administrative Expenses

The following table sets forth the components of our administrative expenses for 2010 and 2011:

Year Ended December 31, Year Ended December 31, 2010 2011 2010 2011 (in millions of S/.) % Change % of Administrative Expenses

Personnel expenses(1) ...... S/. 29.4 S/. 33.8 14.8% 48.1% 60.0% Services provided by third parties(2) ...... 7.8 9.2 18.0% 12.8% 16.4% Miscellaneous operational expenses ...... 7.3 5.4 (25.5%) 12.0% 9.7% Amortization of intangible assets ...... 1.8 1.9 4.6% 3.0% 3.4% Electricity(3) ...... 1.8 1.7 (6.3%) 3.0% 3.0% Miscellaneous services ...... 1.4 1.6 11.7% 2.3% 2.8% Taxes...... 4.8 1.5 (68.2%) 7.8% 2.7% Depreciation ...... 0.8 0.8 (8.0%) 1.4% 1.4% Surveillance and security ...... 0.2 0.2 (22.7%) 0.3% 0.3% Miscellaneous fees ...... 0.2 0.1 (20.4%) 0.3% 0.3% Project write-off ...... 5.5 — (100.0%) 9.0% — Administrative expenses ...... S/. 61.1 S/. 56.2 (8.0%) ______(1) Includes severance indemnities. (2) Includes mainly the lease of printers, maintenance, repairs and professional fees. (3) Corresponds to electricity related to properties that we leased to third parties, which electricity is entirely rebilled to those third parties to recover the expenses and accounted for in “Other income (expenses), net.”

Our administrative expenses were S/.56.2 million (5.5% of sales) for the year ended December 31, 2011, a decrease of S/.4.9 million, or 8.0%, from S/.61.1 million (7.7% of sales) for the year ended December 31, 2010. The decrease was due primarily to (i) a one-time non-cash impairment of S/.5.5 million in 2010 relating to our

cancellation of a finance-company project (following our decision to enter into an agreement with CrediScotia), (ii) a 25.5% decrease in miscellaneous operational expenses because of a decrease in the amount paid to our employees pursuant to our stock-based payment plan and (iii) a 68.2% decrease in taxes because of the reduction of the Financial Transactions Tax rate from 0.05% during the first three months of 2011 to 0.005% beginning in April 2011, which more than offset (i) a 14.8% increase in personnel expenses related to increased overhead in connection with the opening of new stores and (ii) a substantial increase in lease expenses related to space leased in 2011 for stores that were not yet operational.

Selling Expenses

The following table sets forth the components of our selling expenses for 2010 and 2011:

Year Ended December 31, Year Ended December 31, 2010 2011 2010 2011 (in millions of S/.) % Change % of Selling Expenses Personnel expenses ...... S/. 53.7 S/. 74.5 38.7% 44.5% 46.3% Services provided by third parties ...... 11.1 20.0 80.7% 9.2% 12.4% Advertising ...... 19.6 17.8 (8.8%) 16.2% 11.1% Lease of buildings ...... 10.9 15.1 38.6% 9.0% 9.4% Depreciation ...... 8.0 9.6 20.8% 6.6% 6.0% Credit card commissions ...... 6.3 6.7 7.3% 5.2% 4.2% Miscellaneous operational expenses ...... 2.6 5.5 115.3% 2.1% 3.4% Utilities ...... 3.3 4.0 20.9% 2.8% 2.5% Security ...... 2.3 3.5 52.5% 1.9% 2.2% Maintenance of fixed assets ...... 2.6 3.3 29.8% 2.1% 2.1% Permits and governmental fees ...... 0.4 0.8 88.6% 0.4% 0.5% Selling expenses ...... S/. 120.7 S/. 161.1 33.4%

Our selling expenses were S/.161.1 million (15.8% of sales) for the year ended December 31, 2011, an increase of S/.40.4 million, or 33.4%, from S/.120.7 million (15.1% of sales) for the year ended December 31, 2010, due primarily to a 38.7% increase in personnel expenses because of an increase in our sales personnel as a result of the opening of five new stores in 2011, a 80.7% increase in services provided by third parties largely as a result of payments on equipment leases of forklifts and cash registers incurred in 2011, a 115.3% increase in miscellaneous operational expenses mostly due to increased expenses relating to the purchase of pallets in 2011 and increased insurance premiums paid in 2011 as a result of our decision to increase our insurance coverage, which more than offset an 8.8% decrease in advertising.

Other Income (Expenses), Net

Our other income (expenses), net, was S/.7.9 million for the year ended December 31, 2011, a decrease of S/.13.8 million, or 63.8%, from S/.21.7 million for the year ended December 31, 2010. This decrease was due primarily to a one-time gain of S/.12.9 million in 2010 on the sale of land we owned in Arequipa, which we determined was no longer useful in the operation of our business. We did not earn any income from our agreement with CrediScotia in 2010 or 2011.

Financial Expenses

Our financial expenses were S/.16.5 million for the year ended December 31, 2011, an increase of S/.4.0 million, or 31.7%, from S/.12.5 million for the year ended December 31, 2010. This increase was due primarily to an increase in the average balance of our financial debt in 2011 as compared to 2010, mainly in connection with the opening of new stores and working capital requirements.

Financial Income

Our financial income was S/.1.5 million for the year ended December 31, 2011, an increase of S/.0.1 million, or 9.1%, from S/.1.4 million for the year ended December 31, 2010. This increase was due primarily to an increase in our interest-bearing accounts receivable of S/.6.1 million as a result of a S/.7.8 million account receivable from Inmobiliaria El Quinde S.A.C. relating to construction costs of our store in Ica recorded in 2011, which was offset by a decrease of S/.1.6 million in our accounts receivable from Plaza Lima Norte S.A.C. and Hipermercados Metro S.A.

Gain from Exchange Difference, Net

Our gain from exchange difference, net, was S/.1.1 million for the year ended December 31, 2011, an increase of S/.0.2 million, or 26.0%, from S/.0.9 million for the year ended December 31, 2010. This increase was due primarily to a depreciation of the U.S. dollar from S/.2.806 per U.S.$1.00 as of December 31, 2010 to S/.2.696 per U.S.$1.00 as of December 31, 2011.

Income Tax

Our income tax was S/.22.9 million for the year ended December 31, 2011, an increase of S/.5.3 million, or 30.5%, from S/.17.6 million for the year ended December 31, 2010. This increase was due primarily to an increase in our income before taxes.

The following table sets forth the reconciliation of our tax rates for 2010 and 2011:

Year Ended Year Ended December 31, 2010 December 31, 2011 (in millions (in millions of S/.) % of S/.) % Income before taxes ...... S/. 50.4 100% S/. 65.1 100% Theoretical cost ...... 15.1 30% 19.5 30% Net effect of non-deductible expenses .... 2.4 4.8% 3.4 5.2% Income tax ...... S/. 17.6 34.8% S/. 22.9 35.2%

Net Income

Our net income was S/.42.2 million for the year ended December 31, 2011, an increase of S/.9.3 million, or 28.4%, from S/.32.9 million for the year ended December 31, 2010. This increase was due primarily to a 27.8% increase in sales, which more than offset lower increases in cost of sales, administrative expenses and selling expenses.

Liquidity and Capital Resources

Liquidity

We have experienced, and expect to continue to experience, substantial liquidity and capital resource requirements, primarily in order to finance working capital needs and capital expenditures for new stores.

The principal source of our liquidity is cash generated from operations. Over 90% of our sales are on a cash basis or are paid with credit cards (including Presta and Presta Experto cards), which in each case ordinarily pay the billed amounts within three business days. The remainder of our sales are made on a short-term credit basis, where we provide credit directly to businesses on 30-day terms without interest. During 2010 and 2011, the average collection term of our accounts receivable ranged from 15 to 30 days, while the average payment term of our accounts payable to our main suppliers ranged from 30 to 90 days. We have traditionally relied on cash generated from operations to fund our working capital requirements and capital expenditures. We have also used a

combination of borrowings from Peruvian and international banks. See “—Debt.” These credit lines are used for funding working capital and capital expenditures. We expect to permanently repay these credit lines with proceeds from the offering contemplated hereunder as described under “Use of Proceeds.”

As of June 30, 2012, we had adjusted working capital, which we define as current assets (excluding cash and cash equivalents) less current liabilities (excluding short-term debt) of S/.58.8 million, as compared to adjusted working capital of S/.1.2 million as of December 31, 2011 and S/.0.3 million as of December 31, 2010.

We review our cash requirements and financial resources on a regular basis. We continue to have sufficient liquidity and financial resources to manage our day-to-day cash requirements. Taking into consideration our established borrowing facilities and operating cash flows, we believe that we have sufficient liquidity and working capital to meet our present and budgeted requirements.

The following table sets forth our accounts receivable and provision for doubtful accounts as of June 30, 2012, and as of December 31, 2010 and 2011:

As of June 30, As of December 31, 2012 2010 2011 (in millions of S/.) Accounts receivable ...... 23.7 S/. 18.8 S/. 20.8 Provision for doubtful accounts ...... (1.7) (0.9) (1.4) Total ...... S/. 22.0 S/. 17.9 S/. 19.5

Our accounts receivable as of June 30, 2012 were S/.23.7 million. Our provision for doubtful accounts as of June 30, 2012 was S/.1.7 million. Our accounts receivable as of December 31, 2010 and 2011 were S/.18.8 million and S/.20.8 million, respectively. Our provision for doubtful accounts as of December 31, 2010 and 2011 was S/.0.9 million and S/.1.4 million, respectively.

Sources and Uses of Cash

The following table sets forth our consolidated cash and cash equivalents as of the periods indicated and the net cash provided by (or used in) operating, investing, and financing activities during such periods:

Six Months Ended Year Ended June 30, December 31, 2011 2012 2010 2011 (in millions of S/.) Cash and cash equivalents at beginning of period ...... S/. 15.7 S/. 15.8 S/. 11.3 S/. 15.7 Cash and cash equivalents from operating activities ...... 8.7 (0.7) 45.8 20.4 Cash and cash equivalents from investing activities ...... (48.5) (35.9) (37.5) (163.4) Cash and cash equivalents from financing activities ...... 33.2 36.4 (3.9) 143.2 Cash and cash equivalents at end of period ...... S/. 9.1 S/. 15.6 S/. 15.7 S/. 15.8

During the first six months of 2012, our cash and cash equivalents from operating activities were S/.(0.7) million compared to S/.8.7 million during the same period in 2011. This decrease was due primarily to increased payments to suppliers during the first six months of 2012. During the first six months of 2012, our cash and cash equivalents used in investing activities were S/.35.9 million compared to S/.48.5 million during the same period in 2011. This decrease was due primarily to payments received from the sale of fixed assets during the first six months of 2012. During the first six months of 2012, our cash and cash equivalents from financing activities

were S/.36.4 million compared to S/.33.2 million generated during the same period in 2011. During the first six months of 2012, our cash and cash equivalents increased by S/.6.5 million compared to the same period in 2011 as a result of the factors described above.

In 2011, our cash and cash equivalents from operating activities were S/.20.4 million compared to S/.45.8 million in 2010. This decrease was due primarily to increased payments to suppliers and employees, which more than offset increased collections from sales. In 2011, our cash and cash equivalents used in investing activities were S/.163.4 million compared to S/.37.5 million in 2010. This increase was due primarily to capital expenditures in connection with the opening of stores. See “—Capital Expenditures.” In 2011, our cash and cash equivalents from financing activities were S/.143.2 million compared to S/.(3.9) million used in financing activities in 2010. This variation in financing activities was due primarily to higher repayment of bank loans in 2010 and increased borrowings in 2011.

As of June 30, 2012, cash and cash equivalents were S/.15.6 million, as compared to S/.15.8 million as of December 31, 2011. As of June 30, 2012, our cash and cash equivalents were comprised of 94.8% nuevos soles and 5.2% U.S. dollars. We believe that these funds, in addition to the cash generated by our operations and our lines of credit, are sufficient to meet our operating requirements.

Debt

The following table shows our outstanding debt as of December 31, 2010 and 2011 and June 30, 2012:

Year Ended Six Months December 31, Ended June 30, 2010 2011 2012 (in millions of S/.) Short-Term Debt: Banks and other financial institutions ...... S/. 47.6 S/. 85.6 S/. 130.6 Banks and other financial institutions – short-term portion of long-term debt ...... 6.1 39.0 41.1 Total short-term debt ...... 53.8 124.6 171.7 Long-Term Debt: Banks and other financial institutions ...... 100.2 173.5 153.8 Total long-term debt ...... 100.2 173.5 153.8 Total debt ...... 154.0 298.1 325.5 Cash ...... 15.7 15.8 15.6 Net debt ...... S/. 138.3 S/. 282.2 S/. 309.9

Our total indebtedness was S/.325.5 million as of June 30, 2012, compared to S/.298.1 million as of December 31, 2011. Short-term debt and long-term debt were S/.171.7 million and S/.153.8 million, respectively, as of June 30, 2012, compared to S/.124.6 million and S/.173.5 million, respectively, as of December 31, 2011. Total debt increased by S/.27.4 million in the first six months of 2012, and net debt increased by S/.27.6 million in 2011, due primarily to an increase of S/.45.0 million in short-term debt to finance our increased working capital requirements and capital expenditures, which more than offset a decrease in long-term debt as a result of long-term debt nearing maturity.

Our total indebtedness was S/.298.1 million as of December 31, 2011, compared to S/.154.0 million as of December 31, 2010. Short-term debt and long-term debt were S/.124.6 million and S/.173.5 million, respectively, as of December 31, 2011, as compared to S/.53.8 million and S/.100.2 million, respectively, as of December 31, 2010. Total debt increased by S/.144.1 million in 2011, and net debt increased by S/.144.1 million in 2011, due primarily to debt incurred to construct new stores and finance our working capital requirements.

As of June 30, 2012, December 31, 2011 and December 31, 2010, substantially all of our indebtedness was denominated in nuevos soles.

We expect net proceeds from the sale of the Notes will be approximately U.S.$198.4 million. We intend to use a portion of the net proceeds from the sale of Notes to repay our short-term and long-term indebtedness with banks and other financial institutions. See “Use of Proceeds.”

Summary of Significant Debt Instruments

As of December 31, 2010 and 2011, we had an aggregate amount of S/.47.6 million and S/.85.6 million, respectively, outstanding in short-term promissory notes, which were used primarily for working capital. As of June 30, 2012, we had an aggregate amount of S/.130.6 million outstanding in short-term promissory notes, used primarily for working capital. Our short-term promissory notes may be renewed at maturity. We intend to use a portion of the net proceeds of this offering to repay up to the nuevos soles–equivalent of U.S.$49.0 million of our short-term promissory notes. See “Use of Proceeds.”

As of December 31, 2010 and 2011, we had an aggregate amount of S/.7.9 million and S/.62.6 million, respectively, outstanding in financial leasing, which consists primarily of the financial leasing of our stores. As of June 30, 2012, we had an aggregate amount of S/.55.8 million outstanding in financial leasing, which consists primarily of the financial leasing of our stores.

Our obligations under financial leasing agreements with Banco Santander Perú S.A. in connection with the construction of our stores in Cerro Colorado, Cusco and San Luis are secured by pledges on cash flows generated by those stores. In addition, certain of our existing and future obligations with Banco Santander Perú S.A. are or will be secured by generic pledges on equipment and other properties at our store in Callao up to an aggregate amount of U.S.$1.6 million and at our store in Pueblo Libre up to an aggregate amount of U.S.$1.0 million.

The following table sets forth the outstanding amount, currency and maturity for our secured long-term loans as of June 30, 2012:

Outstanding Amount as of June 30, 2012 Institution (in millions of S/.) Currency Maturity Citibank del Perú S.A. S/. 102.3 S/. May 2017 Citibank del Perú S.A. S/. 38.6 S/. March 2018 and Scotiabank Perú S.A.A.

In May 2010, Maestro and Domel entered into a secured loan agreement with Citibank del Perú S.A. for up to U.S.$35.0 million or its equivalent in nuevos soles. The loan is secured by a pledge on certain of our future cash flows and accounts receivable related to sales paid with certain credit and debit cards and by a mortgage on our real estate properties located in Ate, Colonial, Chacarilla and Surquillo in Lima and in Arequipa, El Naranjal, Huancayo and Trujillo. The financial covenants include the maintenance of (i) a debt service coverage ratio (EBITDA divided by current portion of long-term debt plus financial expenses) of no less than 1.60, (ii) a leverage ratio (financial debt divided by EBITDA) of less than 3.00 (except during 2012 when the leverage ratio shall be less than or equal to 3.50) and (iii) a liquidity ratio (current assets divided by current liabilities) of no less than 0.75. We intend to use a portion of the net proceeds of this offering to repay this loan in full. See “Use of Proceeds.”

In October 2010, Maestro and Domel entered into a syndicated loan agreement with Citibank del Perú S.A. and Scotiabank Perú S.A.A. for up to S/.60.0 million. The loan is secured by a pledge on certain of our future cash flows and accounts receivable related to sales paid with certain credit and debit cards and by a mortgage on our real estate properties located in Ate, Colonial, Chacarilla and Surquillo in Lima and in Arequipa, El Naranjal, Huancayo and Trujillo. The financial covenants include the maintenance of (i) a debt service coverage ratio (EBITDA divided by current portion of long-term debt plus financial expenses) of no less than 1.60, (ii) a leverage ratio (financial debt divided by EBITDA) of less than 3.00 (except during 2012 when the leverage ratio shall be less than or equal to 3.50) and (iii) a liquidity ratio (current assets divided by current liabilities) of no less than 0.75. We intend to use a portion of the net proceeds of this offering to repay this loan in full. See “Use of Proceeds.”

Dividends

Our Board of Directors makes a recommendation at our annual shareholders’ meeting with respect to the amount and timing of dividend payments, if any, to be made on our common shares. Under our dividend policy, the amount and timing of any dividend distribution must take into consideration our liquidity requirements, leverage and projected cash flow and not cause an adverse effect on our financial and economic condition. We paid dividends totaling S/.5.4 million in 2010. We did not pay any dividends in 2011. According to the Peruvian Corporate Law, holders of common shares representing no less than 20% of our total share capital may request the distribution of dividends up to 50% of the net income corresponding to the previous year, net of any legal reserve requirements.

Capital Expenditures

Substantially all of our capital expenditures are related to the opening of new stores and purchasing land reserves. We believe that internally generated funds and the proceeds from the sale of the Notes will be sufficient to meet our budgeted capital expenditures for the remainder of 2012 and 2013.

In the first six months of 2012, we made S/.44.4 million of capital expenditures, which was spent primarily on acquiring land and premises for new stores.

The table below sets forth capital expenditures for the years ended December 31, 2010 and 2011:

2010 2011 (in millions of S/.) New stores ...... S/. 34.1 S/. 77.3 Current stores ...... 3.7 12.1 Land acquisition...... 17.2 64.3 Administrative offices ...... 1.6 3.9 Total ...... S/. 56.6 S/. 157.6

In 2010, we made S/.56.6 million of capital expenditures, which was spent primarily on the opening of new stores and acquiring land. In 2011, we made S/.157.6 million of capital expenditures, which was spent primarily on the opening of new stores and acquiring land.

Quantitative and Qualitative Disclosure About Market Risk

We believe the principal market risk that we are exposed to is foreign-exchange risk (principally with respect to the Peruvian nuevo sol–U.S. dollar rate).

Foreign-Exchange Risk

Because we collect revenues principally in Peruvian nuevos soles, we are exposed to foreign-exchange risk through contracts and debt that are denominated in other currencies, principally U.S. dollars. We set limits on our level of exposure to foreign-exchange risk by currency and the total amount of foreign currency used in daily operations. Fluctuations in exchange rates depend principally on national economic conditions, although general perceptions of emerging-markets risk and global events, such as wars, recessions and crises, have in the past resulted in the depreciation of currencies in emerging markets, such as Peru. In addition, the Peruvian government has in the past intervened, and may in the future continue to intervene, in foreign-exchange markets. See “Risk Factors— Risks Related to Peru—The re-implementation of certain laws by the Peruvian government, most notably restrictive exchange rate policies, could have an adverse effect on our business, financial condition and results of operations.”

The following table sets forth an analysis of our foreign-exchange risk with respect to U.S. dollars, the currency for which we have the greatest exposure, as of December 31, 2010 and 2011:

Potential Potential Change in Exposure Exposure Exchange Rate in 2010 in 2011 (in millions of S/.) Depreciation U.S. dollar ...... 5% 0.4 1.2 U.S. dollar ...... 10% 0.8 2.5 Appreciation U.S. dollar ...... 5% (0.4) (1.2) U.S. dollar ...... 10% (0.8) (2.5)

The increase in potential exposure to depreciation and appreciation of the value of the U.S. dollar versus the nuevo sol in 2010 as compared to 2011 was primarily due to an increase in purchases from international suppliers, who typically charge prices in U.S. dollars, and an increase in the number of international suppliers, who generally require payment in U.S. dollars.

Commitments

As of June 30, 2012, we had no activities or operations that were not recorded on our consolidated statement of financial position.

Contractual Obligations

The following table sets forth certain contractual obligations as of June 30, 2012:

Payments Due by Period Total <1 year 1–3 years 3–5 years >5 years (in millions of U.S.$) Financial obligations ...... U.S.$ 101.5 U.S.$ 58.9 U.S.$ 19.9 U.S.$ 19.9 U.S.$ 2.8 Leasing ...... 20.8 5.3 10.3 5.2 0.0 Total ...... U.S.$ 122.4 U.S.$ 64.2 U.S.$ 30.2 U.S.$ 25.1 U.S.$ 2.8

DESCRIPTION OF THE COMPANY

Overview

We are a leading Peruvian retailer of home improvement and construction products with “Maestro” stores in Lima and eight other large cities throughout Peru. We offer our customers project solutions and excellent customer service and advice, which, we believe, generate high levels of customer loyalty. We believe that by targeting both DIY and professional customers, we are able to serve a broad array of customers and benefit from the expected continued growth in Peru’s home improvement and construction markets.

Our Business Model

project-focused sales strategy requires more than making one-off sales for particular tasks. We have built our business model around the concept of home improvement projects. We train, evaluate and compensate our project advisors to focus on projects when interacting with customers. The layout and merchandising in our stores showcases projects and where to find related products, and the workshops that we offer to our customers focus on completion of projects rather than individual products. These elements, together with the other elements of our business model, are all derived from our project-focused sales strategy.

 Provide access to financing. We also facilitate project sales to our customers by promoting the origination of credit cards and personal loans by CrediScotia through the Maestro-branded Presta, Presta Experto and PrestaFácil brands under an agreement with CrediScotia.

Our Strengths

We believe that the following key competitive strengths differentiate us and are critical to our continuing success:

growth opportunity throughout Peru. During the last decade, the Peruvian economy has experienced sustained economic growth and has been one of the fastest-growing and most stable economies in Latin America. According to data published by the Central Reserve Bank of Peru, in 2010 and 2011, Peruvian GDP increased at a rate of 8.8% and 6.9%, respectively, and in the first six months of 2012, Peruvian GDP increased 6.1%. This economic growth, together with low inflation, has contributed to, among other key improvements, significant poverty reduction. The percentage of the country’s population living below the poverty line decreased from approximately 48.6% in 2004 to approximately 27.8% in 2011. According to data published by INEI, the construction sector in Peru grew 16.5% in 2008, 6.1% in 2009, 17.4% in 2010, 3.4% in 2011 and 14.7% in the first six months of 2012.

Excellence in productivity and supply-chain management. We have been particularly successful at executing our business model with a focus on customer service and high operating margins, shrinkage rates, sales per area, sales per employee and average sales per ticket. In 2011, we generated S/.10,469 in sales per square meter of store space, one of the highest among our competitors. We focus on reducing each store’s working capital and investing capital needs in a cost-efficient manner while maintaining high sales volume and superior customer service and product quality. Our efficient supply-chain network, supported by continued improvements in SAP-based information technology, allows us to optimize our working capital requirements through high inventory turnover and reduce our inventory-related costs. In addition, our strategically located distribution centers, our logistics system and our purchasing power with suppliers enable us to meet the merchandising demands of our stores. In recent years, we have also made significant investments in technology systems focused primarily on supporting our pricing strategy, customer relationship management systems, workforce management and in-store operational efficiency. We believe that continued upgrading of our operations and technology allows us to further increase efficiency, reduce expenses and provide the necessary customer information to enhance merchandising decisions at our stores.

chain. Finally, our identification of under-served consumer segments and aggressive expansion by opening 15 stores between 2007 and 2011 enabled us to obtain a return on equity of 17.3% in 2011. These elements have allowed us to reinforce our position as a leading retailer offering competitive prices, giving us a significant competitive advantage.

Our Strategy

have developed private-brand products that are widely recognized for their high value, innovation and quality. In 2011, private-brand products represented 14.0% of sales. The selection of our suppliers and the products that we offer have allowed us to increase our gross margin, which grew from 27.7% in 2010 to 28.3% in 2011. As we continue to pursue an aggressive expansion strategy of opening new stores, we will require greater quantities of goods to stock our stores, making our purchasing strategy essential to our continued success.

History

Maestro is a corporation (sociedad anónima) that was incorporated under the laws of Peru in 1978 under the name Costa de Marfil S.A. In September 2008, we changed our name to Maestro Home Center S.A., which we subsequently changed to Maestro Perú S.A. in September 2010.

Our operations began in 1994 by the Vurnbrand family, who obtained a license from the U.S. hardware company Ace Hardware to open stores under the name “Ace Home Center” in Peru. Maestro’s original stores focused on offering a wide selection of primarily high-margin, imported products, enabling us to position ourselves as the home improvement store of choice for customers from the upper and upper-middle classes. Maestro opened one store per year between 1994 and 1997 with an average size of 3,200 square meters. Sales grew rapidly during these years.

Between 1997 and 2002, we did not open additional stores and instead focused on refining our business model. During this period, sales remained flat, as we experienced competitive pressure on our high-margin products from new market entrants, including department stores, that implemented aggressive pricing strategies, leveraging their scale in sales volume, customer traffic and large product mix. In response, we decided to revamp our business model, developing a format to reach consumers from all income levels and customer segments. This new business model offered a more robust product mix with a project-based objective and an aggressive approach to price competition, as well as a strong focus on providing complete home improvement and construction solutions, including expert advice focused on high-selling products.

Our new business model was successful, and we entered into an expansion period during which we benefited from an increase in consumer income levels and a robust economic environment. We introduced our revamped store design, which is still in use today, expanded other stores to conform to the new model and closed stores that were not consistent with the new business model. We began to open new stores in some of Lima’s fastest-growing and most populous districts and in the principal cities throughout Peru in order to respond to high customer demand. At the end of 2009, we had 11 stores, of which nine were in the new Maestro format and two were in the previous format.

Our largest shareholder, Enfoca Inversiones, acquired its first equity interest in the Company in 2007 and increased its participation in 2009, marking a period of rapid expansion, including three store openings in 2009, two in 2010 and five in 2011. In 2012, Enfoca Inversiones acquired an additional stake in the Company, increasing its participation to 91.85%.

As of August 31, 2012, we had 20 stores located throughout Peru, and we plan to open four additional stores in 2012. We have over 3,500 employees, including over 2,300 project advisors who work with customers in our stores to achieve their home improvement goals. We have a highly recognized brand in Peru, and based on customer surveys conducted by Ipsos Apoyo, we maintain high levels of customer satisfaction.

Corporate Structure

The following chart sets forth our corporate structure as of the date of this offering memorandum:

Maestro S.A. (Issuer)

Inmobiliaria Domel S.A.C.(1)

Industrias Delta S.A.(1)

(1) Mr. Jesús Zamora León owns 100 shares in Domel and one share in Delta.

Our subsidiaries, Domel and Delta, own or lease all of the properties where our stores are located (except for those stores that lease space in a shopping mall and our Chacarilla store).

Our Products and Services

Our Products

To meet our customers’ varying home improvement needs, we offer a complete line of products and appliances for maintenance, repair, remodeling and home improvement. Our commercial strategy is aimed at being the market leader in each category of products that we sell. In furtherance of this strategy, our commercial division is divided into 12 units, each responsible for one category of products that we offer: electrical supplies, hardware, bath and kitchen, tools, gardening, cleaning, lumber, construction materials, home organization, paint, flooring and tiles, plumbing and lighting. Each unit is responsible for managing the product selection in its category with a focus on innovation and having a wide and specialized selection of products, as well as achieving synergies with complementary product categories by focusing on selling home improvement projects and positioning Maestro as a destination retailer for every category of home improvement products.

Our wide network of domestic and international suppliers allows us to offer our customers a wide selection of domestic and imported brand-name products, such as General Electric®, Black and Decker®, Bosch® and Eternit®, which are generally sought by customers looking for a brand that they know and trust. In 2011, 24.6% of our sales were from products that we imported and 75.4% of our sales were from products purchased from domestic suppliers. We believe that our product selection provides our DIY and professional customers a “one-stop-shop” for a wide variety of domestic and imported brand-name merchandise needed to complete home improvement, repair, maintenance or construction projects. In addition, we have developed private brands that are widely recognized in the Peruvian home improvement market for their high quality and innovative design. Private brands are an important element of our overall portfolio, representing approximately 14% of our total product offering, and help us differentiate from the competition in prices and design. We offer a number of proprietary and exclusive brands across a wide range of departments, such as Khor Premium® lighting, Khor® lighting, Pitbull Profesional® power tools and Pitbull® tools.

Product Selection and Pricing Strategy

The product mix offered in each store is determined by our commercial division from the perspective of solving the project needs of our DIY and professional customers. Stores and project advisors regularly provide information to the commercial division about inquiries gathered from customers regarding our product mix. The commercial division fosters extensive discussions with domestic and international suppliers about the future and development of product categories, as well as making regular trips to study more developed home improvement markets and therefore strengthen our capacity for innovation.

Selling prices for all of our products are determined by our commercial planning division. This division constantly evaluates selling prices of our products in each city in which we operate by determining comparable prices at a local reference store. We modify our selling prices based on the results of our commercial planning division’s research to offer our customers competitive prices in each city where we operate. We regularly conduct customer research to evaluate our customers’ opinion about our prices. According to a study conducted by Ipsos Apoyo in 2011, substantially all of our customers believed the prices of the products sold in our stores to be “average,” “cheap” or “very cheap.”

Product Sourcing and Quality Assurance

We source our products from local and international vendors, with no single vendor accounting for more than 5% of total purchases.

In 2011, sales of imported goods represented 24.6% of total sales. Domestic products represented 75.4% of total sales. In 2011, 70.3% of Maestro’s imports came from countries that have free trade agreements with Peru, such as China, the United States and member countries of Mercosur and the Andean Community. We are one of the largest importers in Peru of merchandise intended for retail sales.

We enter into annual purchase agreements with our main suppliers to establish certain conditions, including, among others, rebates and minimum fill rates (i.e., the percentage of each purchase order fulfilled on time by the supplier), but pricing terms are set at the time that we place an order based on a price list agreed with each supplier.

We contract with third-party manufacturers to produce our private-brand products. We conceptualize the private-brand products that we sell and often have low-cost, intermediate and premium versions of the same type of product. After we determine the general specifications for our private-brand products, we work with the third-party manufacturers who design, manufacture, package and deliver the products. We have worked with manufacturers in China and several other countries to produce our private-brand products.

We ensure that suppliers satisfy our high standards for quality and fill rates. For that purpose, we have agreed with our local suppliers on specific fill rates to measure the amount of products delivered on time in proportion to the amount of products ordered.

We have quality-assurance teams dedicated to overseeing the quality of all of our products, whether they are or imported, locally sourced or private-brand products. Through these efforts, we have established criteria for supplier and product performance that are designed to ensure that our products comply with applicable international quality and performance standards. We perform periodic inspections of our key international suppliers in countries including, but not limited to, China, Turkey and Brazil in order to assess the quality of the products that we purchase and our suppliers’ infrastructure, machinery and equipment, procedures and corporate sustainability. All of the factories and distribution centers of our international suppliers are inspected by us or by third-party firms specialized in quality control prior to their products being delivered to us and sold in our stores and periodically thereafter.

We believe that alternative and competitive suppliers are available for virtually all of our products. Whenever possible, we purchase directly from manufacturers to provide savings for customers and improve our gross margin.

Logistics

We are focused on obtaining a competitive advantage over our competitors in the traditional home improvement market by ensuring constant product availability for our customers whenever they require products at our stores by actively managing our inventory and total supply chain costs. We have optimized our logistics network by improving our inventory management systems and processes and are committed to leveraging our advantage to fully utilize and optimize our improved logistics network.

We have a service agreement with a third-party logistics operator for the full operation of a distribution center, including reception, handling, inspection and storage of local and imported merchandise, stock management and merchandise dispatch throughout Peru. In addition, we have service agreements with another logistics operator for 19,000 cubic meters of storage in 2012 and 22,000 cubic meters of storage in 2013 of imported products and the supply of related logistic services, such as reception, handling and dispatch of merchandise, as well as the provision of 450 cubic meters of cross-docking per day for products purchased from certain domestic suppliers. All of our distribution centers operated by third parties are located near the port of Callao, which is the largest and most important port in Peru.

Deliveries to our stores and, under limited circumstances, to our customers, are made using subcontracted external carriers. We normally enter into transportation agreements with ground transportation carriers to establish freight charges, volume and certain obligations related to the transportation service, such as insurance, availability of trucks and delivery time. We believe that cross-docking helps reduce logistics costs because the appropriate product mix can be loaded on a single truck for each store and delivered in a single delivery, reducing loading and unloading times at our stores.

Inventory

We focus on efficient inventory management while ensuring that our stores maintain a sufficient variety of products in stock at all times so that customers can purchase everything that they need for their home improvement or construction project during a single visit to any of our stores. We employ SAP Materials Management to control our inventory at our store locations. Our inventory turnover ratio (i.e., cost of goods purchased divided by the annual average inventory, calculated as the average inventory for each month in a calendar year) was 4.89 at the end of 2011 compared to 5.15 at the end of 2010.

Most of our inventory at any given time is warehoused in our stores, which are designed to have available merchandise at the customer level, with the remaining inventory stacked above on racks. We manage inventory through a combination of centralized and decentralized systems. Under the centralized system, our central office defines the level of inventory of products purchased from foreign suppliers and certain local suppliers. Under the decentralized system, each store manager is responsible for restocking products at each store from our distribution center, in the case of imported products, and directly from local suppliers. We believe that storing merchandise directly at stores reduces our costs and improves our efficiency by requiring fewer deliveries and less “restocking” exercises by our employees.

Stores

Between June 30, 2007 and June 30, 2012, we increased our total number of stores from four to 19, increasing our total selling space to 101,006 square meters exclusively through organic growth. These stores are located in the most important regions of Peru covering approximately half of the country’s population.

As of June 30, 2012, we or our wholly owned subsidiaries owned approximately 40% of the properties on which our stores are located and leased the remaining 60%.

The map below shows our geographic area of activity and the location of the target customers of our stores as of June 30, 2012:

(1) Numbers indicate order in which stores were opened.

The following table sets forth information on the expansion of our stores in Peru since 2010:

Year Ended Six Months Ended December 31, June 30, 2010 2011(1) 2012 Number of stores opened ...... 2 5 1 Square meters of salesrooms added ..... 49,869 26,314 5,273 ______(1) In 2011 we closed our store in the Jockey Plaza shopping mall.

In July 2012 we opened a new store in Tacna with a total selling space of 5,564 square meters, and currently we are developing three stores in Comas, Sullana and Cajamarca, which we plan to open before the end of 2012. In addition, as of June 30, 2012, we had secured six locations for future store openings in Cajamarca, Comas, Chimbote, Sullana, Surco and Lima (Barrios Altos).

We have implemented a sophisticated process to identify potential locations for opening new stores based on population density, growth potential and concentration of hardware businesses. In Lima, we initially focused on opening stores in areas with high purchasing power, but recently, our focus has been on opening stores in highly populated areas with growing purchasing power. We have also been aggressively expanding our stores to areas outside of Lima to take advantage of favorable market conditions and high demand for modern home improvement stores in those markets.

Our stores are designed to minimize both up-front and maintenance capital expenditures, thus allowing the stores to achieve profitability earlier than comparable retail stores. Our stores generally take 12 weeks to construct and an additional four weeks to equip.

Store design has become one of our trademark characteristics, providing customers with a consistent shopping experience. The stores, designed to resemble warehouses, provide a shopping experience that is attractive to our target customers.

Each of our stores has two main entry points for customers, both of which serve a particular function and appeal to specific segments of the Company’s customer base. One entrance is used to transport bulk items and is located near the lumber and heavy construction materials sections. This entrance is generally frequented by maestros and other professional customers and is used to facilitate mechanized transport of bulk goods while limiting walking distance. Forklifts and other mechanized transportation devices can easily transport pallets directly from the store floor to customers’ vehicles. The second entrance is designed for DIY customers, who generally do not purchase heavy building materials but rather place particular importance on store design.

We strive to create impressive displays of inventory. Shelves are intentionally stacked high and deep to create a notion of massive scale and breadth of the product mix. This approach helps reinforce the notion that we are a market leader in Peru.

Project Advisors

As of June 30, 2012, we had 2,313 project advisors, whom we consider fundamental to the implementation of our positioning strategy as a specialist retailer in the sale of home improvement and construction projects. We ensure that project advisors are highly trained and motivated to provide solutions for our customers. Our project advisors assist customers with specific product and installation questions in our stores, and we have made substantial efforts to improve our information technology solutions and have optimized certain elements of our supply chain to take tasks out of the store and allow our project advisors to devote more time to customer-facing activities. We use software applications and statistical models to forecast our sales and use that data to efficiently allocate our project advisor labor hours based on customer traffic patterns.

Our project advisors undergo intensive training on an annual basis to ensure that they are knowledgeable in several project-based technical areas. After being hired, all of our project advisors must complete a training program before attending to customers, and during their time at Maestro, they are required to complete practical training sessions. We offer a number of training courses to our project advisors in 12 different project categories. Our project advisors completed over 90,000 hours of training in 2011.

We encourage our project advisors to pursue careers with us. We provide regular performance evaluations so that project advisors know areas in which they excel and areas in which they need improvement. Many of our project advisors have joined our management team after working with customers on a daily basis, which gives them a unique perspective that is a valuable asset as a manager.

Given that knowledge is key for a successful career path with Maestro, and due to the fact that project advisors receive full pay for attending training programs, our project advisors are incentivized to participate in training programs. Our training programs are designed to be hands-on, teaching our project advisors how to complete a project and the advantages and disadvantages of various products that can be used in the project. Armed with this knowledge, we believe our project advisors can not only offer a superlative customer service experience, but can also suggest additional products that a customer may need to complete a project, or higher-value products that may be of benefit to the customer in completing their project, all of which, we believe, contribute to higher sales and gross margins.

We motivate our project advisors by offering competitive salaries, opportunities for development and advancement, as well as other benefits, in order to empower them to deliver excellent customer service and demonstrate product and project knowledge to our customers through our training programs. To encourage our project advisors to do so, we measure their satisfaction regularly and maintain multiple means of ensuring effective communications with them. The results of our last internal work-environment survey conducted in 2011 showed that approximately 88% of our project advisors were satisfied with their working environment.

Customers

We serve DIY and professional customers. Our DIY customers generally purchase equipment and products or materials for decoration and to complete, either by themselves or with the assistance of a third-party contractor, small and large home improvement and construction projects in their home or office. We assist our DIY customers with specific product and installation questions and offer them a variety of installation services. Our professional customers purchase products to complete home improvement and construction projects for their clients. Our principal professional customers consist of maestros (i.e., individual contractors who work in construction, remodeling and repair) and small specialized construction companies with minimum infrastructure that hire subcontractors to complete projects and compete for minor construction projects. Based on the Ipsos Apoyo survey, in 2011, approximately 79% of our customers were DIY customers, and 21% were professional customers. These percentages have varied only slightly in recent years and show the importance of both of our customer bases and their needs for home improvement and construction projects.

