Translation of independent auditors’ report and consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries

Consolidated financial statements as of December 31, 2020 and 2019, together with the Independent Auditors’ Report

Translation of independent auditors’ report and consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries

Consolidated financial statements as of December 31, 2020 and 2019, together with the Independent Auditors’ report

Contents

Independent Auditors’ Report

Consolidated financial statements

Consolidated statements of financial position Consolidated income statements Consolidated statements of other comprehensive income Consolidated statements of changes in equity Consolidated statements of cash flows Notes to the consolidated financial statements

Paredes, Burga & Asociados Sociedad Civil de Responsabilidad Limitada

Translation of independent auditors’ report originally issued in Spanish - Note 36

Independent Auditors’ Report

To the Shareholders and Board of Directors of InRetail Perú Corp. and Subsidiaries

We have audited the accompanying consolidated financial statements of InRetail Perú Corp. and Subsidiaries (jointly “InRetail Group”), which comprise the consolidated statements of financial position as of December 31, 2020 and 2019, and the related consolidated income statements, of other comprehensive income, of changes in equity, and of cash flows for the years ended on those dates, 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 issued by the International Accounting Standards Board, and for such internal control that 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 audits. We conducted our audits in accordance with International Auditing Standards approved for its application in Peru by the Board of Deans of the Peruvian Charter of Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

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 auditors’ 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 auditor considers internal control relevant to InRetail Group in the 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 InRetail Group 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 de Personas Jurídicas de Lima y Callao Miembro de Ernst & Young Global

Translation of independent auditors’ report originally issued in Spanish - Note 36

Independent Auditors’ 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 consolidated financial position of InRetail Perú Corp. and Subsidiaries as of December 31, 2020 and 2019, and their consolidated results of operations and cash flows for the years ended December 31, 2020 and 2019, in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board.

Lima, Peru, March 15, 2021

Countersigned by:

Sandra Luna Victoria C.P.C.C. Registration No. 50093

Firma miembro de Ernst & Young Global Limited Translation of consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries Consolidated statements of financial position At December 31, 2020 and 2019

Note 2020 2019 Note 2020 2019 S/(000) S/(000) S/(000) S/(000) Assets Liabilities and equity

Current liabilities Current assets Trade payables 18 3,317,632 2,946,832 Other payables 19 671,161 462,237 Cash and short-term deposits 4.3(g) and 6 936,315 740,166 Interest-bearing loans and borrowings 20 1,773,620 386,266 Financial instruments at fair value through profit or loss 4.3(c) and 7 242,395 22,015 Accounts payable to related parties 27(b) 24,830 36,891

Current income tax, net 4.3(t) and 22(e) 73,684 21,282 Financial instruments at amortized cost 4.3(c(i)) 24,624 - Deferred revenue 28 20,263 19,139 Lease liabilities 4.3(k) and 17(c) 226,749 306,145 Trade receivables, net 8 624,316 580,994 ______

Total current liabilities 6,107,939 4,178,792 ______Other receivables, net 9 128,966 83,833

Accounts receivable from related parties, net 27(b) 78,494 50,283 Non-current liabilities

Trade payables 18 5,495 16,258 Inventories, net 4.3(h) and 10 2,158,521 1,835,047 Other payables 19 23,448 21,289

Interest-bearing loans and borrowings 20 1,780,980 1,636,784 Prepaid expenses 13,170 14,831 Accounts payable to related parties 27(b) 42,517 40,260 Senior notes issued 21 3,461,907 3,226,821 Taxes recoverable 12 130,775 101,483 ______Deferred revenue 28 32,278 35,696 475,879 465,588 Total current assets 4,337,576 3,428,652 Deferred income tax liabilities, net 4.3(t) and 22(a) ______Taxes related to Special Purpose Entities 31(e) 326,683 318,848 Non-current assets Lease liabilities 1,287,786 1,096,135 4.3(k) and 17(c) ______Other receivables, net 9 62,481 44,937 Total non-current liabilities 7,436,973 6,857,679 ______

Total liabilities 13,544,912 11,036,471 Recoverable taxes 12 25,033 17,308 ______

Accounts receivable from related parties 27(b) 26,564 30,252 Equity 23

Equity attributable to InRetail Perú Corp: Derivative financial instruments – “Call Spread” 4.3(d) and 13 212,447 130,913 Capital stock 2,138,566 2,138,566 Capital premium 472,967 472,967 Property, furniture and equipment, net 4.3(j) and 14 4,266,541 3,602,925 Treasury shares (57,636) (57,636) Investment properties 4.3(l) and 15 3,899,509 3,879,572 Other reserves 419,001 419,001

Unrealized results on derivative financial instruments (130,233) (13,076) Intangible assets, net 4.3(m) and 16 3,927,072 3,156,805 Unrealized results for exchange differences on translation Right-of-use assets 4.3(k) and 17(b) 1,393,726 1,402,882 of foreign operations 1,840 (208) Unrealized results for actuarial update 927 415 Deferred income tax assets, net 4.3(t) and 22(a) 100,033 51,932 Retained earnings 1,764,481 1,657,034 ______Other assets 7,949 7,208 4,609,913 4,617,063 ______Non-controlling interests ______104,106 ______99,852 Total non-current assets 13,921,355 12,324,734 ______Total equity 4,714,019 4,716,915 ______Total assets 18,258,931 15,753,386 Total liabilities and equity 18,258,931 15,753,386 ______

The accompanying notes are an integral part of consolidated statement of financial position. Translation of consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries

Consolidated income statements For the years ended December 31, 2020 and 2019

Note 2020 2019 S/(000) S/(000)

Net sales of goods 13,727,044 12,260,910 Rental income 344,129 473,024 Rendering of services 338,231 335,678 ______Revenue 4.3(r) 14,409,404 13,069,612

Cost of sales and services 4.3(r) and 24 (10,240,703) (9,121,810) ______Gross profit 4,168,701 3,947,802

Changes in fair value of investment property 15(e) (84,520) 157,158 Selling expenses 24 (2,454,124) (2,362,403) Administrative expenses 24 (497,947) (427,749) Other operating (expense) income, net 25 (3,558) 29,758 ______Operating profit 1,128,552 1,344,566

Finance income 26 10,045 19,489 Finance expenses 26 (464,285) (466,848) Exchange difference 5 and 33.2(i) (124,170) 20,832 ______Profit before income tax 550,142 918,039 Income tax expense 4.3(t) and 22(c) (210,791) (321,201) ______

Net profit for the year 339,351 596,838 ______

Attributable to: InRetail Perú Corp. shareholders 302,650 558,573 Non-controlling interests 36,701 38,265 ______

339,351 596,838 ______

Earnings per share: Basic and diluted profit for the year attributable to InRetail Perú Corp. shareholders, basic and diluted (in Soles) 4.3(v) and 29 3.36 5.91 ______

Average number of outstanding shares (in thousands) 4.3(v) and 29 101,057 101,057 ______

The accompanying notes are an integral part of these consolidated financial statements. Translation of consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries

Consolidated statements of other comprehensive income For the years ended December 31, 2020 and 2019

Note 2020 2019 S/(000) S/(000)

Net profit 339,351 596,838

Other comprehensive income to be reclassified to the consolidated income statements in subsequent periods: Unrealized results on derivative financial instruments “Call Spread“ 13 (140,894) 31,876 Deferred income tax 22(b) 18,117 (3,758) Unrealized income on financial instruments at fair value through other comprehensive income 11 - 260 Transfer of realized results on financial instruments at fair value through other comprehensive income to the consolidated income statements 11 - (413) Unrealized gain (loss) on foreign currency translation 1,674 (245) Unrealized gain on actuarial reserve update 4.3(o) 588 297 ______Other comprehensive income to be reclassified to the consolidated income statements in subsequent period, net of income tax (120,515) 28,017 ______

Total comprehensive income for the year 218,836 624,855 ______

Attributable to: InRetail Perú Corp. shareholders 187,462 585,417 Non-controlling interests 31,374 39,438 ______

218,836 624,855 ______

The accompanying notes are an integral part of these consolidated financial statements. Translation of consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries

Consolidated statements of changes in equity For the years ended December 31, 2020 and 2019

______Attributable to owners of InRetail Perú Corp. ______Unrealized income on financial Unrealized instruments at Unrealized results fair value results on Unrealized on derivative through other foreign gain for Non- Capital Treasury Capital Other financial comprehensive currency actuarial Retained controlling Total stock shares premium reserves instruments income translation update earnings Total interest equity S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

Balances as of January 1, 2019 2,138,566 (57,636) 472,967 419,001 (40,028) 153 5 157 1,212,132 4,145,317 78,346 4,223,663 ______

Net income ------558,573 558,573 38,265 596,838 Other comprehensive income - - - - 26,952 (153) (213) 258 - 26,844 1,173 28,017 ______Total comprehensive income - - - - 26,952 (153) (213) 258 558,573 585,417 39,438 624,855 ______

Dividends paid, note 23(d) ------(115,640) (115,640) - (115,640) Dividends paid by subsidiaries, note 23(d) ------(17,932) (17,932) Treasury stock dividends, note 23(d) ------1,969 1,969 - 1,969 ______Balances as of December 31, 2019 2,138,566 (57,636) 472,967 419,001 (13,076) - (208) 415 1,657,034 4,617,063 99,852 4,716,915 ______

Net income ------302,650 302,650 36,701 339,351 Other comprehensive income - - - - (117,157) - 1,457 512 - (115,188) (5,327) (120,515) ______Total comprehensive income - - - - (117,157) - 1,457 512 302,650 187,462 31,374 218,836 ______

Dividends paid, note 23(d) ------(197,896) (197,896) - (197,896) Dividends paid by subsidiaries, note 23(d) ------(27,205) (27,205) Treasury stock dividends, note 23(d) ------3,369 3,369 - 3,369 Other ------591 - (676) (85) 85 - ______