In Peru, new houses are generally constructed by individual homeowners who build, renovate and remodel their homes either by themselves or with the assistance of a maestro. We offer more than 300 workshops each year to DIY customers, giving courses on building and renovating homes, distribute instructional and technical materials focused on how to complete home improvement projects and sell all products necessary to complete these projects. The average sales per ticket and the frequency of store visits are extremely important for our DIY customers, as even if a DIY customer completes few projects each year, the purchase of all products necessary for a project results in high sales per ticket. In 2011, 67% of our DIY customers made a purchase in our stores at least once each month.

Maestros, small- and medium-sized contractors account for almost 80% of our professional customers. For the most part, professional customers purchase products for small and medium construction projects, remodeling and equipment installations. Although professional customers only make up 21% of our total customer base, as compared to DIY customers, professional customers typically purchase products from our stores more frequently and with higher average sales per ticket. In 2011, 47% of our professional customers made a purchase in our stores at least once each week. In addition to our workshops, we offer professional customers 30-day no-interest financing, and recognize the unique service needs of the professional customer and use our expertise to facilitate their buying experience.

We believe that both our DIY and professional customers belong principally to the lower or middle class. We have seen little change in recent years in the economic demographics of our customer base, which we believe to be due to our strategy of offering everyday competitive prices.

We conduct customer research through various surveys to visiting customers, customers that participate in our training programs and focus groups. This research allows us to evaluate customers’ opinion of our customer service, analyze our customers’ profile, track purchasing trends, identify cross-selling opportunities and collect other data relating to our customers. We believe that our customer research has allowed us to identify opportunities for

growing our business and investing in customer acquisition and retention initiatives, such as free training courses. In addition, we openly welcome customer suggestions and feedback.

We believe that our high standard of customer service, reflected in competitive pricing of merchandise, store locations, quality and quantity of stock and merchandise selection and presentation has enhanced customer loyalty, as reflected by our growing customer base and frequency of customer visits to our stores. According to a study conducted by Ipsos Apoyo, in 2010 and 2011, 85% and 81%, respectively, of our customers indicated that they visited one of our stores at least once each month.

Marketing

We have a dynamic and robust marketing strategy to drive sales among all of our customer segments. In line with our business strategy, our marketing is mainly directed at positioning our image as the home improvement retailer of choice for all project needs. Our principal slogan is “Especialista en precios bajos” (specialist in low prices), which, we believe, summarizes the shopping experience when purchasing at our stores.

We have developed an extensive database that allows us to communicate with our customers in a targeted manner. Our database includes transactional data from purchases made at our stores and with Maestro-branded credit cards, data collected during our workshops and other value-added services offered at our stores. This information allows us to focus our marketing strategy on each of our customers’ home improvement needs and is essential for our direct marketing strategy. In addition, our advertising campaigns include the monthly distribution of several full-color catalogs featuring our products and monthly specials, television advertising campaigns to promote the Maestro brand, radio campaigns and magazine advertisements. In 2011, we spent S/.17.8 million on marketing and advertising campaigns, as compared to S/.19.6 million in 2010. During the first six months of 2012, we spent S/.13.3 million on marketing and advertising campaigns.

We also offer free workshops and training programs for our DIY customers and maestros in a variety of home improvement projects and installation services and believe that our course offering has allowed us to affirm our position as a specialist in home improvement projects and retain and expand our customer base. In 2011, we conducted over 10,000 workshops and training programs. In addition, we participate in a number of community service programs, such as “Jubilados con Espíritu Joven” (Retirees with Young Spirits), which provide benefits to the communities in which we are located.

Presta, Presta Experto and Other Credit Programs

We facilitate project sales to our customers by promoting the origination of credit cards and personal loans by CrediScotia through the Maestro-branded Presta, Presta Experto and PrestaFácil brands under an agreement with CrediScotia. The Presta credit card is offered to customers who already have access to the banking system, while the Presta Experto card is offered to lower-income customers with limited or no access to the banking system. Both cards combine the benefits of a customer loyalty card with those of a credit card by allowing those customers to finance their purchases at our stores, build a credit record and enjoy other benefits, such as access to special prices and training. In general, the Presta and Presta Experto credit cards are more popular in our stores outside of Lima, where we believe that access to credit and credit cards is more limited.

The Maestro-branded Presta and Presta Experto credit cards and PrestaFácil personal loans are issued by CrediScotia pursuant to an agreement. Under this agreement, all of the accounts receivable are recorded on CrediScotia’s financial position, and CrediScotia is responsible for the administration of the cards and the collection of outstanding balances. As a result, CrediScotia is responsible for all of the credit risk for the total amount of sales made at our stores using Presta and Presta Experto credit cards and PrestaFácil personal loans. Both parties share the profits from the agreement after accounting for credit loss, provisions and expenses.

Our agreement with CrediScotia also contemplates the offering of personal loans provided by CrediScotia through the PrestaFácil program. PrestaFácil personal loans are offered to customers with access to the banking system who require credit for their purchases and for labor and installation costs. PrestaFácil allows customers to make monthly payments on their purchases at our stores.

As of June 2012, we had a stock of over 300,000 Presta and Presta Experto credit cards, combined.

The average sales per ticket have historically been substantially higher for purchases made by Presta or Presta Experto than purchases made in cash or other credit cards.

Competition and Market Position

Our business is highly competitive, based primarily on customer service, price, store locations and product mix, and our goal is to be the market leader in every home improvement category.

The Peruvian home improvement market is divided into the traditional home improvement market and the modern home improvement market. The table below sets forth our estimates of the market share of the traditional home improvement market and the modern home improvement market in 2010 and 2011:

Market Share(1) 2010 2011 Traditional home improvement market ...... 82.8% 81.0% Modern home improvement market ...... 17.2% 19.0% Total ...... 100.0% 100.0% ______(1) Source: Internal estimates based on market information gathered from Peruvian suppliers for domestic products and Veritrade for imported products.

Traditional Home Improvement Market

The traditional home improvement market is composed of “mom-and-pop” hardware stores, specialty stores, informal stores and hardware clusters. We estimate that the traditional home improvement market is approximately 81% of the total home improvement market. The main players in the traditional home improvement market are “mom-and-pop” hardware stores and, in Lima, hardware clusters. “Mom-and-pop” hardware stores are businesses that are generally owned and operated in a single small location, rather than being part of a national chain. They generally do not rely on brands, offer customers a limited variety of products and stock, and primarily compete based on price, ongoing relationships with members of the local community and convenient locations for their customers. In Lima, we estimate that there are more than 3,700 “mom-and-pop” hardware stores, and they have effectively established themselves as a retailer of convenience for the general public. Hardware clusters are locations in a city where there are several small vendors of home improvement and construction products in close proximity to each other. They compete mainly based on product specialization, price, customer relationships and product variety. In Lima, there are two principal hardware clusters: Las Malvinas and Palao.

We believe that traditional hardware stores are our main competition and provide us with the greatest opportunity to differentiate our products and customer service. In general, we compete with traditional hardware stores on our ability to offer superior customer service and greater product mix, as well as the availability of large quantities of each product at our stores. We do not normally compete on prices with the traditional home improvement market, as we tend to set our prices with reference to our largest competitor for each product line. We believe that our cost of sales is comparable to those of our competitors in the home improvement market.

Although no data is regularly published on the traditional home improvement market, our store and product managers, as well as our central management, regularly conduct walk-throughs and mystery-shopping at local hardware markets and in districts where hardware stores are common.

Modern Home Improvement Market

The modern home improvement market is composed of home improvement warehouse chains, and our main competitors in this market are Sodimac, Cassinelli, Decor Center and, recently, Promart. We estimate that in 2011, the modern home improvement market represented approximately 19% of the total home improvement market. We believe that our competitive advantage with respect to the modern home improvement market lies in

our recognition as a home improvement specialist and an expert in project advice, stock availability and competitive prices.

The table below sets forth our estimates of the market share in the modern home improvement market for 2010 and 2011:

Market Share(1) 2010 2011 Maestro ...... 40.0% 42.6% Sodimac ...... 41.0% 41.7% Cassinelli ...... 14.3% 11.8% Decor ...... 4.6% 3.8% Total ...... 100.0% 100.0% ______(1) Source: Internal estimates based on market information gathered from Peruvian suppliers for domestic products and Veritrade for imported products.

Properties

Our properties include home centers, warehouses and land reserves for future stores. All of our properties are located in Peru. We believe that all of our facilities are adequate for our present needs and suitable for their intended purposes.

We lease approximately 60% of our properties from third parties. The remainder of our properties are owned by us or by our wholly owned subsidiary Domel or its subsidiary Delta.

The agreement governing the surface rights to the land plot where our Callao store is located has not been registered with the public registry and, as a result, may not be enforceable against third parties.

We lease our headquarters, located at Jirón San Lorenzo 881, Surquillo, Lima 34, Peru. For more information on our stores, see “—Stores.” For more information on our logistics centers, see “—Logistics.”

Intellectual Property

Our business has a recognized brand in Peru. As a result, we believe that the Maestro® trademark is highly recognized and has significant value and is an important factor in the marketing of our products, stores and business. In addition, we believe that the brand names for our proprietary brands, Khor® and Pitbull®, are widely recognized and have a reputation for quality and competitive price. We have registered or applied for the registration of trademarks, service marks, copyrights and internet domain names, both domestically and internationally, for use in our business.

Insurance

We maintain a comprehensive insurance program designed to address specific risks associated with our operations. Our insurance program is provided through the local Peruvian insurance market and international reinsurance market and covers us against business interruption, automobile liability, third-party general liability, all property risk, including fire, explosion, earthquake, political risk, all construction and engineering risk and all risk contractor equipment. We believe that our insurance programs and policy limits and deductibles are appropriate for the risks associated with our business and are in line with the insurance policies of similar companies that operate in Peru.

Employees and Unions

We believe that our employees are fundamental to our success and strive to maintain an organization that rewards competitive, engaged and qualified employees and offers them an opportunity for development and

advancement. As of June 30, 2012, we had 3,379 employees. As of December 31, 2011, we had 3,501 employees, compared to 2,694 employees as of December 31, 2010. In 2011, we decided to migrate most of our product advisor sales force to full-time positions, and as a result, we substantially reduced our part-time workforce.

The aggregate personnel cost in 2010 and 2011 was S/.73.7 million and S/.95.3 million, respectively.

The following chart sets forth the number of employees employed by the Company:

As of December 31, As of June 30, 2010 2011 2012 Management / Administrative positions ...... 233 240 225 Part-time employees ...... 699 722 77 Full-time salaried employees ...... 1,762 2,539 3,077 Total ...... 2,694 3,501 3,379

All of our sales employees are paid a monthly bonus based on their store’s performance measured against its sales plan and against certain targets for their product area. We also have a program to measure employee satisfaction, which is focused mainly on recognition, training, well-being, career development and communication.

None of our employees are unionized. Historically, we have not experienced any significant labor disputes or strikes. We currently enjoy good relations with our employees.

Information Technology

Information technology systems are critical to managing our business. Over time, we have made significant investments in implementing, maintaining and updating our technology infrastructure, system applications and business solutions. These information systems include SAP ERP for back-office administration in accounting and finance control, logistics, commercial execution for sales and distribution, human capital management for human resource operations, workforce management system; SAP for certain front-office operations, such as credits, sales notes or pre-sales operations; and IBM ACE system to manage the cash register systems. Currently, we are implementing RED PRAIRIE’s WFM system in all stores to control time and attendance and scheduling systems, which we plan to have operational by November 2012. We believe that our information technology systems are a key element of our business strategy, and we are constantly evaluating new systems or products to better analyze sales and other data.

Social Responsibility

We are a socially responsible company committed to the development of Peru. We aim to have a positive social impact on Peruvian society by supporting social welfare programs, such as Asociación Pide un Deseo (Make- a-Wish Foundation), a not-for-profit organization dedicated to granting wishes of children with terminal illnesses. In addition, we have implemented a program named Jubilados con Espíritu Joven (Retirees with Young Spirit), under which we offer employment opportunities to retired employees who can still work.

Legal Proceedings

We are involved in a number of legal and regulatory proceedings incidental to the normal conduct of our business. We believe that none of such legal and regulatory proceedings is likely to have, in the aggregate, a material adverse effect on our consolidated financial condition or results of operations.

DIRECTORS AND SENIOR MANAGEMENT

Directors

Our Board of Directors has eight members. As of the date of this offering memorandum, the Directors of our company were:

Year Year Name Appointed of Birth Jesús Zamora León 2005 1962 Ángel Becerra Tresierra 2009 1957 Enrique Manuel Gubbins Bovet 2011 1960 Jorge Basadre Brazzini 2009 1968 José Chlimper Ackerman 2005 1955 Julio Campos Arceu 2005 1957 Miguel Aramburú Álvarez-Calderón 2011 1963 Arturo Juan Nuñez Devescovi 2012 1954

Jesús Zamora León. Mr. Zamora has been a member of our Board of Directors since 2005. Mr. Zamora has a degree in industrial engineering from the Universidad Nacional Autónoma de México and an MBA from Columbia University. Mr. Zamora is the co-founder of Enfoca Inversiones and a director of public and private corporations including Pro Naturaleza, a leading not-for-profit organization, and Cerámica Lima S.A., Talma S.A., Grupo Salud del Perú, S.A., Compañía Latinoamericana de Radiodifusión S.A. and Pesquera Diamante S.A. Previously, Mr. Zamora held various senior executive positions in banking and asset management including those at Banco de Crédito del Perú, BEA Associates and Salomon Brothers Inc.

Ángel Becerra Tresierra. Mr. Becerra has been a member of our Board of Directors since 2009. Mr. Becerra has a degree in industrial engineering from the Universidad Nacional de Ingeniería, an MBA from the Marshall School of Business at the University of Southern California and a Master of Science in operations research from the University of Southern California. Mr. Becerra is a director of Corporación Aceros Arequipa S.A., as well as a director and member of committees of Grupo Sarfaty, Talma S.A., Yobel, Grupo Salud del Perú S.A., IasaCorp, Oncosalud, Compañía Latinoamericana de Radiodifusión S.A., GS1 Perú and Enfoca SAFI. In addition, Mr. Becerra is a director of Grupo León Jiménes (Dominican Republic) and Banco de Costa Rica. Mr. Becerra has also been a visiting professor at Boston University.

Enrique Manuel Gubbins Bovet. Mr. Gubbins has been a member of our Board of Directors since 2011. Mr. Gubbins has a degree in industrial engineering from Texas A&M University. Mr. Gubbins is currently chairman of the board of directors of Sudamericana de Fibras S.A. and Metalúrgica Peruana S.A., a director of Autoridad Portuaria Nacional, Tiendas EFE S.A., Financiera Efectiva and Fundación Margot Echecopar de Rassmuss, general manager of SdF Energía S.A.C., Gerencia Industrial Corporativa S.A.C., Mountain Minerals Perú S.A. and Cia. Minera Satélite, member of the APEC Business Advisory Council, the National Confederation of Private Entrepreneurial Institutions (CONFIEP) and the Peruvian Society of International Commerce (“ComexPerú”). Previously, Mr. Gubbins was chairman of the board of the Peruvian Institute of Economics and a board member of ESSALUD (Peruvian National Health System).

Jorge Basadre Brazzini. Mr. Basadre has been a member of our Board of Directors since 2009. Mr. Basadre has a degree in business administration from the Universidad del Pacífico and an MBA from Harvard Business School. Mr. Basadre is the co-founder and executive vice-president of Enfoca Inversiones. Mr. Basadre is also a director of Cerámica Lima S.A., Corporación Cerámica S.A., Talma S.A., Aeropuertos del Perú S.A., Compañía Latinoamericana de Radiodifusión S.A. and Grupo Salud del Perú S.A. Previously, Mr. Basadre was a senior associate consultant at Booz Allen Hamilton and worked for Banco de Crédito del Perú.

José Chlimper Ackerman. Mr. Chlimper has been a member of our Board of Directors since 2005. Mr. Chlimper has a degree in economics and business administration from North Carolina State University. Mr. Chlimper has held executive positions in many leading companies and institutions in Peru, including the Central Reserve Bank of Peru, the National Society of Industries (Sociedad Nacional de Industrias) and Interbank. Currently, Mr. Chlimper is a director of Corporación Drokasa S.A., Graña y Montero S.A.A., GyM, Aeropuertos del Perú S.A. and ComexPerú. He is also chairman of the board and chief executive officer of Sociedad Agrícola Drokasa S.A. and a member of the Peru-Chile Business Council (Consejo Empresarial Peruano-Chileno). Mr. Chlimper is a lecturer at two schools of management and president of the consulting committee of the Master in Agribusiness at Universidad del Pacífico. In 2000, Mr. Chlimper was the Minister of Agriculture of Peru.

Julio Campos Arceu. Mr. Campos has been a member of our Board of Directors since 2005. Mr. Campos has a degree in industrial engineering from the Universidad Católica de Chile. Mr. Campos has wide experience in home improvement retail stores, having held various executive positions at Home Depot and in the general management of Home Depot in Chile.

Miguel Aramburu Alvarez-Calderón. Mr. Aramburú has been a member of our Board of Directors since 2011. Mr. Aramburú has a degree in industrial engineering from Pontificia Universidad Católica del Perú and an MBA from Stanford University. Currently, Mr. Aramburú is a director of Corporación Minera Castrovirreyna S.A., Castrovirreyna Compañía Minera S.A., Andino Investment Holding S.A., Neptunia S.A., Stracon GyM S.A. and Minsur S.A. He is also a member of the Investment Committee of Enfoca S.A.

Arturo Juan Nuñez Devescovi. Mr. Nuñez has been a member of our Board of Directors since 2012. Mr. Nuñez has a law degree from Pontificia Universidad Católica del Perú and an MBA from the Escuela de Administración de Negocios para Graduados (“ESAN”). Mr. Nuñez was previously chief executive officer of Banco Capital (El Salvador), vice-president of the Bank Association of El Salvador and a director of Casa de Valores Cuscatlán. Mr. Nuñez was also previously a member of the board of directors of Grupo Ripley S.A.

Board Practices

It is the practice of our Board of Directors to meet monthly. Under our bylaws, directors serve two-year terms, although they continue in office until successors are appointed. If no successor is appointed during this period, the Board of Directors may continue in office until the new members are elected or the existing members are ratified in their posts.

Senior Management

The following sets forth our current senior management:

Year Year Name Position Appointed of Birth Leonardo Bacherer Fastoni Chief Executive Officer 2010 1975 Rodrigo Gamero Cussianovich Commercial Manager 2006 1971 Lucero Ugaz Alarcón Marketing Manager 2011 1975 Pedro Castillo Paredes Chief Financial Officer 2011 1979 Lars Reyes Ploog Support Services Manager 2012 1970 Luz Marina Huamán Human Resources Manager 2011 1959 Guillermo García Echevarría Operations Manager 2007 1969 Fernando Carpio Audit Manager 2012 1971 Guillermo Lecaros Credit Card Manager 2012 1976

Leonardo Bacherer Fastoni. Mr. Bacherer has been our Chief Executive Officer since 2010. Mr. Bacherer has a degree in industrial engineering from the Military School of Engineering (Bolivia) and an MBA from the Rotterdam School of Management (Netherlands). Previously, Mr. Bacherer was head of planning and management control for Grupo Ripley S.A. in Peru and held several executive positions at Banco de Crédito del Perú in Bolivia. Mr. Bacherer was previously the Chief Financial Officer and Deputy Manager of Maestro. Mr. Bacherer has been with Maestro since July 2007.

Rodrigo Gamero Cussianovich. Mr. Gamero has been our Commercial Manager since 2006. Mr. Gamero has a degree in marketing from the Universidad San Ignacio de Loyola. Mr. Gamero has more than 12 years of experience in the commercial area of the home improvement industry. Mr. Gamero previously worked for Ace Hardware Corporation in several executive positions managing procurement for Asia. Mr. Gamero has been with Maestro since July 2006.

Lucero Ugaz Alarcón. Ms. Ugaz has been our Marketing Manager since 2011. Ms. Ugaz has a degree in industrial and systems engineering and an MBA from the Universidad de Piura. Ms. Ugaz has 12 years of experience in marketing with retail and consulting companies in Latin America (mainly Brazil) and Europe. Ms. Ugaz was previously the marketing and communications manager for Peru and Bolivia at Tetra Pak. Ms. Ugaz has been with Maestro since February 2011.

Pedro Castillo Paredes. Mr. Castillo has been our Chief Financial Officer since 2011. Mr. Castillo has a degree in industrial engineering from the Universidad de Lima and an MBA from Tecnológico de Monterrey (Mexico) and completed a Programa Avanzado de Dirección de Empresas (“PADE”) in finance from ESAN. Mr. Castillo is the former Chief Financial Officer of Grupo Zunino (Ecuador) and has held executive positions at Banco Santander and Grupo Ripley S.A. in areas including project evaluation, planning, management control and finance. Mr. Castillo has been with Maestro since January 2011.

Lars Reyes Ploog. Mr. Reyes has been our Suport Service Manager since 2012. Mr. Reyes has a degree in mechanical engineering from Pontificia Universidad Católica del Perú and an MBA from the University of Michigan. Mr. Reyes has many years of experience in high-performing companies. Previously, Mr. Reyes worked at Tejidos San Jacinto S.A., Ripley Financor and Exxon Mobil Corporation (Mobil Oil del Perú). Mr. Reyes has been with Maestro since November 2010.

Luz Marina Huamán. Ms. Huamán has been our Human Resources Manager since 2011. Ms. Huamán has a degree in social services from Pontificia Universidad Católica del Perú and a master’s degree in strategic management of human resources from the Universidad Peruana de Ciencias Aplicadas. Previously, Ms. Huamán was the recruiting manager at Supermercados Peruanos S.A., chief of human resources at Mobil Oil del Perú and human resources supervisor at Petróleos del Perú. Ms. Huamán joined Maestro on September 2011.

Guillermo García Echevarría. Mr. García has been our Operations Manager since 2007. Mr. García has a degree in engineering in navy sciences from the Peruvian Naval School and a master’s degree from Centrum at Pontificia Universidad Católica del Perú. Mr. García has held several executive positions in Maestro. Mr. García is a former Store Assistant Manager. Prior to Maestro, Mr. García was an officer in the Peruvian Navy for 10 years. Mr. García has been with Maestro since June 2004.

Fernando Carpio. Mr. Carpio has been our Audit Manager since 2012. Mr. Carpio has a degree in economics from the Universidad de Lima and an MBA from Escuela Europea de Negocios (Spain) and completed a PADE in finance from ESAN. Previously, Mr. Carpio worked for Grupo Falabaella Perú as corporate controller and previously held executive positions at KPMG. Mr. Carpio has been with Maestro since April 2012.

Guillermo Lecaros. Mr. Lecaros has been our Credit Card Manager since 2012. Mr. Lecaros has a degree in business administration from the Universidad de Lima and an MBA from Concordia University of Wisconsin. Mr. Lecaros has over 13 years of experience in credit card management. Mr. Lecaros has held executive positions in Cencosud S.A. (Chile), Grupo Sancor Seguros (Argentina), Grupo Zunino (Ecuador), Grupo Ripley S.A., Banco de Crédito del Perú and Banco Santander. Mr. Lecaros joined Maestro in April 2012.

Compensation of Directors and Officers

For the year ended December 31, 2011, the aggregate compensation of all of our directors and executive officers paid or accrued for services in all capacities was approximately S/.8.8 million (approximately U.S.$3.3 million).

Stock-Based Payment Plan for Executives

Certain of our executives are included in our benefits plan. These benefits include the granting of stock appreciation rights that may only be redeemed for cash. According to the terms of these plans, a redemption price for stock options is established. This price is equivalent to the price at the date on which the benefit is granted plus an increase based on reference interest rates. The benefits from this plan result from the difference between the value stipulated at the start of the plan and the valuation stipulated at the date the option is exercised, as explained in note 12(b) of our Audited Consolidated Financial Statements.

Share Ownership by Inversiones en Maestro Limitada

Mr. Julio Campos Arceu, through Inversiones en Maestro Limitada, indirectly owns 3,776,681 of our common shares as of the date of this offering memorandum, which represent 5.28% of our capital stock.

We have agreed to grant Inversiones en Maestro Limitada options to acquire additional common shares representing up to 1% of our capital stock each year for a period of five years commencing on December 31, 2010. Each option will vest and become exercisable on the second anniversary of the date the option is granted, except for options that will be granted on December 31, 2014, which will vest and become exercisable after the first anniversary of the date such options are granted. Each option will expire after the tenth anniversary of the date the option is granted.

We have an option to purchase (directly or through a designated third party), and Inversiones en Maestro Limitada has an option to cause us to purchase, all of our common shares owned by Inversiones en Maestro Limitada. Our call option will also cover (i) all shares underlying stock options granted to Inversiones en Maestro Limitada and (ii) all shares underlying stock options that would be granted during the fiscal year when our call option is exercised. The price we would be obligated to pay for these shares if we exercise our call option or Inversiones en Maestro Limitada exercises its put option will be equivalent to a multiple of our EBITDA less net debt and certain other items.

PRINCIPAL SHAREHOLDERS

Our capital stock consists of common shares. Common shares represent 100% of our voting shares. As of June 30, 2012, we had 71,496,706 common shares outstanding. Our common shares have a par value of S/.1.00 per share and have been fully subscribed and are fully paid.

The following table sets forth our main shareholders as of August 31, 2012:

Owner Number of Shares Percentage of Ownership Enfoca Inversiones(1) ...... 65,670,972 91.85% Inversiones en Maestro Limitada(2) ...... 3,776,681 5.28% Och-Ziff Peru Holdings LLC ...... 2,049,053 2.87% Total ...... 71,496,706 100.00% ______(1) Includes Enfoca Descubridor 1, Fondo de Inversión; Enfoca Capital 1, Fondo de Inversión; Enfoca en Maestro II, L.P. (Cayman Islands); Enfoca Discovery 1, L.P. (Cayman Islands); Enfoca en Maestro, Ltd. (Cayman Islands); Enfoca en Maestro III, L.P. (Cayman Islands); Enfoca en Maestro IV, L.P. (Cayman Islands); Enfoca en Maestro V, L.P. (Cayman Islands); Enfoca Discovery 1 Parallel Fund 1, L.P. (Cayman Islands); and Home Center Holdings Ltd. (2) Inversiones en Maestro Limitada is beneficially owned by Mr. Julio Campos Arceu. Mr. Campos is a member of our Board of Directors.

RELATED-PARTY TRANSACTIONS

In the ordinary course of business, we engage in a variety of transactions with our subsidiaries, affiliates and related parties, including agreements relating to the purchase of products and lease agreements with of our subsidiaries with respect to certain of our stores. As a general policy, we do not enter into transactions with our subsidiaries, affiliates and related parties on terms more favorable to them than what we would offer third parties.

We receive consulting services from Inversiones en Maestro Limitada, through Mr. Julio Campos Arceu, in exchange of a monthly payment of U.S.$20,000, net of taxes. Subject to certain limitations, Inversiones en Maestro Limitada and Mr. Campos have agreed not to provide services (either directly or indirectly) to third parties relating to home improvement retail and DIY or to become shareholders of companies that compete in the home improvement and DIY businesses. We are also party to a stock option agreement with Mr. Campos; see “Directors and Senior Management—Share Ownership by Inversiones en Maestro Limitada.”

DESCRIPTION OF NOTES

The Notes will be issued under the Indenture among Maestro Perú S.A. (the “Issuer”), each of Inmobiliaria Domel S.A.C. and Industrias Delta S.A., as guarantors (the “Subsidiary Guarantors”), and Deutsche Bank Trust Company Americas (the “Trustee”), as trustee, registrar, transfer agent and paying agent. The Notes will be guaranteed by the Subsidiary Guarantors. For purposes of this section of the offering memorandum, references to the “Company,” “we,” “us,” “our” or similar terms shall mean the Issuer without its Subsidiaries. The definitions of certain capitalized terms used in this section are set forth below under “—Certain Definitions.”

The statements in this section of the offering memorandum relating to the Indenture, the Notes and the Note Guarantees are summaries and are not a complete description of the Indenture, the Notes or the Note Guarantees. Where reference is made to particular provisions of the Indenture, such provisions, including the definitions of certain terms, are qualified in their entirety by reference to the provisions of the Indenture. Unless otherwise indicated, references in this section of the offering memorandum to Sections or Articles are references to sections and articles of the Indenture.

You are urged to read the Indenture because it, and not this description, will define your rights as a holder of Notes and the Note Guarantees. Copies of the Indenture are available for inspection during normal business hours at the Issuer’s principal office and at the office of the Trustee in New York, New York and, for so long as the Notes are listed on the Luxembourg Stock Exchange, at the office of the Luxembourg Paying Agent.

Overview

The Notes will be:

 general unsecured obligations of the Issuer;  equal in right of payment with any existing and future senior Indebtedness of the Issuer;  senior in right of payment to any existing and future obligations of the Issuer that are, by their terms, expressly subordinated in right of payments to the Notes;  effectively subordinated to existing and future secured obligations of the Issuer, to the extent of the value of the assets securing such obligations;  structurally subordinated to all Indebtedness and other liabilities and commitments, including trade payables, lease obligations and preferred stock, of each Subsidiary of the Issuer (other than the Subsidiary Guarantors); and

 subordinated to obligations preferred by statute or by operation of law.

The Note Guarantees of the Subsidiary Guarantors will be:

 general unsecured obligations of the Subsidiary Guarantors;  equal in right of payment with any existing and future senior Indebtedness of the Subsidiary Guarantors;  senior in right of payment to any existing and future obligations of the Subsidiary Guarantors that are, by their terms, expressly subordinated in right of payments to the Note Guarantees;  effectively subordinated to existing and future secured obligations of the Subsidiary Guarantors, to the extent of the value of the assets securing such obligations; and

 subordinated to obligations preferred by statute or by operation of law.

As of June 30, 2012, after adjusting for this offering and the assumed application of the estimated net proceeds therefrom, as described under “Use of Proceeds”:

 the outstanding consolidated Indebtedness of the Issuer would have amounted to U.S.$215.8 million; and  the Issuer’s and the Subsidiary Guarantors’ outstanding senior Indebtedness would have amounted to U.S.$215.8 million, of which U.S.$20.9 million would have been secured by assets of the Issuer or the Subsidiary Guarantors. The Issuer will be permitted to incur additional pari passu Indebtedness, which may also be secured Indebtedness, subject to the covenants described below under “—Certain Covenants—Limitation on Incurrence of Indebtedness” and “—Certain Covenants—Limitation on Liens.”

As of the date of the Indenture, all of the Issuer’s Subsidiaries will be Restricted Subsidiaries. Under the circumstances described under “—Note Guarantees,” certain Restricted Subsidiaries that guarantee Indebtedness of the Issuer will be required to guarantee the Notes. In addition, as described under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” the Issuer will be permitted to designate certain of its Subsidiaries as Unrestricted Subsidiaries. The Unrestricted Subsidiaries of the Issuer will not be subject to many of the restrictive covenants in the Indenture and will not be required to guarantee the Notes. As of the Issue Date, all of the Issuer’s Subsidiaries will be Subsidiary Guarantors.

Principal, Maturity and Interest

The Issuer will initially issue U.S.$200.0 million in aggregate principal amount of Notes in this offering. The Issuer will issue the Notes in minimum denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof.

The Notes will mature on September 26, 2019. Interest on the Notes will accrue at a rate of 6.75% per annum and will be payable semi-annually on March 26 and September 26. The first interest payment will be made on March 26, 2013 in respect of the period from (and including) September 26, 2012 to (but excluding) March 26, 2013. The Issuer will make each interest payment to the holders of record on the March 11 and September 11 immediately preceding the following interest payment date. Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid.

Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Additional Notes

The Issuer may issue additional Notes (the “Additional Notes”) under the Indenture from time to time after this offering in an unlimited principal amount. Any issuance of Additional Notes is subject to all of the covenants in the Indenture, including the covenant described below under the caption “—Certain Covenants—Limitation on Incurrence of Indebtedness.” Any Additional Notes will have the same terms and conditions as the Notes (including the benefit of the Note Guarantees) in all respects (other than the issue date, issue price and date from which interest will accrue and, to the extent necessary, certain temporary securities law transfer restrictions) so that such Additional Notes will be part of the same series as the Notes offered hereby and will vote on all matters that require a vote, including, without limitation, waivers, amendments, redemptions and offers to purchase; provided that Additional Notes with the same securities identifiers may be issued only if such issuance would constitute a “qualified reopening” for U.S. federal income tax purposes or if such Additional Notes are issued without, or with less than a de minimis amount of, original issue discount for U.S. federal income tax purposes.

Note Guarantees

The Subsidiary Guarantors will, subject to applicable legal limitations, fully and unconditionally guarantee the full and punctual payment of principal, premium, if any, interest, Additional Amounts and any other amounts that may become due and payable by the Issuer in respect of the Notes. The Note Guarantees will provide that the

Subsidiary Guarantors will immediately pay any amount that the Issuer fails to punctually pay but is required to pay pursuant to the terms of the Indenture.

The Subsidiary Guarantors’ Guarantees of the Notes will not be secured by any of their assets or properties. As a result, if the Subsidiary Guarantors are required to pay under the Note Guarantees, holders of the Notes would be unsecured creditors of the Subsidiary Guarantors. The Note Guarantees will not be subordinated to any of the Issuer’s or the Subsidiary Guarantors’ other unsecured debt obligations. In the event of a bankruptcy or liquidation proceeding against the Issuer or any of the Subsidiary Guarantors, the Note Guarantees would rank equally in right of payment with all of the Issuer’s or such Subsidiary Guarantor’s other unsecured and unsubordinated debt.

The Notes and the Note Guarantees will be effectively subordinated to claims of creditors (including trade creditors and preferred stockholders, if any) of the Issuer’s Subsidiaries other than the Subsidiary Guarantors. The Indenture will limit the obligations of each Subsidiary Guarantor under its Note Guarantee to an amount not to exceed the maximum amount that can be guaranteed by such Subsidiary Guarantor by law or without resulting in its obligations under its Note Guarantee being voidable or unenforceable under applicable laws relating to fraudulent transfer, or under similar laws affecting the rights of creditors generally. By virtue of these limitations, a Subsidiary Guarantor’s obligation under its Note Guarantee could be significantly less than amounts payable with respect to the Notes and the Indenture, or a Subsidiary Guarantor may have effectively no obligation under its Note Guarantee. We cannot assure you that the above limitation will protect the Note Guarantees from fraudulent transfer challenges or, if it does, that the remaining amount due and collectible under the Note Guarantees would suffice, if necessary, to pay the Notes in full when due.

See “Risk Factors—Risks Related to an Investment in the Notes.”

As of the date of the Indenture, all of the Issuer’s Subsidiaries will be Subsidiary Guarantors. The Issuer will cause any Restricted Subsidiary of the Issuer that guarantees any Indebtedness of the Issuer or any other Restricted Subsidiary after the Issue Date, to become a Subsidiary Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel. In addition, the Issuer will cause any Restricted Subsidiary of the Issuer that (A) as of the last date of any quarter and with respect to the Issuer and its Restricted Subsidiaries, individually represents at least 5% of the Consolidated Assets of the Issuer and its Restricted Subsidiaries as determined in accordance with IFRS, or (B) for the preceding twelve-month period, individually represents at least 5% of the Consolidated EBITDA of the Issuer and its Restricted Subsidiaries as determined in accordance with IFRS, to become a Subsidiary Guarantor, and execute a supplemental indenture and deliver an Opinion of Counsel; provided, however, that if (i) with respect to (A) above, as of the last date of the relevant quarter, the Issuer and the then existing Subsidiary Guarantors collectively represent at least 85% of the Consolidated Assets of the Issuer and its Restricted Subsidiaries, then such Restricted Subsidiary will not be required to become a Subsidiary Guarantor, and (ii) with respect to (B) above, for the relevant twelve-month period, the Issuer and the then existing Subsidiary Guarantors collectively represent at least 85% of the Consolidated EBITDA of the Issuer and its Restricted Subsidiaries, then such Restricted Subsidiary will not be required to become a Subsidiary Guarantor. Furthermore, the Issuer will cause any Person that becomes a Restricted Subsidiary of the Issuer after the Issue Date that (A) as of the last date of the quarter in which such Person becomes a Restricted Subsidiary of the Issuer, and with respect to the Issuer and its Restricted Subsidiaries, individually represents at least 5% of the Consolidated Assets of the Issuer and its Restricted Subsidiaries as determined in accordance with IFRS, or (B) for the preceding twelve-month period beginning with the twelve months preceding the last date of the quarter in which any such Person becomes a Restricted Subsidiary of the Issuer, and with respect to the Issuer and its Restricted Subsidiaries, such Person individually represents at least 5% of the Consolidated EBITDA of the Issuer and its Restricted Subsidiaries as determined in accordance with IFRS, to become a Subsidiary Guarantor, and execute a supplemental indenture and deliver an Opinion of Counsel; provided, however, that if (i) with respect to (A) above, as of the last date of the relevant quarter and after giving effect to any such Person becoming a Restricted Subsidiary of the Issuer after the Issue Date, the Issuer and the then existing Subsidiary Guarantors collectively represent at least 85% of the Consolidated Assets of the Issuer and its Restricted Subsidiaries, then such Person will not be required to become a Subsidiary Guarantor, and (ii) with respect to (B) above, for the relevant twelve-month period and after giving effect to any such Person becoming a Restricted Subsidiary of the Issuer after the Issue Date, the Issuer and the then existing Subsidiary Guarantors collectively represent at least 85% of the Consolidated EBITDA of the Issuer and its Restricted Subsidiaries, then such Person will not be required to become a Subsidiary Guarantor.

The Subsidiary Guarantors will guarantee the Issuer’s Obligations under the Notes and the Indenture jointly and severally, fully and unconditionally, on a senior unsecured basis. The Subsidiary Guarantors will agree to pay, in addition to the amount stated above, any and all reasonable and documented costs and expenses (including reasonable and documented counsel fees and expenses) incurred by the Trustee or the holders of Notes in enforcing any rights under the Note Guarantees. The Obligations of each of the Subsidiary Guarantors under its Note Guarantee will rank equally in right of payment with other senior unsecured Indebtedness of such Subsidiary Guarantor, except to the extent such other Indebtedness is expressly subordinate to the Obligations arising under such Note Guarantee. The Obligations of each of the Subsidiary Guarantors under its Note Guarantee will be limited as necessary to prevent the Note Guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law.

A Subsidiary Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person) another Person, other than the Issuer or another Subsidiary Guarantor, unless:

(1) immediately after giving effect to that transaction (and treating any Indebtedness that becomes an Obligation of the resulting, surviving or transferee Person or any Restricted Subsidiary as a result of that transaction as having been incurred by such Person or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default exists;

(2) either:

(A) the Person formed by or surviving any such consolidation or merger (if other than the Subsidiary Guarantor) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Subsidiary Guarantor under the Note Guarantee and the Indenture and, in the case of a consolidation or merger, the Person formed by or surviving any such consolidation or merger agrees to modify the provisions under “—Additional Amounts” so that Tax Jurisdiction will be defined to include any jurisdiction in which such Person is resident for tax purposes; or

(B) the transaction is made in compliance with the covenant described under “—Certain Covenants—Limitation on Asset Sales”; and

(3) the Issuer will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

The Note Guarantees of a Subsidiary Guarantor will be released:

(1) in connection with any liquidation or sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary of the Issuer, if the sale or other disposition is in compliance with the Indenture, including the covenant “—Certain Covenants—Limitation on Asset Sales”;

(2) (A) in connection with any sale or other disposition of all of the Capital Stock of that Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary of the Issuer, that is in compliance with the Indenture, including “— Certain Covenants—Limitation on Asset Sales” and (B) in connection with any sale or other disposition of Capital Stock of that Subsidiary Guarantor that is in compliance with the Indenture, including “—Certain Covenants—Limitation on Restricted Payments” that results in such Subsidiary Guarantor no longer constituting a Subsidiary of the Issuer;

(3) if the Issuer designates any Restricted Subsidiary that is a Subsidiary Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture; or

(4) upon legal defeasance or satisfaction and discharge of the Indenture as provided below under the captions “—Legal Defeasance and Covenant Defeasance” and “—Satisfaction and Discharge.”

Additional Amounts

All payments of principal, premium or interest by the Issuer in respect of the Notes or the Subsidiary Guarantors in respect of the Note Guarantees (whichever applicable, the “Applicable Payor”) will be made without deduction or withholding for or on account of any present or future taxes, penalties, fines, duties, assessments or other governmental charges of whatever nature imposed or levied by or on behalf of any jurisdiction in which the Applicable Payor is then resident for tax purposes or any jurisdiction by or through which payment is made (each, a “Tax Jurisdiction”), or any political subdivision thereof or any authority therein having power to tax (such taxes, penalties, fines, duties, assessments or other governmental charges, “Applicable Taxes”), unless such deduction or withholding is required by law.

In the event that any Applicable Taxes are required to be so deducted or withheld, the Applicable Payor will pay such additional amounts (“Additional Amounts”) as may be necessary to ensure that the amounts received by holders of such Notes after such withholding or deduction will equal the respective amounts that would have been receivable in respect of such Notes in the absence of such withholding or deduction, except that no such Additional Amounts will be payable:

(1) to or on behalf of a holder or beneficial owner of a Note that is liable for Applicable Taxes in respect of such Note by reason of having a present or former connection with the relevant Tax Jurisdiction imposing or levying the Applicable Taxes other than the mere holding or owning of such Note or the enforcement of rights with respect to such Note or the receipt of income or any payments in respect thereof;

(2) to or on behalf of a holder or beneficial owner of a Note in respect of Applicable Taxes that would not have been imposed but for the failure of the holder or beneficial owner of a Note to comply with any certification, identification, information, documentation or other reporting requirement (within 30 calendar days following a written request from the Applicable Payor to the holder for compliance) if such compliance is required by applicable law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or reduction in the rate of deduction or withholding of, Applicable Taxes; provided, however, that in no event shall such holder’s requirement to provide such information require the holder to provide any materially more onerous information, documents or other evidence than would be required under U.S. federal income tax law, regulation and administrative practice;

(3) to or on behalf of a holder or beneficial owner of a Note in respect of any estate, inheritance, gift, sales, transfer, personal assets or similar tax, assessment or other governmental charge;

(4) to or on behalf of a holder or beneficial owner of a Note in respect of Applicable Taxes payable otherwise than by withholding from payment of principal of or premium, if any, or interest on the Notes;

(5) to or on behalf of a holder or beneficial owner of a Note in respect of Applicable Taxes that would not have been imposed but for the fact that the holder presented such Note for payment (where presentation is required) more than 30 days after the later of (x) the date on which such payment became due and (y) if the full amount payable has not been received by the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect will have been given to the holders by the Trustee;

(6) to or on behalf of a holder or beneficial owner of a Note in respect of any tax, duty, assessment or government charge that is imposed on or with respect to a Note presented for payment by or on behalf of a holder or beneficial owner to a paying agent in the European Union who would have been able to avoid such withholding or deduction by presenting the relevant Note to another paying agent in a Member State of the European Union; or

(7) any combination of items (1) to (6) above;

nor will Additional Amounts be paid with respect to any payment of the principal of, or any premium or interest on, any Notes to any holder or beneficial owner of a Note who is a fiduciary, or partnership, or limited liability company or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of the relevant Tax Jurisdiction to be included in the income for tax purposes of a beneficiary, or settlor with respect to such fiduciary, or a member of such partnership or limited liability company or a beneficial owner who would not have been entitled to such Additional Amounts had it been the holder of such Notes.

In the event that Additional Amounts actually paid with respect to the Notes pursuant to the preceding paragraphs are based on rates of deduction or withholding of withholding taxes in excess of the appropriate rate applicable to the holder of such Notes, and as a result thereof such holder is entitled to make a claim for a refund or credit of such excess from the authority imposing such withholding tax, then such holder shall, by accepting such Notes, be deemed to have assigned and transferred all right, title and interest to any such claim for a refund or credit of such excess to the Issuer. However, by making such assignment, the holder makes no representation or warranty that the Issuer will be entitled to receive such claim for a refund or credit and incurs no other obligations with respect thereto.

In addition, the Issuer will pay and indemnify the Holders against any Peruvian value-added tax that is imposed on a payment of interest on the Notes, except to the extent that such Peruvian value-added tax is payable as described in items (1) through (7) above.

All references in this offering memorandum to principal, premium or interest payable hereunder will be deemed to include references to any Additional Amounts payable with respect to such principal, premium or interest. Upon written request from the Trustee, the Applicable Payor will provide the Trustee with documentation reasonably satisfactory to the Trustee evidencing the payment of any amounts deducted or withheld promptly upon the Applicable Payor’s payment thereof, and copies of such documentation will be made available by the Trustee to holders upon written request to the Trustee.

The Issuer will pay promptly when due any present or future stamp, court or documentary taxes or any excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery or registration of each Note or any other document or instrument referred to in the Indenture or such Note, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside the relevant Tax Jurisdiction except those resulting from, or required to be paid in connection with, the enforcement of such Note or any other such document or instrument after the occurrence and during the continuance of any Event of Default with respect to the Note in default.

Optional Redemption

The Issuer may acquire Notes by means of the redemption provisions below or by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with the applicable securities laws, so long as such acquisition does not otherwise violate the terms of the Indenture.

Optional Redemption upon Equity Offerings

At any time prior to September 26, 2015, the Issuer may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including any additional Notes issued after the Issue Date) at a redemption price of 106.75% of the principal amount, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings of the Issuer; provided that:

(1) at least 65% of the aggregate principal amount of Notes originally issued under the Indenture (including any additional Notes issued after the Issue Date) remains outstanding immediately after the occurrence of such redemption; and

(2) the redemption occurs within 90 days of the date of the closing of such Equity Offering.

Optional Redemption with a Make-Whole Premium

At any time prior to September 26, 2016, the Issuer may also redeem any of the Notes (including any additional Notes issued after the Issue Date) in whole at any time or in part from time to time, at its option, at a “make-whole” redemption price equal to the greater of (A) 100% of the principal amount of such Notes and (B) the sum of the present value at such redemption date of (i) the redemption price of the Notes at September 26, 2016 (such redemption price being set forth in the table below under “—Optional Redemption Without a Make-Whole Premium”) and (ii) all required interest payments thereon through September 26, 2016 (excluding accrued but unpaid interest to the redemption date), discounted to the redemption date on a semi-annual basis (assuming a 360- day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points; plus, in each case, any accrued and unpaid interest and Additional Amounts, if any, on such Notes to the redemption date as calculated by the Independent Investment Banker.

Optional Redemption Without a Make-Whole Premium

On or after September 26, 2016, the Issuer may redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning September 26 of the years indicated below, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date.

Year Percentage 2016 ...... 103.375% 2017 ...... 101.688% 2018 and thereafter ...... 100.000%

Optional Redemption for Changes in Taxes

The Issuer may redeem the Notes, in whole but not in part, at its discretion at any time at a redemption price equal to the principal amount thereof, together with accrued and unpaid interest to (but excluding) the date fixed by the Issuer for redemption (a “Tax Redemption Date”) if on the next date on which any amount would be payable in respect of the Notes, (A) the Applicable Payor is or would be required to pay (after taking reasonable measures to avoid this requirement) Additional Amounts with respect to the Notes (or in the case of the Subsidiary Guarantors, the Note Guarantees) in excess of the Additional Amounts that it would pay if payments in respect of the Notes (or in the case of the Subsidiary Guarantors, the Note Guarantees) were subject to deduction or withholding at a rate of 4.99% generally (excluding any value-added taxes) determined without regard to any interest, fees, penalties or other additions to tax, as a result of any change in, expiration of or amendment to, the law of the relevant Tax Jurisdiction or any regulations or rulings promulgated thereunder, or any change in the official interpretation or official application of such laws, regulations or rulings, or any change in the official application or interpretation of, or any execution of or amendment to, any treaty or treaties affecting taxation to which the relevant Tax Jurisdiction is a party, which change, expiration, amendment or treaty becomes effective on or after the date of the Indenture, and on or after such jurisdiction becomes a relevant Tax Jurisdiction, or in the case of any withholding taxes imposed by the jurisdiction of the paying agent after the date of appointment of such paying agent or (B) if Additional Amounts are payable in respect of value-added taxes or if payment of principal of or premium, if any, or interest on the Notes is subject to value-added taxes and, in each case, the Issuer is not entitled to a tax credit with respect to such value-added taxes paid due to an action or event not attributable to the Issuer.

The Issuer will not give any such notice of redemption earlier than 60 days prior to the earliest date on which the Issuer or any Subsidiary Guarantor would be obligated to make such payment or withholding if a payment in respect of the Notes were then due. Prior to the publication or, where relevant, mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuer will deliver to the Trustee an Opinion of Counsel (which may be the Issuer’s counsel) to the effect that there has been such change or amendment which would entitle the Issuer to redeem the Notes hereunder and the Issuer or the Subsidiary Guarantor cannot avoid any obligation to pay Additional Amounts by taking reasonable measures available.

Mandatory Redemption

The Issuer is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

Selection and Notice

If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption on a pro rata basis or by such method acceptable to the Trustee and in accordance with DTC procedures unless otherwise required by law or applicable stock exchange requirements.

No Notes of U.S.$200,000 or less can be redeemed in part. Notices of redemption will be mailed by first- class mail at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture. Notices of redemption may not be conditional.

If any Note is to be redeemed in part only, the notice of redemption that relates to such Note will state the portion of the principal amount of that Note that is to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the holder of the Notes upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of Notes called for redemption, unless payment is not made on that date.

Repurchase of Notes upon a Change of Control Repurchase Event

If a Change of Control Repurchase Event occurs, each holder of the Notes will have the right to require the Issuer to repurchase all or any part (equal to an integral multiple of U.S.$1,000; provided that the remaining portion of such holder’s Note will not be less than U.S.$200,000) of that holder’s Notes pursuant to an offer (the “Change of Control Offer”) made by the Issuer on the terms set forth in the Indenture. In the Change of Control Offer, the Issuer will offer to purchase such holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal amount of such Notes to be repurchased plus accrued and unpaid interest on such Notes to be repurchased to the date of purchase subject to the rights of holders of such Notes on the relevant record date to receive interest due on the relevant interest payment date (the “Change of Control Payment”). Within 30 days following a Change of Control Repurchase Event, the Issuer will mail a notice to each holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase the Notes on a date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures required by the Indenture and described in such notice. The Issuer will also give notice to the holders of the Notes by publication in a daily newspaper of general circulation in Luxembourg and/or on the website of the Luxembourg Stock Exchange. The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.

On the Change of Control Payment Date, the Issuer will, to the extent lawful:

(1) accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.

The paying agent will promptly mail to each holder of Notes properly tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control Repurchase Event will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to the Change of Control Offer, the Indenture does not contain provisions that permit the holders of the Notes to require that the Issuer repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

The Issuer will not be required to make a Change of Control Offer upon a Change of Control Repurchase Event if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to the Indenture as described above under the caption “—Optional Redemption,” unless and until there is a default in payment of the applicable redemption price.

Other existing and future indebtedness of the Issuer and its Subsidiaries may contain prohibitions on the occurrence of events that would constitute a Change of Control Repurchase Event or require that indebtedness be repurchased upon a Change of Control Repurchase Event. In addition, the exercise by the holders of their right to require the Issuer to repurchase the Notes upon a Change of Control Repurchase Event may cause a default under such indebtedness even if the Change of Control Repurchase Event itself does not.

If a Change of Control Offer occurs, the Issuer may not have available funds sufficient to make the Change of Control Payment for all the Notes that might be delivered by holders of Notes seeking to accept the Change of Control Offer. In the event the Issuer is required to purchase outstanding Notes pursuant to a Change of Control Offer, the Issuer expects that it would seek third-party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that the Issuer would be able to obtain necessary financing. See “Risk Factors—Risks Related to an Investment in the Notes—We may not have the ability to raise the funds necessary to finance any change-of-control offer required by the Indenture.”

Suspension of Covenants

From and after the first date following the Issue Date, or following the most recent Reversion Date, that (i) the Notes have Investment Grade Ratings from two out of three Rating Agencies and (ii) no Default or Event of Default has occurred and is continuing under the Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), the Issuer and its Restricted Subsidiaries will not be subject to the following provisions of the Indenture as to the Notes:

(1) “—Repurchase of Notes upon a Change of Control Repurchase Event”;

(2) “—Certain Covenants—Limitation on Asset Sales”;

(3) “—Certain Covenants—Limitation on Incurrence of Indebtedness”;

(4) “—Certain Covenants—Limitation on Restricted Payments”;

(5) “—Certain Covenants—Dividend and Other Payment Restrictions Affecting Subsidiaries”;

(6) clause (4) of the first paragraph of “—Certain Covenants—Limitation on Merger, Consolidation or Sale of Assets”;

(7) “—Certain Covenants—Limitation on Transactions with Affiliates”;

(8) “—Certain Covenants—Business Activities”; and

(9) the second paragraph of “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries” (collectively, the “Suspended Covenants”).

In the event that the Issuer and its Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) the Notes have Investment Grade Ratings from fewer than two out of three Rating Agencies, then the Issuer and its Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants. The period of time between the Suspension Date and the Reversion Date is referred to in this description as the “Suspension Period.” Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period (or upon termination of the Suspension Period or after that time based solely on events that occurred during the Suspension Period).

On the Reversion Date, all Indebtedness incurred, or Disqualified Stock issued, during the Suspension Period will be classified to have been incurred or issued pursuant to the first paragraph of “—Certain Covenants— Limitation on Incurrence of Indebtedness” below or one of the clauses set forth in the second paragraph of “— Certain Covenants—Limitation on Incurrence of Indebtedness” below (to the extent such Indebtedness would be permitted to be incurred or issued thereunder as of the date of the incurrence and after giving effect to Indebtedness incurred or issued prior to the Suspension Period and outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be incurred or issued pursuant to the first or second paragraph of “— Certain Covenants—Limitation on Incurrence of Indebtedness,” such Indebtedness will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under clause (2) of the second paragraph of “— Certain Covenants—Limitation on Incurrence of Indebtedness.” Calculations made after the Reversion Date of the amount available to be made as Restricted Payments under “—Certain Covenants—Limitation on Restricted Payments” will be made as though the covenant described under “—Certain Covenants—Limitation on Restricted Payments” had been in effect since the Issue Date and throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under the first paragraph of “—Certain Covenants—Limitation on Restricted Payments.”

Certain Covenants

For so long as any Note is outstanding, the Issuer will, and to the extent specified below will cause its Restricted Subsidiaries to, comply with the terms of the following covenants:

Limitation on Incurrence of Indebtedness

The Issuer will not, and will not permit any of its Restricted Subsidiaries to create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Issuer will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Issuer may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Subsidiary Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if:

(i) the Fixed Charge Coverage Ratio for the Issuer’s most recently ended four fiscal quarters for which internal consolidated financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been at least (x) 2.0 to 1.0, if such Indebtedness is incurred or such Disqualified Stock or such preferred stock is

issued on or prior to the third anniversary of the Issue Date or (y) 2.5 to 1.0, if such Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued thereafter; and

(ii) the Consolidated Debt to EBITDA Ratio for the Issuer’s most recently ended four fiscal quarters for which internal consolidated financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been no greater than (x) 4.5 to 1.0, if such Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued on or prior to the second anniversary of the Issue Date, (y) 4.0 to 1.0, if such Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued after the second anniversary of the Issue Date and on or prior to the third anniversary of the Issue Date or (z) 3.5 to 1.0, if such Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued thereafter;

in each case, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four fiscal quarters.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

(1) Existing Indebtedness;

(2) the incurrence on the Issue Date by the Issuer of Indebtedness represented by the Notes and the Indenture and any Note Guarantees thereof by the Subsidiary Guarantors;

(3) the incurrence by the Issuer or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, Attributable Indebtedness under Sale and Leaseback Transactions, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property (real or personal), plant or equipment used in the business of the Issuer or any of its Restricted Subsidiaries (whether through the direct purchase of assets or the Equity Interests of any Person owning such assets), in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (3), not to exceed the greater of U.S.$20.0 million and 5% of the Issuer’s Consolidated Net Tangible Assets;

(4) the incurrence by the Issuer or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (1), (2), (4) or (14) of this paragraph;

(5) the incurrence by the Issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries; provided, however, that:

(A) if the Issuer or any Subsidiary Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Subsidiary Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Issuer, or the Note Guarantee, in the case of a Subsidiary Guarantor; and

(B) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Issuer or a Restricted Subsidiary of the Issuer and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Issuer or a Restricted Subsidiary of the Issuer, will be deemed, in each case, to constitute an

incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5);

(6) the issuance by any Restricted Subsidiary to the Issuer or to any other Restricted Subsidiary of shares of preferred stock; provided, however, that:

(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Issuer or a Restricted Subsidiary; or

(B) any sale or other transfer of any such preferred stock to a Person that is not either the Issuer or a Restricted Subsidiary,

in each case, will be deemed to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (6);

(7) the incurrence by the Issuer or any Restricted Subsidiaries of Hedging Obligations, including, without limitation, in respect of financing transactions permitted under the Indenture;

(8) the guarantee by the Issuer or any Restricted Subsidiary of Indebtedness of the Issuer or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant (including any Note Guarantee); provided that if the Indebtedness being guaranteed is subordinated to the Notes or the Note Guarantees, then the Guarantee shall be subordinated to the same extent as the Indebtedness guaranteed;

(9) the incurrence of Indebtedness by the Issuer or any of its Restricted Subsidiaries in the form of performance bonds, completion guarantees and surety or appeal bonds entered into by the Issuer or any of its Restricted Subsidiaries in the ordinary course of their business;

(10) the incurrence of Indebtedness by the Issuer or any of its Restricted Subsidiaries owed to any Person in connection with workers’ compensation, self-insurance, health, disability or other employee benefits or property, casualty or liability insurance provided by such Person to the Issuer or such Restricted Subsidiary, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;

(11) the incurrence by the Issuer or any of the Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) inadvertently drawn against insufficient funds, so long as such Indebtedness is extinguished within five Business Days of incurrence;

(12) the incurrence of Indebtedness by the Issuer or any of the Restricted Subsidiaries arising from agreements of the Issuer or any of the Restricted Subsidiaries providing for adjustment of purchase price or other similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Restricted Subsidiary of the Issuer; provided, however, that, in the case of a disposition, the maximum aggregate liability in respect of such Indebtedness shall at no time exceed the gross proceeds actually received by the Issuer and its Restricted Subsidiaries in connection with such disposition;

(13) Indebtedness incurred by the Issuer or any of the Restricted Subsidiaries in respect of letters of credit (and reimbursement obligations with respect thereto) issued in the ordinary course of business, including, without limitation, letters of credit to procure merchandise or relating to workers’ compensation claims or self-insurance, or other Indebtedness relating to reimbursement-type obligations regarding workers’ compensation claims;

(14) (A) Indebtedness of a Restricted Subsidiary incurred and outstanding on the date on which such Restricted Subsidiary was acquired by, or merged into, the Issuer other than Indebtedness

incurred (i) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Issuer or (ii) otherwise in connection with, or in contemplation of, such acquisition; provided, however, that at the time such Restricted Subsidiary is acquired by the Issuer, either (x) the Issuer would have been able to incur U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the incurrence of such Indebtedness pursuant to this clause (14) or (y) the Fixed Charge Coverage Ratio would be greater than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction and the Consolidated Debt to EBITDA Ratio would be less than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction; and (B) Acquired Debt of a Person consolidated or merged with the Issuer; provided, however, that immediately after giving effect to such transaction on a pro forma basis and any related financing transactions as if the same had occurred at the beginning of the applicable four fiscal quarters, (x) the Successor Issuer would have been able to incur U.S.$1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to the incurrence of such Indebtedness pursuant to this clause (14) or (y) the Fixed Charge Coverage Ratio would be greater than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction and the Consolidated Debt to EBITDA Ratio would be less than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction;

(15) Guarantees permitted by clauses (8), (15) or (16) of the definition of Permitted Investments; and

(16) in addition to the items referred to in clauses (1) through (15) above, Indebtedness and Disqualified Stock of the Issuer and Indebtedness or preferred stock of Restricted Subsidiaries in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (16) and then outstanding, will not exceed the greater of U.S.$20.0 million and 5% of the Issuer’s Consolidated Net Tangible Assets at any time outstanding.

The Issuer will not incur, and will not permit any Subsidiary Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Issuer or such Subsidiary Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the Note Guarantee on substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Issuer solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.

For purposes of determining compliance with this “Limitation on Incurrence of Indebtedness” covenant, in the event that an item of proposed Indebtedness (or any portion thereof) meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuer, in its sole discretion, will be permitted to classify such item of Indebtedness (or any portion thereof) on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant and will only be required to include the amount and type of such Indebtedness in one of the above clauses. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms and the reclassification of preferred stock as Indebtedness due to a change in accounting principles will not be deemed to be an incurrence of Indebtedness for purposes of this covenant; provided that, in each such case, the amount of any such accrual, accretion or payment is included in Fixed Charges of the Issuer as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S.-dollar amount of Indebtedness denominated in a currency other than the U.S. dollar shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred or, in the case of revolving credit Indebtedness, on the date such Indebtedness was first committed. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate that is in effect on the date of such refinancing.

The amount of any Indebtedness outstanding as of any date will be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2) the principal amount or liquidation preference of the Indebtedness, in the case of any other Indebtedness; and

(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(A) the Fair Market Value of such assets at the date of determination; and

(B) the amount of the Indebtedness of the other Person.

Limitation on Asset Sales

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the Issuer (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2) at least 75% of the consideration received in the Asset Sale by the Issuer or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:

(A) any liabilities, as shown on the Issuer’s most recent consolidated balance sheet, of the Issuer or any Restricted Subsidiary (other than Disqualified Stock or contingent liabilities and liabilities that are subordinate to the Notes or the Note Guarantees) that are assumed by the transferee of any such assets pursuant to a customary arrangement that releases the Issuer or such Restricted Subsidiary from further liability (in which case, the Issuer will, without further action, be deemed to have applied such deemed cash to Indebtedness in accordance with clause (1) of the paragraph below);

(B) any securities, notes or other obligations received by the Issuer or any Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents within 90 days, to the extent of the cash or Cash Equivalents received in that conversion; and

Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Issuer and its Restricted Subsidiaries may apply such Net Proceeds at their option:

(1) to permanently reduce (A) Obligations of the Issuer or any Restricted Subsidiary under senior secured Indebtedness permitted to have been incurred under “—Certain Covenants—Limitation on Incurrence of Indebtedness” and “—Limitation on Liens” (and, if applicable, to correspondingly reduce commitments with respect thereto), (B) Indebtedness that ranks pari passu with the Notes; provided that if the Issuer shall so reduce Obligations under such Indebtedness, the Issuer will equally and ratably reduce obligations under the Notes by making an offer (in accordance with the procedures set forth below for an Asset Sale Offer (as defined below)) to all holders of Notes to purchase at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, the pro rata principal amount of such

Notes or (C) senior secured Indebtedness of a Restricted Subsidiary or Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor, in each case other than Indebtedness owed to the Issuer or an Affiliate of the Issuer;

(2) to acquire all or substantially all of the assets of, or any Capital Stock of, a Person engaged in a Permitted Business, if, after giving effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of the Issuer;

(3) to acquire other assets that are not classified as current assets under IFRS and that are used or useful in a Permitted Business; or

(4) any combination of items (1) through (3) of this paragraph.

In the case of clauses (2) and (3), the Issuer will have complied with its obligations if it enters into a binding commitment to acquire such assets or Capital Stock within 365 days after receipt of such Net Proceeds; provided that such binding commitment shall be subject only to customary conditions and that such acquisition is consummated before the later of (x) the date that is six months from the date of signing such binding commitment and (y) the end of such 365-day period.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second and third paragraphs of this covenant will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds U.S.$20.0 million, within 30 days thereof, the Issuer will make an offer (the “Asset Sale Offer”) to all holders of Notes and, at the Issuer’s option if required by the terms of such other Indebtedness, to all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest to the date of purchase (or, in respect of such other pari passu Indebtedness of the Issuer or the Subsidiary Guarantors, such lesser price, if any, as may be provided for by the terms of such pari passu Indebtedness) and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee will select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. The Issuer may satisfy its obligations under this covenant by making an Asset Sale Offer prior to the expiration of 365 days from the date of such Asset Sale or Asset Sales.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

Any future credit agreements or other agreements relating to Indebtedness to which the Issuer or a Subsidiary Guarantor becomes a party may contain restrictions and provisions prohibiting the Issuer or a Subsidiary Guarantor from purchasing any Notes or providing that certain control or asset sale events with respect to the Issuer or a Subsidiary Guarantor will constitute a default. In the event a Change of Control Repurchase Event or Asset Sale occurs at a time when the Issuer or a Subsidiary Guarantor is prohibited from purchasing the Notes, the Issuer or a Subsidiary Guarantor could seek the consent of parties to such agreements to purchase Notes or could attempt to refinance the borrowings that contain such prohibition. If the Issuer or a Subsidiary Guarantor does not obtain such consents or repay such borrowings, the Issuer or a Subsidiary Guarantor will remain prohibited from purchasing the Notes. In such case, the Issuer or a Subsidiary Guarantor’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture, which would, in turn, constitute a default under such Indebtedness. On the other hand, certain corporate events may not constitute an Asset Sale, in which case we will not be required to repurchase your Notes.

Limitation on Restricted Payments

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Issuer’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than (A) dividends, payments or distributions payable in Equity Interests (other than Disqualified Stock) of the Issuer or (B) dividends, payments or distributions payable to the Issuer or a Restricted Subsidiary (and if such Restricted Subsidiary is not a wholly owned Subsidiary, to its other holders of common Equity Interests on a pro rata basis));

(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Issuer) any Equity Interests of the Issuer or any direct or indirect parent corporation of the Issuer held by Persons other than the Issuer or a Restricted Subsidiary, including in connection with any merger or consolidation involving the Issuer (other than in exchange for Equity Interests of the Issuer (other than Disqualified Stock));

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Issuer or any Restricted Subsidiary that is contractually subordinated to the Notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries), except a payment of interest or principal at the Stated Maturity thereof; or

(4) make any Restricted Investment;

(all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

(2) the Issuer would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four fiscal quarters, have been permitted to incur at least U.S.$1.00 of additional Indebtedness pursuant to both the Consolidated Debt to EBITDA Ratio and the Fixed Charge Coverage Ratio tests set forth in the first paragraph of the covenant described above under the caption “—Certain Covenants—Limitation on Incurrence of Indebtedness”; and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and its Restricted Subsidiaries since the Issue Date (excluding Restricted Payments permitted by clauses (3), (4), (5), (7), (8) and (10) of the next succeeding paragraph) is less than the sum, without duplication of:

(A) 50% of the Consolidated Net Income of the Issuer for the period (taken as one accounting period) from January 1, 2012 to the end of the Issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(B) 100% of the aggregate net cash proceeds or Fair Market Value of assets received by the Issuer subsequent to the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of the Issuer or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Issuer that have been converted into or exchanged for such Equity Interests (other

than Equity Interests (or Disqualified Stock or convertible or exchangeable debt securities) sold to a Subsidiary of the Issuer); plus

(C) to the extent that any Restricted Investment that was made under this clause (3) after the Issue Date is sold or otherwise liquidated or repaid (other than to the Issuer or a Restricted Subsidiary), the amount of cash received by the Issuer or any Restricted Subsidiary in respect of such sale, liquidation or disposition or the Fair Market Value of property to be used in the Permitted Business of the Issuer or any Restricted Subsidiary received by the Issuer or any Restricted Subsidiary in respect of such sale, liquidation or disposition (in each case, less the cost of disposition, liquidation or repayment, if any, paid or to be paid by the Issuer or any Restricted Subsidiary); plus

(D) to the extent that any Unrestricted Subsidiary of the Issuer designated as such after the Issue Date is redesignated as a Restricted Subsidiary or is merged with or consolidated into the Issuer or a Restricted Subsidiary after the Issue Date, the lesser of (i) the Fair Market Value of the Issuer’s Investment in such Subsidiary as of the date of such redesignation or merger or consolidation or (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary after the Issue Date; plus

(E) 100% of any dividends or distributions received by the Issuer or a Restricted Subsidiary of the Issuer after the Issue Date from an Unrestricted Subsidiary or unconsolidated investee of the Issuer; plus

(F) the amount of cash received by the Issuer or a Restricted Subsidiary of the Issuer as repayment of loans which constitute Restricted Investments made under this clause (3) after the Issue Date by the Issuer or a Restricted Subsidiary or the value of Guarantees made under this clause (3) after the Issue Date by the Issuer or a Restricted Subsidiary which constituted Restricted Investments that have been released in full.

The preceding provisions will not prohibit:

(1) the payment of any dividend or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have complied with the provisions of the Indenture; provided that such purchase or redemption shall be included (without duplication for the declaration) in the calculation of the amount of Restricted Payments;

(2) upon the occurrence of a Change of Control Repurchase Event and within 60 days after the completion of the offer to repurchase the Notes pursuant to the covenant described under “— Repurchase of Notes upon a Change of Control Repurchase Event” above, or within 60 days after the completion of the offer to repurchase the Notes pursuant to the covenant described under “—Certain Covenants—Limitation on Asset Sales”, any purchase or redemption of Obligations subordinated to the Notes, or Disqualified Stock, required pursuant to the terms thereof as a result of such Change of Control Repurchase Event at a purchase or redemption price not to exceed 101% of the outstanding principal amount thereof or liquidation value thereof (in the case of a Change of Control Repurchase Event) or 100% of the outstanding principal amount thereof or liquidation value thereof (in the case of an offer to repurchase as a result of an Asset Sale), as the case may be, plus any accrued and unpaid interest; provided, however, that (A) at the time of such purchase or redemption no Event of Default shall have occurred and be continuing (or would result therefrom) and (B) such purchase or redemption shall be included in the calculation of the amount of Restricted Payments;

(3) any purchase or redemption of Disqualified Stock of the Issuer or a Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, Disqualified Stock of the Issuer or a Restricted Subsidiary which is permitted to be incurred pursuant to the covenant described under “—Certain Covenants—Limitation on Incurrence of Indebtedness”; provided that the amount of any

such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (3)(B) of the preceding paragraph;

(4) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Issuer; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (3)(B) of the preceding paragraph; provided, further, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments;

(5) the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer or any Restricted Subsidiary that is contractually subordinated to the Notes or to any Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness which is incurred in compliance with the covenant “—Certain Covenants— Limitation on Incurrence of Indebtedness”; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (3)(B) of the preceding paragraph; provided, further, that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments;

(6) so long as no Default or Event of Default has occurred and is continuing, payments to fund the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any Restricted Subsidiary of the Issuer held by any current or former officer, director or employee of the Issuer or any of its Restricted Subsidiaries pursuant to any equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement to compensate management employees; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests (other than upon the death or disability of the relevant officer, director or employee) may not exceed U.S.$1.0 million in any fiscal year (with unused amounts in any fiscal year being carried over to succeeding fiscal years subject to a maximum payment (without giving effect to the following provisions) of U.S.$3.0 million in the aggregate in any fiscal year), plus the amount of cash proceeds from any key man life insurance; provided, further, that such amount may be increased by an amount not to exceed the cash proceeds from the sale of Equity Interests of the Issuer to current or former members of management, directors, managers or consultants of the Issuer or any of its Subsidiaries that occurs after the Issue Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the calculation of available Restricted Payments by virtue of clause (3)(B) of the preceding paragraph; provided, further, that such purchase or redemption shall be included in the calculation of the amount of Restricted Payments;

(7) so long as no Default or Event of Default has occurred and is continuing, payments to fund the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer held by Mr. Julio Campos Arceu and/or Inversiones Maestro Limitada pursuant to the Consulting Agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed U.S.$15.0 million;

(8) the repurchase of Equity Interests deemed to occur upon the exercise of stock options, warrants or other convertible securities to the extent such Equity Interests represent a portion of the exercise price thereof; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment shall be excluded from clause (3)(B) of the preceding paragraph;

(9) so long as no Default or Event of Default has occurred and is continuing, the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Issuer or any Restricted Subsidiary issued on or after the Issue Date in accordance with both the Consolidated Debt to EBITDA Ratio and the Fixed Charge Coverage Ratio tests described above under the caption “—Certain Covenants—Limitation on Incurrence of Indebtedness” and to the extent such dividends are included in calculating Fixed Charges; provided that such purchase or redemption shall be excluded in the calculation of the amount of Restricted Payments;

(10) any purchase or redemption of Obligations subordinated to the Notes, or Disqualified Stock, from Net Proceeds upon completion of an Asset Sale Offer; provided that the purchase price is not greater than 100% of the principal amount thereof or liquidation value thereof, as the case may be, in accordance with provisions similar to “—Certain Covenants—Limitation on Asset Sales” thereto; provided, further, that prior to such purchase or redemption, the Issuer has made the Asset Sale Offer as provided under “—Certain Covenants—Limitation on Asset Sales” and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with the Asset Sale Offer; provided, further, that such purchase or redemption shall be included in the calculation of the amount of Restricted Payments; and

(11) so long as no Event of Default has occurred and is continuing or would be caused thereby, other Restricted Payments in an amount not to exceed U.S.$10.0 million in the aggregate since the Issue Date.

The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment; provided that any Fair Market Value determination pursuant to this covenant shall be approved by (x) the Chief Financial Officer of the Issuer for Restricted Payments having a Fair Market Value that is less than or equal to U.S.$5.0 million or (y) a majority of the disinterested members of the Board of Directors of the Issuer or of the relevant Restricted Subsidiary, as the case may be, for Restricted Payments having a Fair Market Value that is greater than U.S.$5.0 million. For purposes of determining compliance with this covenant, in the event that a Restricted Payment meets the criteria of more than one of the exceptions described in clauses (1) through (11) above or is entitled to be made pursuant to the first paragraph of this covenant, the Issuer shall be permitted, in its sole discretion to classify such Restricted Payment on the date that such Restricted Payment is made, or later reclassify all or a portion of such Restricted Payment, in any manner that complies with this covenant, and such Restricted Payment shall be treated as having been made pursuant to only one of such clauses of this covenant.

Limitation on Liens

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) of any kind on any asset (including Capital Stock of Restricted Subsidiaries) now owned or hereafter acquired to secure Indebtedness, unless contemporaneously with the incurrence of such Liens effective provision is made to secure the Indebtedness due under the Indenture and the Notes or, in respect of Liens on any Restricted Subsidiary’s property or assets, any Note Guarantee of such Restricted Subsidiary, equally and ratably with (or prior to in the case of Liens with respect to Obligations subordinate to the Notes and any Note Guarantees, as the case may be) the Indebtedness secured by such Lien for so long as such Indebtedness is so secured.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to the Issuer or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries;

(2) make loans or advances to the Issuer or any of its Restricted Subsidiaries; or

(3) sell, lease or transfer any of its properties or assets to the Issuer or any of its Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) agreements governing Existing Indebtedness, any other agreements as in effect on the Issue Date and any amendments, restatements, modifications, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, restatements, modifications, renewals, increases, supplements, refundings, replacements or refinancings are, taken as a whole, in the good-faith judgment of the Issuer, no less favorable in any material respect to the holders of the Notes than the dividend and other payment restrictions contained in those agreements on the Issue Date;

(2) the Indenture, the Notes and, if applicable, the Note Guarantees;

(3) applicable law, rule, regulation or order;

(4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Issuer or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition or as consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Issuer), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture to be incurred;

(5) in the case of clause (3) in the preceding paragraph, customary non-assignment provisions in contracts and licenses entered into in the ordinary course of business;

(6) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations permitted under the Indenture that impose restrictions on the property purchased or leased of the nature described in clause (3) of the preceding paragraph;

(7) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;

(8) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

(9) restrictions contained in security agreements, pledges or mortgages securing Indebtedness of the Issuer or a Restricted Subsidiary permitted to be incurred under the Indenture so long as the restrictions solely restrict the transfer of the property governed by the security agreements, pledges or mortgages;

(10) Liens permitted to be incurred under the provisions of the covenant described above under the caption “—Certain Covenants—Limitation on Liens” that limit the right of the debtor to dispose of the assets subject to such Liens;

(11) (A) provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale and leaseback agreements, stock sale agreements and other similar agreements entered into with the approval of the Board of Directors of the Issuer, which limitation is applicable only to the assets that are the subject of such agreements, and (B) restrictions contained in any agreement governing Indebtedness incurred in compliance with the covenant “—Certain Covenants— Limitation on Incurrence of Indebtedness” by any Restricted Subsidiary that is a bona fide joint venture engaging in a Permitted Business, of which at least 30% of the common Equity Interests of such Restricted

Subsidiary is owned by a non-affiliated third party; provided that such Indebtedness is for the purpose of enabling such Restricted Subsidiary to finance projects or for working capital purposes; and

(12) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business.

Limitation on Merger, Consolidation or Sale of Assets

The Issuer will not, directly or indirectly: (A) consolidate or merge with or into another Person (whether or not the Issuer is the surviving Person); or (B) sell, lease, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries, taken as a whole, in one or more related transactions, to another Person, unless:

(1) either: (A) the Issuer is the surviving Person; or (B) the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance or other disposition has been made, is a Person organized or existing under the laws of Peru, the United States, any state of the United States or the District of Columbia or any other country that is a member country of the European Union;

(2) the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Issuer under the Notes and the Indenture and, in the case of a consolidation or merger, the Person formed by or surviving any such consolidation or merger agrees to modify the provisions under “Additional Amounts” so that Tax Jurisdiction will be defined to include any jurisdiction in which such Person is resident for tax purposes;

(3) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Issuer or any Subsidiary of the Successor Issuer as a result of such transaction as having been incurred by the Issuer or the Person formed by or surviving any such consolidation or merger (if other than the Issuer), or to which such sale, assignment, transfer, conveyance or other disposition has been made (the Issuer or such Person, as the case may be, the “Successor Issuer”) or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(4) immediately after giving effect to such transaction on a pro forma basis and any related financing transactions as if the same had occurred at the beginning of the applicable four fiscal quarters, either:

(A) the Issuer or the Successor Issuer would, on the date of such transaction, be permitted to incur at least U.S.$1.00 of additional Indebtedness pursuant to both the Consolidated Debt to EBITDA Ratio and the Fixed Charge Coverage Ratio tests set forth in the first paragraph of the covenant described above under the caption “—Certain Covenants— Limitation on Incurrence of Indebtedness” or

(B) (i) the Fixed Charge Coverage Ratio for the Successor Issuer and its Restricted Subsidiaries would be greater than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction, and (ii) the Consolidated Debt to EBITDA Ratio for the Successor Issuer and its Restricted Subsidiaries would be less than such ratio for the Issuer and its Restricted Subsidiaries immediately prior to such transaction;

(5) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture; and

(6) each Subsidiary Guarantor (unless it is the other party to the transactions above, in which case clause (1) of this paragraph shall apply), if any, shall have by supplemental indenture confirmed that its Note Guarantee shall apply to such Person’s obligations in respect of the Indenture and the Notes.