Balances as of December 31, 2020 2,138,566 (57,636) 472,967 419,001 (130,233) - 1,840 927 1,764,481 4,609,913 104,106 4,714,019 ______

The accompanying notes are an integral part of these consolidated financial statements. Translation of consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries

Consolidated statements of cash flows For the years ended December 31, 2020 and 2019

Note 2020 2019 S/(000) S/(000)

Operating activities Receipts from contracts with costumers 14,305,253 13,112,052 Payments to suppliers of goods and services (11,232,030) (10,164,730) Payments to employees for salaries and social benefits (1,279,025) (1,185,291) Taxes paid (310,366) (261,147) Other (payments) collections, net (4,932) 32,354 ______Net cash provided by operating activities 1,478,900 1,533,238 ______

Investing activities Sale of financial instruments at fair value through other comprehensive income - 37,812 Loan granted to related parties - (117,250) Sale of Subsidiary, net of cash 5,834 - Acquisition of Subsidiary, net of cash acquired (1,212,599) - Purchase of property, furniture and equipment, net of acquisition through leasing contracts 14(a) (201,688) (431,840) Purchase of investment properties, net of acquisition through leasing contracts 15(b) (84,698) (249,892) Purchase of financial instruments at fair value through profit or loss (908,572) (214,291) Sale of financial instruments at fair value through profit or loss 666,159 212,048 Tax payments for investment properties in progress (13,914) (35,787) Purchase and development of intangibles assets 16(a) (44,617) (22,637) Purchase of financial instruments at fair value through other comprehensive income - (29,724) Sale of property, furniture and equipment 14(e) 1,852 1,120 Collection of loan granted to related parties - 124,028 ______Net cash used in investing activities (1,792,243) (726,413) ______

Translation of consolidated financial statements originally issued in Spanish - Note 36

Consolidated statements of cash flows (continued)

Note 2020 2019 S/(000) S/(000)

Financing activities Payment of financial obligations 33.5 (1,757,327) (857,902) Proceeds from interest-bearing loans and borrowings obtained 33.5 3,172,357 932,208 Interest paid 33.5 (306,676) (302,761) Income and key money paid in advance (5,781) - Dividends paid 33.5 (221,732) (131,603) Payment of leases 17(f) (371,349) (349,439) ______Net cash flows provided by (used in) financing activities 509,492 (709,497) ______

Net increase in cash and short-term deposits 196,149 97,328 Cash and short–term deposits at beginning of year 740,166 642,838 ______

Cash and short–term deposits at end of year 936,315 740,166 ______

Non-cash transactions Property, furniture and equipment purchased through leasing and other financial and non-financial obligations 14(a) 18,820 12,415 Investment properties acquired through leasing 19,469 130,466 Initial recognition of right-of-use assets 17(b) - 1,576,859 Additions of right-of-use assets 17(b) 284,683 146,435

The accompanying notes are an integral part of these consolidated financial statements. Translation of consolidated financial statements originally issued in Spanish - Note 36

InRetail Perú Corp. and Subsidiaries

Notes to the consolidated financial statements As of December 31, 2020 and 2019

1. Business activity (a) Identification - InRetail Perú Corp. (hereinafter “the Company”), is a holding incorporated in January 2011 in the Republic of Panama and is a subsidiary of Intercorp Retail Inc. which in turn is a subsidiary of Intercorp Perú Ltd., (a holding company incorporated in The Bahamas, hereinafter “Intercorp Perú” matrix of “Intercorp Group”) which is the ultimate parent and holds 100 percent of Intercorp Retail Inc.’s capital stock.

The percentages of ownership as of December 31, 2020 and 2019 are as follows:

Owner 2020 2019 %(**) %(**)

Intercorp Retail Inc. 59.04 59.04 Intercorp Perú Ltd. (*) 14.88 15.41 Others 26.08 25.55 ______Total 100.00 100.00 ______

(*) Includes direct and indirect control from Intercorp Perú Inc. through its Subsidiaries. (**) The percentages above are presented net from treasury shares.

The Company’s legal address is 50 Street and 74 Street, floor 16, PH Building, San Francisco, Republic of Panama; however, its management and administrative offices are located at Calle Morelli 181, San Borja, Lima, Peru.

The Company and its subsidiaries Supermercados Peruanos S.A. and subsidiaries, InRetail Pharma S.A. and Subsidiaries, InRetail Real Estate Corp. and Subsidiaries, IR Management S.R.L. (before InRetail Properties Management S.R.L.) and InRetail Foods S.A.C, hereinafter and together the “InRetail Group”, are dedicated to operate supermarkets, hypermarkets, pharmacies and shopping centers, as well as real estate development. InRetail Group’s operations are concentrated in Peru; however, it maintains operations in Ecuador, Colombia and Bolivia related to the marketing of chemicals and pharmaceuticals products.

Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

The consolidated financial statements as of December 31, 2019 have been approved by the General Stockholders’ Meeting on April 7, 2020. The consolidated financial statements as of December 31, 2020 have been approved by Management and will be presented to Board of Directors for approval on March 2021, and then put for consideration of the General Stockholders’ Meeting that will be held within the terms established by Law, for final approval. In Management’s opinion, the Board of Directors and Stockholders’ Meeting will approve the accompanying consolidated financial statements as of December 31, 2020 without modifications.

(b) Global pandemic Covid-19 - The variant of coronavirus, SARS-CoV-2 virus, which causes the disease known as “COVID- 19,” was first identified in Wuhan, China in December 2019 and on March 11, 2020, the World Health Organization recognized COVID-19 as a pandemic. In an effort to prevent the virus from spreading, governments around the world have implemented strategies that restrict social gathering and promote social distancing, such as quarantines, travel restrictions, closing of schools, workplaces, and shopping centers, among others. The rapid outbreak and the measures taken by governments to contain its spread have significantly impacted the world economy.

In this regard, the Peruvian Government declared, since March 2020, a National State of Emergency throughout the territory of Peru, which is in force until the date of this report. Among the first actions taken within this National State of Emergency, were ordered the closing of the borders, compulsory social confinement, the closing of businesses deemed non- essential (exceptions were production, distribution and commercialization of food and pharmaceuticals, financial services and healthcare), among others; but which negative effects on the Peruvian economy were significant.

Subsequently, in May 2020, through Supreme Decree No. 080-2020, the Peruvian Government approved the gradual reopening of economic activities in order to mitigate the economic effects of the pandemic. The proposed reactivation would be in four phases based on the impact of each sector on the economy and the beginning of each of these phases was in constant evaluation following the recommendations of the Sanitary Authority.

- Phase 1 - beginning at the end of May 2020, concentrated activities in the Mining, Industrial, Construction (projects), Services and tourism sectors (restaurants with home delivery, services related to telecommunications, agriculture, notaries, recycling, maintenance and storage), and Trade (of agricultural products and electronic goods for the home).

- Phase 2 - beginning of June 2020, concentrated activities of Agriculture, Manufacturing, Commerce (sales, maintenance and repair of automobiles), Services (professionals, lodging, vehicle and machinery rental, telecommunications, interprovincial transport).

2 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

- Phase 3 - beginning by the end of June 2020, concentrated activities of Commerce (shops in general with a capacity of 50 percent, wholesale and retail), Tourism and Services (restaurants with a capacity of 40 percent, national air transport, lodging services, accounting, auditing, consulting, among others).

- Phase 4 - beginning by the end of September 2020, concentrated activities of Commerce (stores in general with a capacity of 60 percent, wholesale and retail), Tourism and Services (restaurants with a capacity of 50 percent, national and international air transport, entertainment with a capacity of 50 and 60 percent).

Although the actions implemented by the Peruvian Government reached to contain and partially mitigate the exponential spread of this disease, through quarantines, social distancing, promotion for the use of face masks and the early detection of positive cases to achieve its isolation; by not having effective drugs and vaccines against the virus, the danger of a new chain of infections is always present.

In this sense, to continue containing and mitigating the spread of COVID-19, during the end of the year, the Peruvian Government issued a series of Supreme Decrees, extending the Nacional State of Sanitary Emergency with a series of restrictions that vary depending on the level of each region until February 28, 2021. The defining alert levels are moderate, high, very high and extreme; that are granted to each of the regions of Peru, based on an evaluation carried out by the Ministries of Health, and that recede in the cases very high and extreme the phases of economic reactivation mentioned above.

Pursuant to the National State of Emergency, all of the operations of Supermercados Peruanos S.A. and InRetail Pharma S.A. were considered essential and as a result, during the COVID-19 pandemic, their stores and pharmacies have remained open to the public and their operations have not been materially affected. While Supermercados Peruanos S.A. and InRetail Pharma S.A. have not been immune to the negative effects of the COVID-19 pandemic, the impact of such effects to their business has not been as substantial as in other sectors and business.

On the other hand, InRetail Real Estate restarted its operations in June 2020, complying with the government’s restriction of having no more than 40 and 60 percent of its normal capacity, depending on the risk index of each region, as previously explained. These effects are included in the consolidated financial statements. It is worth mentioning that InRetail Real Estate has enough liquidity and indebtedness capacity to comply with its obligations, as well as to ensure the supply chain during the restart of its operations.

3 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

In addition, to face the COVID-19 impacts, InRetail Real Estate has a bank financing subsidized by the Peruvian government, which amounts to S/10,000,000, so that it can maintain its operations and its payment chain. Said loan is due in June 2023, see note 20.

Likewise, Química Suiza S.A.C. obtained a bank financing subsidized by the Peruvian government that amounted to S/10,000,000; it is due in May 2023. Química Suiza S.A.C. paid off all the loan in December 2020.

The companies included in the consolidated financial statements as of December 31, 2020 and 2019 continue evaluating the potential short-term and long-term implications of COVID- 19 on its operations. The ultimate severity of the COVID-19 outbreak is uncertain at this time and therefore the Company and its Subsidiaries cannot predict the possible impact on the world, the Peruvian economy, the international financial markets, or ultimately on its financial condition.