This “Limitation on Merger, Consolidation or Sale of Assets” covenant will not apply to any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets from a Restricted Subsidiary to the Issuer.

For purposes of this covenant, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Issuer, which properties and assets, if held by the Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.

The Successor Issuer will succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Indenture, but, in the case of a lease of all or substantially all its assets, the predecessor Issuer will not be released from the obligation to pay the principal of and interest on the Notes.

Limitation on Transactions with Affiliates

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer (each, an “Affiliate Transaction”), unless:

(1) the Affiliate Transaction is on terms that are no less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuer or such Restricted Subsidiary with Person who is not an Affiliate;

(2) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of U.S.$5.0 million, the Issuer delivers to the Trustee a resolution of the Board of Directors of the Issuer or of the relevant Restricted Subsidiary, as the case may be, set forth in an Officers’ Certificate certifying such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Issuer or of the relevant Restricted Subsidiary, as the case may be; and

(3) in the event that such Affiliate Transaction involves aggregate payments, or transfers of property or services with a Fair Market Value in excess of U.S.$10.0 million, the Issuer shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such Affiliate Transaction to the Issuer or such Restricted Subsidiary from a financial point of view from an accounting, appraisal or investment banking firm of recognized standing.

The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1) transactions pursuant to any employment agreement, employee benefit plan, stock options, stock ownership plan, officer or director indemnification agreement or any similar arrangement entered into by the Issuer or any of its Restricted Subsidiaries provided on behalf of directors, officers and employees in the ordinary course of business, and, in each case, payments pursuant thereto; provided that in the case of transactions pursuant to employment agreements, employee benefit plans, stock options, stock ownership plans, officer or director indemnification agreements or any similar arrangement with officers and directors, such transactions shall be approved by the Board of Directors of the Issuer and/or the relevant Restricted Subsidiary, as applicable;

(2) transactions between or among the Issuer and the Restricted Subsidiaries and Guarantees issued by the Issuer or a Restricted Subsidiary for the benefit of the Issuer or a Restricted Subsidiary, as the case may be, in accordance with “—Certain Covenants—Limitation on Incurrence of Indebtedness”;

(3) payment of reasonable and customary directors’ fees of the Issuer and any Restricted Subsidiary;

(4) any issuance of Equity Interests (other than Disqualified Stock) of the Issuer to Affiliates of such Person;

(5) Restricted Payments or Permitted Investments that do not violate the provisions of the Indenture described above under the caption “—Certain Covenants—Limitation on Restricted Payments”;

(6) transactions pursuant to any contract or agreement with the Issuer or any of the Restricted Subsidiaries in effect on the Issue Date, as the same may be amended, modified or replaced from time to time so long as any such amendment, modification or replacement is not less favorable in any material respect to the Issuer and the Restricted Subsidiaries than the original agreement as in effect on the Issue Date, except for any extension of the time period thereof;

(7) (A) transactions with customers, clients, distributors, lessors, suppliers or purchasers or sellers of goods or services, in each case, in the ordinary course of business and on market terms or (B) transactions with Permitted Joint Ventures on market terms;

(8) any Note Guarantees; and

(9) loans or advances to employees, directors, officers or consultants (i) in the ordinary course of business or (ii) otherwise not to exceed U.S.$2.0 million in the aggregate at any one time outstanding with respect to all loans or advances made since the Issue Date.

Business Activities

The Issuer will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses.

Prepayment of Existing Indebtedness and Release of Liens

The Issuer will (i) within 90 days of the Issue Date, apply a portion of the net proceeds from the sale of the Notes to prepay existing Indebtedness of the Issuer and its Restricted Subsidiaries as described under the section entitled “Use of Proceeds” in the offering memorandum, (ii) within 150 days of the Issue Date, take all necessary actions and/or cause any of its Restricted Subsidiaries to take all necessary actions (including, but not limited to, submitting all relevant documentation to and making any required filings with governmental agencies, registries or authorities under applicable law) to terminate and release in full all Liens over assets or property of the Issuer or any of its Restricted Subsidiaries relating to the such existing Indebtedness and (iii) within 270 days of the Issue Date, terminate and release in full all Liens over assets or property of the Issuer or any of its Restricted Subsidiaries relating to the such existing Indebtedness, including, without limitation, completion of any required registration of such termination and release with any governmental agencies, registries or authorities pursuant to applicable laws.

Maintenance of Priority

The Issuer shall ensure that its payment obligations with respect to the Notes will constitute its direct, unconditional and general senior unsecured obligations and will rank senior or pari passu (except for Indebtedness that is subordinated in right of payment to the Notes) in priority of payment and in all other respects (other than security) with respect to its future Indebtedness, except for labor, tax and trade obligations that in case of the Issuer’s insolvency or bankruptcy are granted preferential treatment pursuant to the laws of Peru.

Each Subsidiary Guarantor shall ensure that its payment obligations with respect to its Note Guarantee will constitute its direct, unconditional and general senior unsecured obligations and will rank senior or pari passu (except for Indebtedness that is subordinated in right of payment to its Note Guarantee) in priority of payment and in all other respects (other than security) with respect to its future Indebtedness, except for labor, tax and trade obligations that in case of such Subsidiary Guarantor’s insolvency or bankruptcy are granted preferential treatment pursuant to the laws of Peru.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors of the Issuer may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Issuer and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption “—Certain Covenants—Limitation on Restricted Payments” or under one or more clauses of the definition of Permitted Investments, as determined by the Issuer. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Issuer may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if that redesignation would not cause a Default.

Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “—Certain Covenants—Limitation on Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Issuer as of such date, and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “—Certain Covenants—Limitation on Incurrence of Indebtedness,” the Issuer will be in default of such covenant. The Board of Directors of the Issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Issuer; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Issuer of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (A) such Indebtedness is permitted under the covenant described under the caption “—Certain Covenants—Limitation on Incurrence of Indebtedness,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four fiscal quarters; and (B) no Default or Event of Default would be in existence and be continuing following such designation.

Reports

So long as any of the Notes are outstanding, the Issuer will provide to the Trustee, the holders of Notes and prospective holders of Notes (in respect of clause (iv)), (i) as soon as available after the end of each fiscal year (and in any event, within 120 days after the close of such fiscal year) annual audited consolidated financial statements for the Issuer and its subsidiaries in English prepared in accordance with IFRS (containing a balance sheet and statements of income, retained earnings and cash flows, and notes thereto, as of the end of and for such fiscal year and the immediately preceding fiscal year with a report thereon by an internationally recognized outside firm of certified public accountants), (ii) interim unaudited quarterly consolidated financial statements for the Issuer and its subsidiaries in English prepared in accordance with IFRS (containing a consolidated balance sheet and consolidated statements of income, retained earnings and cash flows, and notes thereto, as of the end of and for the interim period covered thereby and the comparable interim period in the immediately preceding fiscal year) within ten Business Days after the earlier of (x) the date on which such quarterly consolidated financial statements are required to be delivered to the SMV and (y) the date on which such quarterly consolidated financial statements are delivered to the SMV and, in the event the Issuer is no longer obligated to deliver such quarterly financial statements to the SMV, as soon as available (and in any event within 60 days after the close of each fiscal quarter), (iii) to the extent the Issuer has designated any Subsidiary as an Unrestricted Subsidiary, financial information as to the assets, liabilities and results of operations of such Subsidiary prepared in English in accordance with IFRS or generally accepted accounting principles in the country in which the relevant Unrestricted Subsidiary is organized and in a form

reasonably determined by the Issuer shall be included in the information delivered pursuant to clause (i) above and (iv) upon request by holders of Notes or prospective holders of Notes, information meeting the applicable requirements of Rule 144A(d)(4) of the Securities Act (which information need not be delivered to the Trustee so long as such information is provided to the holder of Notes or prospective holders of Notes).

Events of Default and Remedies

Each of the following is an “Event of Default”:

(1) default for 30 days in the payment when due of interest or Additional Amounts on any Note;

(2) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on any Note, including the failure to purchase Notes of pursuant to a Change of Control Offer or an Asset Sale Offer as required by the provisions described under the captions “—Repurchase of the Notes upon a Change of Control Repurchase Event” and “—Certain Covenants— Limitation on Asset Sales”;

(3) failure by the Issuer or its Restricted Subsidiaries to comply with the provisions described under “—Certain Covenants—Limitation on Merger, Consolidation or Sale of Assets”;

(4) failure by the Issuer or any of its Restricted Subsidiaries for 60 days to comply with any agreements or covenants in the Indenture (other than as described under clauses (1), (2) and (3) above, which are covered by such clauses) after notice by the Trustee or the holders of 25% or more in principal amount of the outstanding Notes;

(5) default in respect of any Indebtedness of the Issuer or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Issuer or any of its Restricted Subsidiaries), whether such Indebtedness now exists, or is created after the date of the Indenture, if that default:

(A) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness when due, in each case after the expiration of any applicable grace period (a “Payment Default”); or

(B) results in the acceleration of such Indebtedness prior to its express maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates U.S.$20. million or more;

(6) failure by the Issuer or any of its Restricted Subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of U.S.$20.0 million (net of any amounts covered by insurance), which final judgments are not paid, discharged or stayed for a period of 60 days;

(7) except as permitted by the Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any of the Issuer, a Subsidiary Guarantor, or any Person acting on behalf of the Issuer or a Subsidiary Guarantor, denies or disaffirms its obligations under its Note Guarantee; or

(8) certain events of bankruptcy or insolvency described in the Indenture with respect to the Issuer or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary.

In the case of an Event of Default arising and continuing from certain events of bankruptcy or insolvency, with respect to the Issuer, any Restricted Subsidiary of the Issuer that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

Subject to certain limitations, holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of such Notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or premium, if any.

In the event of any Event of Default specified in clause (5) of the first paragraph above, such Event of Default and all consequences thereof (excluding, however, any resulting payment default) will be annulled, waived and rescinded, automatically and without any action by the Trustee or the holders of the Notes, if within 30 days after such Event of Default arose, the Issuer delivers an Officers’ Certificate to the Trustee stating that the holders of such Indebtedness have annulled, rescinded or waived the acceleration, notice or action (as the case may be) giving rise to such Event of Default; provided that none of the Issuer or any Restricted Subsidiary made or agreed to make any payment or provide any other consideration in exchange for such annulment, rescission or waiver. It is understood that in no event shall an acceleration of the principal amount of the Notes as described above be annulled, waived or rescinded upon the happening of any such events as described in this paragraph.

Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any holders of Notes unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder of a Note may pursue any remedy with respect to the Indenture or the Notes unless:

(1) such holder has previously given the Trustee notice that an Event of Default is continuing;

(2) holders of at least 25% in aggregate principal amount of the then outstanding Notes have requested the Trustee to pursue the remedy;

(3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;

(4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(5) holders of a majority in aggregate principal amount of the then outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

The holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of the holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or premium or the principal of, the Notes.

The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of Default, the Issuer is required to deliver to the Trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator, stockholder, member or partner of the Issuer or any Subsidiary Guarantor, as such, will have any liability for any obligations of the Issuer or any Subsidiary Guarantor under the Notes, the Indenture or the Note Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the United States federal securities laws.

Listing

Application has been made to list the Notes on the Official List of the Luxembourg Stock Exchange and to trade on the Euro MTF market of the Luxembourg Stock Exchange, and the Issuer will use commercially reasonable efforts to obtain and maintain listing of the Notes on the Official List of the Luxembourg Stock Exchange; however, the Notes are not yet listed, and the Issuer cannot assure the holders of the Notes that they will be accepted for listing.

Legal Defeasance and Covenant Defeasance

The Issuer may at any time, at the option of its Board of Directors evidenced by a resolution set forth in an Officers’ Certificate, elect to have all of the obligations of the Issuer discharged with respect to the outstanding Notes and the Indenture and all obligations of the Issuer and the Subsidiary Guarantors discharged with respect to their Note Guarantees and the Indenture (“Legal Defeasance”). Legal Defeasance means that the Issuer and the Note Guarantors will be deemed to have paid and discharged the entire indebtedness represented by the outstanding Notes on the 91st day after the deposit specified in clause (1) of the second following paragraph except for:

(1) the rights of holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium on, such Notes when such payments are due from the trust referred to below;

(2) the Issuer’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s and the Subsidiary Guarantors’ obligations in connection therewith; and

(4) the Legal Defeasance and Covenant Defeasance (as defined below) provisions of the Indenture.

In addition, the Issuer may, at its option and at any time, elect to have the obligations of the Issuer and the Subsidiary Guarantors released with respect to certain covenants (including its obligation to make Change of Control Offers and Asset Sale Offers) that are described in the Indenture (“Covenant Defeasance”), and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “Events of Default and Remedies” will no longer constitute an Event of Default with respect to such Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the holders of the Notes, cash in U.S. dollars, non-callable Government Securities or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, or interest and premium on, the outstanding Notes on the stated date for payment thereof or on

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the applicable redemption date, as the case may be, and the Issuer must specify whether Notes are being defeased to such stated date for payment or to a particular redemption date;

(2) in the case of Legal Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (A) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issue Date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit), and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Subsidiary Guarantor is a party or by which the Issuer or any Subsidiary Guarantor is bound;

(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Indenture) to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound;

(6) the Issuer must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the holders of Notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer or others; and

(7) the Issuer must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with, such opinion to be subject to customary assumptions and exceptions.

Amendment, Supplement and Waiver

Except as provided in the next three succeeding paragraphs, the Indenture, the Notes or the Note Guarantees may be amended or supplemented with the consent (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes) of the holders of at least a majority in aggregate principal amount of the Notes then outstanding (excluding any Notes held by the Issuer or any of its Affiliates), and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the holders of a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes).

Without the consent of each holder of Notes affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting holder):

(1) reduce the principal amount of Notes whose holders must consent to an amendment, supplement or waiver;

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(2) reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the redemption of the Notes (other than provisions relating to the covenants described above under the captions “—Repurchase of Notes upon a Change of Control Repurchase Event” and “—Certain Covenants—Limitation on Asset Sales” but only before the Change of Control Repurchase Event has occurred or the obligation to make an Asset Sale Offer has arisen, as applicable);

(3) reduce the rate of or change the time for payment of interest, including default interest, on any Notes;

(4) waive a Default or Event of Default in the payment of principal of, or interest or premium on, the Notes (except a rescission of acceleration of the Notes by the holders of at least a majority in aggregate principal amount of the Notes then outstanding and a waiver of the payment default that resulted from such acceleration);

(5) make any Notes payable in money other than that stated in the Notes;

(6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of the Notes to receive payments of principal of, or interest or premium on, the Notes;

(7) waive a redemption payment with respect to any Note (other than a payment required by one of the covenants described above under the captions “—Repurchase of Notes upon a Change of Control Repurchase Event” and “—Certain Covenants—Limitation on Asset Sales”);

(8) amend, change or modify the obligation of the Issuer to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with the covenant described under the caption “— Certain Covenants—Limitation on Asset Sales” after the obligation to make such Asset Sale Offer has arisen; or the obligation of the Issuer to make and consummate a Change of Control Offer in the event of a Change of Control Repurchase Event in accordance with the covenant described under the caption “— Repurchase of Notes upon a Change of Control Repurchase Event” after such Change of Control Repurchase Event has occurred, including, in each case, amending, changing or modifying any definition relating thereto;

(9) reduce any premium and Additional Amounts with respect to any Note; or

(10) release any Subsidiary Guarantor from any of its obligations under its Note Guarantee or the Indenture, except in accordance with the terms of the Indenture.

Notwithstanding the preceding, without the consent of any holder of the Notes, the Issuer, the Trustee and, if applicable, the Subsidiary Guarantors may amend or supplement the Indenture, the Notes or any Note Guarantees:

(1) to cure any ambiguity, defect or inconsistency in a manner that is not materially adverse to the interests of the holders of the Notes;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that uncertificated Notes are issued in registered form for purposes of Section 163(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

(3) to provide for the assumption of the Issuer or a Subsidiary Guarantor’s obligations to holders of Notes and Note Guarantees in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s or such Subsidiary Guarantor’s assets, as applicable;

(4) to make any change that would provide any additional rights or benefits to the holders of Notes or that does not adversely affect the legal rights under the Indenture of any such holder;

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(5) to conform the text of the Indenture, the Note Guarantees or the Notes to any provision of this “Description of Notes” to the extent that such provision in this “Description of Notes” was intended by the Issuer and the initial purchasers to be a verbatim recitation of a provision of the Indenture, the Note Guarantees, or the Notes as represented by the Issuer to the Trustee in an Officers’ Certificate;

(6) to provide for the issuance of additional Notes in accordance with the limitations set forth in the Indenture; or

(7) to allow any Subsidiary Guarantor to execute a supplemental Indenture with respect to a Note Guarantee and/or a Note Guarantee with respect to the Notes.

Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when:

(1) either:

(A) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuer, have been delivered to the Trustee for cancellation; or

(B) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year, and the Issuer or any Subsidiary Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable Government Securities or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and accrued interest to the date of maturity or redemption;

(2) no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit), and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Subsidiary Guarantor is a party or by which the Issuer or any Subsidiary Guarantor is bound;

(3) the Issuer or any Subsidiary Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and

(4) the Issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.

In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Paying Agent and Registrar for the Notes

The Trustee will initially act as paying agent and registrar. The Issuer may change the paying agent or registrar without prior notice to the holders of the Notes; provided that (i) while Notes are outstanding, the Issuer will maintain a paying agent and registrar in the Borough of Manhattan, The City of New York, State of New York and (ii) as long as the Notes are listed on the Luxembourg Stock Exchange for trading on the Luxembourg Stock

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Exchange and the rules of the Euro MTF Market so require, at least one paying agent will be located in Luxembourg.

Concerning the Trustee

If the Trustee becomes a creditor of the Issuer or any Subsidiary Guarantor, the Indenture limits the right of the Trustee to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if, following an event of default, it acquires any conflicting interest, it must either eliminate such conflict within 90 days or resign.

The holders of a majority in aggregate principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default occurs and is continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of Notes, unless such holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Notices

As long as we issue notes in global form, notices to be given to holders will be given to DTC, in accordance with its applicable policies as in effect from time to time. If we issue notes in certificated form, notices, including upon the occurrence of a Change of Control Repurchase Event, to be given to holders will be sent by mail to the respective addresses of the holders as they appear in the Trustee’s records, and will be deemed given when mailed.

Additional Information

Registered holders of the Notes may obtain a copy of the Indenture without charge at the sole expense of the Issuer by writing to the Trustee.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all defined terms used therein, as well as any other capitalized terms used herein for which no definition is provided.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person; provided that the Indebtedness is not incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; provided, further, that Indebtedness of such Person that is redeemed, defeased, retired or otherwise repaid at the time, or immediately upon consummation, of the transaction by which such other Person is merged with or into or became a Restricted Subsidiary of such Person shall not be Acquired Debt; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person; provided that the Indebtedness is not incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; provided, further, that the amount of such Indebtedness shall be deemed to be the lesser of the value of such asset and the amount of the obligation so secured.

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“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets or rights (other than Capital Stock); provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption “—Repurchase of Notes upon a Change of Control Repurchase Event” and/or the provisions described above under the caption “—Certain Covenants— Limitation on Merger, Consolidation or Sale of Assets” and not by the provisions of the covenants described under the caption “—Certain Covenants—Limitation on Asset Sales”; and

(2) the issuance or sale of Equity Interests in any of the Issuer’s Restricted Subsidiaries, in each case, other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Issuer or a Restricted Subsidiary.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than U.S.$3.0 million;

(2) a transfer of assets between or among a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to a Restricted Subsidiary (including to a Person that becomes a Restricted Subsidiary upon such transfer);

(3) an issuance of Equity Interests by a Restricted Subsidiary to the Issuer or to a Restricted Subsidiary of the Issuer;

(4) the sale, lease, conveyance or other disposition of products, inventory, services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn- out, uneconomical, surplus or obsolete assets in the ordinary course of business;

(5) the sale or other disposition of cash or Cash Equivalents in the ordinary course of business;

(6) a Restricted Payment that does not violate the covenant described above under the caption “—Certain Covenants—Limitation on Restricted Payments” or a Permitted Investment; and

(7) the creation of a Permitted Lien and dispositions in connection with Permitted Lien.

“Attributable Indebtedness” in respect of a Sale and Leaseback Transaction means, as of the time of determination, the present value, discounted at the interest rate implicit in the Sale and Leaseback Transaction, of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for such lease has been extended).

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

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“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the Board of Directors of the general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person serving a similar function.

“Business Day” means a day, other than a Saturday or a Sunday, on which commercial banks are not required or authorized to close in New York City and Lima.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with IFRS, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalents” means:

(1) securities issued or directly and fully guaranteed or insured by the United States government, the European Union Central Bank, the European Union, countries with sovereign credit ratings of A or better, Peru or countries that share a border with Peru with sovereign credit ratings of BBB– or better or any agency or instrumentality of any such government (provided that the full faith and credit of any such government is pledged in support of those securities) having maturities of not more than one year from the date of acquisition;

(2) time deposit accounts, checking accounts, passbook accounts, specified money trust accounts, certificates of deposit, money market deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any commercial bank organized under the laws of the United States or any state or territory thereof (or any foreign branch of the foregoing) or any country recognized by the United States, in each case having capital and surplus in excess of U.S.$250.0 million (or the local affiliate of a commercial bank meeting such qualifications in any country where the Issuer has operations);

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(3) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1) and (2) above entered into with any financial institution meeting the qualifications specified in clause (2) above;

(4) commercial paper having one of the two highest ratings obtainable from Moody’s or one of the three highest ratings obtainable from S&P or a comparable rating by a comparable rating agency in the relevant jurisdiction if a Moody’s or S&P rating is unavailable and, in each case, maturing within one year after the date of acquisition; and

(5) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (4) of this definition.

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries taken as a whole to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to either of the foregoing), unless holders of a majority of the aggregate voting power of the Voting Stock of the Issuer and its Restricted Subsidiaries, immediately prior to such transaction, hold securities of the surviving or transferee “person” or “group” that represent, immediately after such transaction, at least a majority of the aggregate voting power of the Voting Stock of the surviving “person” or “group”;

(2) the adoption of a plan relating to the liquidation or dissolution of the Issuer;

(3) if any “person” or “group” (as defined above) (other than a Permitted Holder) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Issuer, measured by voting power rather than number of shares; or

(4) individuals appointed by the Permitted Holders cease for any reason to constitute a majority of the members of the Board of Directors of the Issuer.

“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Rating Downgrade Event.

“Common Stock” means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date and includes, without limitation, all series and classes of such common stock.

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities with a maturity comparable to the remaining term of the Notes.

“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“Consolidated Assets” means with respect to the Issuer and its Restricted Subsidiaries, as of any date of determination, the total consolidated assets of the Issuer and its Restricted Subsidiaries as set forth on the consolidated balance sheet of the Issuer pursuant to IFRS as of the most recent fiscal quarter.

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“Consolidated Debt” means, with respect to any specified Person, as of any date of determination, an amount equal to the aggregate amount (without duplication) of all Indebtedness of such Person and its Subsidiaries (Restricted Subsidiaries in the case of the Issuer) outstanding at such time, excluding Indebtedness incurred under clauses (5), (10) or (11) of the second paragraph of “—Certain Covenants—Limitation on Incurrence of Indebtedness.”

“Consolidated Debt to EBITDA Ratio” means at any date (“transaction date”), the ratio of (i) Consolidated Debt as of the transaction date to (ii) Consolidated EBITDA for the four fiscal quarters immediately prior to the transaction date for which internal financial statements are available (the “reference period”); provided, however, that:

(1) if the transaction giving rise to the need to calculate the Consolidated Debt to EBITDA Ratio is an incurrence of Indebtedness, Consolidated Debt shall be calculated after giving effect on a pro forma basis to the incurrence of such Indebtedness; provided, however, that the pro forma calculation of Consolidated Debt shall not give effect to any Indebtedness Incurred on the transaction date pursuant to the second paragraph of the covenant described under “—Certain Covenants—Limitation on Incurrence of Indebtedness”;

(2) if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged on the transaction date (other than Indebtedness incurred under any revolving credit agreement), Consolidated Debt shall be calculated after giving effect on a pro forma basis to the discharge of such Indebtedness; provided, however, that the pro forma calculation of Consolidated Debt shall not give effect to the discharge on the transaction date of any Indebtedness to the extent such discharge results from the proceeds of Indebtedness incurred pursuant to the second paragraph of the covenant described under “—Certain Covenants—Limitation on Incurrence on Indebtedness”;

(3) if since the beginning of the reference period the Issuer or any Restricted Subsidiary shall have made any Asset Sale, then Consolidated EBITDA for the reference period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Sale for the reference period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for the reference period;

(4) if since the beginning of the reference period the Issuer or any Restricted Subsidiary shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary or merges with or into a Restricted Subsidiary) or other acquisition of the assets of any Person which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business, then Consolidated EBITDA for the reference period shall be calculated after giving pro forma effect thereto as if such Investment or acquisition occurred on the first day of the reference period;

(5) if since the beginning of the reference period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such reference period shall have made any Asset Sale, Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Issuer or any Restricted Subsidiary during the reference period, then Consolidated EBITDA for the reference period shall be calculated after giving pro forma effect thereto as if such Asset Sale, Investment or acquisition had occurred on the first day of the reference period; and

(6) if since the beginning of the reference period the Issuer or any Restricted Subsidiary shall have discontinued any operations, Consolidated EBITDA for the reference period shall be calculated after giving pro forma effect thereto as if such discontinued operations had been discontinued on the first day of the reference period.

For purposes of this definition, whenever pro forma effect is to be given to any Asset Sale, any Investment or acquisition of assets, and the amount of income or earnings related thereto, the pro forma calculations shall be made in good faith by the chief financial or accounting officer of the Issuer (and may include cost savings and

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synergies resulting from the acquisition of a Person or business that supplies raw materials to the Issuer or any Restricted Subsidiary, which savings or synergies will not exceed the market value of the raw materials that the Issuer or any Restricted Subsidiary would have purchased from such Person or business).

“Consolidated EBITDA” means, for any period, the amount equal to the sum of Consolidated Net Income for such period plus, to the extent deducted in calculating such Consolidated Net Income:

(1) consolidated financial expenses for such period;

(2) consolidated income and social contribution taxes for such period;

(3) consolidated depreciation and amortization for such period;

(4) consolidated minority interests for such period;

(5) any restructuring charges or reserves, including any one-time costs incurred in connection with acquisitions after the Issue Date and costs related to the closure and/or consolidation of facilities; and

(6) any non-cash charges of the Issuer and its consolidated Subsidiaries (excluding any such non-cash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period).

Notwithstanding the preceding, any expenses, taxes, depreciation and amortization and charges or reserves of any Person (other than the Issuer) will be added to Consolidated Net Income to compute Consolidated EBITDA only (i) to the extent (and in the proportion) that the net income (loss) of such Person was included in calculating Consolidated Net Income in such period and (ii) to the extent that such amounts are in excess of those necessary to effect a net loss of such Person (to the extent such Person is a Restricted Subsidiary), only if a corresponding amount would be permitted to be dividended to the Issuer.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with IFRS (without duplication); provided that:

(1) the Net Income (loss) of (A) any unconsolidated Affiliate of such Person (including any Person accounted for by the equity method of accounting) and (B) any Unrestricted Subsidiary of the Issuer, shall be included only to the extent of the amount of dividends or similar distributions paid in cash to such Person or a Restricted Subsidiary of such Person, except that, for purposes of calculating Consolidated Net Income pursuant to clause (3)(A) of “—Certain Covenants—Limitation on Restricted Payments,” any such dividend or distribution shall be excluded from this definition to the extent included under clause (3)(E) of “—Certain Covenants—Limitation on Restricted Payments;

(2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, except to the extent that any dividend or similar distribution is actually and lawfully made and not otherwise included in Consolidated Net Income of such Person; provided that the Net Income of any Restricted Subsidiary that is subject to governmental statute, rule or regulation-based restrictions described in this clause (2) or to a restriction permitted by clause (11)(B) of the covenant “— Dividend and Other Payment Restrictions Affecting Subsidiaries” will not be excluded under this clause (2), in each case solely to the extent that this definition is used to calculate “Consolidated EBITDA” for purposes of (i) incurring Indebtedness or issuing preferred stock pursuant to the first paragraph of “— Limitation on Incurrence of Indebtedness” or (ii) calculating the Consolidated Debt to EBITDA Ratio for

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the Issuer under clause 4(A) or 4(B), as the case may be, of the covenant “—Certain Covenants— Limitation on Merger, Consolidation or Sale of Assets”;

(3) any gain (loss) realized upon the sale or other disposition of any asset, including any property, plant or equipment, securities or Capital Stock of any Person, of the Issuer or its Restricted Subsidiaries, which is not sold or otherwise disposed of in the ordinary course of business will be excluded;

(4) any transaction gains and losses due to fluctuations in currency values and the related tax effect will be excluded;

(5) any after-tax extraordinary gains or losses will be excluded;

(6) any after-tax gains or losses attributable to the early extinguishment of Indebtedness will be excluded;

(7) non-cash compensation charges will be excluded; and

(8) any non-cash impairment charges relating to goodwill and other intangibles and long lived assets including property, plant and equipment will be excluded.

“Consolidated Net Tangible Assets” means the Consolidated Assets of the Issuer and its Restricted Subsidiaries less goodwill and intangibles, in each case calculated in accordance with IFRS, less current liabilities (other than current maturities of long-term debt); provided that in the event that the Issuer or any of its Restricted Subsidiaries assumes liabilities or acquires any assets in connection with the acquisition by the Issuer or any of its Restricted Subsidiaries of another Person subsequent to the commencement of the period for which the Consolidated Net Tangible Assets is being calculated but prior to the event for which the calculation of the Consolidated Net Tangible Assets is made, then the Consolidated Net Tangible Assets shall be calculated giving pro forma effect to such assumption of liabilities or acquisition of assets, as if the same had occurred at the beginning of the applicable period.

“Consulting Agreement” means that certain consulting agreement (Contrato de Servicios de Consultoría y Otros Acuerdos) dated December 31, 2009 among the Issuer, Inversiones Maestro Limitada and Mr. Julio Campos Arceu, as it may be amended or replaced from time to time.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the earlier of the date on which the Notes mature or on which the Notes are no longer outstanding. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale (each defined in a substantially identical manner to the corresponding definitions in the Indenture) will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenants described above under the caption “—Repurchase of Notes upon a Change of Control Repurchase Event” and “—Certain Covenants—Limitation on Asset Sales” and such repurchase or redemption complies with “—Certain Covenants—Limitation on Restricted Payments.” The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the Indenture will be the maximum amount that the Issuer and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

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“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means the issuance and sale for cash of Common Stock (other than Disqualified Stock) of the Issuer or any of its direct or indirect parents to any Person (other than a Restricted Subsidiary) pursuant to (A) a public offering in accordance with applicable laws, rules and regulations or (B) a private offering in accordance with Rule 144A, Regulation S and/or another exemption under the Securities Act.

“Existing Indebtedness” means the Indebtedness of the Issuer and its Restricted Subsidiaries outstanding on the Issue Date until such amounts are permanently repaid.

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller, determined in good faith by the Board of Directors of the Issuer (unless otherwise provided in the Indenture).

“Fitch” means Fitch Ratings Ltd. and its Affiliates or any successors thereof.

“Fixed Charge Coverage Ratio” means with respect to any specified Person and its Restricted Subsidiaries, the ratio of the Consolidated EBITDA of such Person and its Restricted Subsidiaries for the period of the most recent four fiscal quarters ending prior to the determination for which financial statements are in existence to the Fixed Charges of such Person and its Restricted Subsidiaries for such four fiscal quarters. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four fiscal quarters, the amount of Fixed Charges shall be computed based upon the actual outstanding amount of such Indebtedness over the applicable four fiscal quarter.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions or dispositions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases or decreases in ownership of Restricted Subsidiaries, during the four fiscal quarters or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four fiscal quarters; provided that any pro forma calculation will only include amounts that are factually supportable and are expected to have a continuing impact on the Issuer and its Restricted Subsidiaries as determined in good faith by the Chief Financial Officer of the Issuer;

(2) the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with IFRS, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(4) any Person that is a Restricted Subsidiary on the Calculation Date or that becomes a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four fiscal quarters;

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(5) any Person that is not a Restricted Subsidiary on the Calculation Date or would cease to be a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four fiscal quarters; and

(6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).

“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, determined in accordance with IFRS, including, without limitation, the following:

(A) amortization of original issue discount,

(B) non-cash interest payments,

(D) the interest component of all payments associated with Capital Lease Obligations,

(E) commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and

(F) net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus

(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

(4) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Issuer (other than Disqualified Stock) or to the Issuer or a Restricted Subsidiary of the Issuer.

“Government Securities” means securities that are:

(1) direct obligations of the United States for the timely payment of which its full faith and credit is pledged; or

(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities

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held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.

“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, directly or indirectly, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2) other agreements or arrangements designed to manage interest rates or interest rate risk; and

(3) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices, in each case, in reasonable relation to the business of the Issuer and the Restricted Subsidiaries entered into in the ordinary course of business or for bona fide hedging purposes and not for speculative purposes (as determined in good faith by the Board of Directors or senior management of the Issuer) and, in the case of (1) and (2), substantially corresponding in terms of notional amount, duration, currencies and interest rates, as applicable, to Indebtedness of the Issuer or its Restricted Subsidiaries incurred without violation of the Indenture.

“IFRS” means International Financial Reporting Standards issued by the International Accounting Standards Board, as in effect from time to time.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent:

(1) in respect of borrowed money;

(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3) in respect of bankers’ acceptances, letters of credit or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation relates to a trade payable and such obligation is satisfied within 30 days of incurrence);

(4) representing Capitalized Lease Obligations and all Attributable Indebtedness of such Person;

(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed;

(6) representing any Hedging Obligations; or

(7) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary that is not a Subsidiary Guarantor, any preferred stock (but excluding, in each case, any accrued dividends),

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if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with IFRS. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person and the amount of such obligation being deemed to be the lesser of the value of such asset and the amount of the obligation so secured) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person.

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Issuer.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB– (or the equivalent) by S&P and BBB– (or the equivalent) by Fitch.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding (A) advances to customers in the ordinary course of business that are recorded as accounts receivable on the consolidated balance sheet of such Person and (B) commission, travel, moving and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with IFRS. If the Issuer or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Issuer such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Issuer’s Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under the caption “—Certain Covenants—Limitation on Restricted Payments.” Except as otherwise provided in the Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

“Issue Date” means September 26, 2012.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Moody’s” means Moody’s Investors Service, Inc. and its Affiliates or any successors thereof.

“Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with IFRS and before any reduction in respect of preferred stock dividends.

“Net Proceeds” means the aggregate cash proceeds received by the Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, sales commissions and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements) and any repayment of Indebtedness that was permitted to be secured by the assets sold in such Asset Sale after taking into account any reserve for adjustment in respect of the sale price of such asset or assets or in respect of any retained liabilities associated with such Asset Sale, in each case as established in accordance with IFRS.

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither the Issuer nor any of its Restricted Subsidiaries (A) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute

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Indebtedness), (B) is directly or indirectly liable as a guarantor or otherwise, or (C) constitutes the lender; and

(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Issuer or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and

(3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Issuer or any of its Restricted Subsidiaries.

“Note Guarantee” means the Guarantee by any Subsidiary Guarantor of the Issuer’s obligations under the Indenture and the Notes, executed pursuant to the provisions of the Indenture.

“Obligations” means any principal (including reimbursement obligations with respect to letters of credit whether or not drawn), interest, premium (if any), fees, indemnifications, reimbursements, expenses and other liabilities payable under the documentation governing any Indebtedness.

“Officer” means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer of the Issuer. Officer of any Subsidiary Guarantor has a correlative meaning.

“Officers’ Certificate” means a certificate signed by two Officers or by an Officer and an Assistant Treasurer of the Issuer.

“Opinion of Counsel” means a written opinion from legal counsel reasonably satisfactory to the Trustee.

“Permitted Business” means (i) the business of the Issuer and its Restricted Subsidiaries as described in this offering memorandum, (ii) businesses and activities related, ancillary or incidental to such activities including, but not limited to, research and development activities, technology licensing, contract manufacturing and distribution and service businesses relating to the foregoing and (iii) any other business conducted by the Issuer and its Restricted Subsidiaries on the Issue Date.

“Permitted Holders” means one or more of the following entities: (i) “Enfoca Asset Management Ltd.,” “Enfoca Descubridor 1, Fondo de Inversión,” “Enfoca Capital 1, Fondo de Inversión,” “Enfoca en Maestro II, L.P.,” “Enfoca Discovery 1, L.P.,” “Enfoca en Maestro Ltd.,” “Enfoca en Maestro III, L.P.,” “Enfoca en Maestro IV, L.P.,” “Enfoca en Maestro V, L.P.” and “Enfoca Discovery 1, Parallel Fund 1, L.P.” or their respective Affiliates or (ii) a Person in which the foregoing Persons hold more than 50% of Voting Stock.

“Permitted Investments” means:

(1) any Investment in the Issuer or in a Restricted Subsidiary of the Issuer;

(2) any Investment in cash and Cash Equivalents;

(3) any Investment by the Issuer or any Restricted Subsidiary of the Issuer in a Person, if as a result of such Investment:

(A) such Person becomes a Restricted Subsidiary of the Issuer; or

(B) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary of the Issuer;

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(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “— Certain Covenants—Limitation on Asset Sales” or any other disposition of assets not constituting an Asset Sale;

(5) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Issuer or any of its direct or indirect parents;

(6) any Investments received in compromise or resolution of (A) obligations that were incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates;

(7) Investments represented by Hedging Obligations;

(8) loans or advances to, or Guarantees of loans or advances made to, employees, directors, officers or consultants made in the ordinary course of business of the Issuer or any Restricted Subsidiary of the Issuer in an aggregate principal amount not to exceed U.S.$2.0 million at any one time outstanding;

(9) repurchases of the Notes;

(10) any Investment existing on the Issue Date and any extension, modification or renewal of any such Investments (but not any such extension, modification or renewal to the extent it involves additional advances, contributions or other investments of cash or property, other than reasonable expenses incidental to the structuring, negotiation and consummation of such extension, modification or renewal);

(11) (A) advances to customers in the ordinary course of business that are either (x) recorded as accounts receivable on the consolidated balance sheet of such Person or (y) made through investments in joint ventures that provide advances to customers, (B) extensions of credit to suppliers in the ordinary course of business that are recorded as accounts payable on the consolidated balance sheet of such person; and (C) payroll, travel and similar advances to cover matters that are expected at the time of the advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(12) receivables owing to the Issuer or any Restricted Subsidiary of the Issuer if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include the concessionary trade terms as the Issuer or the Restricted Subsidiary deems reasonable under the circumstances;

(13) Investments in any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Issuer or any Restricted Subsidiary;

(14) Investment in any Person where such Investment was acquired by the Issuer or any of the Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of a foreclosure by the Issuer or any of the Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(15) Investments in one or more Permitted Joint Ventures having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (15) that are at the time outstanding, that does not exceed the greater of U.S.$20.0 million (with the fair market value of

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each Investment being measured at the time made and without giving effect to subsequent changes in value) and 5% of the Issuer’s Consolidated Net Tangible Assets; provided that any cash return on capital in any such Permitted Investment (including through any dividend, distribution, repayment, redemption, payment of interest or other transfer) made pursuant to this clause (15) will reduce the amount of any such Permitted Investment for purposes of calculating the amount of Permitted Investments under this clause (15) and will be excluded from clauses 3(A), (D) and (E) of the first paragraph of the covenant described under the caption “—Certain Covenants—Limitation on Restricted Payments”; and

(16) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (16) that are at the time outstanding, that does not exceed U.S.$10.0 million (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided that any cash return on capital in any such Permitted Investment (including through any dividend, distribution, repayment, redemption, payment of interest or other transfer) made pursuant to this clause (16) will reduce the amount of any such Permitted Investment for purposes of calculating the amount of Permitted Investments under this clause (16) and will be excluded from clauses 3(A), (D) and (E) of the first paragraph of the covenant described under the caption “—Certain Covenants—Limitation on Restricted Payments.”

“Permitted Joint Venture” means a joint venture in a Permitted Business between the Issuer or any Restricted Subsidiary and any other Person.

“Permitted Liens” means:

(1) Liens in favor of the Issuer or the Restricted Subsidiaries;

(2) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Issuer or any Subsidiary of the Issuer; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Issuer or the Subsidiary;

(3) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Issuer or any Restricted Subsidiary of the Issuer; provided that such liens were in existence prior to, and not incurred in contemplation of, such acquisition; provided, however, that any such Lien may not extend to any other property owned by the Issuer or any Restricted Subsidiary;

(4) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature if issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

(5) Liens to secure Indebtedness incurred in connection with Capital Lease Obligations, Attributable Indebtedness under Sale and Leaseback Transactions and purchase money obligations permitted by the covenant entitled “—Certain Covenants—Limitation on Incurrence of Indebtedness,” in each case covering only the assets acquired with or financed by such Indebtedness; provided that, in each case, (A) the aggregate principal amount of Indebtedness does not exceed the cost of the assets or property so acquired or constructed and (B) such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Issuer or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(6) Liens existing on the Issue Date;

(7) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with IFRS has been made therefor;

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(8) Liens imposed by law, such as vendors’, carriers’, warehousemen’s, landlords’ and mechanics’ Liens, in each case, incurred in the ordinary course of business and for sums not yet due or being contested in good faith good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with IFRS has been made therefor;

(9) pledges or deposits by a Person under workers’ compensation laws, unemployment insurance laws or similar legislation, or good-faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;

(10) survey exceptions, easements or reservations of, or rights of others for, licenses, rights- of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness, are incidental to the conduct of the business of such Person and do not, in the aggregate, materially and adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(11) Liens created for the benefit of (or to secure) the Notes (or any Note Guarantees);

(12) attachment or judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(13) customary Liens in favor of trustees and escrow agents and Liens arising solely by virtue of any statutory or common law provision relating to bankers’ Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided, however, that (A) such deposit account is not a dedicated cash collateral account and (B) such deposit account is not intended by the Issuer or any Restricted Subsidiary to provide collateral to the depository institution;

(14) Liens securing Hedging Obligations so long as such Hedging Obligations relate to Indebtedness that is permitted to be incurred under the Indenture (and, if such Indebtedness is secured, is secured by a Lien on the same property securing such Hedging Obligation);

(15) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the Indenture; provided, however, that:

(A) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(B) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(16) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Issuer or any of the Restricted Subsidiaries in the ordinary course of business;

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(17) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the proceeds thereof;

(18) licenses or leases or subleases as licensor, lessor or sublessor of any of a Person’s property, including intellectual property, in the ordinary course of business and that do not materially interfere with the ordinary conduct of the business of the Issuer or any of its Restricted Subsidiaries;

(19) options, put and call arrangements, rights of first refusal and similar rights relating to Investments in joint ventures, partnerships and the like, to the extent that such Investments are permitted under “—Certain Covenants—Limitation on Restricted Payments”;

(20) any pledge of the Capital Stock of an Unrestricted Subsidiary to secure Indebtedness of such Unrestricted Subsidiary, to the extent that such pledge constitutes an Investment permitted under “— Certain Covenants—Limitation on Restricted Payments”; and

(21) Liens of the Issuer or any Restricted Subsidiary of the Issuer with respect to Obligations (other than Obligations subordinated to the Notes or the Note Guarantees, as the case may be) that do not exceed the greater of U.S.$20.0 million and 5% of the Issuer’s Consolidated Net Tangible Assets at any one time outstanding.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Issuer or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, extend, defease or discharge other Indebtedness of the Issuer or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded, refinanced, replaced, extended, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being renewed, refunded, refinanced, replaced, extended, defeased or discharged;

(3) if the Indebtedness being renewed, refunded, refinanced, replaced, extended, defeased or discharged is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; and

(4) in no event may Indebtedness of the Issuer or any Subsidiary Guarantor be refinanced pursuant to this clause by means of any Indebtedness of any Restricted Subsidiary that is not a Subsidiary Guarantor.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Rating Agencies” mean Moody’s, S&P and Fitch, except that in the event that Moody’s, S&P or Fitch is no longer in existence or issuing ratings, such organization, as the case may be, may be replaced by a nationally recognized statistical rating organization (as defined in Rule 15c3-1(c)(2)(vi)(F) of the Exchange Act or any successor provision) designated by the Issuer with notice to the Trustee.

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“Rating Downgrade Event” means the rating on the Notes is lowered from their rating then in effect by any of the Rating Agencies on any date during the period (the “Trigger Period”) commencing on the date of the first public announcement of any Change of Control (or pending Change of Control) and ending 60 days following consummation of such Change of Control (which Trigger Period will be extended following consummation of a Change of Control for so long as any of the Rating Agencies has publicly announced prior to the end of the 60 days following consummation of the Change of Control that it is considering a possible ratings change); provided that a Rating Downgrade Event otherwise arising by virtue of a particular lowering in rating will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Downgrade Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agency making the lowering in rating to which this definition would otherwise apply does not announce or publicly confirm or inform the Trustee in writing in response to a request made at the direction of holders of a majority in principal amount of the then outstanding Notes that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Rating Downgrade Event). Notwithstanding the foregoing, no Rating Downgrade Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.

“Reference Treasury Dealer” means J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, or their affiliates which are primary U.S. Government securities dealers, and not less than one other leading primary U.S. Government Securities dealers in the City of New York reasonably designated by the Issuer; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in the City of New York (a “Primary Treasury Dealer”), the Issuer shall substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Banker of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 p.m. New York time on the third Business Day preceding such redemption date.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“Sale and Leaseback Transaction” means any direct or indirect arrangement relating to property (whether real, personal or mixed), now owned or hereafter acquired whereby the Issuer or any Restricted Subsidiary transfers such property to another Person and the Issuer or any Restricted Subsidiary leases it from such Person.

“S&P” means Standard & Poor’s Ratings Group and its Affiliates or any successors thereof.

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of the Indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and

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after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (A) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (B) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

“Subsidiary Guarantor” means any Subsidiary of the Issuer that executes a Note Guarantee in accordance with the provisions of the Indenture, and its respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of the Indenture.

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

“Unrestricted Subsidiary” means any Subsidiary of the Issuer that is designated by the Board of Directors of the Issuer as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but in each case only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) except as permitted by the covenant described above under the caption “—Certain Covenants—Limitation on Transactions with Affiliates,” on the date of such designation, is not party to any agreement, contract, arrangement or understanding with the Issuer or any Restricted Subsidiary of the Issuer unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Issuer;

(3) is a Person with respect to which neither the Issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation (A) to subscribe for additional Equity Interests or (B) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(4) has not guaranteed or otherwise provided credit support for any Indebtedness of the Issuer or any of its Restricted Subsidiaries.

“Voting Stock” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (A) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (B) the number of years (calculated to the nearest one- twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

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BOOK-ENTRY, DELIVERY AND FORM

The Notes are being offered and sold in connection with the initial offering thereof solely to “qualified institutional buyers,” as defined in Rule 144A under the Securities Act (“QIBs”), pursuant to Rule 144A and in offshore transactions to persons other than “U.S. persons,” as defined in Regulation S under the Securities Act (“Non-U.S. Persons”), in reliance on Regulation S. Following the initial offering of the Notes, the Notes may be sold to QIBs pursuant to Rule 144A, Non-U.S. Persons in reliance on Regulation S and pursuant to other exemptions from, or in transactions not subject to, the registration requirements of the Securities Act, as described under “Transfer Restrictions.”

The Global Notes

Rule 144A Global Notes. Notes offered and sold to QIBs pursuant to Rule 144A will be issued in the form of one or more registered Notes in global form, without interest coupons (collectively, the “Rule 144A Global Note”). The Rule 144A Global Note will be deposited on the issue date with, or on behalf of, DTC and registered in the name of a nominee of DTC, or will remain in the custody of the Trustee. Interests in the Rule 144A Global Note will be available for purchase only by QIBs.

Regulation S Global Notes. Notes offered and sold in offshore transactions to Non-U.S. Persons in reliance on Regulation S will initially be issued in the form of one or more registered Notes in global form, without interest coupons (collectively, the “Regulation S Global Note”). Each Regulation S Global Note will be deposited upon issuance with, or on behalf of, a custodian for DTC in the manner described in the preceding paragraph.

Except as set forth below, the Rule 144A Global Note and the Regulation S Global Note (collectively, the “Global Notes”) may be transferred, in whole and not in part, solely to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in physical, certificated form (“Certificated Notes”) except in the limited circumstances described below.

The Notes will be subject to certain restrictions on transfer and will bear a restrictive legend as set forth under “Transfer Restrictions.” All interests in the Global Notes may be subject to the procedures and requirements of DTC. Any interests held through the Euroclear System (“Euroclear”) or Clearstream Banking S.A. of Luxembourg (“Clearstream, Luxembourg”) may also be subject to the procedures and requirements of such systems.

Book-Entry for the Global Notes

The descriptions of the operations and procedures of DTC, Euroclear and Clearstream, Luxembourg set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. Neither we nor the initial purchasers take any responsibility for these operations or procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters.

DTC has advised us that it is:

 a limited purpose trust company organized under the laws of the State of New York;

 a “banking organization” within the meaning of the New York Banking Law;

 a member of the Federal Reserve System;

 a “clearing corporation” within the meaning of the Uniform Commercial Code, as amended; and

 a “clearing agency” registered pursuant to Section 17A of the Exchange Act.

DTC was created to hold securities for its participants (collectively, the “Participants”) and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the

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accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC’s Participants include securities brokers and dealers (including the initial purchasers), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC’s system is also available to other entities, such as banks, brokers, dealers and trust companies (collectively, the “Indirect Participants”) that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by or on behalf of DTC only through Participants or Indirect Participants.

We expect that pursuant to procedures established by DTC (1) upon deposit of each Global Note, DTC will credit the accounts of Participants designated by the initial purchasers with an interest in the Global Note, and (2) ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of Participants) and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants).

Investors in the Global Notes who are Participants may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream, Luxembourg) that are Participants. Euroclear and Clearstream, Luxembourg will hold interests in the Global Notes on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositories, which are Euroclear Bank S.A./N.V. and Clearstream. All interests in a Global Note, including those held through Euroclear or Clearstream, Luxembourg, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream, Luxembourg may also be subject to the procedures and requirements of such systems.

The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the Notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in Notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC’s system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest.

So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by the Global Note for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of Notes under the Indenture or such Global Note. We understand that under existing industry practice, in the event that we request any action of holders of Notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action, and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither we nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC or for maintaining, supervising or reviewing any records of DTC relating to such Notes.

Payments with respect to the principal of, and premium, if any, and interest on (including additional interest, if any), any Notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the Trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such Notes under the Indenture. Under the terms of the Indenture, we and the Trustee may treat the persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither we nor the Trustee has or will have any responsibility or liability for (i) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to, or payments made on account of,

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its beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes or (ii) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of the Participants or the Indirect Participants and DTC. Transfers between Participants in DTC will be effected in accordance with DTC’s procedures and will be settled in same-day funds. Transfers between participants in Euroclear or Clearstream, Luxembourg will be effected in the ordinary way in accordance with their respective rules and operating procedures.

Subject to compliance with the transfer restrictions applicable to the Notes, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream, Luxembourg participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, Luxembourg, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, Luxembourg, as the case may be, by the counterparts in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, Luxembourg, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Notes in DTC and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream, Luxembourg participants may not deliver instructions directly to the depositories for Euroclear or Clearstream, Luxembourg.

Because of time zone differences, the securities account of a Euroclear or Clearstream, Luxembourg participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream, Luxembourg participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream, Luxembourg) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream, Luxembourg as a result of sales of interests in the Global Notes by or through a Euroclear or Clearstream, Luxembourg participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream, Luxembourg cash account only as of the business day for Euroclear or Clearstream, Luxembourg following DTC’s settlement date.

DTC has advised the us that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Notes or the Indenture, DTC reserves the right to exchange the Global Notes for legended Certificated Notes and to distribute such Certificated Notes to its Participants.

Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, Luxembourg, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither we nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream, Luxembourg or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Certificated Notes

If:

 we notify the Trustee in writing that DTC is no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation; or

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 an event of default has occurred and is continuing and the registrar has received a request from DTC to issue Certificated Notes, then, upon surrender by DTC of the Global Notes, Certificated Notes will be issued to each person that DTC identifies as the beneficial owner of the Notes represented by the Global Notes. Upon any such issuance, the Trustee is required to register such Certificated Notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto.

Neither we nor the Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related Notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the Notes to be issued).

In the event that Certificated Notes are issued, so long as the Notes are listed on the Luxembourg Stock Exchange, the Issuer will notify the Luxembourg Stock Exchange and the holders of the Notes via a notice to be published in Luxembourg that shall contain material information including, but not limited to, the time and means of transfer or exchange of the Notes for Certificated Notes.

Exchange of Certificated Notes for Global Notes

Certificated Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such Notes. See “Transfer Restrictions.”

Exchanges Between Regulation S Notes and Rule 144A Notes

Through and including the 40th day after the later of (a) the commencement of the offering contemplated hereunder and (b) the issue date (such period through and including such 40th day, the “Restricted Period”), beneficial interests in the Regulation S Global Note may be exchanged for beneficial interests in the Rule 144A Global Note only if:

(1) such exchange occurs in connection with a transfer of the Notes pursuant to Rule 144A; and

(2) the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that the Notes are being transferred to a Person:

(a) whom the transferor reasonably believes to be a QIB within the meaning of Rule 144A;

(b) purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A; and

Beneficial interests in a Rule 144A Global Note may be transferred to a Person who takes delivery in the form of an interest in the Regulation S Global Note, whether before or after the expiration of the Restricted Period, only if the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer is being made in accordance with Rule 903 or Rule 904 of Regulation S.

Transfers involving exchanges of beneficial interests between the Regulation S Global Notes and the Rule 144A Global Notes will be effected by DTC by means of an instruction originated by the Trustee through the DTC Deposit/Withdraw at Custodian system. Accordingly, in connection with any such transfer, appropriate adjustments will be made to reflect a decrease in the principal amount of the Regulation S Global Note and a

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corresponding increase in the principal amount of the Rule 144A Global Note or vice versa, as applicable. Any beneficial interest in one of the Global Notes that is transferred to a Person who takes delivery in the form of an interest in the other Global Note will, upon transfer, cease to be an interest in such Global Note and will become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Note for so long as it remains such an interest.

Same-Day Settlement and Payment

We will make payments in respect of the Notes represented by the Global Notes (including principal, premium, if any, interest) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. We will make all payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder’s registered address. We expect that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Because of time zone differences, the securities account of a Euroclear or Clearstream, Luxembourg participant purchasing an interest in a Global Note from a Participant will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream, Luxembourg participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream, Luxembourg) immediately following the settlement date of DTC. DTC has advised the us that cash received in Euroclear or Clearstream, Luxembourg as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream, Luxembourg participant to a Participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream, Luxembourg cash account only as of the business day for Euroclear or Clearstream, Luxembourg following DTC’s settlement date.

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TAXATION

This is a general summary of certain United States federal and Peruvian income tax considerations in connection with an investment in the Notes. This summary does not address all aspects of United States federal and Peruvian income tax law and does not discuss any state or local tax considerations. While this summary is considered to be a correct interpretation of existing laws in force on the date of this offering memorandum, there can be no assurance that those laws or the interpretation of those laws will not change. This summary does not discuss all of the income tax consequences that may be relevant to an Investor in light of such Investor’s particular circumstances or to Investors subject to special rules, such as regulated investment companies, certain financial institutions or insurance companies. Prospective investors are advised to consult an independent tax advisor with respect to the tax consequences of the purchase, ownership or disposition of the Notes (or beneficial interests therein) as well as any tax consequences that may arise under the laws of any state, municipality or other taxing jurisdiction. For the purposes of this summary, any reference to the purchase, ownership or disposition of the Notes shall mean reference to the purchase, ownership or disposition of the Notes or beneficial interests therein.

U.S. Tax Considerations

U.S. Internal Revenue Service Circular 230 Notice: To ensure compliance with Internal Revenue Service Circular 230, holders or prospective purchasers of Notes are hereby notified that: (i) any discussion of U.S. federal income tax issues contained or referred to in this offering memorandum or any document referred to herein is not intended or written to be used, and cannot be used or relied upon by holders of Notes for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code of 1986, as amended (the “Code”); (ii) such discussion was written solely for use in connection with the promotion or marketing, to the extent permitted by applicable law, of the Notes; and (iii) holders of Notes should seek advice based on their particular circumstances from an independent tax advisor.

General

The following is a general summary of certain material U.S. federal income tax consequences that may be relevant with respect to the ownership of the Notes. This summary addresses only the U.S. federal income tax considerations of holders that acquire the Notes at their original issuance pursuant to this offering memorandum and that will hold such Notes as a capital asset within the meaning of the Code.

This summary does not purport to address all U.S. federal income tax matters that may be relevant to a particular holder of the Notes. In particular, this summary does not address tax considerations applicable to holders of the Notes that may be subject to special tax rules including, without limitation, the following: (i) financial institutions; (ii) insurance companies; (iii) dealers or traders in Notes, currencies or notional principal contracts; (iv) tax-exempt entities; (v) regulated investment companies; (vi) real estate investment trusts; (vii) persons that will hold the Notes as part of a “hedging” or “conversion” transaction or as a position in a “straddle” or as part of a “synthetic Note” or other integrated transaction for U.S. federal income tax purposes; (viii) persons whose “functional currency” is not the U.S. dollar; (ix) persons that own (or are deemed to own) 10 percent or more of the voting shares (or interests treated as equity) of the Issuer; (x) persons subject to the alternative minimum tax and (xi) partnerships or other pass-through entities for U.S. federal income tax purposes, or persons who hold Notes through such partnerships or other pass-through entities. This summary also does not describe any tax consequences arising under the laws of any taxing jurisdictions other than the federal income tax laws of the U.S. federal government.

This summary is based on the Code, U.S. Treasury Regulations and judicial and administrative interpretations thereof, in each case as in effect and available on the date of this offering memorandum. All of the foregoing is subject to change, which change could apply retroactively and could affect the tax consequences described below.

Prospective investors should consult an independent tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, owning or disposing of the Notes.

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For the purposes of this summary, a “U.S. Holder” is a beneficial owner of the Notes that is, for U.S. federal income tax purposes, an individual who is a citizen or resident of the United States, a U.S. domestic corporation, an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or a trust (a) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (b) that otherwise validly elected to be treated as United States person under the Code. A “Non-U.S. Holder” is a beneficial owner of the Notes that is not a U.S. Holder. If a partnership holds the Notes, the U.S. federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner of a partnership holding the Notes should consult an independent tax advisor about its particular situation.

Taxation of U.S. Holders

Interest

Interest paid on the Notes, including the payment of any Additional Amounts (including any withheld taxes), will be taxable to a U.S. Holder as ordinary income at the time it is received or accrued, depending on the U.S. Holder’s method of accounting for U.S. federal income tax purposes. Peruvian tax withheld from interest paid on the Notes and Peruvian tax withheld from payments of any Additional Amounts may be eligible for a foreign tax credit against a U.S. Holder’s U.S. federal income tax liability, or, if a U.S. Holder has elected to deduct such taxes, generally may be deducted in computing taxable income for U.S. federal income tax purposes. Interest income on the Notes and payments of any Additional Amounts will be treated as foreign-source passive category income for U.S. federal income tax purposes, which may be relevant in calculating a U.S. Holder’s foreign tax credit limitation for U.S. federal income tax purposes. The U.S. foreign tax credit limitation is calculated separately with respect to specific classes of income. The foreign tax credit rules are complex, and U.S. Holders should consult an independent tax advisor regarding the availability of a foreign tax credit and the application of the limitation in their particular circumstances.

Sale, Exchange, Redemption or Other Disposition of the Notes

Upon the disposition of a Note by sale, exchange, redemption or otherwise, a U.S. Holder generally will recognize gain or loss equal to the difference between (i) the amount realized on the disposition and (ii) the holder’s adjusted tax basis in the Note. A holder’s adjusted tax basis in a Note generally will be the purchase price the holder paid for the Note. Except to the extent attributable to accrued but unpaid interest (which will be taxable as interest income to the extent not previously included in income), any gain or loss on the sale or other disposition of a Note will be capital gain or loss. Such capital gain or loss will generally be long-term capital gain or loss if the holder held the Note for more than one year at the time of the disposition. Certain non-corporate U.S. Holders (including individuals) are eligible for preferential rates of U.S. federal income taxation in respect of long-term capital gains. The ability of a U.S. Holder to deduct a capital loss is subject to limitations under the Code.

Peruvian tax withheld from amounts paid on the disposition of a Note may be eligible for a foreign tax credit against a U.S. Holder’s U.S. federal income tax liability, or, if a U.S. Holder has elected to deduct such taxes, generally may be deducted in computing taxable income for U.S. federal income tax purposes. Capital gains of a U.S. Holder will be treated as U.S.-source, passive category income, which may be relevant in calculating a U.S. Holder’s foreign tax credit limitation for U.S. federal income tax purposes. The U.S. foreign tax credit limitation is calculated separately with respect to specific classes of income. The foreign tax credit rules are complex, and U.S. Holders should consult an independent tax advisor regarding the availability of a foreign tax credit and the application of the limitation in their particular circumstances.

Taxation of Non-U.S. Holders

Subject to the backup withholding discussion below, a Non-U.S. Holder generally should not be subject to U.S. federal income or withholding tax on any payments on the Notes or gain from the sale, exchange, redemption or other disposition of the Notes unless (i) that payment and/or gain is effectively connected with the conduct by that Non-U.S. Holder of a trade or business in the United States; (ii) in the case of any gain realized by an individual Non-U.S. Holder, that Non-U.S. Holder is present in the United States for 183 days or more in the taxable year of

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the sale or other disposition and certain other conditions are met; or (iii) the Non-U.S. Holder is subject to tax pursuant to provisions of the Code applicable to certain expatriates. Non-U.S. Holders should consult an independent tax advisor regarding the U.S. federal income tax considerations and other tax consequences of owning the Notes.

Information Reporting and Backup Withholding

Backup withholding and information reporting requirements may apply to certain payments on the Notes, and to proceeds of the sale or other disposition of the Notes, made to U.S. Holders. The Issuer, its agent, a broker or any paying agent, as the case may be, may be required to withhold tax from any payment if a U.S. Holder fails (i) to furnish the U.S. Internal Revenue Service (the “IRS”) with its taxpayer identification number, (ii) to certify that it is not subject to backup withholding or (iii) to otherwise comply with the applicable requirements of the backup withholding rules. Certain U.S. Holders are not subject to the backup withholding and information reporting requirements. Non-U.S. Holders may be required to comply with applicable certification procedures to establish that they are not U.S. Holders in order to avoid the application of such information reporting requirements and backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally may be claimed as a credit against such holder’s U.S. federal income tax liability provided that the required information is furnished to the IRS.

Certain Peruvian Tax Considerations

The discussion in this offering memorandum is not intended or written to be used, and cannot be used by any person, for the purpose of avoiding Peruvian taxation, and was written to support the promotion or marketing of this offering. Each investor should seek advice based on its particular circumstance from an independent tax advisor.

The following is a general summary of the material consequences under Peruvian income tax law, in effect as of the date of this offering memorandum, derived from the purchase, ownership and disposition of the beneficial interests in the Notes while the Notes are held through DTC by non-Peruvian holders. For purposes of this section, a “non-Peruvian holder” means either: (i) an individual who is not domiciled in Peru or (ii) a legal entity that is not incorporated under the laws of Peru. For purposes of Peruvian taxation, an individual is deemed domiciled in Peru if he or she (i) is a Peruvian citizen and is also a resident of Peru, or (ii) is not a Peruvian citizen but has been physically present in Peru for more than 183 days within any 12-month period. This summary does not purport to address all Peruvian income tax consequences that may be applicable or relevant to particular non-Peruvian holders.

Interest

Under the laws of Peru, any interest, commission, premiums or any other financial expense in connection with loans, credits or other financial transactions is subject to Peruvian income tax, as a Peruvian source income, if such funds are placed, or economically used in Peru, or if the payer of the interest is domiciled in Peru.

As a result, a non-Peruvian holder who receives interest on the Notes is subject to a 4.99% withholding tax, provided that such non-Peruvian holder (whether an individual or legal entiy) is not deemed to be our related party. Additionally, in the case of individuals, the 4.99% withholding tax will apply only if the interest is not generated in a transaction derived “from or through a tax haven”. If the latter requirement is not fulfilled, the applicable rate will be 30%.

We are required to act as withholding agent for any income tax due with respect to interest paid on the Notes. We have agreed, subject to specific exceptions and limitations set forth herein, to pay additional amounts to the holders of the Notes in respect of the Peruvian income taxes mentioned above. See “Description of Notes— Additional Amounts.”

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Capital Gains

Proceeds received by a non-Peruvian holder on a sale, exchange or disposition of a beneficial interest in the Notes held through a clearing agency will not be subject to any Peruvian withholding or capital gains tax. In the event that the beneficial interests in the Notes are exchanged for definitive notes, any capital gain arising from the sale, exchange or other disposition of such Notes by non-Peruvian holders would be subject to Peruvian income tax with a 5% rate, only if these two requirements are satisfied: (i) the Notes are registered in the Securities Public Register and (ii) the Notes are negotiated in a Peruvian Stock Market. Otherwise, capital gains will be taxable at a 30% rate.

A capital gain on the Notes is considered to be the difference between the sale value and the acquisition value of the Notes, taking into consideration that the acquisition value must be certified by the Peruvian Tax Administration at the request of the seller of the Notes. The certification, however, is not required if the sale is conducted through the Peruvian Stock Exchange.

The Income Tax Law provides a temporal exemption for individuals (either domiciled or non-domiciled) on any capital gains resulting from the sale of securities issued by Peruvian entities for the first S/.18,250 (5 UITs) gained in a calendar year. This exemption will be in effect until December 31, 2012. Prospective purchasers should discuss with an independent tax advisor the application of any income tax described herein to their particular situations.

Value-Added Tax

Interest payments under the Notes will be subject to Peruvian Value-Added Tax (Impuesto General a las Ventas) if we use the proceeds from the offering of the Notes in Peru.

Notwithstanding the foregoing, interest payments under the Notes are exempt from Value-Added Tax, provided that (i) the Notes are offered in an international offering which includes a local tranche offering pursuant to the Peruvian Securities Law, and (ii) the Notes are registered with the Public Registry of Securities of the SMV. Although this exemption expires on December 31, 2012, in the past such exemption has been extended. However, we cannot assure you that such exemption will be renewed after December 31, 2012. Accordingly, we expect interest payments under the Notes to be exempt from Value-Added Tax until December 31, 2012, unless such exemption is extended.

Financial Transaction Tax

In Peru there is also a Financial Transactions Tax (“FTT”) of 0.005% applied to debits and credits on accounts held in a Peruvian bank or other Peruvian financial institutions, either in local or foreign currency. Likewise, if the proceeds from the Notes are deposited in a bank account held in the Peruvian Financial System, such credit will be taxed at the corresponding FTT tax rate. The taxpayer of the FTT is the holder of the bank account.

THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO AN INVESTMENT IN THE NOTES. PROSPECTIVE INVESTORS SHOULD CONSULT AN INDEPENDENT TAX ADVISOR CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATION.

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PLAN OF DISTRIBUTION

We intend to offer the Notes through the initial purchasers. J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as the initial purchasers. Subject to the terms and conditions contained in a purchase agreement between us and the initial purchasers, we have agreed to sell to the initial purchasers and the initial purchasers have agreed to purchase from us, the principal amount of the Notes listed opposite their names below.

Initial Purchasers Principal J.P. Morgan Securities LLC ...... U.S.$ Merrill Lynch, Pierce, Fenner & Smith Incorporated ...... U.S.$ Total ...... U.S.$

The purchase agreement provides that the obligations of the initial purchasers to purchase the Notes are several and not joint and subject to approval of legal matters by counsel and to other conditions. The initial purchasers must purchase all the Notes if they purchase any of the Notes. Each of the initial purchasers may offer and sell the Notes through certain of its affiliates.

The initial purchasers propose to resell the Notes at the offering price set forth on the cover page of this offering memorandum within the United States to persons they reasonably believe to be qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside of the United States to non-U.S. persons in reliance on Regulation S. The Notes sold to “qualified institutional buyers” under Rule 144A will be represented by one or more global Notes and the Notes sold outside of the United States to non-U.S. persons in reliance on Regulation S will be represented by one or more global notes. The Notes will be subject to restrictions on transfer and will bear restrictive legends. See “Transfer Restrictions.” The price at which the Notes are offered may be changed at any time without notice.

We have agreed to indemnify the initial purchasers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the initial purchasers may be required to make in respect of those liabilities.

The initial purchasers are offering the Notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by its U.S. and Peruvian counsel, including the validity of the Notes, and other conditions contained in the purchase agreement, such as, but not limited to, the receipt by the initial purchasers of officers’ certificates and legal opinions. The initial purchasers reserve the right to withdraw, cancel or modify offers to investors and to reject orders in whole or in part.

Larrain Vial and Scotia Capital (USA) Inc. are acting as co-managers, and Scotia Sociedad Agente de Bolsa S.A. as local placement agent, for wich they will receive a fee. Neither Larrain Vial, Scotia Capital (USA) Inc. nor Scotia Sociedad Agente de Bolsa S.A. will act as initial purchasers of the Notes.

Notes Are Not Being Registered

The Notes have not been registered under the Securities Act or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. See “Transfer Restrictions.”

Pursuant to Section 4(3) of the Securities Act, until 40 days after the commencement of the offering (the “Distribution Compliance Period”), an offer or sale of Notes within the United States by a dealer (whether or not participating in this offering) may violate the registration requirements of the Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A under the Securities Act or pursuant to another exemption from registration under the Securities Act.

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No Sale of Similar Securities

Maestro has agreed that, for a period of 60 days following the date of this offering memorandum, it will not, without the prior written consent of J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, offer, sell, contract to sell, pledge or otherwise dispose of or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by Maestro or any of the Guarantors or any person in privity with Maestro or any of the Guarantors, directly or indirectly, or announce the offering of, any debt securities substantially similar to the Notes offered hereby in the international capital markets and having a tenor of more than one year other than the offer and sale of the Notes.

This lockup provision applies to debt securities or any securities convertible into or exercisable or exchangeable for debt securities.

New Issue of Notes

The Notes are a new issue of securities with no established trading market. We do not intend to apply for listing of the Notes on any U.S. securities exchange or for quotation of the Notes on any automated dealer quotation system. The initial purchasers have advised us that they presently intend to make a market in the Notes after completion of this offering. However, they are under no obligation to do so and may discontinue any market- making activities at any time without any notice.

Although application has been made for the Notes to be admitted to the official list of the Luxembourg Stock Exchange and to be traded on the Euro MTF Market of the Luxembourg Stock Exchange, we cannot ensure that a liquid or active public trading market for the Notes will develop. If an active trading market for the Notes does not develop, the market price and liquidity of the Notes may be adversely affected. If the Notes are traded, they may trade at a discount from their offering price, depending on prevailing interest rates, the market for similar securities, our performance, general economic conditions and other factors.

Settlement

We expect that delivery of the Notes will be made to investors on or about September 26, 2012, which will be the third business day following the date of this offering memorandum (such settlement being referred to as “T+3”).

Price Stabilization and Short Positions

In connection with the offering, the initial purchasers may purchase and sell Notes in the open market. Purchases and sales in the open market may include short sales, purchases to cover syndicate short positions and stabilizing purchases.

 Short sales involve secondary market sales by the initial purchasers of a greater number of Notes than they are required to purchase in the offering.  Syndicate covering transactions involve purchases of Notes in the open market after the distribution has been completed in order to cover short positions.  Stabilizing transactions involve bids to purchase Notes for the purpose of pegging, fixing or maintaining the price of the Notes so long as the stabilizing bids do not exceed a specified maximum. Purchases to cover syndicate short positions and stabilizing purchases, as well as other purchases by the initial purchasers for their own accounts, may have the effect of preventing or retarding a decline in the market price of the Notes. They may also cause the price of the Notes to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The initial purchasers may conduct these transactions in the over-the-counter market or otherwise but are not required to do so. If the initial purchasers commence any of these transactions, they may discontinue them at any time.

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Other Relationships

The initial purchasers and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

In addition, in the ordinary course of their business activities, the initial purchasers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. If any of the initial purchasers or their affiliates has a lending relationship with us, certain of those initial purchasers or their affiliates routinely hedge, and certain other of those initial purchasers or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, the initial purchasers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the Notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the Notes offered hereby. The initial purchasers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments with us.

Stamp Taxes

Purchasers of any Notes sold outside of the United States may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of purchase in addition to the offering price paid by such purchasers for such Notes.

Notice to Prospective Investors in Chile

The Notes may not be offered or sold in Chile, directly or indirectly, by means of a “Public Offer” (as defined under Chilean Securities Law (Law No. 18,045 and regulations from the Superintendencia de Valores y Seguros of the Republic of Chile)). Chilean institutional investors (such as banks, pension funds and insurance companies) are required to comply with specific restrictions relating to the purchase of the Notes.

Notice to Residents in the Republic of Colombia

The Notes may not be offered, sold or negotiated in Colombia, except under circumstances which do not constitute a public offering of securities under applicable Colombian securities laws and regulations. Furthermore, foreign financial entities must abide by the terms of Decree 2555 of 2010 to offer privately the Notes to their Colombian clients.

Notice to Prospective Investors in Hong Kong

This prospectus has not been approved by or registered with the Securities and Futures Commission of Hong Kong or the Registrar of Companies of Hong Kong. The Notes will not be offered or sold in Hong Kong other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the Notes which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) has been issued or will be issued in Hong Kong or elsewhere other than with respect to securities which are or are intended to be disposed of only to persons outside of Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

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Notice to Residents in the Republic of Panama

The Notes have not been, and will not be, registered for public offering in Panama with the Superintendency of Capital Markets of Panama under Decree-Law 1 of July 8, 1999, as amended (the “Panamanian Securities Act”). Accordingly, the Notes may not be offered or sold in Panama, except in certain limited transactions exempted from the registration requirements of the Panamanian Securities Act. The Notes do not benefit from tax incentives accorded by the Panamanian Securities Act and are not subject to regulation or supervision by the Superintendency of Capital Markets of Panama.

Notice to Prospective Investors in Peru

The Notes are expected to be registered with the Peruvian Securities Markets Superintendency (Superintendencia del Mercado de Valores) for purposes of offering the Notes to institutional investors in Peru. In addition, the Notes are expected to be registered with the Foreign Investment and Derivative Instruments Registry (Registro de Instrumentos de Inversión y de Operaciones de Cobertura de Riesgo Extranjeros) of the Peruvian Banks, Insurance and Private Pension Fund Managers Superintendency (Superintendencia de Banca, Seguros y Administradoras Privadas de Fondos de Pensiones) for Peruvian private pension fund investment eligibility, as required by Peruvian legislation. The Notes may not be offered or sold in Peru or any other jurisdiction except in compliance with the securities law thereof.

Notice to Prospective Investors in Singapore

This offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offering may not be circulated or distributed, nor may the Notes be offered, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act (Chapter 289) (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the Notes are subscribed for under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, then securities, debentures and units of securities and debentures of that corporation or the beneficiaries’ rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the Notes under Section 275 except: (i) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA; (ii) where no consideration is given for the transfer; or (iii) by operation of law.

Notice to Prospective Investors in Switzerland

This offering memorandum does not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of Obligations and the Notes will not be listed on the SIX Swiss Exchange. Therefore, this offering memorandum may not comply with the disclosure standards of the listing rules (including any additional listing rules or prospectus schemes) of the SIX Swiss Exchange. Accordingly, the Notes may not be offered for exchange to the public in or from Switzerland, but only to a selected and limited circle of investors who do not subscribe to the Notes with a view to distribution. Any such investors will be individually approached by the initial purchasers from time to time.

Notice to Prospective Investors in the United Kingdom

Each of the initial purchasers has represented, warranted and agreed that:

 it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activitiy (within the

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meaning of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuer; and  it has complied and will comply, with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

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TRANSFER RESTRICTIONS

Because the following restrictions will apply with respect to the resale of the Notes, purchasers are advised to consult legal counsel prior to making any offer, resale, pledge or transfer of the Notes.

None of the Notes has been registered under the Securities Act or any state securities laws, and they may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes are being offered and sold only (A) to QIBs in compliance with Rule 144A and (B) outside of the United States in offshore transactions in reliance upon Rule 903 or Rule 904 of Regulation S under the Securities Act, or Regulation S. As used herein, the terms “United States” and “U.S. person” have the meanings given to them in Regulation S.

Each purchaser of the Notes in the United States will be deemed to have represented and agreed as follows: the purchaser is either (1) a QIB and is aware that the sale of the Notes to it is being made in reliance on exemptions from the registration requirements of the Securities Act and such acquisition will be for its own account or for the account of a qualified institutional buyer or (2) a non-U.S. person who, at the time the buy order for the Notes was originated, was outside of the United States.

In making its decision to purchase the Notes, the purchaser understands and acknowledges that:

1. the Notes are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act; that the Notes have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below;

2. it shall not resell or otherwise transfer any of such Notes, except (A) to the Company or any of its subsidiaries, (B) to a QIB in a transaction complying with Rule 144A, (C) outside of the United States in compliance with Rule 903 or Rule 904 of Regulation S, (D) in accordance with another exemption from the registration requirements of the Securities Act (if available and based upon an opinion of counsel if the Company so requests) or (E) pursuant to an effective registration statement under the Securities Act;

3. it agrees that it will give to each person to whom it transfers the Notes notice of any restrictions on transfer of such Notes;

4. prior to any proposed transfer of Notes in certificated form or of beneficial interests in a Note in global form (a “Global Note”) (in each case other than pursuant to an effective registration statement), the holder of Notes or the holder of beneficial interests in a Global Note, as the case may be, may be required to provide certifications and other documentation relating to the manner of such transfer and submit such certifications and other documentation as provided in the Indenture;

5. it understands that the Rule 144A Global Note will bear a legend substantially to the following effect unless otherwise agreed by us and the holder thereof:

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN

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EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

THE FOREGOING LEGEND WILL ONLY BE REMOVED AT THE OPTION OF THE ISSUER.