2. Acquisitions and disposals subsidiaries (a) Acquisition Makro Supermayorista S.A. - In December 2020, InRetail Perú Corp., through its subsidiaries Supermercados Peruanos S.A. and InRetail Foods, acquired 100 percent of Makro Supermayorista S.A. (hereinafter “Makro”). Makro is a cash-and-carry wholesaler that sells food and non-food products to professional as well as individual customers. The acquisition operation included 16 stores in Lima and Provinces and the “Makro” and other minor private label brands.

The price of the transaction was US$359,619,000 (equivalent to approximately S/1,300,743,000), which was paid in full with the proceeds from the Bridge Facility. The Bridge Facility was for an amount up to US$375,000,000 (equivalent to approximately S/1,356,000,000), was arranged with J.P. Morgan Chase Bank, N.A. and contains covenants, including restrictions on incurrence of debt and maintenance of certain financial ratios, among others (see note 20(a)).

The acquisition of Makro was recorded in accordance with IFRS 3 "Business Combinations", applying the "Purchase" accounting method. Under this method, assets and liabilities were recorded at their estimated fair values at the date of purchase, including identified intangible assets not recorded in the financial statements position of each entity acquired.

4 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

The following is the preliminary fair values of the identifiable assets and liabilities of Makro at the date of acquisition:

Fair value of the acquired entities S/(000)

Assets - Cash and short-term deposits 88,144 Trade accounts receivables 1,807 Other accounts receivables 48,541 Inventories 121,409 Property, installations, furniture and equipment, note 14(a) 692,592 Right-of-use assets, net, note 17(b) 23,884 Intangibles, note 16(a) 62,027

Other assets 1,719 Liabilities - Trade accounts payables (252,077) Other accounts payables (54,292) Lease liabilities, note 17(c) (26,404) Interest-bearing loans and borrowings (59,755) Deferred income tax liabilities, note 22(b) (86,820) ______Total net assets identified at fair value 560,775

Goodwill generated in the acquisition, note 16(a) and 16(c) 739,968 ______Purchase price transferred 1,300,743 ______

The recorded goodwill amounting to S/739,968,000 represents the future synergies that are expected to arise from the combination of operations, distribution channels, workforce and other efficiencies not included in the intangible assets of the present value of in-force business.

As mentioned before and considering that the acquisition date was December 23, 2020, the fair values of the identifiable assets and liabilities of Makro detailed above correspond to preliminary amounts. In Management’s opinion, they will have the final balances and finish the measurement period during 2021, which is in accordance to IFRS 3.

5 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(b) Disposal Mifarma S.A. (Bolivia) - On October 5, 2020, InRetail Pharma S.A. sold the shareholder interest in their Bolivian subsidiary Mifarma S.A. for approximately US$2,000,000 (equivalent to S/7,233,000), to a non-related entity, recording a profit of S/5,805,000, see note 25.

The following are the assets and liabilities, at the date of disposals:

05.10.2020 S/(000)

Assets - Cash and short-term deposits 1,399 Inventories 8,522 Property, furniture and equipment, note 14(a) 809 Right-of-use assets, net, note 17(b) 891 610 Other ______12,231 Liabilities - Trade accounts payables 7,586 Lease liabilities, note 17(c) 890 Other 2,327 ______10,803 ______Net value 1,428 ______

3. Subsidiaries’ activities Following is the description of the activities of the main Subsidiaries of the Company:

(a) InRetail Perú Corp. is the controlling entity of Patrimonio en Fideicomiso-D.S.N°093-2002-EF- InRetail Consumer, which is a Special Purpose Entity (SPE) established in Peru in 2014 in order to possess certificates of participation and equitable title of the shares representative of the capital stock of: i) InRetail Pharma S.A. and Subsidiaries and ii) Supermercados Peruanos S.A. and Subsidiaries and iii) InRetail Foods S.A.C. As of December 31, 2020 and 2019, the Company holds 87.02 percent of InRetail Pharma S.A., 99.98 percent of Supermercados Peruanos S.A. and 100.00 percent of InRetail Foods S.A.C.

InRetail Pharma S.A. (formerly Eckerd Perú S.A.) is dedicated to the commercialization of pharmaceutical products, cosmetic products, food for medical use and other elements aimed for health protection and recovery through its “Inkafarma” and " Mifarma" pharmacy chains and manufacturing, distribution and marketing of pharmaceutical products. As of December 31, 2020 and 2019, it mainly operates in Peru, Colombia, Ecuador and Bolivia. InRetail Pharma S.A. holds 100 percent of: (i) Eckerd Amazonía S.A.C., (ii) Boticas del Oriente S.A.C., (iii) Droguería InRetail Pharma S.A.C., (iv) Farmacias Peruanas S.A.C., and (iii) Quicorp S.A.

6 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

Supermercados Peruanos S.A. is mainly dedicated to retail. As of December 31, 2020 and 2019, it has a chain of stores operating under “Plaza Vea”, “Plaza Vea Super”, “Vivanda”, “Mass” and “Economax” brands, located in Lima and provinces. Supermercados Peruanos S.A. holds 100 percent of: (i) Desarrolladora de Strip Center S.A.C. (before Peruana de Tiquetes S.A.C.), (ii) Plaza Vea Sur S.A.C. and (iii) Plaza Vea Oriente S.A.C.

In addition, the General Meeting of Shareholders, held in February 11, 2020, approved the merger of the subsidiaries Supermercados Peruanos S.A. and Plaza Vea Sur S.A.C., this last one being absorbed; in December 2020, Supermercados Peruanos S.A. acquired 62.58 percent of Makro Supermayorista S.A., see note 2(a).

InRetail Foods S.A.C. was created with the only purpose of acquiring 37.42 percent of Makro Supermayorista S.A., see note 2(a). Through a Board Meeting of Supermercados Peruanos S.A. and InRetail Foods S.A.C. held on February 15, 2021, the merger of said companies was approved, the last company being absorbed.

(b) InRetail Real Estate Corp. is a holding company established in Panama in April 2012, at the same time, it is the controlling entity of Patrimonio en Fideicomiso – D.S.N°093-2002–EF-InRetail Shopping Malls and subsidiaries (hereinafter “InRetail Shopping Malls”), a Special Purpose Entity (SPE) established in order to possess certificates of participation of the Patrimonio en Fideicomiso - D.S.N°093-2002-EF-Interproperties Holding, of the Patrimonio en Fideicomiso - D.S.N°093-2002-EF-Interproperties Holding II and subsidiaries, and the actions representatives of the capital stock of Real Plaza S.R.L. and its subsidiaries (jointly referred to as “the InRetail Real Estate Group”). As of December 31, 2020 and 2019, the Company holds 100 percent of the InRetail Real Estate Group.

The Patrimonio en Fideicomiso – D.S.N°093-2002–EF-Interproperties Perú is a special purpose entity established in April 2008, to which different investors ―related to the Intercorp Group― contributed with investment properties; each investor or group of investors have the ownership and the specific control of the property they contributed with. As of December 31, 2020 and 2019, the fair value of the properties contributed by Interproperties Holding and Interproperties Holding II, which were included in said structured entity, amounted to S/3,827,516,000 and S/3,830,919,000 respectively.

For accounting purposes and according to IFRS 10 “Consolidated Financial Statements”, the assets included in said structured entity are considered “silos”, given that they are delimited parts of a broader structured entity (the Trust Property “Interproperties Perú”). The InRetail Real Estate Group has ownership and decision power over these properties and has exposure or rights

7 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

on returns; as a result, it has consolidated the silos that contain the investment properties it controls. In the attached consolidated financial statements, the investment properties held by the InRetail Real Estate Group that are used by InRetail Pharma S.A. and subsidiaries and Supermercados Peruanos S.A. and subsidiaries to carry out operations are presented at their historical cost in the caption “Property, furniture and equipment, net” in the consolidated statement of financial position.

The InRetail Real Estate Group is dedicated to the business of investment properties under the form of shopping malls to generate income principally through renting. The shopping malls operate under the name “Real Plaza” and are located in the cities of Chiclayo, Pucallpa, Piura, Chimbote, Trujillo, Huancayo, Arequipa, Juliaca, Huánuco, Cusco, Cajamarca and Lima.

Furthermore, Interproperties Holding II holds a participation of 100 percent of the Propiedad en Fideicomiso - D.S.N°093-2002-EF–Interproperties Puerta del Sol, which is a SPE established to control 100 percent of the shares of Inmobiliaria Puerta del Sol S.A. (the owner of Real Plaza Cusco Shopping Mall).

Real Plaza S.R.L. and its subsidiaries are companies dedicated to the management and administration of shopping malls, as well as the maintenance and development of relations with other tenants. Likewise, as of December 31, 2020 and 2019, Real Plaza S.R.L. holds a participation of 100 percent, of the entity Centro Comercial Estación Central S.A. e Inversiones Real Estate S.A.C., which is dedicated to the operation, exploitation and maintenance of the commercial area and the restrooms of the central station of Corredor Segregado de Buses Alta Capacidad - COSAC I.

(c) IR Management S.R.L. (formerly InRetail Properties Management S.R.L.), is an entity which manages and operates the InRetail Group and renders different types of corporate services.