6. it understands that the Regulation S Global Note will bear a legend substantially to the following effect unless otherwise agreed by us and the holder thereof:

THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE AFTER 40 DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DATE ON WHICH THE NOTES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AND (B) THE ORIGINAL ISSUE DATE OF THE NOTES.

7. the foregoing restrictions apply to holders of beneficial interests in the Notes, as well as holders of the Notes;

8. the Trustee will not be required to accept for registration of transfer any Notes acquired by it, except upon presentation of evidence satisfactory to us and the Trustee that the restrictions set forth herein have been complied with; and

9. we, the initial purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that if any of the acknowledgments, representations or agreements deemed to have been made by its purchase of the Notes is no longer accurate, it shall promptly notify us and the initial purchasers. If it is acquiring the Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgments, representations, and agreements on behalf of each account.

Transfer Restrictions for Peruvian Purchasers

The Notes are being offered to “institutional investors” in Peru (as such term is defined in Seventh Final Disposition of Conasev Resolution No. 141-98-EF/94.10.1), and are subject to the transfer and resale restrictions set forth in Conasev Resolution No. 079-2008-EF/94.10.1.

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LEGAL MATTERS

Certain legal matters under New York law relating to the Notes and this offering will be passed upon by Cleary Gottlieb Steen & Hamilton LLP, our special U.S. counsel, and for the initial purchasers, by Skadden, Arps, Slate, Meagher & Flom LLP, special U.S. counsel to the initial purchasers. Certain legal matters under Peruvian law relating to the validity of the Notes and this offering will be passed upon by Estudio Echecopar, our special Peruvian counsel, and for the initial purchasers, by Miranda & Amado Abogados, special Peruvian counsel to the initial purchasers. With respect to certain matters governed by Peruvian law, Cleary Gottlieb Steen & Hamilton LLP may rely on the opinion of Estudio Echecopar, and Skadden, Arps, Slate, Meagher & Flom LLP may rely on the opinion of Miranda & Amado Abogados.

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INDEPENDENT AUDITORS

Our consolidated financial statements as of January 1 and December 31, 2010 and for the year ended December 31, 2010 have been audited by Dongo-Soria Gaveglio y Asociados S.C.R.L., member firm of PricewaterhouseCoopers, independent accountants, as stated in its report included elsewhere in this offering memorandum. Our consolidated financial statements as of and for the year ended December 31, 2011 have been audited by Medina, Zaldívar, Paredes & Asociados S.C.R.L., member firm of Ernst & Young, independent accountants, as stated in its report also included elsewhere in this offering memorandum.

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GENERAL INFORMATION

Authorization

The issuance of the Notes has been authorized by our shareholders on September 12, 2012 and by a resolution of our Board of Directors dated September 12, 2012.

Trading

Application has been made to admit the Notes to the official list of the Luxembourg Stock Exchange and for the Notes to be admitted to be traded on the Euro MTF Market of the Luxembourg Stock Exchange. Transactions will normally be effected for settlement in U.S. dollars and for delivery on the 5th working day after the day of the transaction.

Clearing Systems

Application has been made to have the Notes accepted for clearance through Euroclear and Clearstream, Luxembourg. In addition, application has been made to have the Notes accepted for trading in book-entry form by DTC. For the Rule 144A Notes, the ISIN is US55902RAA14, and the CUSIP number is 55902RAA1. For the Regulation S Notes, the ISIN is USP6426CAA73, and the CUSIP number is P6426CAA7.

No Material Adverse Change

Except as disclosed in this offering memorandum, there has been no material adverse change in the financial position or prospects of Maestro and its subsidiaries taken as a whole since December 31, 2011.

Litigation

We are not involved in any legal or arbitration proceedings (including any such proceedings which are pending or threatened) relating to claims or amounts which may have or have had during the 12 months prior to the date of this offering memorandum a material adverse effect on our financial position and our subsidiaries taken as a whole.

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INDEX TO FINANCIAL STATEMENTS Unaudited Consolidated Financial Statements as of and for the Six-Month Periods Ended June 30, 2012 and 2011 ...... F-2 Interim Consolidated Statements of Financial Position ...... F-5 Interim Consolidated Statements of Comprehensive Income ...... F-6 Interim Consolidated Statements of Changes in Equity ...... F-7 Interim Consolidated Statements of Cash Flows ...... F-8 Notes to Interim Condensed Consolidated Financial Statements ...... F-9 Audited Consolidated Financial Statements as of January 1, 2010 and December 31, 2011 and 2010 and for the Years Ended December 31, 2011 and 2010...... F-31 Independent Auditors’ Reports ...... F-33 Consolidated Statements of Financial Position ...... F-37 Consolidated Statements of Comprehensive Income ...... F-38 Consolidated Statements of Changes in Equity ...... F-39 Consolidated Statements of Cash Flows ...... F-40 Notes to the Consolidated Financial Statements ...... F-41

F-1

Maestro Perú S.A. and Subsidiaries

Interim condensed consolidated financial statements for the period ending June 30, 2012

F-2 Independent auditor’s report

To the shareholders of Maestro Perú S.A.

We have reviewed the accompanying interim condensed consolidated financial statements of Maestro Perú S.A. (a Peruvian entity) and its subsidiaries as of June 30, 2012, comprising of the interim consolidated statement of financial position as of June 30, 2012 and the related interim consolidated statements of comprehensive income, changes in equity and cash flows for the six- month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with IAS 34, “Interim Financial Reporting” (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing. Consequently, it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34.

Inscrita en la partida 11396556 del Registro Miembro de Ernst & Young Global de Personas Jurídicas de Lima y Callao F-3 Independent auditor’s report (continued)

Other matter

Additionally, we have previously audited, in accordance with generally accepted auditing standards in Peru, the accompanying consolidated statement of financial position of Maestro Perú S.A. and Subsidiaries as of December 31, 2011, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended. Our report dated September 11, 2012, expressed an unmodified opinion on those consolidated financial statements.

Lima, Peru, September 11, 2012

Countersigned by:

Fernando Núñez Pazos C.P.C.C. Register No.22755

F-4

Maestro Perú S.A. and Subsidiaries

Interim consolidated statements of financial position As of June 30, 2012 (unaudited) and December 31, 2011 (audited)

June 30, Note 2012 December 31, 2011 June 30, S/.(000) S/.(000) Note 2012 December 31, 2011 S/.(000) S/.(000) Asset Current assets Liability and equity Cash and cash equivalent 4 15,640 15,837 Current liabilities Financial obligations 13 171,736 124,577 Trade accounts receivable, net 5 21,945 19,455 Trade accounts payable 11 181,905 208,984 Current income tax 12 1,362 2,403 Other accounts receivable 6 17,656 3,145 Other accounts payable 12 26,500 24,515 Deferred income 9 848 848 ______

Inventories, net 7 216,028 244,096 Total current liabilities 382,351 361,327 ______Prepaid expenses 8 12,726 4,940 ______Non-current liability Total current assets 283,995 287,473 Long-term financial obligations 13 153,804 173,488 ______Trade accounts payable 6,658 6,809 Deferred tax liability 14 36,235 35,559 Prepaid expenses 8 1,972 4,258 Deferred income 1,272 1,696 ______

Total non-current liabilities 197,969 217,552 Other accounts receivable 6 15,303 16,121 ______

Total liability 580,320 578,879 Available-for-sale investments 318 318 ______Equity 15 Property, plant and equipment, net 10 538,686 510,043 Share capital 71,497 71,497 Legal reserve 12,890 8,673 Intangible assets, net 4,994 4,791 Retained earnings 180,561 163,955 ______

Total non-current assets 561,273 535,531 ______Total equity 264,948 244,125 ______Total asset 845,268 823,004 ______Total liabilities and equity 845,268 823,004 ______

The accompanying notes to the interim condensed consolidated financial statements are an integral part of this statement. F-5

Estos estados financieros se han preparado de los libros y documentos de la Compañía, después de efectuar todos los ajustes necesarios y ellos representan los Estados finales para el periodo objeto de examen, estos estados financieros han sido revisados y aceptados por la Gerencia Maestro Perú S.A. and Subsidiaries ______Firma Interim consolidated statements of comprehensive income (unaudited) For the six-month periods ended June 30, 2012 and 2011

For the six-month periods ended Note ______June 30, ______2012 2011 S/.(000) S/.(000)

Net sales of merchandise 568,418 459,463 Cost of sales 17 (417,724) (333,768) ______Gross profit 150,694 125,695 ______

Operating income (expenses) Administrative expenses 18 (25,270) (25,029) Selling expenses 19 (88,907) (72,789) Other income, net 22 5,873 4,657 ______Operating profit 42,390 32,534 ______

Other income (expenses) Financial expenses 21 (13,111) (6,784) Financial income 406 733 Exchange difference, net 104 482 ______Profit before income tax 29,789 26,965 Income tax 14 (8,959) (9,051) ______Net income 20,830 17,914 ______

Other comprehensive income - - ______

Total comprehensive income 20,830 17,914 ______

Net income per basic and diluted share (in nuevos soles) 15 (c) 0.291 0.251

Weighted average of outstanding shares adjusted by split shares (in thousands of units) 15 (c) 0.291 0.251

All amounts relate to continuing operations

The accompanying notes to the interim condensed consolidated financial statements are an integral part of this statement. F-6

Maestro Perú S.A. and Subsidiaries

Interim consolidated statements of changes in equity (unaudited) For the six-months periods ended June 30, 2012 and 2011

Legal Retained Capital reserve earnings Total S/.(000) S/.(000) S/.(000) S/.(000)

Balance as of January 1, 2011 71,497 5,265 125,187 201,949

Adjustments - - 8 8 Transfer to legal reserve, note 15 (b) - 3,408 (3,408) - Net income - - 17,914 17,914 ______Balances as of June 30, 2011 71,497 8,673 139,701 219,871 ______

Balance as of January 1, 2012 71,497 8,673 163,955 244,125

Adjustments - - (7) (7) Transfer to legal reserve, note 15 (b) - 4,217 (4,217) - Net income - - 20,830 20,830 ______

Balances as of June 30, 2012 71,497 12,890 180,561 264,948 ______

The accompanying notes to the interim condensed consolidated financial statements are an integral part of this statement.

F-7

Maestro Perú S.A. and Subsidiaries

Interim consolidated statements of cash flows (unaudited) For the six-month periods ended June 30, 2012 and 2011

For the six-month periods ______ended June ______30, _____ 2012 2011 S/.(000) S/.(000)

Operating activities Collections from customers 683,591 547,706 Payments to suppliers (606,173) (473,983) Payments to employees (55,851) (44,798) Payment of income tax (13,330) (15,045) Payment of Interests (8,922) (5,185) ______Net cash flows from operating activities (685) 8,695 ______Investing activities Acquisition of property, plant and equipment (45,354) (47,586) Sale of property, plant and equipment 10,264 - Acquisition of other assets (812) (888) ______Net cash flows from investing activities (35,902) (48,474) ______Financing activities Proceeds from borrowings 346,346 126,461 Payment of borrowings (309,956) (93,261) ______Net cash flows from financing activities 36,390 33,200 ______Net increase in cash (197) (6,579) Cash balance at beginning of the year 15,837 15,698 ______

Cash balance at the end of the year 15,640 9,119 ______

The accompanying notes to the interim condensed consolidated financial statements are an integral part of this statement.

F-8

Maestro Perú S.A. and Subsidiaries

Notes to interim condensed consolidated financial statements (unaudited) As of June 30, 2012 and 2011

1. Identification and economic activity of the Company Maestro Perú S.A. (hereinafter "the Company") was established in Peru on June 5, 1978. Since April 2011, the Company has as its main shareholder the Private Equity Fund Manager Enfoca Inversiones who owns 76.91 percent of the Company through its diverse investment funds. Before April 2011, Enfoca Inversiones owned Maestro Perú S.A. through Ace Investment Corporation until its merger with the Company as explained below.

The legal domicile of the Company is Jirón San Lorenzo 881, Surquillo, Lima 34, Peru.

The Company’s main economic activity is the sale of hardware and household goods, both in Lima and provinces, under the format of home improvement stores and the trade name of "Maestro”.

As of June 30, 2012 the Company had 11 stores in the city of Lima, two in the city of Arequipa and one in each of the cities of Piura, Chiclayo, Trujillo, Huancayo, Cusco and Ica (10 stores in the city of Lima and one in each of the cities of Arequipa, Piura, Chiclayo and Trujillo as of June 30, 2011). In addition, the Company has a license from Ace Hardware Corporation to commercialize the Ace brand in Peru.

The interim condensed consolidated financial statements for the six months ended June 30, 2012, have been approved and authorized for their issuance by the Company’s Management and will be submitted for their approval by the Board of Directors on September12, 2012. In Management’s opinion, such consolidated financial statements will be approved without modifications by the Board of Directors.

The accompanying consolidated financial statements include the Company’s financial statements and those of its subsidiaries in which has more than 50 percent of direct or indirect participation. As of June 30, 2012 and December 31, 2011, the Company has two subsidiaries, Inmobiliaria Domel S.A.C. and Industrias Delta S.A. on which Maestro Perú S.A. has a 99.99 percent direct and indirect participation, respectively.

Corporate Reorganization - The General Shareholders’ Meeting held on April 19, 2011 approved the merger of the Company and Ace Investment Corporation (hereinafter "Ace"), which had an effective date on April 5, 2011. The Company assumed all the assets of Ace, which was dissolved without liquidation, transferring all assets to Maestro Perú S.A. Ace net assets transferred to the Company were as follows:

S/.(000)

Investment in Subsidiaries 58,699 ______Equity 58,699 ______

F-9

Notes to interim condensed consolidated financial statements (continued)

statements have been prepared assuming that the absorbed company had been merged with the Company for all periods presented.

2. Basis of presentation, accounting principles and practices 2.1 Basis of presentation - The interim condensed consolidated financial statements of the Company and Subsidiaries for the six-month period ended June 30, 2012 have been prepared in accordance with IAS 34, “Interim Financial Reporting”.

The interim condensed consolidated financial statements do not include all the information and disclosures required in annual financial statements, and should be read in conjunction with Company and Subsidiaries’ annual financial statements as of December 31, 2011.

2.2 Accounting principles and practices - (a) The accounting principles and practices adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company and Subsidiaries’ annual financial statements for the year ended December 31, 2011.

(b) The Company and Subsidiaries’ functional and presentation currency is the Peruvian Nuevo Sol. It is considered foreign currency transactions to those made in a currency other than the functional currency. Foreign currency transactions are initially recorded in the functional currency using the exchange rates prevailing at the dates of transactions. Monetary assets and liabilities denominated in foreign currency are then adjusted to the functional currency using the exchange rate prevailing at the date of the consolidated financial position. Gains or losses on account of exchange difference resulting from such transactions are recognized under the “Exchange difference, net” caption in the consolidated statement of comprehensive income, with the exception of those differences in exchange operations in foreign currency with cash flow hedges, which are directly recorded in the equity until their disposal, at which time they are recognized in the income statement. The non-monetary assets and liabilities determined in foreign currency are transferred to the functional currency at the exchange rate prevailing at the date of the transaction.

2.3 International Standards issued but not yet effective - The standards issue but not yet effective as of June 30, 2012, which are expected to be applicable thereto, are described below:

- IAS 1, Presentation of Consolidated Financial Statements: Changes in this Standard are related to the set of items presented in the consolidated statement of comprehensive income. Those items that may be reclassified in the income statement for a future period (for example, once derecognized) may be presented separately from the items that shall never be reclassified. The change affects only the presentation and has no impact on the Company’s financial position or its performance. The change shall be effective for the annual periods beginning on July 1, 2012.

- IAS 19, Employee Benefits (amendment): IASB issued a number of amendments to IAS 19 which are effective for annual periods beginning on January 1, 2013. These amendments include deep changes such as the elimination of the corridor method and the concept of expected returns on plan assets, as well as certain concept clarifications. The Company is currently evaluating the impact of adopting these amendments, if any.

F-10

Notes to interim condensed consolidated financial statements (continued)

- IFRS 7, Financial Instruments: Improved disclosure requirements for the derecognition of financial instruments; entities are now required to make additional disclosures for transferred financial assets which did not qualify for derecognition, in order to provide the user of the entity’s financial statement with a better understanding of the relationship between such assets that are not derecognized and the associated liabilities. In addition, the change requires disclosing the impact on such derecognized assets. The change is effective for annual periods beginning on July 1, 2011. This change only affects the information to be disclosed and has no effect on the Company’s financial position or its financial performance.

- IFRS 9, Financial Instruments: Classification and measurement: This change is applicable for annual periods beginning on January 1, 2015. IFRS 9 as issued reflects the first phase of IASB’s work plan to replace IAS 39 and is applicable to the classification and measurement of financial assets and liabilities as defined in IAS 39. In subsequent phases, IASB shall address the accounting treatment of hedges and the devaluation of financial assets. This project is expected to be completed during 2011 or up to the first half of 2012. The adoption of IFRS 9 first phase shall have an effect on the classification and measurement of the Company’s assets, though no potential impacts are expected on the classification and measurement of financial liabilities. The Company will quantify the joint effect of all the other phases so as to have a full insight into them.

On December 2011, IASB issued a number of amendments to IFRS 9, the same which delay its coming into effect from January 1, 2013 to January 1, 2015. Early adoption remains to be allowed. These changes do not require restructuring any comparative information; instead, IFRS 7 has been amended in the sense of allowing additional disclosures in the transition from IAS 39 to IFRS 9. These new disclosures are required as from the Company’s date of transition to IFRS 9. The Company is evaluating the impact of adopting this standard, if any.

- IFRS 13, Fair Value Measurement: IFRS 13 establishes a single framework for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather, describes how to measure fair value under IFRS when it is required or permitted by IFRS. The Company continues evaluating the impact of adopting this standard, if any. This standard is effective for annual periods beginning on or after January 1, 2013.

Management is currently analyzing the impact that such standards may have on its transactions once they come effective.

3. Seasonality of operations The Company operates continuously without showing significant fluctuations due to seasonal factors.

4. Cash and cash equivalents (a) This item is made up as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Cash (b) 462 174 Demand deposits (c) 8,001 9,890 Remittances in transit (d) 7,177 5,773 ______

15,640 15,837 F-11

Notes to interim condensed consolidated financial statements (continued)

______

(b) Cash balance comprises cash held by the Company and Subsidiaries at each store as a fixed fund.

(c) Demand deposits are held at domestic banks and are denominated in local currency and U.S. dollars, are freely available and do not earn interest.

(d) Corresponds to accounts receivable from credit card operators recognized as cash and cash equivalents in “Remittances in transit” item because the amounts are deposited in demand deposits on the next business day.

5. Trade accounts receivable, net (a) This item is made up as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Invoices receivable (b) 23,646 20,839 Less – Allowance for doubtful accounts (d) (1,701) (1,384) ______

21,945 19,455 ______

Trade accounts receivable are denominated in local and foreign currency, do not accrue interest, and are largely current.

(b) Mainly corresponds to accounts receivable from institutional sales of merchandising to various local companies.

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Outstanding 17,835 16,315

Past due From 1 - 30 days 2,174 1,730 Greater than 31 days 3,637 2,794 ______

23,646 20,839 ______

(d) The movement of the allowance for doubtful accounts for the six-month periods ended June 30, 2012 and 2011 is shown as follows:

2012 2011 S/.(000) S/.(000)

Balance at beginning of the year 1,384 864

F-12

Notes to interim condensed consolidated financial statements (continued)

Allowance for the year 317 - Write-offs - - ______

Balance as of June 30, 1,701 864 ______

Balance as of December 31, 2011 1,384 ______

In Management’s opinion, the allowance for doubtful accounts is sufficient to cover any risk of uncollectibility as of June 30, 2012 and December 31, 2011.

F-13

Notes to interim condensed consolidated financial statements (continued)

6. Other accounts receivable (a) This item is made up as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Loans to third parties (b) 13,531 644 Inmobiliaria El Quinde (c) 7,740 7,747 Plaza Lima Norte S.A.C. (c) 6,894 6,955 CrediScotia Financiera, Note 9 1,889 - Hipermercado Metro S.A. (c) 668 1,419 Guarantee deposits 156 157 Claims to third parties - 1,263 Others 2,081 1,081 ______32,959 19,266 ______By term Short-term 17,656 3,145 Long-term 15,303 16,121 ______32,959 19,266 ______

(b) Corresponds to loans granted to construction companies building stores for the Company in the cities of Tacna and Cajamarca. These loans have short term maturities and do not accrue interest.

(c) Corresponds to expenses incurred by the Company in the construction of stores located in the districts of Chorrillos and Independencia, and in the cities of Lima and Ica, which were built over land owned by Plaza Lima Norte, Hipermercados Metro, and Inmobiliaria El Quinde, respectively. These accounts receivable are stated in foreign currency, accrue interest at annual rates between 4 and 6 percent, and will be recovered through the collection of the invoices received on the lease of such stores. In Management’s opinion, these receivable balances will be fully recovered.

F-14

Notes to interim condensed consolidated financial statements (continued)

7. Inventories, net (a) This item is made up as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Merchandise in stores and warehouses (b) 209,165 203,739 Merchandise in transit 6,831 40,325 Miscellaneous supplies 32 32 ______

216,028 244,096 ______

(b) As of June 30, 2012 and December 31, 2011, the Company holds merchandise in warehouses amounting to approximately S/.42,559,000 and S/.31,227,000, respectively, as well as merchandise held in stores amounting to approximately S/.166,458,000 and S/.172,512,000, respectively.

(c) The movement of the provision for slow moving and inventory losses for the six-month periods ended June 30, 2012 and 2011 is shown as follows:

2012 2011 S/.(000) S/.(000)

Balance at the beginning of the year - - Additions 3,095 2,729 Write-offs (d) (3,095) (2,729) ______

Balance as of June 30, - - ______Balance as of December 31, 2011 - ______

The provision for slow moving is determined based on turnover ratios and periodic assessments conducted by Management. In Management’s opinion, the balance of this provision properly covers the risk of impairment of inventories as of June 30, 2012 and December 31, 2011.

(d) In addition, as of June 30, 2012 and 2011, the Company recorded inventory write-offs resulting from stock-takings carried out periodically by the Company in the stores by S/.2,920,000 and S/.1,966,000, respectively.

F-15

Notes to interim condensed consolidated financial statements (continued)

8. Prepaid expenses (a) This item is made up as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Income tax credit balance 3,980 903 Prepaid insurance 2,690 819 Prepaid leases (b) 2,550 2,129 Prepaid advertising 2,334 193 Advances to be rendered 281 251 Sales tax credit balance 12 60 Miscellaneous 879 585 ______

12,726 4,940 ______Long-term - Prepaid leases (b) 1,972 4,258 ______

(b) Mainly corresponds to leases paid in advance to Inmobiliaria Santa Manuela S.A. and certain individuals for the lease of land located in Lima and Cusco, respectively. Such leases expire in 2014 and 2012, respectively.

9. Account receivable from Crediscotia Financiera S.A. On December 2010, Crediscotia Financiera S.A. (hereinafter, the “CSF”) and the Company entered into an Agreement to conduct a financial transaction that contributes to CFS so as to have access to a client acquisition channel in the Company’s objective segment (non-traditional and micro-business banking customers dedicated to construction business). In addition, CSF undertakes to deliver an initial contribution in favor of the Company amounting US$1,500,000 (equivalent to S/.4,240,000), which was recorded as deferred income in the consolidated statement of financial position and will be recognized as income over the term of the Agreement. As of June 30, 2012 and 2011, the Company has recognized income for approximately S/.424,000 in “Other income, net” caption of the consolidated comprehensive income.

The main conditions of the contract are as follows:

(a) Each party to the Agreement is entitled to receive 50% of the results, before employees’ profit sharing and income tax levied, on this specific financial transaction (income and costs related to the "Maestro" credit card transactions, according to the terms of this Agreement).

F-16

Notes to interim condensed consolidated financial statements (continued)

(b) The profit and loss of the Agreement are determined at the end of each month. As of June 30, 2012, a credit balance amounting to approximately S/.1,889,000 was generated for the Company (nil as of June 30, 2011) which is recorded in “Other accounts receivable” caption of the consolidated statement of financial position, Note 6(a), and in “Other income, net” caption of the consolidated statement of comprehensive income.

F-17

Notes to interim condensed consolidated financial statements (continued)

10. Property, plant and equipment, net (a) The movement of this item is as follows:

June 30, 2012 December 31, 2011 ______Transport Furniture and Work in Description Land Buildings Premises units fixture Sundry equipment progress Total Total S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000)

Cost Beginning balance 265,339 127,839 38,785 596 3,413 98,832 21,704 556,508 408,420 Additions (b) 22,734 294 18,682 - 50 2,670 - 44,430 157,649 Sales and/or retirements - (1,387) (2,978) (96) (251) (2,003) (8,212) (14,927) (9,561) Transfers - 435 8,513 (183) 125 (6,938) (1,952) - - ______

Ending balance 288,073 127,181 63,002 317 3,337 92,561 11,540 586,011 556,508 ______

Accumulated depreciation Beginning balance - 10,355 8,586 509 1,531 25,484 - 46,465 38,323 Additions (f) - 2,428 1,487 (158) 283 2,407 - 6,447 10,406 Sales and/or retirements - (457) (2,902) (96) (231) (1,901) - (5,587) (2,264) ______

Ending balance - 12,326 7,171 255 1,583 25,990 - 47,325 46,465 ______

Net carrying amount 288,073 114,855 55,831 62 1754 66,571 11,540 538,686 510,043 ______

F-18

Notes to interim condensed consolidated financial statements (continued)

(b) During 2012, the Company executed implementation, opening and remodeling works in a number of stores and offices, which, as of June 30, 2012, required an approximate investment of S/.10,760,000. During 2011, other implementation works were executed in a number of new stores, which required an approximate investment of S/.64,919,000.

(d) As of June 30, 2012 and December 31, 2011, this item includes assets under warranty through a leasing agreement, which payment is outstanding for a net approximate value of S/.70,226,800 and S/.68,329,000, respectively.

(e) The depreciation expense for the six-month periods ended June 30, 2012 and 2011 have been recorded in the following captions of the consolidated statement of comprehensive income:

June 30, June 30, 2012 2011 S/.(000) S/.(000)

Selling expenses, Note 19 5,693 4,860 Administrative expenses, Note 18 754 434 ______6,447 5,294 ______

11. Trade accounts payable (a) This item is made up as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Invoices payable (b) Domestic 155,775 177,554 Notes payable 26,130 31,430 ______

181,905 208,984 ______

(b) Trade invoices payable corresponds to obligations to domestic and foreign suppliers, resulting mainly from the purchase of merchandise. Invoices payable are denominated in Nuevos Soles and U.S. Dollars, do not accrue interest and have current maturity.

F-19

Notes to interim condensed consolidated financial statements (continued)

12. Other accounts payable (a) This item is made up as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

Remuneration and social benefits payable 14,529 15,837 Taxes and contributions payable 6,003 6,883 Stock options (b) 3,801 3,801 Other accounts payable 3,529 1,227 Claims to third-parties - 18 ______

27,862 27,766 ______For presentation purposes: Current income tax 1,362 2,403 Other accounts payable 26,500 25,363 ______

27,862 27,766 ______

(b) On December 31, 2009 and 2010, certain executives and a commercial business advisory company (hereinafter, “the Advisor”) were granted stock purchase options.

The Company, once a year and over the next five years starting from December 31, 2010, will grant the Advisor a stock purchase options for a percentage of the Company’s share capital to be calculated according to its last audited balance sheet. Such rights may be exercised as from their second year anniversary, except for such options granted on December 31, 2014, which may be exercised on that same year. Non-exercised rights shall expire upon their tenth year anniversary.

The Advisor shall exercise its rights based on share price as of December 31, 2009. As from such date, such prices shall increase at a 10 percent rate that may be capitalized on an annual basis.

As from the second anniversary, the Company shall have the option to purchase all rights from the Advisor at a price based on the agreed share value as of December 31 of the previous year.

In the case of Managers, the Company granted stock options to be settled in cash. Upon the lapsing of three years from the granting, the rights may be exercised up to for 25% of the total options as part of the plan. The rights shall expire up to April 2016.

F-20

Notes to interim condensed consolidated financial statements (continued)

The fair value of the options is estimated annually. Management has estimated the fair value of the options over the stocks as of December 31, 2011, by applying a binomial option pricing model and taking into account the following market information:

Assumptions December 31, 2011

Expected volatility 32.08% Risk-free interest rate 5.87% Expected useful life 3 years

During 2011, for the stock issued and to be issued, Management decided to exercise its purchase option, thus modifying its assumptions related to expected useful life as of December 31, 2011 and reducing the value of such options.

As of June 30, 2012 and December 31, 2011, no options have been exercised. Up to 2014, the Company will vest 714,967 shares per year under this plan. Expenses recorded for this plan are presented in the “Administrative expenses” caption in the consolidated statement of comprehensive income.

F-21

Notes to interim condensed consolidated financial statements (continued)

13. Financial obligations (a) This item is made up as follows:

June 30, 2012 December 31, 2011 ______Yearly average fixed interest rate as of June Currency of Non-current Non-current Creditor Guarantee 30, 2012 Maturity origin Current portion portion Total Current portion portion Total % S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) Promissory notes (c) -

BBVA Banco Continental 5.59% 18/09 /2012 S/. 42,890 - 42,890 22,931 - 22,931 Scotiabank Perú S.A.A. 5.70% 06/09/2012 S/. 30,590 - 30,590 3,402 - 3,402 Banco de Crédito del Perú 6.30% 20/09/2012 S/. 28,450 - 28,450 35,169 - 35,169 Interbank 6.23% 11/09/2012 S/. 13,500 - 13,500 4,857 - 4,857 Citibank del Perú S.A. 5.88% 14/08/2012 S/. 8,000 - 8,000 8,053 - 8,053 Banco interamericano de Finanzas 6.19% 06/09/2012 S/. 7,200 - 7,200 3,735 - 3,735 HSBC Bank Perú 6.30% 12/03/2012 S/. - - - 7,435 - 7,435 ______

130,630 - 130,630 85,582 - 85,582 ______

Long-term bank loans - Citibank Properties 7.29% 29/05/2017 S/. 6,840 26,535 33,375 9,003 40,513 49,516 Scotiabank Properties 7.29% 29/05/2017 S/. 5,863 22,744 28,607 5,688 25,587 31,275 Scotiabank (e) Properties 7.95% 26/03/2018 S/. 3,333 15,833 19,166 2,500 17,500 20,000 Citibank Properties 7.29% 29/05/2017 S/. 2,443 9,477 11,920 - - - Citibank (e) Properties 7.95% 26/03/2018 S/. 1,686 8,042 9,728 1,250 8,750 10,000 Citibank (e) Properties 7.95% 26/03/2018 S/. 1,686 8,042 9,728 1,250 8,750 10,000 Scotiabank Properties 7.29% 29/05/2017 S/. 1,666 7,917 9,583 - 10,500 10,500 Scotiabank Perú S.A.A. Properties 7.29% 29/05/2017 S/. 1,667 7,917 9,584 3,000 7,000 10,000 Citibank (e) Mortgage 7.29% 29/05/2017 S/. 1,915 7,331 9,246 1,960 8,529 10,489 ______

27,099 113,838 140,937 24,651 127,129 151,780 ______

Leasing - Banco Santander S.A. Leased asset 7.75% 26/10/2016 S/. 3,709 14,982 18,691 3,574 16,871 20,445 Banco Santander S.A. Leased asset 8.00% 26/10/2016 S/. 3,316 14,976 18,292 2,417 16,540 18,957 Banco interamericano de Finanzas Leased asset 7.87% 02/01/2015 S/. 3,024 5,283 8,307 2,930 6,571 9,501 Banco Santander S.A. Leased asset 8.26% 06/11/2014 S/. 1,563 2,437 4,000 1,502 3,248 4,750 Banco interamericano de Finanzas Leased asset 7.90% 02/12/2014 S/. 1,433 2,378 3,811 1,380 3,095 4,475 Banco Santander S.A. Leased asset 7.06% 06/11/2014 S/. 938 1,459 2,397 907 1,936 2,843 HSBC Bank Perú Leased asset 9.20% 01/07/2012 S/. 238 - 238 1,269 - 1,269 Banco Financiero del Perú Leased asset 9.30% 29/06/2012 S/. 29 - 29 400 - 400 ______

14,250 41,515 55,765 14,379 48,261 62,640 ______

171,979 155,353 327,332 124,612 175,390 300,002 Amortized fees (243) (1,549) (1,792) (35) (1,902) (1,937) ______

Total 171,736 153,804 325,540 124,577 173,488 298,065 ______

F-22

Notes to interim condensed consolidated financial statements (continued)

(b) Bank loans are denominated in Nuevos Soles and were primarily obtained for working capital and funding for the Company’s investment plans. Such loans have no specific collateral or allocation restrictions, nor any conditions to be fulfilled by the Company.

(c) As of June 30, 2012 and December 31, 2011, promissory notes in local currency obtained from domestic financial institutions were primarily used for working capital, are secured by the Company’s real estate properties and may be renewed upon maturity.

Accrued interest expense on bank loans for the six-month periods ended June 30, 2012 and 2011 amount approximately to S/.12,658,000 and S/.6,437,000, respectively, and are recorded in the “Financial expenses” caption in the consolidated statement of comprehensive income, Note 21.

(d) On October 29, 2010, the Company, Citibank and Scotiabank (hereinafter, “the Banks”) entered into a syndicated loan agreement, whereby funding was granted by the Banks to the Company for an amount up to S/.40,000,000. The loan has specific collateral and the main contractual obligations to be complied with during the term of the agreement are as follows:

- Maintaining a debt service coverage ratio of not less than 1.60. - Maintaining an indebtedness level lower than or equal to 3.00. - Maintaining a liquidity ratio of not less than 0.75.

Management supervises the compliance of the above obligations. Any failure to comply with the above covenants shall result in early termination of the agreement. In Management’s opinion, the Company has complied with such obligations as of December 31, 2011 and 2010.

(e) On May 24, 2010, the Company and Citibank entered into a mortgage agreement whereby funding was granted to the Company for an amount up to US$35,000,000 in Nuevos Soles. The loan has specific collateral and the main contractual obligations to be complied with during the term of the agreement are as follows:

- Maintaining, at the end of each quarter, a debt service coverage ratio of not less than 1.60. - Maintaining, at the end of each quarter, an indebtedness level lower than 3.00. - Maintaining a liquidity ratio of not less than 0.75.

In addition, the Company has to comply with the following obligation: - Presenting the Company’s financial statements to the Bank.

F-23

Notes to interim condensed consolidated financial statements (continued)

(f) The non-current portion maturity during the years to come is detailed below:

June 30, December 31, Year 2012 2011 S/.(000) S/.(000)

2013 - 41,122 2014 41,667 41,080 2015 38,810 34,336 2016 35,402 34,368 2017 31,974 21,983 2018 7,500 2,501 ______

155,353 175,390 ______

14. Deferred income tax (a) The components generating deferred income tax as of June 30, 2012 and December 31, 2011 are as follows:

June 30, 2012 December 31, 2011 S/.(000) S/.(000) Deferred asset Sundry provisions 2,850 2,683 Provision for vacations 1,189 1,035 Prepaid expenses 1,000 1,000 Right of use of intangible asset paid by Scotiabank 636 763 Share-based payments 1,140 1,140 ______6,815 6,621 ______Deferred liability Effect of differences between finance bases and tax bases of fixed assets (41,418) (40,245) Amortization of intangibles assets – SAP (477) (425) Amortized cost (543) (581) Others (612) (929) ______(43,050) (42,180) ______

Total deferred liability, net (36,235) (35,559) ______

(b) As of June 30, 2012, the income tax credit, net of income tax payable, amounts to approximately S/.3,993,000 (the provision for current income tax payable, net of advanced payments, amounts to approximately S/.1,500,000).

F-24

Notes to interim condensed consolidated financial statements (continued)

15. Shareholders’ equity (a) Share capital - As of June 30, 2012 and December 31, 2011, the Company’s share capital is represented by 71,496,706 common shares fully subscribed and paid-in, with a nominal value of 1 Nuevo Sol per share.

(b) Legal reserve – Under the terms of the General Corporation Law, it is required that at least 10 percent of the distributable profit for each year, less income tax, has to be transferred to a legal reserve until such reserve equals to 20 percent of the share capital. The legal reserve may offset any losses or may be capitalized, existing in both cases the obligation to replenish it.

(c) Earnings per share - Basic and diluted earnings per share are calculated by dividing the net income for the year attributable to common shareholders by the weighted average number of outstanding ordinary shares as of the date of the statement of financial position.

Effective days during Weighted average Outstanding shares the period of shares

2011 - Balance as of January 1, 2011 71,496,706 360 71,496,706 ______

Balance as of June 30, 2011 71,496,706 71,496,706 ______

2012 - Balance as of January 1, 2012 71,496,706 360 71,496,706 ______

Balance as of June 30, 2012 71,496,706 71,496,706 ______

The calculation of basic and diluted earnings per share as of June 30, 2012 and 2011 is presented as follows:

2012 2011 ______Number of shares Profit Number of shares Profit (numerator) (denominator) Earnings per share (numerator) (denominator) Earnings per share S/. S/. S/. S/.

20,830,000 71,496,706 0.291 17,915,000 71,496,706 0.251 ______

F-25

Notes to interim condensed consolidated financial statements (continued)

16. Tax situation (a) The Company is subject to the Peruvian tax system. As of June 30, 2012 and December 31, 2011, the statutory income tax rate is at 30 per cent on taxable income.

Not domiciled legal entities and individuals must pay an additional tax of 4.1 percent on the dividends received.

(b) For income tax and value added tax calculation purposes, the transfer price of transactions with related entities and companies residing in territories with little or no taxation must be substantiated with documentation and information on the valuation methods used and the criteria considered for their determination.

Based on the analysis of the Company's operations, Management and its legal advisors believe that the application of these rules will not result in material contingencies for the Company as of June 30, 2012 and December 31, 2011.

(c) The Tax Authority is entitled to review and, if applicable, amend the income tax calculated by the Company up to four years after the tax return was filed. Income tax and value added tax returns for the years 2007 to 2011 are pending of review by the Tax Authority.

Due to the interpretations likely to be given by the Tax Authority on current legal regulations, it is not possible to determine, as of this date, if whether the reviews to be conducted will result or not in liabilities for the Company, therefore, any increased tax or surcharge that could arise from possible tax reviews will be applied to the results of the year in which is determined. In Management’s opinion, any additional tax settlement will not be significant for the consolidated financial statements as of June 30, 2012 and December 31, 2011.

In July 2012, the Tax Authority notified the Company and will review the income tax return filed in 2010. As of the date of this report, the review is in process; however, in Management’s opinion, any additional tax assessment will not be significant for the consolidated financial statements as of June 30, 2012 and December 31, 2011.

F-26

Notes to interim condensed consolidated financial statements (continued)

17. Cost of sales For the six-month periods ended June 30, 2012 and 2011, this item is made up as follows:

2012 2011 S/.(000) S/.(000)

Beginning inventory, Note 7(a) 203,730 133,671 Purchase of merchandise 405,602 342,536 Inventory losses 2,920 1,966 Ending inventory, Note 7(a) (208,957) (148,921) ______Cost to sell merchandise 403,295 329,252 Cost to sell services 14,429 4,516 ______

417,724 333,768 ______

18. Administrative expenses (a) For the six-month periods ended June 30, 2012 and 2011, this item is made up as follows:

2012 2011 S/.(000) S/.(000)

Personnel expenses, Note 20(b) 16,782 14,384 Services provided by third parties (b) 3,703 3,242 Miscellaneous fees 1,286 1,492 Depreciation for the year, Note 10(e) 754 434 Taxes 717 889 Electricity 644 1,034 Amortization of intangible assets 610 981 Miscellaneous operational expenses 343 1,780 Surveillance and security 361 393 Miscellaneous services 70 400 ______

25,270 25,029 ______

(b) Mainly corresponds to lease of printers, maintenance, repairs and professional fees.