The following is a summary of the main captions of the financial statements of the major subsidiaries as of December 31, 2020 and 2019, and for the years ending on those dates, before the elimination adjustment for the preparation of the accompanying financial statements. consolidated:

______InRetail Pharma S.A. and Subsidiaries 2020 2019 S/(000) S/(000)

Total assets 5,803,532 5,611,798 Total liabilities 4,988,781 4,835,298 Equity 814,751 776,500 Operating profit 649,366 617,101 Net profit 282,561 294,645

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Notes to the consolidated financial statements (continued)

Supermercados Peruanos S.A. and ______Subsidiaries 2020 2019 S/(000) S/(000)

Total assets 6,732,139 5,003,156 Total liabilities 5,435,719 3,916,840 Equity 1,296,420 1,086,316 Operating profit 403,302 286,690 Net profit 119,563 100,666

InRetail______Real Estate Corp. and Subsidiaries 2020 2019 S/(000) S/(000)

Total assets 5,425,857 5,223,750 Total liabilities 2,987,993 2,699,124 Equity 2,437,864 2,524,626 Operating profit 99,376 502,280 Net profit (28,980) 266,366

______IR Management S.R.L. 2020 2019 S/(000) S/(000)

Total assets 22,982 16,941 Total liabilities 16,188 13,554 Equity 6,794 3,387 Operating profit 5,150 (108) Net profit 3,408 (1,476)

InRetail______Foods S.A.C. 2020 S/(000)

Total assets 519,430 Total liabilities 521,693 Equity (2,263) Operating profit (1,075) Net profit (2,264)

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Notes to the consolidated financial statements (continued)

4. Summary of significant accounting policies The significant accounting policies used in the preparation and presentation of the InRetail Group consolidated financial statements are described below:

4.1 Basis of preparation and presentation The consolidated financial statements of InRetail Perú Corp. have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), effective as of December 31, 2020 and 2019, respectively, considering the application’ effects of IFRS 16 “Leases”, which was adopted by the Company and its Subsidiaries as of January 1, 2019, using the modified retrospective approach.

The information contained in these consolidated financial statements is the responsibility of the InRetail Group Management, who explicitly manifest that principles and criteria included on IFRS, as issued by the IASB are fully applied as of the date of consolidated financial statements.

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments at fair value through profit or loss, financial instruments at fair value through other comprehensive income, investment properties and derivative financial instruments, "Call Spread", that have been measured at fair value. The consolidated financial statements are presented in Soles and all values are rounded to the nearest thousand (S/(000)), except when otherwise indicated.

4.2 Changes in accounting policies and disclosures The InRetail Group applied certain standards and amendments that are effective for annual reporting periods beginning on January 1, 2020, for the first time; they had no impact on the consolidated financial statements and are described in this note.

Furthermore, as of January 1, 2019, the InRetail Group has been applying for the first time IFRS 16 “Leases” and IFRIC 23 “Uncertainty over Income Tax Treatments”; their main impacts on the consolidated financial statements are explained below in this note.

Other standards, interpretations and amendments are also applied for the first time in 2019, but they had no significant impact on the consolidated financial statements of the InRetail Group as detailed below in this note.

The InRetail Group has not adopted any standard, interpretation or amendment that was issued but is not effective.

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Notes to the consolidated financial statements (continued)

Applicable as of January 1, 2020 - Amendments to IFRS 16: COVID-19 related rent concessions On May 28, 2020, the IASB issued the amendment to IFRS 16: COVID-19 related rent concessions. These modifications provide relief for lessees using IFRS 16 standards in accounting for rent concessions arising as a direct consequence of the COVID-19 pandemic. As a practical solution, a lessee may choose not to assess whether a COVID-19 related rent concession of a lessor is a lease modification. A lessee that makes this choice accounts for any change in lease payments that result from the COVID-19 related rent concession the same way that would account for any change according to IFRS 16, as if such change were not a lease modification.

The amendment is applied to annual reporting periods beginning on June 1, 2020. Early application is allowed. This modification had no significant impact on consolidated financial statements.

- As of January 1, 2020, the InRetail Group applied other pronouncements such as Amendments to IFRS 3: Definition of business, Amendments to IFRS 7, IFRS 9 and IAS 39: Benchmark Interest Rate and Amendments to IAS 1 and IAS 8: Definition of material. InRetail Group’s Companies concluded that those pronouncements had no impact on their consolidated financial statements.

Aplicable as of January 1, 2019 - First adoption of IFRS 16 “Leases” IFRS 16 replaced IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement Contains a Lease”, SIC-15 “Operating Leases – Incentives”, and SIC- 27 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”. This standard establishes the principles for recognition, measurement, presentation and disclosure of leases and requires lessees to recognize most lease contracts in the statement of financial position.

This new standard did not substantially change the accounting for lessors previously established by IAS 17. Lessors will continue classifying leases as operational or financial based on principles that are similar to those of IAS 17. Therefore, IFRS 16 had no impact on leases where the InRetail Group acts as a lessor.

The InRetail Group adopted IFRS 16 using the modified retrospective approach through an adjustment resulting from the cumulative effect as of January 1, 2019, not restating the amounts of comparative periods. The InRetail Group chose to apply this standard to all the contracts entered into before January 1, 2019, that were identified as leases according to IAS 17.

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Notes to the consolidated financial statements (continued)

The InRetail Group has also used the exemption proposed by this standard for lease contracts for which lease terms end within 12 months of the date of the initial application, and lease contracts for which the underlying asset is of low value. The InRetail Group has leases for some office equipment (such as, computers, printers and photocopies) that are considered of low value.

- Leases previously classified as finance leases - The InRetail Group did not modify the initial carrying amount of assets and liabilities through finance leases recognized at the date of the first adoption (for example, the right-of-use asset and the lease liability are equivalent to the lease asset and the lease liability recognized under IAS 17). The requirements of IFRS 16 were applied in these lease contracts from January 1, 2019.

- Leases previously classified as operating leases - The InRetail Group recognizes the right-of-use of the asset and the lease liability for lease contracts previously classified as operating leases, except for lease contracts for short-term and low-value assets. The asset’s right-of-use for most leases was recognized according to the amount recognized in the lease liability, adjusted by any prepayment or previously recognized payments accrued from leases. The lease liability was recognized based on the present value of outstanding payments, which were discounted using an incremental borrowing rate at the initial application date of IFRS 16.

The InRetail Group also applied the available practical expedients wherein it:

- Used a single discount rate for a lease contract portfolio with reasonably similar characteristics. - Relied on its assessment of whether leases are onerous immediately before the date of initial application. - Applied the short-term leases exemption to leases with lease term that ends within 12 months of the date of initial application and the low-value leases expemption. - Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease.

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Notes to the consolidated financial statements (continued)

In the adoption of IFRS 16, the Companies recognized liabilities related to the leases that were previously classified as operating leases under IAS 17. These liabilities were measured based on the present value of the remaining future payments, discounted using an interest rate of incremental interest as of January 1, 2019. As a result of the effect of the transition of IFRS 16, as of January 1, 2019, approximately S/1,577 million were recognized as right- of-use assets and S/1,541 million as lease liabilities. As of December 31, 2019 the effects of IFRS 16 are presented in note 17(b) and 17(c). As is indicated above, as part of the initial application of IFRS 16, the InRetail Group used the modified retrospective method; therefore, the figures for previous years were not modified.

- Interpretation of IFRIC 23 – Uncertainty over Income Tax Treatments The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12. The interpretation does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.

The interpretation specifically addresses the following:

- Whether an entity considers uncertain tax treatments separately. - The assumptions an entity makes about the examination of tax treatments by taxation authorities. - How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. - How an entity considers changes in facts and circumstances.

The InRetail Group must determine whether to consider as uncertain each tax treatment separately or together with one or more uncertain tax treatments. The approach that better predicts the solution of the uncertainty should be followed.

The InRetail Group applies a significant judgement when identifying uncertainties over income tax treatments.

The InRetail Group determined that, based on its tax compliance and the transfer pricing study, it is probable that other tax treatments (including those of subsidiaries) are accepted by taxation authorities. Therefore, this interpretation had no impact on the consolidated financial statements of the InRetail Group.

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Notes to the consolidated financial statements (continued)

From January 1, 2020, the InRetail Group also applied other pronouncements such as Amendments to IFRS 9: Prepayment Features with Negative Compensation; Amendments to IAS 28: Long-term Interests in Associates and Joint Ventures; Amendments to IAS 19: Plan Amendment, Curtailment or Settlement; and Improvements to IFRS Standards (2015–2017 Cycle). The Group concluded that those pronouncements had no impact on its consolidated financial statements.

4.3 Summary of significant accounting policies (a) Basis of consolidation - The consolidated financial statements comprise the financial statements of the Company and its Subsidiaries, see note 3.

The InRetail Group controls an investee if and only if it has:

- Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee); - Exposure, or rights, to variable returns from its involvement with the investee; and - The ability to use its power over the investee to affect its returns.

Generally, it is presumed that most voting rights entitles to control. In order to support this presumption and when the InRetail Group has less than most votes or similar rights in the investee, the InRetail Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

- The contractual arrangement with the other vote holders of the investee; - Rights arising from other contractual arrangements; and - The Group’s voting rights and potential voting rights.

The InRetail Group assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a Subsidiary begins when the InRetail Group obtains control over the Subsidiary and ceases when the Group loses control of the Subsidiary.

The financial statements of the Subsidiaries are prepared for the same period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealized gains and losses resulting from intra-group transactions and dividends are eliminated in full.

The non-controlling interests have been determined in proportion to the participation of minority shareholders in the equity and the results of the Subsidiaries in which they hold participation, and they are presented separately in the consolidated statements of financial position, the consolidated income statements and the consolidated statements of other comprehensive income.

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Notes to the consolidated financial statements (continued)

Losses in a subsidiary are attributed to the non-controlling interests even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

(b) Business combinations and goodwill - Acquisitions are recorded using the purchase method of accounting, as defined in IFRS 3 "Business Combinations", applicable to the date of each transaction. Assets and liabilities are recorded at their estimated market values at the date of purchase, including identified intangible assets not recognized in the statements of financial position of each entity acquired. Acquisition costs incurred are expensed and included in the heading “Administrative expenses” of the consolidated financial statements.

When the InRetail Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in consolidated income statements as profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the InRetail Group’s cash-generating units that are expected to benefit from the combination.

(c) Financial instruments – Initial recognition and subsequent measurement - As of the date of the consolidated financial statements, the InRetail Group classifies its financial instruments in the following categories defined on IFRS 9 (2018 version): (i) financial assets at amortized cost, (ii) financial assets at fair value through other comprehensive income, (iii) financial assets at fair value through profit or loss, (iv) financial liabilities at amortized cost or (v) financial liabilities at fair value through profit or loss.

The main criteria of IFRS 9 are described below: (i) Financial assets - Initial recognition and measurement The Company and its Subsidiaries determine the classification of financial assets at initial recognition. All financial assets are initially recognized at their fair value plus the incremental costs related to the transaction that are directly attributable to the purchase, except for financial assets at fair value through profit or loss.

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Notes to the consolidated financial statements (continued)

The InRetail Group’s financial assets include cash and short-term deposits, financial instruments at fair value through profit or loss, financial instruments at fair value through other comprehensive income, trade receivables, other receivables and accounts receivable from related parties.

Subsequent measurement The InRetail Group classifies its financial assets into the following four categories:

- Financial assets at amortized cost (debt instruments). - Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments). - Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments). - Financial assets at fair value through profit or loss.

The classification depends on the InRetail Group business model and the financial asset’s contractual cash flow characteristics.

Financial assets are not reclassified after initial recognition, except if InRetail Group changes its business model for their management.

As of December 31, 2020 and 2019, the InRetail Group only maintains financial assets classified in the following categories:

Financial assets at amortized cost (debt instruments) InRetail Group measure financial assets at amortized cost if both of the following conditions are met:

- The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest method (EIR) and are subject to impairment. These assets generate income from interest accrued prior to maturity of disposal. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or impaired.

Such category includes, cash and short-term deposits, trade receivables, other receivables and accounts receivable from related parties.

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Notes to the consolidated financial statements (continued)

Likewise, in September 2020, InRetail Consumer acquired a Structured Note for US$6,821,000 (equivalent to S/24,624,000 as of December 31,2020), the underlying asset for this note were bonds issued by Colegios Peruanos S.A, whose yield to maturity was 6.25 percent. This instrument was deemed on January 2021. The interest generated during the period amounted to S/389,000, approximately, which is presented in the caption “Financial income” of the consolidated income statement, see note 26.

Financial assets at fair value with changes in other comprehensive income Debt Instruments: The InRetail Group measure debt instruments at fair value with changes in other comprehensive income if both of the following conditions are met:

- The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and - The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

As of December 31, 2020 and 2019, the InRetail Group has not designated financial assets at fair value with changes in other comprehensive income.

Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value.

Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments and financial assets with cash flows that are not solely payments of principal and interest with independence of the business model.

Financial assets with changes in results are carried in the consolidated statement of financial position at fair value, and net changes in such fair value are presented as financial expenses (net negative changes in fair value) or financial income (net positive changes in fair value) in the consolidated statement of income.

In this category, the InRetail Group only has mutual funds, which are presented in “Financial instruments at fair value through profit or loss” in the consolidated statement of financial position. The changes in fair value are recorded in the consolidated income statement in the caption “Financial income”.

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Notes to the consolidated financial statements (continued)

Derecognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:

(i) The rights to receive cash flows from the asset have expired; or (ii) Contractual rights have been transferred on the cash flows generated by the asset, or an obligation has been assumed to pay all of these cash flows to a third party without a significant delay, through a transfer agreement ( "Pass- through arrangement"), and (a) substantially all the risks and benefits of the asset have been transferred; or (b) substantially all the risks and benefits of the asset have not been transferred or retained, but control over it has been transferred.

The InRetail Group will continue to recognize the asset when it has transferred its rights to receive the cash flows generated by the asset, or has entered into an intermediation agreement, but has not transferred or retained substantially all the risks and benefits of the asset and has held the asset control over it. In this case, the InRetail Group will recognize the asset transferred based on its continuous involvement and will also recognize the related liability. The transferred asset and the related liability will be measured on a basis that reflects the rights and obligations retained by the InRetail Group.

Impairment of financial assets InRetail Group recognize an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the InRetail Group expect to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements.

For trade receivables and contract assets, the InRetail Group applies a simplified approach in calculating ECLs. Therefore, the InRetail Group does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The InRetail Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

(ii) Financial liabilities - Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

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Notes to the consolidated financial statements (continued)

All financial liabilities are recognized initially at fair value and, in the case of loans and payables, net of directly attributable transaction costs.

Financial liabilities include trade payables, other payables, accounts payable to related parties, interest-bearing loans and borrowings, lease liabilities and senior notes issued.

Subsequent measurement The measurement of financial liabilities depends on their classification, as described below:

Loans and borrowings After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in the consolidated income statement when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by considering any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in the caption “Finance expenses” in the consolidated income statement.

In this category are trade payables, other payables, accounts payable to related parties, interest-bearing debts and loans, lease liabilities and senior notes issued.

Financial liabilities at fair value through profit or loss - Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are contracted for the purpose of trading them in the near future; gains or losses related to these liabilities are recognized in results. This category also includes derivative financial instruments entered into by the InRetail Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9.

As of December 31, 2020 and 2019, the InRetail Group have not designated any financial liability at fair value through profit or loss.

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Notes to the consolidated financial statements (continued)

Derecognition A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another 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 the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the consolidated income statement.

(iii) Offsetting of financial instruments - Financial assets and financial liabilities are offset, and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

(d) Derivative financial instruments and hedging accounting – Negotiation – Derivatives financial instruments for negotiation are initially recognized in the consolidated statements of financial position at cost and subsequently are recognized at fair value. The fair value is obtained based on the prices, exchange rates, and market interest rates. All the derivatives are considered as assets when the fair value is positive and as liabilities when the fair value is negative. The gains and losses arisen by the changes in the fair value are recognized in the consolidated income statements.

As of December 31, 2020 and 2019, InRetail Group does not maintain derivatives financial instruments classified as negotiation.

Hedging - Derivatives are initially recognized at the fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. All derivatives are recognized as assets when the fair value is positive and as liabilities when they are negative.

Derivatives can be designated as hedging instruments under hedge accounting if they qualify as such. Depending upon the nature of the hedged item, the method for recognizing gains or losses from changes in fair value will be different. These derivatives, which are used to hedge exposures to risk or modify the characteristics of financial assets and liabilities and which meet IFRS 9 criteria are recognized as hedging accounting.

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Notes to the consolidated financial statements (continued)

In accordance with IFRS 9, to qualify for hedge accounting, all the following conditions must be met:

(i) The hedging relationship consists of only hedging instruments and eligible hedged items.

(ii) At the inception of the hedge, there is formal designation and documentation of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge. This documentation will include the identification of the hedging instrument, the hedged item, the nature of the risk being hedged and the way the entity will assess if the hedging relationship meets the hedge effectiveness requirements.

(iii) The hedging relationship meets all the following hedge effectiveness requirements:

- There is an economic relationship between the hedged item and hedging instrument. - The effect of the credit risk does not dominate the value changes that result from that economic relationship. - The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity hedges and the quantity of the hedging instrument that the entity uses to hedge that quantity of hedged item.

IFRS 9 has three categories for hedge accounting: fair value hedge, cash flow hedge and net investment hedge for foreign operations. The InRetail Group only uses derivatives as cash flow hedging instruments.

For designated derivatives that qualify as a cash flow hedge, the effective portion of the gains or losses on the derivative is recognized in other comprehensive income for cash flow hedges and is reclassified to profit or loss in the same period or periods in which the hedge transaction affects the profit or loss. The part of gain or loss on derivatives that represents the ineffective portion, or the components of the hedge excluded from the effectiveness evaluation is recognized immediately in the period’s profit or loss. The amounts originally recorded in other comprehensive income and subsequently reclassified to profit, or loss are recorded in the corresponding expense or income lines in which the hedged item is reported.

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Notes to the consolidated financial statements (continued)

When a hedging instrument expires or is sold, when a hedge no longer meets the criteria for hedge accounting and also when the InRetail Group re-designates a hedge, any cumulative loss or gain existing in other comprehensive income is retained and recognized as income or expense when the hedged item is ultimately recognized in the consolidated income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss recognized in other comprehensive income is immediately transferred to the consolidated income statement.

(e) Fair value of financial instruments - Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or - In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by InRetail Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non- financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The InRetail Group uses valuation techniques that are appropriate in the circumstances and for which enough data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. - Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. - Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

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Notes to the consolidated financial statements (continued)

For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the InRetail Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

Management determines the policies and procedures for both recurring and non-recurring fair value measurement. At each reporting date, the Valuation Committee analyses the movements in the values of assets and liabilities which are required to be remeasured or re-assessed as per the InRetail Group accounting policies.

For the purpose of fair value disclosures, the InRetail Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above. The fair value of financial instruments measured at amortized cost it presented in note 34.

(f) Foreign currency transactions - (i) Functional and presentation currency - InRetail Group has determined that it’s functional and presentation currency is the Sol, because it reflects the economic substance of the underlying events and circumstances relevant to most of the InRetail Group’s entities, insofar as its main operations and/or transactions, sales, cost of sales, obtained financing and an important percentage of purchases are established and paid in Soles. Management assessed and determined the functional currency for every subsidiary; as a result, it concluded that, in all cases, they are the currencies of the countries where subsidiaries operate.

Because subsidiaries have a functional currency different from the Sol, its balances were translated for consolidation purposes using the methodology established by IAS 21 “The Effects of Changes in Foreign Exchange Rates”, as follows:

- Assets and liabilities at the closing rate at the date of each consolidated statements of financial position. - Income and expenses at the average exchange rate for each month.

As a result of the translation, as of December 31, 2020 and 2019, the InRetail Group has recorded the difference in the item “Unrealized losses on foreign currency translation” of the consolidated statement of comprehensive income.

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Notes to the consolidated financial statements (continued)

(ii) Transactions and balances in foreign currency – Transactions in foreign currency are those that have been performed in currencies different than the functional currency. Transactions in foreign currencies are initially recorded by the entities at the functional currency using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are retranslated at the functional currency using the spot rate of exchange prevailing at the reporting date of consolidated statement of financial position.

Exchange rate gains or losses resulting from restating the monetary assets and liabilities into foreign currency at the exchange rates prevailing at the consolidated statements of financial position date or at their settlement date are recorded in “Exchange difference” of the consolidated income statements.