F-27

Notes to interim condensed consolidated financial statements (continued)

19. Selling expenses For the six-month periods ended June 30, 2012 and 2011, this item is made up as follows:

2012 2011 S/.(000) S/.(000)

Personnel expenses, Note 20(b) 38,183 32,378 Advertising 13,319 10,965 Services provided by third parties 8,930 6,623 Lease of buildings 7,361 6,901 Depreciation for the year, Note 10(e) 5,693 4,860 Miscellaneous operational expenses 4,120 2,423 Credit card commissions 3,682 3,095 Security 2,425 1,457 Utilities 2,325 1,905 Maintenance of fixed assets 2,322 1,808 Permits and governmental fees 547 374 ______

88,907 72,789 ______

20. Personnel expenses (a) For the six-month periods ended June 30, 2012 and 2011, this item is made up as follows:

2012 2011 S/.(000) S/.(000)

Remunerations 29,882 24,292 Gratuities 5,660 4,417 Severance indemnities 2,899 2,307 Payroll taxes 2,899 2,341 Vacations 2,535 2,130 Employees’ profit-sharing 2,450 2,644 Board remuneration 1,576 1,905 Other bonuses 2,170 1,586 Statutory bonuses 1,394 1,370 Welfare 409 287 Training 635 668 Redundancy payment 313 704 Others 2,143 2,111 ______

54,965 46,762 ______

F-28

Notes to interim condensed consolidated financial statements (continued)

(b) For the six-month periods ended June 30, 2012 and 2011, the personnel expenses have been recorded in the following captions of the consolidated statement of comprehensive income:

2012 2011 S/.(000) S/.(000)

Administrative expenses, Note 18 16,782 14,384 Selling expenses, Note 19 38,183 32,378 ______

54,965 46,762 ______

21. Financial expenses For the six-month periods ended June 30, 2012 and 2011, this item is made up as follows:

2012 2011 S/.(000) S/.(000)

Interest on overdrafts and loans, Note 13(c) 12,658 6,437 Other expenses 453 347 ______

13,111 6,784 ______

22. Other income, net For the six-month periods ended June 30, 2012 and 2011, this item is made up as follows:

2012 2011 S/.(000) S/.(000)

Loss (profit) on sale of fixed assets 104 85 Gain on Agreement with CrediScotia Financiera, Note 9 1,889 - Utilities and surveillance billed to third parties 949 1,095 Income from stands rental 480 484 Advertising sold to third parties 442 623 Right of use of intangible asset sold to Scotiabank, Note 9 424 424 Other income, net 1,585 1,946 ______

5,873 4,657 ______

F-29

Notes to interim condensed consolidated financial statements (continued)

23. Lease agreement As of June 30, 2012 and December 31, 2011, the Company has executed a number of operating lease agreements with third parties, for the premises where it operates. The commitment undertaken is referred to the fixed or variable monthly rent, the higher.

During the six-month periods ended June 30, 2012 and 2011, and during 2011, the Company recorded lease expenses amounting to approximately S/.14,172,000, S/.11,623,000 and S/.25,731,000, respectively.

The total amount of the commitments undertaken up to June 30, 2012 and December 31, 2011, calculated based on fixed rents, shall be paid as follows:

June 30, December 31, 2012 2011 S/.(000) S/.(000)

2009 – 2011 - 46,675 2012 – 2016 157,860 150,272 2017 – 2021 162,052 153,674 2022 – 2032 169,311 147,684 2033 – 2048 95,155 70,958 ______

Total 584,378 569,263 ______

24. Contingent liabilities In Company’s Management and its legal advisors opinion, there are no significant proceedings or complaints brought against the Company which are pending resolution that may have a significant effect on the consolidated financial statements as of June 30, 2012 and December 31, 2011.

25. Events after the reporting period In July 13, 2012, the Company’s main shareholder, Private Equity Fund Manager Enfoca Inversiones, increased its participation in Maestro Perú S.A. from 76.91 percent to 91.85 percent through the acquisition of a package of shares in the Lima Stock Exchange.

F-30

Maestro Perú S.A. and Subsidiaries

Consolidated financial statements as of December 31, 2011 and 2010 and January 1, 2010 and for the two years ended December 31, 2011 together with the independent auditors’ report

F-31

Maestro Perú S.A. and Subsidiaries

Consolidated financial statements as of December 31, 2011 and 2010 and January 1, 2010 and for the two years ended December 31, 2011 together with the independent auditors’ report

Content

Independent auditors' report

Consolidated financial statements

Consolidated statement of financial position Consolidated statement of comprehensive income Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements

F-32 Independent auditor’s report

To the shareholders of Maestro Perú S.A.

We have audited the accompanying consolidated financial statements of Maestro Perú S.A. and its subsidiaries, which comprise the consolidated statement of financial position as of December 31, 2011, and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Generally Accepted Auditing Standards in Peru. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Inscrita en la partida 11396556 del Registro Miembro de Ernst & Young Global de Personas Jurídicas de Lima y Callao F-33 Independent auditor’s report (continued)

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the accompanying consolidated financial statements present fairly in all material respects, the financial position of Maestro Perú S.A. and Subsidiaries as of December 31, 2011, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards.

Other Matters

The consolidated financial statements for the year ended December 31, 2010 and the consolidated statement of financial position as of December 31, 2009 (January 1, 2010) in accordance with International Financial Reporting Standards, were audited by other independent auditors whose report dated September 11, 2012 expressed an unqualified opinion.

Lima, Peru, September 11, 2012

Countersigned by:

Fernando Núñez Pazos C.P.C.C. Register No.22755

F-34 F-35 F-36

Maestro Perú S.A. and Subsidiaries

Consolidated statement of financial position As of December 31, 2011

As of January 1, As of January 1, Note 2011 2010 2010 Note 2011 2010 2010 S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000)

Asset Liability and equity Current assets Current liabilities Cash and cash equivalent 4 15,837 15,703 11,591 Bank overdrafts - 5 325 Financial obligations 13 124,577 53,747 84,308 Trade accounts receivable, net 5 19,455 17,924 20,844 Trade accounts payable 11 208,984 138,854 115,562 Current income tax 12 2,403 6,317 2,014 Other accounts receivable 6 3,145 6,195 8,118 Other accounts payable 12 24,515 24,736 14,762 Deferred income 9 848 848 - ______Inventories, net 7 244,096 141,610 107,768 Total current liabilities 361,327 224,507 216,971 ______

Prepaid expenses 8 4,940 5,275 10,538 ______Non-current liabilities Total current assets 287,473 186,707 158,859 ______Long-term financial obligations 13 173,488 100,207 69,814

Trade accounts payable 6,809 7,234 7,349

Deferred income tax liability 14 35,559 35,625 37,301 Non-current assets Deferred income 9 1,696 2,544 - ______

Total non-current liabilities 217,552 145,610 114,464 Prepaid expenses 8 4,258 - ______

Total liabilities 578,879 370,117 331,435 Other accounts receivable 6 16,121 10,013 11,252 ______

Available-for-sale investments 318 -

Equity 15 Property, plant and equipment, net 10 510,043 370,097 330,710 Share capital 71,497 71,497 71,497 Intangible assets, net 4,791 5,249 5,944 Legal reserve 8,673 5,265 3,393 ______Retained earnings 163,955 125,187 100,440 ______Total non-current assets 535,531 385,359 347,906 Total equity 244,125 201,949 175,330 ______Total asset 823,004 572,066 506,765 Total liabilities and equity 823,004 572,066 506,765 ______

The accompanying notes to the consolidated financial statements are an integral part of this statement. F-37

Estos estados financieros se han preparado de los libros y documentos de la Compañía, después de efectuar todos los ajustes necesarios y ellos representan los Estados finales para el periodo objeto de examen, estos estados financieros han sido revisados y aceptados por la Gerencia Maestro Perú S.A. and Subsidiaries ______Firma Consolidated statement of comprehensive income For the year ended on December 31, 2011

Note 2011 2010 S/.(000) S/.(000)

Net sales of inventory 1,019,425 797,629 Cost of sales 17 (730,957) (576,756) ______Gross profit 288,468 220,873 ______

Operating income (expenses) Administrative expenses 18 (56,229) (61,091) Selling expenses 19 (161,059) (120,707) Other income, net 22 7,845 21,657 ______Operating profit 79,025 60,732 ______

Other income (expenses) Financial expenses 21 (16,521) (12,544) Financial income 1,470 1,347 Exchange difference, net 1,123 891 ______Profit before income tax 65,097 50,426 Income tax 14 (22,921) (17,569) ______Net income 42,176 32,857 ______

Other comprehensive income - - ______

Total comprehensive income 42,176 32,857 ______

Basic and diluted earnings per share (in nuevos soles) 15 (c) 0.589 0.459

Weighted average of outstanding shares (in thousands of units) 15 (c) 71,497 71,497

All amounts relate to continuing operations

The accompanying notes to the consolidated financial statements are an integral part of this statement. F-38

Estos estados financieros se han preparado de los libros y documentos de la Compañía, después de efectuar todos los ajustes necesarios y ellos representan los Estados finales para el periodo objeto de examen, estos estados financieros han sido revisados y aceptados por la Gerencia Maestro Perú S.A. and Subsidiaries ______Firma Consolidated statement of changes in equity For the years ended December 31, 2011

Legal Retained Capital reserve earnings Total S/.(000) S/.(000) S/.(000) S/.(000)

Balances as of January 1, 2010 71,497 3,393 100,440 175,330

Adjustments - - (832) (832) Transfer to legal reserve, (note 15 (b)) - 1,872 (1,872) - Dividends - - (5,406) (5,406) Net income - - 32,857 32,857 ______Balances as of December 31, 2010 71,497 5,265 125,187 201,949

Transfer to legal reserve,( note 15 (b)) - 3,408 (3,408) - Net income - - 42,176 42,176 ______

Balances as of December 31, 2011 71,497 8,673 163,955 244,125 ______

The accompanying notes to the consolidated financial statements are an integral part of this statement. F-39

Maestro Perú S.A. and Subsidiaries

Consolidated statement of Cash Flows For the years ended December 31, 2011

2011 2010 S/.(000) S/.(000)

Operating activities Collections from customers 1,222,707 803,996 Payments to suppliers (1,054,507) (666,289) Payments to employees (104,990) (66,385) Payment of income tax (27,245) (15,334) Payment of Interest (15,618) (10,151) ______Net cash flows from operating activities 20,347 45,837 ______Investing activities Acquisition of property, plant and equipment (157,332) (56,605) Sale of property, plant and equipment - 20,201 Acquisition of other assets (6,108) (1,134) ______Net cash flows from investing activities (163,440) (37,538) ______Financing activities Proceeds from borrowings 163,963 139,045 Payment of borrowings (20,731) (137,507) Payment of dividends - (5,406) ______Net cash flows from financing activities 143,232 (3,868) ______Net increase in cash 139 4,431 Cash balance at beginning of the year 15,698 11,267 ______

Cash balance at the end of the year 15,837 15,698 ______

The accompanying notes to the consolidated financial statements are an integral part of this statement. F-40

Maestro Perú S.A. and Subsidiaries

Notes to consolidated financial statements As of December 31, 2011 and 2010

The legal domicile of the Company is Jirón San Lorenzo 881, Surquillo, Lima 34, Peru.

The Company’s main economic activity is the sale of hardware and household goods, both in Lima and provinces, under the format of home improvement stores and the trade name of "Maestro”.

As of December 31, 2011 the Company had 10 stores in the city of Lima, two in the city of Arequipa and one in each of the cities of Piura, Chiclayo, Trujillo, Huancayo, Cusco and Ica (10 stores in the city of Lima and one in each of the cities of Arequipa, Piura, Chiclayo and Trujillo as of December 31, 2010). In addition, the Company has a license from Ace Hardware Corporation to commercialize the Ace brand in Peru.

The consolidated financial statements for the year ended December 31, 2011 have been approved and authorized for their issuance by the Company’s Management and will be submitted for their approval by the Board of Directors on September12, 2012 and subsequently by the Shareholder’s Meeting. In Management’s opinion, such consolidated financial statements will be approved without modifications by the Board of Directors and Shareholders’ Meeting.

The accompanying consolidated financial statements include the Company’s financial statements and those of its subsidiaries in which has more than 50 percent of direct or indirect participation. The main financial data of the Company and its subsidiaries as of December 31, 2011 and 2010, before eliminations for consolidation purposes is as follows:

Maestro Perú S.A. Inmobiliaria Domel S.A.C. Industrias Delta S.A. ______2011 2010 2011 2010 2011 2010 S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) Type of participation - - Direct Direct Indirect Indirect Percentage of participation - - 99.99 % 99.99 % 99.99% 99.99% Business activity Retail Retail Property rental Property rental Property rental Property rental Assets 596,301 381,274 254,091 211,525 30,254 29,989 Liabilities 437,641 263,578 171,681 130,017 7,201 7,244 Equity 158,660 117,696 82,410 81,508 23,053 22,745 Net income 1,019,425 797,629 16,358 13,524 1,295 1,257

F-41

Notes to the consolidated financial statements (continued)

Ace net assets transferred to the Company were as follows:

S/.(000)

Investment in subsidiary 58,699 ______Equity 58,699 ______

The merger was carried out among entities under common control and has not led to an effective change in the control of the Company. Therefore, this merger was accounted for using the "pooling of interests" method and the consolidated financial statements have been prepared assuming that the absorbed company had been merged with the Company for all periods presented.

2. Basis of preparation and presentation, accounting principles and practices 2.1 Basis of preparation - The consolidated financial statements of the Company and Subsidiaries have been prepared in accordance with International Financial Reporting Standards (hereinafter "IFRS") issued by the International Accounting Standards Board (hereinafter "IASB") and effective as of December 31 2011.

The consolidated financial statements for the year ended December 31, 2011 are the first that the Company has prepared in accordance with IFRS. Note 2.3 includes information on how the Company adopted IFRS for the first time. For all previous years, through December 31, 2010, the Company prepared its consolidated financial statements in accordance with Peruvian Generally Accepted Accounting Principles (hereinafter "Peru GAAP ").

The accompanying consolidated financial statements have been prepared on a historical cost basis except for share based obligations that are registered at fair value. The consolidated financial statements are presented in thousands of Peruvian Nuevos Soles, unless otherwise indicated.

Note 2.4 includes information on significant accounting judgments, estimates and assumptions used by Management in the preparation of the accompanying consolidated financial statements.

2.2 Summary of significant accounting principles and practices The following are the significant accounting policies applied by the Company in preparing its consolidated financial statements:

F-42

Notes to the consolidated financial statements (continued)

2.2.1 Consolidation - Subsidiaries are all entities over which the Company has the power to govern financial and operating policies so as to obtain benefits from their activities. This is usually seen in a shareholding participation of more than one half of the shares with voting rights.

Subsidiaries are fully consolidated from the date when the effective control was transferred to the Company and are no longer consolidated from the date when such control ceases. The consolidated financial statements include the assets, liabilities, income and expenses of Maestro Perú and its Subsidiaries. Transactions between the Company and its Subsidiaries, including intra group balances, gains or losses realized or unrealized are eliminated.

The subsidiaries’ accounting policies have been amended to ensure consistency with the policies used by the Company and required by IFRS.

2.2.2 Business combinations involving entities under common control - Business combinations among entities under common control are registered by the pooling of interests method. In accordance with this method, the items in the consolidated financial statements of the merging companies, both in the period when this merger occurred and in the prior periods presented for comparative purposes, are included in the consolidated financial statements as if they had been merged since the beginning of the oldest period presented.

Because the pooling of interests creates one merged entity, it must adopt uniform accounting policies. Therefore, the merged entity recognizes the assets, liabilities and equity of the merging companies at their book values, adjusted by the items needed to standardize the accounting policies and apply them to all fiscal year presented. This process does not result in any capital gain. Also, the effects of all transactions among the merging companies are eliminated in preparing the consolidated financial statements of the merged entity.

2.2.3 Cash and cash equivalent - Cash and cash equivalents caption in the consolidated statement of financial position comprise cash on hand, cash at banks, and short-term deposits with original maturities of three months or less.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents include cash and short-term deposits as defined above, net of outstanding bank overdrafts.

2.2.4 Financial Instruments: initial recognition and subsequent measurement - (a) Financial assets - Initial recognition and measurement - Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables, held- to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company and Subsidiaries determine the classification of its financial assets at initial recognition.

All financial assets are recognized initially at fair value plus, in the case of assets not at fair value through profit or loss, directly attributable transactions costs.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Company and Subsidiaries commit to purchase or sell the asset.

The Company and Subsidiaries’ financial assets include cash and cash equivalents, trade accounts receivable,

F-43

Notes to the consolidated financial statements (continued)

other accounts receivable and available-for-sale investments. Subsequent measurement -

The subsequent measurement of financial assets depends on their classification. As of December 31, 2011 and 2010 and as of January 1, 2010, the Company and Subsidiaries have financial assets in the category of loans and receivables and investments available-for-sale, which criteria are described below:

Loans and receivables - Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method (EIR), less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in the statement of comprehensive income as financial income. The losses arising from impairment are recognized in the statement of comprehensive income and are shown in the consolidated statement of financial position as a provision.

The provision for impairment of receivables is calculated and registered as explained later in this note (refer to impairment of financial assets).

Available-for-sale financial investments - Investments Available-for-sale financial investments are those, which are neither classified as held-to-maturity nor designated at fair value through profit or loss. Available-for-sale financial investments include equity securities.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value with unrealized gains or losses recognized as other comprehensive income in the available-for-sale reserve until the investment is derecognized, at which time the cumulative gain or loss is recognized as a gain or loss, or determined to be impaired, at which time the cumulative loss is reclassified to the statement of comprehensive income as financial expense and removed from the reserve.

As of December 31, 2011, the Company has classified shares amounting to S/.318,000 as available-for-sale investments.

Derecognition - A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when:

(i) The rights to receive cash flows from the asset have expired;

(ii) The Company and Subsidiaries has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” agreement; and

(iii) Either the Company and Subsidiaries has transferred substantially all the risks and rewards of the asset, or the Company and Subsidiaries has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company and Subsidiaries has transferred its rights to receive cash flows from an asset or has

F-44

Notes to the consolidated financial statements (continued)

entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognized to the extent that the Company and Subsidiaries’ continuing involvement in it.

In that case, the Company and Subsidiaries also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company and Subsidiaries could be required to repay.

Impairment of financial assets - The Company and Subsidiaries assesses at each reporting date whether there is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (event causing an incurred " loss "), and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments.

In the case of the Company and Subsidiaries, their principal financial assets are carried at amortized cost, and consequently the Company and Subsidiaries first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company and Subsidiaries determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and which an impairment loss is, or continues to be, recognized are not included in a collectively assessment of impairment.

For the purposes of trade accounts receivable, the management of the Company monthly assesses the adequacy of the allowance for doubtful accounts through an analysis of the accounts receivable aging and collectability statistics maintained by the Company in the last 3 years. Changes in the allowance are recorded in profit or loss in the year. (b) Financial Liabilities - Initial recognition and measurement - Financial liabilities are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company and Subsidiaries determine the classification of its financial liabilities at initial recognition.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings, carried at amortized cost. This includes directly attributable transaction costs.

The Company and Subsidiaries financial liabilities include accounts payable and other financial liabilities.

Subsequent measurement - The measurement of financial liabilities depends on their classification. In the case of the Company and Subsidiaries, all liabilities are carried at amortized cost; thus, they are measured as follows:

F-45

Notes to the consolidated financial statements (continued)

After initial recognition, financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the consolidated statement of comprehensive income when the liabilities are derecognized as well as through the effective interest rate method (EIR) amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included as financial expense in the consolidated statement of comprehensive income.

Derecognition - A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.When an existing financial liability is replaced by another liability from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statement of comprehensive income.

(c) Offsetting of financial instruments - Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if, there is a current enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

F-46

Notes to the consolidated financial statements (continued)

(d) Fair value of financial instruments - The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using arm’s length market transactions; reference to current fair value of another instrument that is substantially the same; a discounted cash flows analysis or other valuation models.

There have been no changes in the valuation techniques as of December 31, 2011 and 2010 and as of January 1, 2010.

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 25.6.

2.2.5 Foreign currency transactions - The Company and Subsidiaries have determined that their functional and presentation currency is the Peruvian Nuevo Sol. It is considered foreign currency transactions to those made in a currency other than the functional currency. Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction. Assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the date of the consolidated statement of financial position. Gains or losses from exchange difference resulting from such transactions are recognized under the “Exchange difference, net” caption in the consolidated statement of comprehensive income, with the exception of those differences in exchange operations in foreign currency with cash flow hedges, which are recorded in the equity until their disposal when they are recognized in the consolidated statement of comprehensive income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the dates of initial transactions.

2.2.6 Inventory - Inventory is recorded at the lower of cost and the net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, net of discounts and other costs and expenses incurred to put the merchandise in sale condition. The cost is determined using the average cost method, except for merchandise in transit, which is presented at the specific cost of acquisition.

Inventory reductions from book to net realizable value are recorded as “Provision for slow moving” with a charge to profit or loss for the period in which the estimated reductions have occurred. Provisions for obsolescence and realization are estimated on the basis of a specific analysis performed at the end of each reporting period.

F-47

Notes to the consolidated financial statements (continued)

2.2.7 Property, plant and equipment - Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The initial cost of an asset comprises its purchase price or cost of manufacture, including import duties and non- refundable purchase taxes and any costs necessary to bring the asset into operation, the initial estimate of the restoration obligation and borrowing costs for long term-construction projects if the recognition criteria are met.

The cost of the asset also includes the present value of the expected cost for the dismantling and removal of equipment or restoration of the physical site where it is located, where they constitute obligations incurred under certain conditions. When significant parts of property, plant and equipment are required to be replaced at intervals, the Company and Subsidiaries derecognize the replaced part, and recognizes the new part with its own associated useful life and depreciation. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied.

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of comprehensive income when the asset is derecognized.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

Work in progress include expenditures for the construction of assets, financial interests and other expenses directly attributable to such works, accrued during the construction stage. Work in progress is capitalized when it is completed and its depreciation is calculated from the time it is put into operation.

Depreciation is calculated on a straight-line basis using the following useful lives:

Years

Leasehold improvements 20 to 30 (*) Facilities and other supplementary works 10 Transport units 5 Furniture and fixtures 10 Miscellaneous equipment 10 Computers 4

(*) Leasehold improvements are depreciated over the lesser of useful life or duration of the lease.

F-48

Notes to the consolidated financial statements (continued)

2.2.8 Leases - The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Finance leases which transfer to the Company and Subsidiaries substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as financial expenses in the statement of comprehensive income.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company and Subsidiaries will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an operating expense in the consolidated statement of comprehensive income on a straight-line basis over the lease term.

2.2.9 Intangible Assets - Intangible assets are recorded at acquisition cost and are presented net of accumulated amortization and accumulated impairment losses, if any. The amortization is recognized as an expense and is calculated on a straight line basis taking into consideration the estimated useful live of the assets that has been estimated in five years.

The estimate of useful life is periodically reviewed to ensure that the period of amortization is consistent with the expected economic pattern of benefits of such assets.

2.2.10 Impairment of non financial assets - The Company and Subsidiaries assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company and Subsidiaries estimate the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Where the carrying amount of an asset or a cash generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

F-49

Notes to the consolidated financial statements (continued)

In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuating multiples, quoted share prices for publicly trade subsidiaries or other available fair value indicators.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the consolidated statement of comprehensive income in those expense categories consistent with the function of the impaired asset.

A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statement of comprehensive income.

2.2.11 Revenue recognition - Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and its Subsidiaries. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, taxes and other concepts related to the sale. The following specific recognition criteria must also be met before revenue is recognized:

- Sales are recognized, net of discounts, on delivery of goods and when the significant risks and rewards of ownership of the goods have passed to the buyer.

- Interest income is recognized using the effective interest rate method

- Other income from counseling services on finishing and remodeling is recognized when the service is provided, and it is measured in accordance with its performance.

2.2.12 Loans and borrowing costs - Loans are recognized at their amortized cost using the effective interest rate method which considers costs of issuance. Loans are classified as current short-term liabilities unless the Company and Subsidiaries have the irrevocable right to defer the agreement of the obligations for more than twelve months after the date of the consolidated statement of financial position. Borrowing costs are recognized on the accrual method, including fees related to acquisition financing.

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset, only within its construction term.

F-50

Notes to the consolidated financial statements (continued)

2.2.13 Income tax - The Company and its subsidiaries’ income tax is determined based on the non consolidated financial statements of each company and the taxable income determined for taxing purposes.

Current income tax – Current income tax for the current period is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.

Deferred income tax - Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which deductible temporary , and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date.

The deferred assets and liabilities are offset if there is a legal right to offset them and the deferred taxes are related to the same entity and the same tax authority.

2.2.14 Employees’ profit sharing - Pursuant to legal regulations, the employees’ profit sharing is computed on the same basis used to compute the current income tax, and it is presented in the consolidated statement of comprehensive income within the "Cost of sales", "Administrative expenses”, and “Selling expenses” captions, as appropriate.

2.2.15 Share-based payment plans Some executives of the Company and a consulting firm are included in a benefit plan that is provided by the Company, which consist in the granting of shares appreciation rights that can only be settled in cash.

Under the conditions of these plans, a liquidation price of the rights on these shares is established, and it is equivalent to the date on which the benefit is granted plus an increase based in reference interest rates. These plans enable obtaining benefit from the difference between the agreed value of the share at the beginning of the plan and the valuation agreed at the date of exercising these options, note 12 (b).

The cost of payment plans based on shares paid in cash, which are those that the Company has, are measured in each period at fair value determined by a binomial model option. The fair value of the virtual shares is recorded as an expense during its period of maturity and until the date of accrual against a corresponding liability. The liability is measured at each reporting date, including the date of liquidation, recognizing changes in fair value under "Other expenses” of the consolidated statement of comprehensive income. When the price or the terms of the benefit plan is changed any resulting additional expense is recorded in the consolidated statement of comprehensive income.

2.2.16 Provisions -

F-51

Notes to the consolidated financial statements (continued)

Provisions are recognized when the Company and Subsidiaries have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are periodically reviewed and adjusted to reflect the best estimate as of the date of the consolidated statement of financial position. The expense related to a provision is included in profit or loss for the year. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a financial expense in the consolidated statement of comprehensive income.

2.2.17 Contingencies - Contingent liabilities are recorded in the consolidated financial statements when it is considered probable to be confirmed in time and can be reasonably estimated; otherwise the contingency is disclosed in notes to the consolidated financial statements, unless the possibility of an outflow of resources embodying economic benefits is remote.

Contingent assets are not recognized in the consolidated financial statements, but are disclosed in notes when its contingency degree is probable.

2.2.18 Earnings per share - Basic and diluted earnings per share have been calculated considering that the Company has no financial instruments that have any dilutive effects, as follows:

- The numerator corresponds to net income for each year

- The denominator is the weighted average number of outstanding shares at the date of the consolidated statement of financial position.

2.2.19 Segments - An operating segment is a component of an entity: (i) that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), (ii) whose operating results are regularly reviewed by the Company’s Management to make decisions about resources to be allocated to the segment and assess its performance, and (iii) for which discrete financial information is available.

The Company’s only reportable segment, taking into account the information reported that the chief operating decision maker uses internally for evaluating the performance of operating segments and allocating resources to that segments is retail (sale of hardware and household goods). The rental property segment is not significant in order to evaluate business development, reason why Management considers retail the only reportable segment. 2.3 First-time adoption of IFRS - The consolidated financial statements for the year ended on December 31, 2011, are the first the Company and Subsidiaries have prepared in accordance with IFRS. For periods up to and including the year ended December 31, 2010, the Company and Subsidiaries prepared its consolidated financial statements in accordance with Peruvian generally accepted accounting principles (Peru GAAP).

Accordingly, the Company and Subsidiaries have prepared consolidated financial statements in compliance with IFRS for the year ended December 31, 2011, together with comparative information for the year ended December 31, 2010. In preparing these consolidated financial statements, the IFRS transition date consolidated statement of financial position was prepared as of January 1, 2010.

F-52

Notes to the consolidated financial statements (continued)

This note explains the principal adjustments made by the Company to its Peruvian GAAP financial statements on the preparation of its consolidated statement of financial position as of January 1, 2010.

Application of exemptions - IFRS 1 - First-time adoption of International Financial Reporting Standards grants to the entities adopting for the first time certain exemptions of retrospective application of certain IFRS.

The only exemption to retrospective application applied by the Company was the use of fair value as deemed cost for certain items of property, machinery and equipment on the date of transition to IFRS (Note 2.3.6 paragraph (i)).

2.3.1 Estimates - The estimates as of January 1, 2010 and December 31, 2010 are consistent with those made for the same dates in accordance with Peruvian GAAP, except for the useful lives of property, plant and equipment.

F-53

Notes to the consolidated financial statements (continued)

2.3.2 Reconciliation of the consolidated statement of financial position as of January 1, 2010 (date of transition to IFRS) –

Peru GAAP as Note of January 1, IFRS as of 2.3.6 2010 (*) Adjustments January 1, 2010 S/.(000) S/.(000) S/.(000) Asset Current assets Cash and cash equivalents 11,591 - 11,591 Trade accounts receivable, net 20,844 - 20,844 Other accounts receivable 8,118 - 8,118 Inventories, net 107,768 - 107,768 Prepaid expenses 10,538 - 10,538 ______Total current assets 158,859 - 158,859 Other accounts receivable 11,252 - 11,252 Property, plant and equipment, net (i) 255,614 75,096 330,710 Intangible assets, net 5,944 - 5,944 ______

Total asset ______431,669 ______75,096 ______506,765 Liability and equity Current liabilities Bank overdrafts 325 - 325 Financial obligations 84,308 - 84,308 Trade accounts payable 115,562 - 115,562 Current income tax 2,014 - 2,014 Other accounts payable 14,762 - 14,762 ______Total current liabilities 216,971 - 216,971 Long-term financial obligations 69,814 - 69,814 Trade accounts payable 7,349 - 7,349 Deferred income tax liability (ii) 14,772 22,529 37,301 ______

Total liability ______308,906 ______22,529 ______331,435 Equity Share capital 71,497 - 71,497 Revaluation surplus 35,586 (35,586) - Legal reserve 3,361 32 3,393 Retained earnings (i) and (ii) 12,319 88,121 100,440 ______Total equity 122,763 52,567 175,330 ______Total liability and equity 431,669 75,096 506,765 ______

(*) Balances as of December 31, 2009 under Peruvian GAAP, audited by other independent auditors whose report dated March 7, 2011 expressed an unqualified opinion.

F-54

Notes to the consolidated financial statements (continued)

2.3.3 Reconciliation of the consolidated statement of financial position as of December 31, 2010

Peru GAAP as of IFRS as of Note December 31, December 31, 2.3.6 2010(*) Adjustments 2010 S/.(000) S/.(000) S/.(000) Asset Current assets Cash and cash equivalents 15,703 - 15,703 Trade accounts receivable, net 17,924 - 17,924 Other accounts receivable 6,539 (344) 6,195 Inventories, net 141,610 - 141,610 Prepaid expenses 5,275 - 5,275 ______Total current assets 187,051 (344) 186,707 Other accounts receivable 10,013 - 10,013 Property, plant and equipment, net (i) 293,121 76,976 370,097 Intangible assets, net 5,249 - 5,249 ______Total asset 495,434 76,632 572,066 ______Liability and equity Current liabilities Bank overdrafts 5 - 5 Financial obligations 53,747 - 53,747 Trade accounts payable 138,854 - 138,854 Current income tax 6,317 - 6,317 Other accounts payable 24,736 - 24,736 Deferred income 848 - 848 ______Total current liabilities 224,507 - 224,507 Long-term financial obligations 101,912 (1,705) 100,207 Trade accounts payable 7,234 - 7,234 Deferred income tax liability 11,807 23,818 35,625 Deferred income 2,544 - 2,544 ______

Total liability ______348,004 ______22,113 ______370,117 Equity Share capital 71,497 - 71,497 Revaluation surplus 34,873 (34,873) - Legal reserve 5,234 31 5,265 Retained earnings (i) and (ii) 35,826 89,361 125,187 ______Total equity 147,430 54,519 201,949 ______Total liability and equity 495,434 76,632 572,066 ______

(*) Balances under Peruvian GAAP, audited by other independent auditors whose report dated March 7, 2011 expressed an unqualified opinion.

F-55

Notes to the consolidated financial statements (continued)

2.3.4 Reconciliation of the consolidated statement of comprehensive income for the year ended on December 31, 2010 –

Peru GAAP as of IFRS as of Note December 31, December 31, 2.3.6 2010(*) Adjustments 2010 S/.(000) S/.(000) S/.(000)

Net sales of merchandise 797,629 - 797,629 Cost of sales (576,756) - (576,756) ______

Gross profit ______220,873 ______- ______220,873 Operating income (expenses)

Administrative expenses (i) and (ii) (59,690) (1,401) (61,091) Selling expenses (i) and (ii) (119,155) (1,552) (120,707) Other income (expenses), net 21,657 - 21,657 ______Operating profit 63,685 (2,953) 60,732 ______Other income (expenses) Financial expenses (14,249) 1,705 (12,544) Financial income 1,347 - 1,347 Exchange difference, net 891 - 891 ______Profit before employees’ profit sharing and income tax 51,674 (1,248) 50,426 Employees’ profit sharing (ii) (4,489) 4,489 - Income tax (i) and (ii) (16,280) (1,289) (17,569) ______Net income 30,905 1,952 32,857 ______

(*) Balances under Peruvian GAAP, audited by other independent auditors whose report dated March 7, 2011 expressed an unqualified opinion.

2.3.5 Reconciliation of statement of cash flows - The IFRS adoption has not had a material impact on the consolidated statement of cash flows generated by the Company; however, certain accounts registered movements due to transition adjustments which are not significant.

2.3.6 Notes to the reconciliation of consolidated statement of financial position and comprehensive income -

Opening balances - Opening balances are derived from the consolidated financial statements in accordance with Peruvian GAAP, which comprise those IFRS made official through resolutions issued as of the date of the consolidated financial statements by the Peruvian National Accounting Standards Board (CNC by its acronym in Spanish).

F-56

Notes to the consolidated financial statements (continued)

Adjustments - The adoption of IFRS required adjustments to existing balances in the consolidated financial statements prepared under Peruvian generally accepted accounting principles. The most significant adjustments are as follows:

(i) Property, plant and equipment - Cost - The Company and Subsidiaries elected to measure certain items of property, plant and equipment at fair value as of the date of transition to IFRS, based on a valuation performed by an independent appraiser. As of the date of transition to IFRS, a S/.75,096,000 increase was recognized in property, plant and equipment. A deferred income tax liability amounting to S/.22,529,000 was recognized, and a difference of S/.52,567,000 was recorded in reserves on transition.

In addition, revaluation surplus previously recorded amounting to S/.35,586,000 was reversed against retained earnings.

Accumulated depreciation - Under Peruvian GAAP, property, plant and equipment were depreciated using the useful lives established in the income tax law applicable to these assets. Depreciation of fixed assets items under IFRS is calculated using the straight-line method to allocate their cost less their residual value over their estimated useful lives. The effect in depreciation of 2010 resulted in an adjustment of S/.1,880,000 which was charged in the consolidated statement of comprehensive income.

(ii) Employees’ profit sharing – On its November 2010 session, the International Financial Reporting Interpretations Committee (IFRIC) agreed that employees’ profit sharing must be recorded in accordance with IAS 19 "Employee Benefits”, and not IAS 12 "Income Taxes”. Accordingly, an entity is only required to recognize a liability when the employee has rendered services; therefore, deferred employees’ profit sharing should not be calculated based on temporary differences as this concept will correspond to future services which must not be considered as obligations or rights under IAS 19. In Peru, the regular practice was to calculate and record any deferred employees’ profit sharing on the financial statements.

Due to the application of IAS 19, the current expense, net of the deferred income tax, has been distributed in the following captions of the statement of comprehensive income for 2010:

- “Selling expenses” increased by approximately S/.3,188,000 on the personnel expense related to the sales area, Note 20.

- "Administrative expenses” increased by approximately S/.1,301,000 on the personnel expense related to the administrative area, Note 19.

F-57

Notes to the consolidated financial statements (continued)

2.4 Significant accounting judgments, estimates and assumptions The preparation of the Company’s consolidated financial statements requires Management to make accounting judgments, estimates and assumptions that affect the reported amounts of income, expenses, assets and liabilities, and the disclosure of contingent liabilities as of the end of the reported period. Such judgments and estimates are based on the best knowledge by Management of material events and circumstances, taking into account historical experience. However, the results obtained may differ from the amounts included in the consolidated financial statements. The information on such judgments and estimates is included in the accounting policies of and/or notes to the consolidated financial statements.

The main uncertainty areas related to the critical estimates and judgments made by Management in the preparation of these consolidated financial statements include as follows:

(i) Estimation of the allowance for doubtful accounts – Note 2.2.4. (ii) Estimation of the useful life of assets, componentization and residual values – Note 2.2.7. (iii) Recoverable amount of fixed assets – Note 2.2.10 (iv) Current and deferred income taxes – Note 2.2.13. (v) Contingencies – Note 2.2.17. (vi) Estimation of the market value of share-based payments – Note 2.2.15.

Any differences between estimates and future actual results are recorded in profit and loss for the year in which they occur.

3. International Standards issued but not yet effective The standards issue but not yet effective as of the date of the Company’s consolidated financial statements, which are expected to be applicable thereto, are described below:

F-58

Notes to the consolidated financial statements (continued)

Management is currently analyzing the impact that such standards may have on its transactions once they come effective.

F-59

Notes to the consolidated financial statements (continued)

4. Cash and cash equivalents (a) This item is made up as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Cash (b) 174 201 950 Demand deposits (c) 9,890 11,992 8,678 Remittances in transit (d) 5,773 3,510 1,963 ______

15,837 15,703 11,591 ______

(b) Cash balance comprises cash held by the Company and Subsidiaries at each store as a fixed fund.

(c) Demand deposits are held at domestic banks and are denominated in local currency and U.S. dollars, are freely available and do not earn interest.

5. Trade accounts receivable, net (a) This item is made up as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Invoices receivable (b) 20,839 18,788 21,221 Less – Allowance for doubtful accounts (d) (1,384) (864) (377) ______

19,455 17,924 20,844 ______

Trade accounts receivable are denominated in local and foreign currency, do not accrue interest, and are largely current.

(b) Mainly corresponds to accounts receivable from institutional sales of merchandising to various local companies.

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Outstanding 16,315 16,389 9,785 Past due – From 1 - 30 days 1,730 1,046 7,315 Greater than 31 days 2,794 1,353 4,121 ______

20,839 18,788 21,221 ______(d) The movement of the allowance for doubtful accounts is shown as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000) F-60

Notes to the consolidated financial statements (continued)

Beginning balance 864 377 - Allowance for the year 520 811 377 Write-offs - (324) - ______

Ending balance 1,384 864 377 ______

In Management’s opinion, the allowance for doubtful accounts is sufficient to cover any risk of uncollectibility as of December 31, 2011 and 2010.