Non-monetary assets and liabilities denominated in foreign currency are translated into the functional currency at the exchange rate prevailing at the transaction date.

(g) Cash and short-term deposits - Cash and short-term deposits in the consolidated statements of financial position comprise bank deposits, balances held in cash in different stores of the retail sector, remittance in transit and short-term deposits with an original maturity of three months or less.

For the purpose of the consolidated statements cash flows, cash consists of cash and short-term deposits as defined above.

(h) Inventories - Inventories are valued at the lower of cost or net realizable value. Commercial discounts, price reductions and other similar items decrease the acquisition cost. Cost is determined by applying the average cost method, except in the case of inventory in transit, which is presented at its specific acquisition cost.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

The reduction of inventories’ carrying amounts to their net realizable value are conducted based on the specific analyses and are recorded as provision for inventory impairment in the item “Costs of sales and services” of the consolidated income statement for the period such reductions are made.

The provision for reductions is calculated based on the average historical losses incurred during the year, including the last physical inventory made before the year ended. This provision is recorded as inventory impairment in the consolidated income statement.

24 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

Discounts, price reduction and other discounts obtained according to the volume of purchases are deducted from goods on the date the discounts are granted by suppliers, and from the sale cost when related goods are sold.

As there are different types of discount, the InRetail Group needs to estimate the distribution of discounts among the goods sold and the inventory held to the date of the consolidated statement of financial position. Management carries out said estimations based on the daily discounts effectively granted by suppliers and the turnover ratio per type of product.

(i) Prepaid expenses - The criteria adopted to record these items are the following:

- Insurances are recorded at the value of the premium paid for the coverage of the different assets and are amortized applying the straight-line method during the policy term. - Advance payments for advertising and others are recorded as an asset and recognized as expenses when the service is accrued.

(j) Property, furniture and equipment - Property, furniture and equipment are stated at cost, net of the accumulated depreciation and/or accumulated impairment losses, if any. The historical acquisition cost includes expenses that are directly attributable to the acquisition of assets. Such cost includes the cost of replacing component parts of the property, furniture and equipment and borrowing costs for long-term construction projects if the recognition criteria are met, as indicated in paragraph (s) below.

When significant parts of property, furniture and equipment are required to be replaced at intervals, the InRetail Group derecognizes 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 equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the income statements as incurred. The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.

Lands are not depreciated. Depreciation is calculated on a straight-line basis over the estimated useful lives described in note 14.

25 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

An item of property, furniture and equipment and any significant part initially recognized is derecognized 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 income statements when the asset is derecognized.

The asset’s residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate.

Work in progress represents buildings in construction and is recorded at cost. This includes the construction cost and other direct costs. Work in progress is not depreciated until relevant assets are concluded and operative.

As indicated in the following paragraph (I), for the transfers made from investment properties to property, plant and equipment, the attributed cost considered for the subsequent recognition is the asset’s fair value at the date the use changes.

(k) 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.

Group as a lessee From January 01, 2019 and after the adoption of IFRS 16, the InRetail Group as a lessee applies a single recognition and measurement approach for all lease contracts, except for short-term and low-value contracts.

- Right-of-use asset - The InRetail Group recognizes right-of-use assets at the lease commencement date (that is the date the underlying asset is available to be used). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and are adjusted for any re-measurement of lease labilities. The cost of right-of-use assets comprises the amount equal to the recognized lease liabilities, initial direct costs incurred, and lease payments made at or before the commencement date, less any lease incentives received. The InRetail Group maintains as right-of-use assets: land, buildings and facilities, and vehicles. Land is not depreciated; buildings and facilities and vehicles are depreciated on a straight-line basis over the lease term and are presented in note 17(a).

26 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

If ownership of the leased asset is transferred to the lessee at the end of the lease term or if the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

Right-of-use assets are also subject to impairment, see note 4.3(n).

- Lease liabilities - The InRetail Group recognizes lease liabilities measured at the present value of the lease payments to be made over the contract’s term. Lease payments include fixed payments (less any lease incentives receivable), variable lease payments that depend on an index or rate and amounts expected to be payable under residual value guarantees. Lease payments also include the price to exercise a purchase option that the InRetail Group is reasonably certain to exercise and the penalties for terminating the lease, if the lease term does not reflect that the InRetail Group will exercise a termination option. Variable lease payments that do not depend on an index or rate are recognized as expenses in the period in which an event or condition causing the payment occurs. Lease payments are presented in note 17(c).

When calculating the present value of lease payments, the InRetail Group applies the incremental borrowing rate which is applied on the lease commencement date, as the interest rate implicit in the lease is not readily determinable. After the commencement date, lease liabilities’ carrying amounts are increased to reflect the accumulation of interests and reduced to reflect the lease payments made. In addition, lease liabilities’ carrying amounts are remeasured if there is a modification due to changes in the lease term, the assessment of a purchase option, the amounts expected to be payable under a residual value guarantee, and future lease payments resulting from a change in an index or a rate.

The lease liabilities of the Company and its Subsidiaries are presented in the line item “Finance lease liability”; see Note 17.

- Short-term leases and leases of low-value assets - The Companies apply the short-term lease recognition exemption to their short- term leases (that is to say, leases with a lease term ending in 12 months or less as of the date of initial application and with no purchase option). It also applies the low-value asset recognition exemption to the office equipment leases that are considered of low value. Lease payments for short-term leases and leases of low- value assets are recognized as expense using a straight-line basis over the lease term.

27 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

The Group as a lessor As of the date of adoption of IFRS 16, there were no substantial changes for lessor accounting in the adoption of IFRS 16. The InRetail Group continues to classify leases as operating or financial using similar principles to those of IAS 17.

Leases in which the InRetail Group do not substantially transfer all the risks and benefits related to the asset’s ownership are classified as operating leases. Rental income obtained from investment properties is accounted on a straight-line basis over the lease term and is recorded as income in the consolidated income statement due to its operating nature, except for the contingent rental income, which is recognized when it arises. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.

(l) Investment properties - Investment property comprises completed property and property under construction or redevelopment held to earn rentals or for capital appreciation or both.

Investment properties are measured initially at cost, including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and initial leasing commissions to bring the property to the condition necessary for it to be capable of operating.

Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the consolidated income statements in the period in which they arise. The fair value is evaluated annually by the Management.

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in the income statements in the period of derecognition. Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to component of property, furniture and equipment, the deemed cost for subsequent accounting is the fair value at the date of change. If a component of property, furniture and equipment becomes an investment property, the InRetail Group accounts such property in accordance with the policy stated under property, furniture and equipment.

28 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(m) Intangible assets - Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding development costs capitalized, are not capitalized and expenditure is reflected in the income statements in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite live are amortized over their useful economic lives (see note 16) and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense for intangible assets with finite lives is recognized in the consolidated income statements in the expense category consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated income statements when the asset is derecognized.

(n) Impairment of non-financial assets - The InRetail Group assesses at each end of year, 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 (goodwill and intangible assets with indefinite useful lives), the InRetail Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating units (CGU) fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate any cash inflows that are largely independent of those from other assets or group of assets.

29 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

When the carrying amount of an asset or CGU exceeds its recoverable value, the asset is considered impaired and its value is reduced to its recoverable amount. In calculating the value in use, the estimated cash flows are discounted to their present value using a discount rate that reflects current market conditions and the risks specific to the asset. Cash flows come from the budget for the asset’s remaining economic life and do not include restructuring activities to which the InRetail Group has not yet committed or significant future investments that would increase the performance of the good or the CGU being tested. In determining fair value less costs of disposal, recent market transactions are considered, if available. If no such transactions can be identified, an appropriate valuation model is used.

The InRetail Group bases its impairment calculation, if needed, on detailed budgets and forecast calculations which are prepared separately for each of the InRetail Group’s cash generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

The recoverable amount is highly sensitive to the discount rate used for the discounted cash flow model and the expected future cash flows. Impairment losses are recognized in the consolidated income statement.

(o) Employees benefits – Short term- InRetail Group have short-term obligations corresponding to benefits to its employees that include wages, social contributions, bonuses, performance bonuses and employees’ profit sharing. These obligations are recorded on a monthly basis with charge to the consolidated statement of comprehensive income as they accrue.

Long term - According to the current legislation in Ecuador, an employer’s retirement and resignation plan is maintained. The present value of the defined benefit obligations is determined annually based on actuarial studies performed by an independent expert, using the projected credit unit method, and it is presented under the “Other payables” caption in the consolidated statement of financial position, see note 19(c). Fluctuations in the present value of the defined benefit obligations are recorded in the period’s other comprehensive income; however, the amount of this fluctuations has not been significant during years 2020 and 2019.

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Notes to the consolidated financial statements (continued)

(p) Provisions - Provisions are recognized when the InRetail Group has 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. When the InRetail Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated income statements net of any reimbursement.

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 finance cost in the consolidated income statements.

(q) Contingencies - A contingent liability is disclosed when the existence of an obligation shall only be confirmed by future events or when the amount of the obligation cannot be measured with enough reliability. Contingent assets are not recognized but are nonetheless disclosed when it is probable that generates an income of economic benefits to the InRetail Group.

Given their nature, contingencies shall only be settled when one or more future events occur or not. The determination of contingencies involves inherently the exercise of judgment and the calculation of estimates on the results of future events.

(r) Revenue from contracts with customers – IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. In this regard, that revenue will be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

InRetail Group’s revenue mainly correspond to sale of goods. These sales occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods. The InRetail Group concluded that they act as the principal in their sales contracts, because they control the goods or services before they are transferred to their customers. (i) Sale of goods - For such revenue, the sale of goods is the only performance obligation. The revenue recognition occurs at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods. Cost of sales, which is the cost of the products that the InRetail Group sale, is recognized when goods are delivered, simultaneously with the recognition of revenue for the corresponding sale.