6. Other accounts receivable (a) This item is made up as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Inmobiliaria El Quinde (b) 7,747 - - Plaza Lima Norte S.A.C. (b) 6,955 7,158 7,013 Hipermercado Metro S.A. (b) 1,419 2,855 3,896 Claims to third parties 1,263 - 13 Loans to third parties 644 337 - Guarantee deposits 157 185 683 Others 1,081 327 821 Value added tax credit - 4,166 6,453 Income tax paid in advance - 1,180 491 ______

19,266 16,208 19,370 ______By term - Short-term 3,145 6,195 8,118 Long-term 16,121 10,013 11,252 ______

19,266 16,208 19,370 ______

(b) Corresponds to expenses incurred by the Company for the construction of stores located in the districts of Chorrillos and Independencia, and in the cities of Lima and Ica, which were built over land owned by Plaza Lima Norte, Hipermercados Metro, and Inmobiliaria El Quinde, respectively. These accounts receivable are stated in foreign currency, accrue interest at annual rates between 4 and 6 percent, and will be recovered offsetting the invoices received on the lease of such stores. In Management’s opinion, these receivable balances will be fully recovered.

F-61

Notes to the consolidated financial statements (continued)

7. Inventories, net (a) This item is made up as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Merchandise in stores and warehouses (b) 203,739 129,254 99,030 Merchandise in transit 40,325 12,324 8,702 Miscellaneous supplies 32 32 36 ______

244,096 141,610 107,768 ______

(b) As of December 31, 2011 and 2010 and January 1, 2010, the Company holds merchandise in warehouses amounting to approximately S/.31,227,000, S/.27,588,000 and S/.13,379,000, respectively, as well as merchandise held in stores amounting to approximately S/.172,512,000, S/.101,666,000 and S/.85,651,000, respectively.

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Beginning balance - - - Additions 5,472 4,682 3,985 Write-offs (5,472) (4,682) (3,985) ______

Ending balance - - - ______

(d) In addition, as of December 31, 2011 and 2010, the Company recorded inventory write-offs resulting from stock-takings carried out periodically by the Company in the stores by S/.3,826,000 and S/.2,887,000, respectively.

F-62

Notes to the consolidated financial statements (continued)

8. Prepaid expenses (a) This item is made up as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Prepaid leases (b) 2,129 3,580 4,043 Income tax credit balance 903 - - Prepaid insurance 819 325 295 Advances to be rendered 251 50 2 Prepaid advertising 193 790 141 Sales tax credit balance 60 - 144 Miscellaneous 585 530 5,913 ______

4,940 5,275 10,538 ______Long-term - Prepaid leases (b) 4,258 - - ______

9. Account receivable from Crediscotia Financiera S.A. On December 2010, Crediscotia Financiera S.A. (hereinafter, the “CSF”) and the Company entered into an Agreement to conduct a financial transaction that contributes to CFS so as to have access to a client acquisition channel in the Company’s objective segment (non-traditional and micro-business banking customers dedicated to construction business). In addition, CSF undertakes to deliver an initial contribution in favor of the Company amounting US$1,500,000 (equivalent to S/.4,240,000), which was recorded as deferred income in the consolidated statement of financial position and will be recognized as income over the term of the Agreement. In each of the years ended December 31, 2011 and 2010, the Company recognized an amount of S/.848,000 in the “Other income, net” caption of the consolidated comprehensive income statement.

The main conditions of the Agreement are described as follows:

(b) The results of the Agreement are determined at the end of each month. As of December 31, 2011 and 2010, no credit balance has been generated for the Company.

F-63

Notes to the consolidated financial statements (continued)

10. Property, plant and equipment, net (a) The movement of this item is as follows:

______2011 ______2010 ______01.01.2010 Transport Work in Description Land Buildings Premises units Furniture and fixture Sundry equipment progress Total Total Total S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000)

Cost Balance as of January 1 200,987 108,348 14,952 596 2,772 67,695 13,070 408,420 365,720 278,249 Additions (b) 64,296 712 23,241 - 365 26,296 42,739 157,649 56,605 105,597 Sales and/or retirements - - (437) - (58) (2,108) (6,958) (9,561) (13,615) (18,126) Transfers 56 18,779 1,029 - 334 6,949 (27,147) - (290) - ______

Balance as of December 31 265,339 127,839 38,785 596 3,413 98,832 21,704 556,508 408,420 365,720 ______

Accumulated depreciation Balance as of January 1 - 6,967 7,827 460 1,287 21,782 - 38,323 35,010 26,627 Additions (f) - 3,388 1,190 49 271 5,508 - 10,406 8,813 9,316 Sales and/or retirements - - (431) - (27) (1,806) - (2,264) (5,500) (933) ______

Balance as of December 31 - 10,355 8,586 509 1,531 25,484 - 46,465 38,323 35,010 ______

Net carrying amount 265,339 117,484 30,199 87 1,882 73,348 21,704 510,043 370,097 330,710 ______

F-64

Notes to the consolidated financial statements (continued)

(b) During 2011, the Company executed implementation, opening and remodeling works in a number of stores and offices, which, as of December 31, 2011, required an approximate investment of S/.64,919,000. During 2010, other implementation works were executed in a number of new stores, which required an approximate investment of S/.66,546,000.

(d) As of December 31, 2011 and 2010 and as of January 1, 2010, this item includes assets under warranty through a leasing agreement, which payment is outstanding for a net approximate value of S/.68,329,000, S/.13,101,000, and S/.19,291,000, respectively.

(e) The depreciation expense for the year have been recorded in the following captions of the consolidated statement of comprehensive income:

2011 2010 S/.(000) S/.(000)

Selling expenses, Note 19 9,633 7,973 Administrative expenses, Note 18 773 840 ______

10,406 8,813 ______

11. Trade accounts payable (a) This item is made up as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Invoices payable (b) Domestic 177,554 136,149 111,306 Notes payable 31,430 2,705 3,886 Abroad - - 370 ______

208,984 138,854 115,562 ______

F-65

Notes to the consolidated financial statements (continued)

12. Other accounts payable (a) This item is made up as follows:

2011 2010 01.01.2010 S/.(000) S/.(000) S/.(000)

Remuneration and social benefits payable 18,631 15,733 7,774 Taxes and contributions payable 4,089 9,667 8,617 Stock options (b) 3,801 3,199 - Other accounts payable 397 2,454 385 ______

26,918 31,053 16,776 ______

For presentation purposes: Current income tax 2,403 6,317 2,014 Other accounts payable 24,515 24,736 14,762 ______

26,918 31,053 16,776 ______

(b) As indicated in Note 2.2.15, on December 31, 2009 and 2010, certain executives and a commercial business advisory company (hereinafter, “the Advisor”) were granted stock purchase options.

The Advisor shall exercise its rights based on share price as of December 31, 2009. As from such date, such prices shall increase at a 10 percent rate that may be capitalized on an annual basis.

As from the second anniversary, the Company shall have the option to purchase all rights from the Advisor at a price based on the agreed share value as of December 31 of the previous year.

In the case of Managers, the Company granted stock options to be settled in cash. Upon the lapsing of three years from the granting, the rights may be exercised up to for 25% of the total options granted as part of the plan. The rights shall expire up to April 2016.

F-66

Notes to the consolidated financial statements (continued)

Management has estimated the fair value of the options over the stocks as of December 31, 2011 and 2010, by applying a binomial option pricing model and taking into account the following market information:

Assumptions 2011 2010

Expected volatility 32.08% 34.00% Risk-free interest rate 5.87% 5.74% Expected useful life 3 years 5 years

As of December 31, 2010, the expected useful life of the options is based on historical information and recent expectations, and does not necessarily represent a pattern of exercise of options that may occur. Expected volatility reflects the assumption that historical volatility for a similar life period of the options indicates a future trend, which may not necessarily be the final result. During 2011, for the stock issued and to be issued, Management decided to exercise its purchase option, thus modifying its assumptions related to expected useful life as of December 31, 2011 and reducing the value of such options.

As of December 31, 2011 and 2010, no options have been exercised, and the number of issued and accrued options is 714,967 and 1,429,934, respectively. Up to 2014, the Company will vest 714.967 shares per year under this plan. Moreover, the market value determined by the Company reached S/.3,801,000 and S/.3,199,000 as of December 31, 2011 and 2010, respectively. Expenses recorded for this plan are presented in the “Administrative expenses” caption in the consolidated statement of comprehensive income.

F-67

Notes to the consolidated financial statements (continued)

13. Financial obligations (a) This item is made up as follows:

Balance as of December 31, 2011 Balance as of December 31, 2010 Balance as of January 1, 2010 ______

Yearly average fixed interest rate as of Currency Non-current Non-current Non-current Creditor Guarantee December 31, 2011 Maturity of origin Current portion portion Total Current portion portion Total Current portion portion Total % S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000)

Promissory notes (c) - Banco de Crédito del Perú 6.57 20/04/2012 S/. 35,169 - 35,169 6,665 - 6,665 - - - BBVA Banco Continental 6.77 20/04/2012 S/. 22,931 - 22,931 18,274 - 18,274 17,334 - 17,334 Citibank del Perú S.A. 6.70 20/01/2012 S/. 8,053 - 8,053 4,018 - 4,018 - - - HSBC Bank Perú 6.24 12/03/2012 S/. 7,435 - 7,435 12,614 - 12,614 13,186 - 13,186 Interbank 5.75 10/01/2012 S/. 4,857 - 4,857 1,522 - 1,522 4,935 - 4,935 Scotiabank Perú S.A.A. 5.85 31/03/2012 S/. 3,402 - 3,402 4,521 - 4,521 10,982 - 10,982 Banco Interamericano de Finanzas S.A. 6.18 07/02/2012 S/. 3,735 - 3,735 - - - 9,912 - 9,912 Banco Santander S.A. 5.77 04/01/2010 S/. ------7,585 - 7,585 Banco Financiero del Perú 5.00 19/01/2010 S/. ------1,014 - 1,014 ______

85,582 - 85,582 47,614 - 47,614 64,948 - 64,948 ______

Long-term bank loans - Citibank del Perú S.A. Property 7.29 29/05/2017 S/. 9,003 40,513 49,516 - 54,349 54,349 - - - Scotiabank Perú S.A.A. Property 7.29 29/05/2017 S/. 5,688 25,587 31,275 - 34,325 34,325 - - - Scotiabank (d) Properties 7.95 26/03/2018 S/. 2,500 17,500 20,000 ------Citibank del Perú S.A. (e) Mortgage 7.95 29/05/2017 S/. 1,960 8,529 10,489 1,777 9,665 11,442 - - - Citibank del Perú S.A. Property 7.29 29/05/2017 S/. - 10,500 10,500 ------Citibank del Perú S.A. (d) Properties 7.95 26/03/2018 S/. 1,250 8,750 10,000 ------Citibank del Perú S.A. (d) Properties 7.95 26/03/2018 S/. 1,250 8,750 10,000 ------Scotiabank Perú S.A.A. Property 7.29 29/05/2017 S/. 3,000 7,000 10,000 ------Scotiabank Perú S.A.A. Property 8.45 30/12/2015 S/. ------3,222 15,838 19,060 Scotiabank Perú S.A.A. Property 8.45 30/12/2015 US$ ------2,105 10,363 12,468 Banco de Crédito del Perú Property 8.40 01/12/2014 US$ ------1,883 9,053 10,936 Banco Interamericano de Finanzas S.A. Property 9.50 30/12/2015 S/. ------1,038 6,536 7,574 Banco Interamericano de Finanzas S.A. Property 9.50 28/12/2013 S/. ------867 2,173 3,040 Banco de Crédito del Perú Properties 8.94 13/07/2015 US$ ------738 4,196 4,934 Banco de Crédito del Perú Properties 8.94 22/04/2015 S/. ------530 2,918 3,448 Banco de Crédito del Perú Properties 8.94 31/08/2011 S/. ------1,518 1,094 2,612 Banco Interamericano de Finanzas S.A. Property 9.50 28/12/2013 US$ ------668 1,650 2,318 ______

24,651 127,129 151,780 1,777 98,339 100,116 12,569 53,821 66,390 ______

F-68

Notes to the consolidated financial statements (continued)

Balance as of December 31, 2011 Balance as of December 31, 2010 Balance as of January 1, 2010 ______

Leasing - Banco Santander S.A. Leased asset 7.75 26/10/2016 S/. 3,574 16,871 20,445 ------Banco Santander S.A. Leased asset 8.00 26/10/2016 S/. 2,417 16,540 18,957 ------Banco interamericano de Finanzas S.A. Leased asset 7.87 02/01/2015 S/. 2,930 6,571 9,501 ------Banco Santander S.A. Leased asset 8.26 06/11/2014 S/. 1,502 3,248 4,750 ------Banco Interamericano de Finanzas S.A. Leased asset 7.90 02/12/2014 S/. 1,380 3,095 4,475 ------Banco Santander S.A. Leased asset 7.06 06/11/2014 S/. 907 1,936 2,843 - - - - - HSBC Bank Perú Leased asset 9.20 01/07/2012 S/. 1,269 - 1,269 1,901 1,269 3,170 1,706 3,169 4,875 Banco Santander S.A. Leased asset 8.00 15/03/2014 S/. - - - 851 1,905 2,756 - - - Banco Financiero del Perú S.A. Leased asset 9.30 29/06/2012 S/. 400 - 400 687 399 1,086 622 1,087 1,709 Banco Financiero del Perú S.A. Leased asset 9.30 30/06/2011 S/. - - - 371 - 371 542 374 916 Banco Financiero del Perú S.A. Leased asset 9.30 03/09/2011 US$ - - - 183 - 183 15 - 15 Banco Financiero del Perú S.A. Leased asset 9.30 17/07/2011 US$ - - - 180 - 180 271 187 458 Banco Financiero del Perú S.A. Leased asset 9.30 16/03/2011 S/. - - - 86 - 86 284 86 370 Banco Financiero del Perú S.A. Leased asset 9.30 02/01/2011 US$ - - - 32 - 32 254 33 287 Banco Financiero del Perú S.A. Leased asset 9.30 16/03/2011 US$ - - - 18 - 18 86 25 111 Banco Financiero del Perú S.A. Leased asset 9.30 14/04/2011 S/. - - - 25 - 25 65 25 90 Banco Financiero del Perú S.A. Leased asset 9.30 15/04/2011 S/. - - - 22 - 22 56 21 77 Banco Interamericano de Finanzas S.A. Property 9.50 30/11/2015 S/. ------1,400 10,794 12,194 Banco Financiero del Perú S.A. Leased asset 7.90 15/08/2010 US$ ------228 191 419 BBVA Banco Continental Leased asset 8.67 29/08/2010 S/. ------389 - 389 Banco interamericano de Finanzas S.A. Leased asset 7.90 30/09/2010 US$ ------272 - 272 Banco interamericano de Finanzas S.A. Leased asset 7.90 02/10/2010 US$ ------111 - 111 Banco interamericano de Finanzas S.A. Leased asset 7.90 26/05/2010 US$ ------93 - 93 Banco interamericano de Finanzas S.A. Leased asset 7.90 21/08/2010 US$ ------88 - 88 Banco interamericano de Finanzas S.A. Leased asset 7.90 05/10/2010 US$ ------71 - 71 Banco interamericano de Finanzas S.A. Leased asset 7.90 26/05/2010 US$ ------66 - 66 Banco interamericano de Finanzas S.A. Leased asset 7.90 02/10/2010 US$ ------56 1 57 Banco Financiero del Perú S.A. Leased asset 9.30 15/05/2010 US$ ------38 - 38 Banco interamericano de Finanzas S.A. Leased asset 7.90 02/10/2010 US$ ------25 - 25 Banco interamericano de Finanzas S.A. Leased asset 7.90 26/05/2010 S/. ------13 - 13 Banco Financiero del Perú S.A. Leased asset 9.30 04/09/2011 US$ ------10 - 10 Banco interamericano de Finanzas S.A. Leased asset 7.90 25/03/2010 US$ ------13 - 13 Scotiabank Perú S.A.A. Leased asset 7.95 05/01/2011 US$ ------7 - 7 Banco Financiero del Perú S.A. Leased asset 9.30 26/06/2010 US$ ------7 - 7 Banco Financiero del Perú S.A. Leased asset 9.30 21/02/2010 US$ ------3 - 3 ______

14,379 48,261 62,640 4,356 3,573 7,929 6,791 15,993 22,784 ______

124,612 175,390 300,002 53,747 101,912 155,659 84,308 69,814 154,122

Amortized fees (35) (1,902) (1,937) - (1,705) (1,705) - - - ______

Total 124,577 173,488 298,065 53,747 100,207 153,954 84,308 69,814 154,122 ______

F-69

Notes to the consolidated financial statements (continued)

(c) As of December 31, 2011, promissory notes in local currency obtained from domestic financial institutions were primarily used for working capital, are secured by the Company’s real estate properties and may be renewed upon maturity.

Accrued interest expense on bank loans for the year ended on December 31, 2011 amount approximately to S/.16,005,000 (S/.9,905,000 as of December 31, 2010) and are recorded in the “Financial expenses” caption in the consolidated statement of comprehensive income, Note 21.

- Maintaining a debt service coverage ratio of not less than 1.60. - Maintaining an indebtedness level lower than or equal to 3.00. - Maintaining a liquidity ratio of not less than 0.75.

In addition, the Company has to comply with the following obligation: - Presenting the Company’s financial statements to the Bank.

F-70

Notes to the consolidated financial statements (continued)

(f) The non-current portion maturity during the years to come is detailed below:

Year 2011 2010 S/.(000) S/.(000)

2012 - 21,502 2013 41,122 17,740 2014 41,080 17,302 2015 34,336 17,154 2016 34,368 17,154 2017 21,983 11,060 2018 2,501 - ______

______175,390 ______101,912

14. Deferred income tax (a) The components generating deferred income tax as of December 31, 2011 and 2010 are as follows:

Debit Debit (credit) to the (credit) to the consolidated consolidated As of statement of As of statement of As of January 1, comprehensive December comprehensive December 2010 income 31, 2010 income 31, 2011 S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) Deferred asset Sundry provisions 1,294 856 2,150 533 2,683 Provision for vacations 799 330 1,129 (94) 1,035 Prepaid expenses - 600 600 400 1,000 Right of use of intangible asset paid by Scotiabank - 1,018 1,018 (255) 763 Share-based payments - 960 960 180 1,140 ______

2,093 3,764 5,857 764 6,621 ______Deferred liability Effect of differences between finance bases and tax bases of fixed assets (38,381) (761) (39,142) (1,103) (40,245) Amortization of intangibles assets - SAP (1,013) 293 (720) 295 (425) Amortized cost - (512) (512) (69) (581) Others - (1,108) (1,108) 179 (929) ______(39,394) (2,088) (41,482) (698) (42,180) ______

Total deferred liability, net (37,301) 1,676 (35,625) 66 (35,559) ______

F-71

Notes to the consolidated financial statements (continued)

(b) Income (expense) for income tax recorded in the consolidated statement of comprehensive income is made up as follows:

2011 2010 S/.(000) S/.(000)

Income tax Current 22,987 19,245 Deferred (66) (1,676) ______

Total income tax 22,921 17,569 ______

______2011 ______2010 S/.(000) % S/.(000) %

Profit before income tax 65,097 100.0 50,426 100.0 ______

Theoretical tax 19,529 30.0 15,128 30.0 Extraordinary expenses 1,306 2.0 216 0.4 Fines 556 0.9 78 0.2 Non deductable expenses 646 1.0 1,361 2.7 Other 884 1.3 786 1.5 ______

Income tax 22,921 35.2 17,569 34.8 ______

15. Shareholders’ equity (a) Share capital - As of December 31, 2011 and 2010 and as of January 1, 2010, the Company’s share capital is represented by 71,496,706 common shares fully subscribed and paid-in, with a nominal value of 1 Nuevo Sol per share.

F-72

Notes to the consolidated financial statements (continued)

Effective days during Weighted average Outstanding shares the period of shares

2010 - Balance as of January 1, 2010 71,496,706 360 71,496,706 ______Balance as of December 31, 2010 71,496,706 71,496,706 ______

2011 - Balance as of January 1, 2011 71,496,706 360 71,496,706 ______Balance as of December 31, 2011 71,496,706 71,496,706 ______

The calculation of basic and diluted earnings per share as of December 31, 2011 and 2010 is presented as follows:

______2011 ______2010 Number of shares Profit Number of shares Profit (numerator) (denominator) Earnings per share (numerator) (denominator) Earnings per share S/. S/. S/. S/.

42,176,000 71,496,706 0.5899 32,857,000 71,496,706 0.4595 ______

16. Tax situation (a) The Company is subject to the Peruvian tax system. As of December 31, 2011 and 2010, the statutory income tax rate is at 30 per cent on taxable income.

Not domiciled legal entities and individuals must pay an additional tax of 4.1 percent on the dividends received.

(b) For income tax and value added tax calculation purposes, the transfer price of transactions with companies residing in territories with little or no taxation must be substantiated with documentation and information on the valuation methods used and the criteria considered for their determination.

Based on the analysis of the Company's operations, Management and its legal advisors do not expect any material contingencies for the Company as of December 31, 2011 and 2010 and as of January 1, 2010, relating to the above mentioned.

F-73

Notes to the consolidated financial statements (continued)

17. Cost of sales This item is made up as follows:

2011 2010 S/.(000) S/.(000)

Beginning inventory, Note 7(a) 129,254 99,030 Purchase of merchandise 776,349 589,970 Inventory losses 3,826 2,887 Ending inventory, Note 7(a) (203,739) (129,254) ______Cost to sell merchandise 705,690 562,633 Cost to sell services 25,267 14,123 ______

730,957 576,756 ______

18. Administrative expenses (a) This item is made up as follows:

2011 2010 S/.(000) S/.(000)

Personnel expenses, Note 20(c) 33,748 29,398 Services provided by third parties (b) 9,211 7,806 Miscellaneous operational expenses 5,444 7,307 Amortization of intangible assets 1,914 1,830 Electricity 1,710 1,825 Miscellaneous services 1,600 1,433 Taxes 1,525 4,795 Depreciation for the year, Note 10(e) 773 840 Surveillance and security 160 207 Miscellaneous fees 144 181 Project write-off - 5,469 ______

56,229 61,091 ______

(b) Mainly corresponds to lease of printers, maintenance, repairs and professional fees. 19. Selling expenses This item is made up as follows:

2011 2010 S/.(000) S/.(000)

F-74

Notes to the consolidated financial statements (continued)

Personnel expenses, Note 20(c) 74,541 53,742 Services provided by third parties 20,033 11,089 Advertising 17,832 19,552 Lease of buildings 15,116 10,907 Depreciation for the year, Note 10(e) 9,633 7,973 Credit card commissions 6,730 6,270 Miscellaneous operational expenses 5,506 2,557 Utilities 4,014 3,320 Security 3,487 2,286 Maintenance of fixed assets 3,337 2,571 Permits and governmental fees 830 440 ______

161,059 120,707 ______

20. Personnel expenses and average employee numbers (a) This item is made up as follows:

2011 2010 S/.(000) S/.(000)

Remunerations 52,038 35,450 Employees’ profit-sharing 6,563 4,490 Gratuities 9,324 6,765 Statutory bonuses 9,272 8,175 Severance indemnities 5,126 3,954 Payroll taxes 5,066 4,824 Vacations 4,874 3,540 Additional profit sharing 3,390 160 Board remuneration 3,151 3,151 Redundancy payment 2,309 767 Overtime 1,376 689 Training 1,281 892 Welfare 1,262 1,081 Others 3,257 4,124 Personnel services - internal control - 5,078 ______

108,289 83,140 ______

(b) The Company’s average number of directors and employees was 2,777 in 2011 and 2,074 in 2010. (c) Personnel expenses have been recorded in the following captions of the consolidated statement of comprehensive income:

2011 2010 S/.(000) S/.(000)

Administrative expenses, Note 18 33,748 29,398

F-75

Notes to the consolidated financial statements (continued)

Selling expenses, Note 19 74,541 53,742 ______

108,289 83,140 ______

21. Financial expenses This item is made up as follows:

2011 2010 S/.(000) S/.(000)

Interest on overdrafts and loans, Note 13(c) 16,005 9,905 Financial charges, net 267 707 Other expenses 249 1,932 ______

16,521 12,544 ______

22. Other income (expenses) This item is made up as follows:

2011 2010 S/.(000) S/.(000)

Loss (profit) on sale of fixed assets (36) 12,928 Utilities and surveillance billed to third parties 2,317 2,612 Advertising sold to third parties 1,564 659 Income from stands rental 991 830 Right of use of intangible asset sold to Scotiabank, Note 9 848 848 Other income, net 2,161 3,780 ______

7,845 21,657 ______

23. Operating lease agreement As of December 31, 2011 and 2010, the Company has executed a number of operating lease agreements with third parties, for the premises where it operates. The commitment undertaken is referred to the fixed or variable monthly rent, the higher.

During 2011, the Company recorded operating lease expenses amounting to approximately S/.25,731,000 (S/.22,240,000 as of December 31, 2010).

F-76

Notes to the consolidated financial statements (continued)

The total amount of the commitments undertaken, calculated based on fixed rents, shall be paid as follows:

2011 2010 S/.(000) S/.(000)

2009 – 2011 46,675 28,513 2012 – 2016 150,272 76,000 2017 – 2021 153,674 76,000 2022 – 2032 147,684 108,269 2033 – 2048 70,958 44,278 ______

Total 569,263 333,060 ______

25. Financial risk management By the nature of their activities, the Company and Subsidiaries are exposed to credit, interest rate, liquidity, and exchange rate risks, which are managed through a process of ongoing identification, measurement, and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company and Subsidiaries continuing profitability and each individual within the Company is accountable for the risk exposures related to their duties.

Business risks such as changes in the environment, technology and industry are excluded from this independent risk control process, and these are monitored through the Company and Subsidiaries’ strategic planning process.

(a) Risk management structure - The risk management structure rests on the Company and Subsidiaries’ Board of Directors, which is responsible for identifying and controlling risks in coordination with other supporting areas, as explained below:

(i) Board of Directors The Board is responsible for the overall risk management approach. The Board sets the risk management principles, as well as the policies prepared for specific areas, such as exchange rate risk, interest rate risk, credit risk, and use of derivative and non-derivative financial instruments.

F-77

Notes to the consolidated financial statements (continued)

(ii) Internal Audit The Company and Subsidiaries’ risk management processes are monitored by the Internal Audit function, which examines both the adequacy of the procedures and the compliance of them. Internal Audit discusses the results of all assessments with Management and reports its findings and recommendations to the Board of Directors.

(iii) Audit Committee The audit committee is responsible for continuously developing, implementing and improving the infrastructure for the management of the Company and Subsidiaries’ risks, adopting and adding the best global practices and following the policies established.

(iv) Finance Department The Finance Department is responsible for managing the Company’s assets and liabilities and the overall financial structure. It is mainly responsible for managing the Company and Subsidiaries’ funds and liquidity risks; assuming the liquidity, interest rate and foreign exchange related risks, in accordance with currently-in-force policies and limits.

(b) Risk mitigation - Management is aware of the existing conditions in the market and, based on its knowledge and experience, controls the afore-mentioned risks by following the policies approved by the General Shareholders’ Meeting and the Board of Directors.

(c) Excessive risk concentration - Risk concentrations arise when a number of counterparties engage in similar business activities, or have similar economic or other conditions. Concentrations indicate the relative sensitivity of the Company’s performance with the characteristics that affect a specific sector.

All credit risk concentrations identified are continuously monitored and controlled.

25.1 Credit risk – The Company takes positions subject to credit risk, which is the risk that a client will cause a financial loss by failing to perform their obligations. The Company’s financial assets potentially exposed to credit risk concentrations primarily consists of bank deposits and trade and other accounts receivable.

As of December 31, 2011, Management has estimated that the maximum credit risk that the Company and Subsidiaries are exposed to amounts approximately to S/.38,721,000 (S/.34,132,000 as of December 31, 2010, and S/.40,214,000 as of January 1, 2010), which represents the carrying amount of the financial assets.

F-78

Notes to the consolidated financial statements (continued)

25.2 Interest rate risk – The Company and Subsidiaries’ policy is to maintain financial instruments accruing a fixed interest rate; as of December 31, 2011 and 2010, the Company maintains financing facilities with financial entities. The Company and Subsidiaries’ operating cash flows are substantially independent from the changes in the market interest rates; given the individual credit rating of the Company, it is allowed to be granted competitive interest rates in the local markets. In Management’s opinion, the Company and Subsidiaries are not significantly exposed to interest rate risks.

The table below shows the sensitivity to a reasonable possible interest rate change, with all other variables held constant, in the consolidated statements of comprehensive income, before income tax. Sensitivity in the consolidated statement of comprehensive income is the effect that the changes in interest rates have on the net finance income for any year, before income tax, based on the financial assets and liabilities exposed to interest rate changes as of December 31, 2011 and 2010.

______As of December 31, 2011 ______As of December 31, 2010 Changes in basic Sensitivity in net Changes in basic Sensitivity in net Currency points results points results S/.(000) S/.(000)

Nuevos soles +/-50 43 +/-50 24 Nuevos soles +/-100 86 +/-100 48 Nuevos soles +/-200 171 +/-200 95 Nuevos soles +/-300 257 +/-300 143

The interest rate sensitivities shown in the above table are illustrative only and are based on simplified scenarios. The figures represent the effect of the pro-forma movements on the net finance income based on the projected yield curve scenarios and the interest rate risk profile. However, this effect does not incorporate the actions that would be taken by Management to mitigate the impact of such risk on the interest rates. In addition, the Company and Subsidiaries seek to proactively change the interest rate risk profile in order to minimize losses and optimize net income. The foregoing projections do also assume that the interest rate of all maturities move by the same amount and, therefore, do not reflect the potential impact that certain rates undergoing changes may have on the net finance income while other rates remain unchanged. The projections also include assumptions in order to ease calculations, such as, for example, all positions maintained up to maturity or, if maturing during the year, they are renewed for the same amount.

F-79

Notes to the consolidated financial statements (continued)

25.3 Liquidity risk – Liquidity risk is understood as the risk that the Company and Subsidiaries may fail to perform its payment obligations related to financial liabilities when due, and replace the funds once they are withdrawn. The consequence entails a default on the payment of its obligations.

The Company and Subsidiaries control their liquidity through properly managing the maturity of their assets and liabilities, so as to achieve matching between flow of income and future payments, thus allowing for the regular development of their activities.

The Company and Subsidiaries main source of cash flows is the collection for the sale of hardware, construction and household finishing items. During 2011 and 2010, the average collection term ranged from 15 to 30 days, respectively; in addition, the average payment term to its main suppliers ranged from 30 to 90 days during 2011 and 2010, respectively. The Company believes that the management of collection and payment terms heads towards improvement due to its enhanced collection management policies.

In the case that the Company and Subsidiaries does not count, at certain point, with the resources needed to meet their obligations in the short term, they have access to several credit lines with renowned financial institutions, and due to their financial worthiness, have managed to be granted short and medium-term loans at rates similar to market average rates.

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Notes to the consolidated financial statements (continued)

The following table presents the cash flows payable by the Company and Subsidiaries in accordance with the contractual terms agreed on the dates of the consolidated statement of financial position. The amounts disclosed are the cash flows in accordance with the contracted terms without discount and include their respective interests:

Up to 1 month From 1 to 3 months From 3 to 12 months From 1 to 2 years From 2 to 3 years From 3 to 7 years Total S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000) S/.(000)

As of December 31, 2011 Financial obligations: Amortization of capital 34,261 40,465 49,851 33,807 33,772 105,909 298,065 Amortization of interest 1,326 2,626 10,199 11,699 8,613 9,888 44,351 Trade accounts payable 90,504 96,319 22,162 6,809 - - 215,794 Income tax - - 2,403 - - - 2,403 Other accounts payable 7,911 10,133 6,471 - - - 24,515 ______

134,002 149,543 91,086 52,315 42,385 115,797 585,128 ______

As of December 31, 2010 Overdrafts and financial obligations: Amortization of capital 15,228 12,851 25,668 16,735 16,269 67,203 153,954 Amortization of interest 669 1,322 5,183 6,570 5,583 7,434 26,761 Trade accounts payable 67,547 67,028 4,279 7,234 - - 146,088 Income tax - - 6,317 - - - 6,317 Other accounts payable 10,878 9,024 4,834 - - - 24,736 ______

94,322 90,225 46,281 30,539 21,852 74,637 357,856 ______

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Notes to the consolidated financial statements (continued)

25.4 Exchange rate risk – The Company and Subsidiaries are exposed to the effects of fluctuations in the foreign currency prevailing on their financial position and cash flows. Management sets the limits on the exposure levels, by currency and the total daily transactions.

Asset and liability transactions are basically performed in local currency. Foreign currency transactions are performed at supply and demand rates. As of December 31, 2011, the free-market weighted average exchange rate for transactions in U.S Dollars was S/.2.695 per US$1.00 for purchase, and S/.2.697 per US$1.00 for sale (S/.2.808 per US$1.00 and S/.2.809 per US$ 1.00 as of December 31, 2010, respectively).

The Company and Subsidiaries manage the foreign currency exchange risk by monitoring and controlling the values of such position not being subject to Nuevos Soles (functional currency), which are exposed to exchange rate movements. The Company and Subsidiaries measure their performance in Nuevos Soles in such a way that, if the foreign currency exchange position is positive, any depreciation of the U.S. dollar would negatively affect the consolidated statement of financial position of the Company and Subsidiaries. The foreign currency current position comprises assets and liabilities indicated at the exchange rate. Any devaluation/revaluation of the foreign currency would affect the consolidated statement of comprehensive income.

2011 2010 01.01.2010 US$(000) US$(000) US$(000)

Assets Cash and cash equivalents 278 561 527 Trade accounts receivable 84 776 233 Other accounts receivable 6,568 3,651 4,094 ______6,930 4,988 4,854 ______

Liabilities Trade accounts payable (18,967) (9,677) (8,211) Financial obligations - (147) (14,824) Other accounts payable - (409) (56) ______(18,967) (10,233) (23,091) ______

Net liability (12,037) (5,245) (18,237) ______

The following table shows the sensitivity analysis of U.S. Dollars, which is the currency the Company and Subsidiaries are significantly exposed to as of December 31, 2011 and 2010, on their monetary assets and liabilities and estimated cash flows. The analysis determines the effect of any given reasonable variation likely to occur in the U.S. Dollar exchange rate, with all other variables held constant in the consolidated statement of comprehensive income, before income tax.

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Notes to the consolidated financial statements (continued)

A negative amount will show a net potential decrease in the consolidated statement of comprehensive income, while a positive amount will reflect a net potential increase.

Change in Sensitivity analysis exchange rates 2011 2010 % S/.(000) S/.(000) Devaluation - Dollars 5 1,239 393 Dollars 10 2,478 785

Revaluation - Dollars 5 (1,239) (393) Dollars 10 (2,478) (785)

25.5 Capital management – The Company and Subsidiaries actively manage a capital base to cover those risks inherent to their activities. The adequacy of the Company and Subsidiaries’ capital is monitored using, among other measures, the ratios set by Management.

The Company and Subsidiaries’ objectives When managing capital, which is a broader concept than the “Equity” caption on the face of the consolidated statement of financial position, are: (i) safeguarding the Company and Subsidiaries’ ability to continue as a going concern to continue providing returns to the shareholders and benefits to other stakeholders; and (ii) maintaining a sound capital base to support the development of their activities.

As of December 31, 2011 and 2010 and as of January 1, 2010, there are no changes in the Company and Subsidiaries’ activities and capital management policies.

25.6 Fair value of financial instruments – Fair value is defined as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction, under the assumption that the entity is a going concern.

When a financial instrument is traded in a liquid and active market, its quoted market price in an actual transaction provides better evidence of its fair value. When a quoted market price is not available, or may not be indicative of the fair value of the instrument, to determine such fair value the current market value of another instrument that is substantially similar, discounted cash flow analysis or other applicable techniques may be used; which will be significantly affected by the assumptions used. Although Management uses its best judgment when estimating the fair value of its financial instruments, any technique to conduct such estimate entails certain level of inherent weakness; as a consequence, the fair value could not be an indicator of the net realizable value or settlement value of an instrument.

F-83

Notes to the consolidated financial statements (continued)

The methodologies and assumptions used to determine the estimated market values depend on the terms and risk characteristics of the various financial instruments, and comprise the following:

(a) Assets which fair value is similar to the carrying value – For liquid financial assets and liabilities or those having a short-term maturity (less than three months), the carrying amount is considered similar to the fair value. This assumption is also applicable to demand deposits, savings accounts without specific maturity, and variable rate financial instruments.

(b) Fixed rate financial instruments – The fair value of financial assets and liabilities at fixed rate and amortized cost is determined by comparing the market interest rates on initial recognition with current market rates related to similar financial instruments. The estimated fair value of deposits accruing interest is determined by applying discounted cash flow methods and using market interest rates for the prevailing currency having similar maturities and credit risks.

Based on the above, the table below sets a comparison between the carrying amount and fair value of the Company and Subsidiaries’ financial instruments presented in the consolidated statement of financial position. Such table excludes the fair value of non-financial assets and liabilities:

______2011 ______2010 Carrying Carrying amount Fair value amount Fair value S/.(000) S/.(000) S/.(000) S/.(000)

Assets Cash and cash equivalents 15,837 15,837 15,703 15,703 Trade accounts receivable, net 19,455 19,455 17,924 17,924 Other accounts receivable 19,266 19,266 16,208 16,208 ______Total 54,558 54,558 49,835 49,835 ______

Liabilities Trade accounts payable 215,793 215,793 146,088 146,088 Other accounts payable 25,363 25,363 25,584 25,584 Financial obligations 298,065 300,002 153,954 155,659 ______Total 539,221 541,158 325,626 327,331 ______

26. Events after the reporting period In July 13, 2012, the Company’s main shareholder, Private Equity Fund Manager Enfoca Inversiones, increased its participation in Maestro Perú S.A. from 76.91 percent to 91.85 percent through the acquisition of a package of shares in the Lima Stock Exchange.

F-84

ISSUER

Maestro Perú S.A. Jirón San Lorenzo 881 Surquillo Lima 34, Peru

LEGAL ADVISORS To the Company

As to U.S. Federal and New York Law: As to Peruvian Law: Cleary Gottlieb Steen & Hamilton LLP Estudio Echecopar One Liberty Plaza Avenida de la Floresta No. 497, Quinto Piso New York, New York 10006 San Borja Lima 41, Peru

LEGAL ADVISORS To the Initial Purchasers

As to U.S. Federal and New York Law: As to Peruvian Law: Skadden, Arps, Slate, Meagher & Flom LLP Miranda & Amado Abogados Four Times Square Avenida Larco 1301, Piso 20 New York, New York 10036 Torre Parque Mar Miraflores Lima 18, Peru

INDEPENDENT ACCOUNTANTS OF THE ISSUER

Medina, Zaldívar, Paredes & Asociados S.C.R.L. Dongo-Soria Gaveglio y Asociados S.C.R.L. Member Firm of Ernst & Young Global Member Firm of PricewaterhouseCoopers Victor Andrés Belaúnde 171, Piso 6 International Limited San Isidro Avenida Santo Toribio 143, Piso 8 Lima 27, Peru San Isidro Lima 27, Peru

TRUSTEE, REGISTRAR, PAYING AGENT LUXEMBOURG LISTING AGENT, SUB-PAYING AND TRANSFER AGENT AGENT AND TRANSFER AGENT

Deutsche Bank Trust Company Americas Deutsche Bank Luxembourg S.A. 60 Wall Street 2, Boulevard Konrad Adenauer MS-NYC 60-2170 1115 Luxembourg New York, New York 10005 Luxembourg