31 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

Otherwise, it has been identified that their only significant variable consideration corresponds to some contracts with customers that provide a right of return. When a contract with a customer provides a right of return in a specific period, the Subsidiaries recognize such right over a historical estimate of returns basis. Consequently, income related to the expected returns is adjusted with expense provisions in the consolidated statements of income, when they directly affect the revenue from contracts with customers.

(ii) Rental income - Rental income obtained from investment properties is accounted for on a straight- line basis over the lease term and is recorded as income in the consolidated income statement due to its operating nature, except for the contingent rental income, which is recognized when it arises.

The lease term is the non-cancellable period, together with any other additional period for which the lessee has the option to extend the lease, if Management is reasonably certain, at the date of the commencement date, that the lessee will exercise that option.

The amounts received from lessees to resolve rents or offset impairment of leased facilities are recorded as income in the consolidated income statement when the right to receive them arises.

Service charges, management charges and others recoverable expenses paid by lessees, and the income from expenses charged to lessees are recognized in the period in which the compensation becomes receivable. Service and management charges and other invoices are included in the gross rental income of related costs, as Management considers that the Group acts as principal.

(iii) Key money - The incentives granted by the lessees to enter into lease (key money) are distributed, agreements are recognized into income evenly over the lease term, even if the payments are not made on such a basis. The deferral term for incentives will correspond to the non-accrual period of the lease contract, as well as any other term for which the tenant has the option to extend the leasing contract and of which the Management of the InRetail Group is certain the tenant will make use. These values are presented in “Deferred income” in the consolidated statement of financial position.

Amounts received from lessees to terminate leases or to compensate for wear and tear are recognized in the consolidated income statements when they arise.

32 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

The income related to service charges, management expenses and other expenses recoverable from tenants are recognized in the period in which such compensations are demandable. Management services charges and other income are included in the gross leasing income net of the related costs.

(iv) Other income, costs and expenses - Other income, costs and expenses are recognized as they accrue, regardless of when they are paid, and recorded in the periods to which they relate.

Furthermore, the InRetail Group has concluded that the only significant variable considerations correspond to some contracts with customers that involve return rights for sales. When a contract with a customer provides the latter with the right to return a good within a specific period, the InRetail Group records that right using a historical return estimate. In this sense, the value of the income related to expected returns is adjusted through the recognition of provisions in the consolidated income statement, when they directly affect the revenue from contracts with customers.

(s) Borrowing costs - Loan costs that are directly attributable to the acquisition, construction or production of an asset which takes a long time to get ready for its intended use or sale are capitalized as part of the asset’s cost. These costs are capitalized as part of the cost of the asset, provided that they are likely to lead to future economic benefits for the entity and they can be reliably measured. All the other loan costs are accounted for as expenses when they accrue and include interest charges and other costs incurred by the InRetail Group in the execution of the respective loan agreements. Non-accrued finance costs reduce the liability that gave rise to them.

(t) Taxes - The income tax of the Subsidiaries is determined based on the non-consolidated financial statements of each subsidiary and the taxable income determined for taxing purposes.

Current income tax - Assets and liabilities for income tax for the current period are measured by the amounts expected to be recovered or paid from or to the Tax Authority, based on the entity’s financial statements. The tax rates and tax regulations used to compute said amounts are those that are approved, as of the date of the statement of financial position. According to Peruvian laws, employee profit sharing is calculated over the same basis used to calculate current income taxes and, in the case of Ecuador, over the basis of financial profit.

33 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

Current income tax relating to items recognized directly in consolidated equity is recognized in consolidated equity and consolidated statements of comprehensive income and not in the consolidated income statements. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

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 at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

- Where the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, does not affects neither the accounting profit nor taxable profit or loss;

- In respect of taxable temporary differences associated with investments in Subsidiaries, associates and interests in joint ventures, when the timing of the reversal can be controlled and it is probable that the temporary differences will not be reversed in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses. Deferred tax assets are recognized to the extent that it is probable taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized, except:

- Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;

- In respect of deductible temporary differences associated with investments in Subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

34 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

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 enough 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 and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized, or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date or whose approval procedure is about to be completed by that date.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in consolidated equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Value added tax - Income from ordinary activities, expenses and assets are recognized excluding the value added tax, except:

- When value added tax (VAT) incurred in an acquisition of assets or services is not recoverable from the tax authority, in which case the VAT is recognized as part of the acquisition cost of the asset or as part of the expense item, as appropriate;

- Accounts receivable and payable that are already expressed with the amount of the VAT included.

The net amount of the VAT that can be recovered from or payable to the tax authority is included as part of the other accounts receivable or payable in the consolidated statement of financial position.

(u) Customer loyalty programs – Revenues related to the loyalty program "Inkaclub" and “Monedero del Ahorro” are recognized according to the market value of the benefits delivered to the customers (considering historical information related to utilization and maturity). Deferred income related to this program is included into the caption "Deferred revenue” of the consolidated statement of financial position.

35 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(v) Earnings per share - Basic and diluted earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary equity holders of the InRetail Group by the weighted average number of ordinary shares outstanding during the year. As of December 31, 2020 and 2019, the InRetail Group does not have financial instruments with dilutive effect, therefore basic and diluted earnings per share are identical for the years reported.

(w) Segment reporting – The InRetail Group reports financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are a component of an entity for which separate financial information is available that is evaluated regularly by the entity’s Chief Operating Decision Maker (“CODM”) in making decisions about how to allocate resources and in assessing performance. Generally, financial information is reported on the same basis as it is used internally for evaluating operating segment performance and deciding how to allocate resources to segments, note 32.

(x) Capital premium - Corresponds to the difference between the nominal value and the issuance price in the market of each share. The share premium is presented net of the expenses incurred in the shares’ issuance.

(y) The government’ subsidies are recognized when there is reasonable assurance that the subsidy will be received, and the imposed conditions will be complied. When the government’s subsidy is related to an expense account, it is recognized as income in a systematic way during the period the related expenses, for which the subsidy was provided as compensation, are recorded. When the subsidy is related to an asset, it is recorded as revenue using a straight-line basis over the expected useful life of the corresponding asset.

When a Company receives subsidies through non-monetary assets, the asset and the subsidy are recorded at their face value and are recorded in the income statement using the straight-line method over the asset’s useful life, based on its consumption pattern.

(z) Subsequent events - Subsequent events that provide additional information about the consolidated financial situation of the InRetail Group as of the date of the consolidated statement of financial position (adjustment events) are included in the consolidated financial statements. Relevant subsequent events that are not adjustment events are disclosed in notes to the consolidated financial statements.

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Notes to the consolidated financial statements (continued)

4.4 Significant accounting judgments, estimates and assumptions The preparation of the consolidated financial statements requires Management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses for the years ended December 31, 2020 and 2019.

In the process of applying the InRetail Group's accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the consolidated financial statements:

(i) Tax judgments - The InRetail Group is subject to income and capital gains taxes. Significant judgment is required to determine the total provision for current and deferred taxes.

There are many transactions and calculations for which the ultimate tax determination and timing of payment is uncertain. In particular, when calculating deferred taxation, the effective tax rate applicable on the temporary differences, mainly in investment properties, depends on the method by which the carrying amount of the assets or liabilities will be realized.

The InRetail Group recognizes liabilities for current taxes based on estimates of whether additional taxes will be due. When the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income and deferred tax provisions in the period in which the determination is made. Deferred tax assets and liabilities are recognized on a net basis to the extent they are relating to the same fiscal unity and fall due in approximately the same period.

On the other hand, the most significant estimations and assumptions considered by Management in relation to the consolidated financial statements are as follows:

(ii) Provision for inventory losses (see note 4.3(h)) - This provision is calculated considering the average historic values of losses incurred throughout the year and until the last physical inventory conducted before the year end. This provision is recorded as provision for inventory devaluation with charge to the consolidated income statements.

(iii) Discounts, price reductions and others obtained by purchasing volumes of goods (see note 4.3(h)) - Discounts, price reduction and other discounts obtained through bulk purchasing are deducted from goods on the date the discounts are granted by suppliers, and from the sale cost when related goods are sold.

37 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

The different forms of such discounts require that the InRetail Group estimates its distribution between the inventory that has been sold and the inventory remaining in stock at the date of the consolidated statements of financial position. Management performs such estimation on the basis of the daily discounts actually granted by suppliers and the rotation rates per item.

(iv) Depreciation method, estimated useful lives and residual value of property, plant and equipment (see note 4.3(j)) - The determination of the depreciation method, the estimated useful lives and the residual value of property, plant and equipment involves judgments and assumptions that could be affected if the circumstances change. Management reviews periodically these assumptions and adjusts them in a prospective manner in case any changes are identified.

(v) Lease conditions in contracts with renewal and termination options - note 4.3(k) The InRetail Group as a lessee defines the lease term as the non-cancellable period, together with any other period covered by an option to extend the lease if it is exercised or any other period covered by an option to terminate the lease if it is not exercised. The InRetail Group applied the judgement to evaluate the possibility of exercising the options to renew or terminate leases. Therefore, it considers all the facts that create an economic incentive to exercise either the renewal or the termination. After the commencement date, the InRetail Group reassesses the lease term if a significant event or change in circumstances that is within its control affects its capacity to exercise or not the renewal or termination options (for instance, the realization of significant improvements for leases or customization of a leased asset).

(vi) Incremental borrowing rate (note 4.3(s)) - To determine the interest rate implicit in the lease, the InRetail Group uses their incremental borrowing rate (IBR) to measure lease liabilities. IBR is the interest rate the InRetail Group would have to pay to borrow, over a similar term and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. Therefore, IBR reflects how much the InRetail Group “would have to pay”, which requires an estimate when there are not observable prices or when they have to be adjusted to reflect the terms and conditions of a lease (for instance, when leases are not in the subsidiary’s functional currency). The InRetail Group estimates the IBR using observable inputs (such as market interest rates) when available and is obliged to make certain specific adjustments in the company (such as the subsidiary’s independent credit evaluation, or in order to reflect the terms and conditions of the lease).

(vii) Fair value of investment properties (see note 4.3(l)) - The fair value of completed investment property (shopping centers and properties) is determined by Management of the InRetail Group using the Discounted Cash Flow Method.

38 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

Investment property held to operate in the future is also valued at fair value as determined through appraisals performed by an accredited external independent value. The external appraiser uses the sales comparison approach, according to which the fair value of a property is valued based on similar transactions; the unit of comparison applied is the price per square meter. In the exceptional cases when a fair value cannot be reliably determined, such properties are recorded at cost.

The determination of the fair value of investment property requires the use of estimates such as future cash flows from assets (such as leases, tenants’ sales, fixed rents to be charged to different types of tenants, variable rent as a percentage of sales, operating costs, building costs (CAPEX), maintenance CAPEX and discount rates applicable to those assets). In addition, development risks (such as construction and letting risks) are also taken into consideration when determining the fair value of investment properties under construction.

Volatility in the financial system is reflected in commercial real estate markets. Therefore, in arriving at their estimates of market values as of the statements of financial position, the Management and appraisers used their market knowledge and professional judgment and did not rely solely on historical transactional comparable. In these circumstances, there was a greater degree of uncertainty than which exists in a more active market in estimating the market values of investment property.

The significant methods and assumptions used in estimating the fair value of investment property are set out in note 15(e).

Techniques used for valuing investment property - The Discounted Cash Flow Method involves the projection of a series of periodic cash flows either from an operating property or a development property. To this projected cash flow series, an appropriate, market-derived discount rate is applied to establish an indication of the present value of the income stream associated with the property. The calculated periodic cash flow is typically estimated as net rental income minus operating expenses/outgoings. A series of periodic net operating incomes, along with an estimate of the terminal value (which uses the traditional valuation approach) anticipated at the end of the projection period, are discounted to present value. The aggregate of the net present values equals the market value of the property.

(viii) Impairment of non-financial assets (see note 4.3(n)) - The InRetail Group assesses, on each reporting date, if there is sign that an asset may be impaired. If there is sign of it or whenever the annual impairment test of an asset is required (indefinite-life intangible assets), the InRetail Group estimates the recoverable amount of the asset, as it mentioned in note 4.3(n).

39 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

For non-financial assets except for goodwill, an assessment is performed on each date of presentation of consolidated financial statements to know if there is sign that the permanent impairment loss previously recognized no longer exists or has decreased. If such sign exists, the InRetail Group estimates the recoverable amount. An impairment loss previously recognized for an asset is only reversed if there was a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized.

The reversal is limited in such a way that the asset’s carrying amount may not exceed its recoverable amount or the carrying amount that it would have been determined had no impairment loss been recognized in prior periods. Said reversal is recorded in the consolidated income statement.

(ix) Recovery of deferred tax assets (see note 4.3(t)) - Deferred tax assets require Management to evaluate the probability that the InRetail Group generates taxable income for future periods in order to use the deferred tax assets. The estimates of future taxable income are based on the projections of cash flows from operations and the application of the tax legislation in force. As the future cash flows and the taxable income differ significantly from the estimates, it might have an impact on the capability of the InRetail Group to realize the net deferred tax assets recorded at the reporting date of consolidated financial statements.

Additionally, future changes in tax legislation might limit the capability of the InRetail Group to obtain tax deductions in future periods. Any difference between the estimations and the later actual payments is recorded in the year in which it occurs.

(x) Fair value measurement of derivative financial instruments (see note 13) - When the fair values of financial assets and financial liabilities recorded in the consolidated statements of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.

Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments, see note 34.

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Notes to the consolidated financial statements (continued)

(xi) Obligations from long-term employee benefits (see note 19) - The present value of the obligations from pension plans is determined through actuarial valuations. Actuarial valuations involve several assumptions that may be different from the events that actually occur in the future. These assumptions include the setting of the discount rate, the future increase in salaries, mortality rates and future increase of pensions.

(xii) Taxes estimation (see notes 22 and 31) - Uncertainty exists with regard to the interpretation of complex tax regulations, the changes in the tax norms and the amount and opportunity in which future taxable income is generated. The subsidiaries of the Company calculate provisions, on the basis of reasonable estimations for the possible consequences derived from the inspections performed by the Tax Authority. The amount of these provisions is based on several factors such as the experience in previous tax examinations, and on the different interpretations about the tax regulations made by the Subsidiaries of the Company and their advisers.

These differences in interpretation can arise in a great variety of questions, depending on the circumstances and existing conditions in the place of domicile of the InRetail Group.

In the Management’s opinion, these judgments, estimations and assumptions were performed on the basis of their best knowledge of the relevant facts and circumstances at the date of preparation of the consolidated financial statements; nevertheless, the final results could differ from the estimations included in the consolidated financial statements. Management of the InRetail Group does not expect that the changes, provided they occur, will have significant effect on the consolidated financial statements.

4.5 New accounting standards - The standards that have been issued but are not yet effective at the date of presentation of the consolidated financial statements are detailed below. This list of issued standards and interpretations include those that the InRetail Group plans to apply in the future. The InRetail Group aims to adopt such standards once they are effective and will not adopt them early:

- Amendments to IFRS 3 “Business Combinations”: Reference to the Conceptual Framework In May 2020, the IASB issued Amendments to IFRS 3, intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements. The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 “Levies”, if incurred separately.

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Notes to the consolidated financial statements (continued)

At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements. The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply prospectively.

Since the amendments apply prospectively to transactions or other events that occur on or after the date of the first application, the InRetail Group will not be affected by these amendments on transition.

- Amendments to IAS 1 – Classification of Liabilities as Current or Non-current In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify: (i) what is meant by a right to defer settlement; (ii) that a right to defer must exist at the end of the reporting period; (iii) that classification is unaffected by the likelihood that an entity will exercise its deferral right; and, (iv) that only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification. The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively.

The InRetail Group is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.

- Amendments to IAS 16 “Property, Plant and Equipment”: Proceeds before Intended Use In May 2020, the IASB issued amendments to IAS 16, which prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment.

The amendments are not expected to have a material impact on the InRetail Group.

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Notes to the consolidated financial statements (continued)

- Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”: Onerous Contracts – Costs of Fulfilling a Contract In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual reporting periods beginning on or after 1 January 2022.

The InRetail Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments.

- Annual improvements (2018-2020 cycle) As part of its 2018-2020 annual improvements to IFRS standards process, the IASB issued the following amendments:

(i) IFRS 1 “First-time Adoption of International Financial Reporting Standards”: Subsidiary as a first-time adopter The amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to IFRS. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of IFRS 1. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted.

(ii) IFRS 9 “Financial Instruments”: Fees in the ’10 percent’ test for derecognition of financial liabilities The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted.

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Notes to the consolidated financial statements (continued)

(iii) IAS 41 “Agriculture”: Taxation in fair value measurements The amendment removes the requirement in paragraph 22 of IAS 41 that entities exclude cash flows for taxation when measuring the fair value of assets within the scope of IAS 41. An entity applies the amendment prospectively to fair value measurements on or after the beginning of the first annual reporting period beginning on or after 1 January 2022 with earlier adoption permitted.

These amendments are not expected to have a material impact on the Companies.

In Management's opinion, these standards, will not have a significant impact on the consolidated financial statements of the InRetail Group.

5. Transactions in foreign currency Transactions in foreign currency are carried out using exchange rates prevailing in the market as published by the Superintendence of Banks, Insurance and Pension Funds Administration. As of December 31, 2020 and 2019, the main operations in foreign currency of the InRetail Group were denominated in U.S. Dollars (US$), bolivianos (Bs) and Colombian pesos ($). Current exchange rate for transactions in foreign currency at those dates was:

Units in foreign currency for each Sol (*) - 2020 2019

U.S. Dollars 0.276 0.301 Bolivianos 1.921 2.098 Colombian pesos 947.158 987.983

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Notes to the consolidated financial statements (continued)

As of December 31, 2020 and 2019, the InRetail Group held the following foreign currency assets and liabilities:

2020 2019 ______US$(000) Bs(000) $(000) US$(000) Bs(000) $(000)

Assets Cash and short-term deposits 32,755 18,278 621,811 14,789 6,669 679,864 Financial instruments at fair value through profit or loss 8,928 - - 2,827 - - Available-for-sale financial investments 6,795 - - - - - Trade receivables, net 57,870 47,684 9,054,828 52,922 45,088 9,833,962 Other receivables, net 4,676 4,732 - 5,429 4,632 - Accounts receivable from related parties 1,773 - - 2,577 - - ______112,797 70,694 9,676,639 78,544 56,389 10,513,826 ______

Liabilities Trade payables (119,432) (16,909) (4,310,221) (92,883) (28,498) (5,484,008) Other payables (16,364) (8,111) - (18,901) (13,089) - Accounts payable to related parties (1,347) - - (2,781) - - Interest - bearing loans and borrowings (385,734) - (2,989,968) (57,652) - (3,600,000) Call Spread Financing (29,305) - - - - - Senior notes issued (724,336) - - (722,864) - - Lease liabilities (277,872) (1,983) - (144,460) (540) - ______(1,554,390) (27,003) (7,300,189) (1,039,541) (42,127) (9,084,008) ______“Call Spread” – Long position 750,000 - - 750,000 - - ______

Net (liabilities) asset position (691,593) 43,691 2,376,450 (210,997) 14,262 1,429,818 ______

Management monitors this risk through the analysis of macro-economic variables of the country.

During 2020, the Companies have recognized a net loss from exchange difference for approximately S/124,170,000, which is presented into the caption "Exchange difference, net" in the consolidated income statements (net profit was for approximately S/20,832,000, during 2019)

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Notes to the consolidated financial statements (continued)

6. Cash and short-term deposits (a) Below is the composition of the item as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

Cash 7,222 9,101 Current accounts (b) 624,031 616,920 Cash in transit (c) 174,702 95,867 Time deposits (d) 130,360 18,278 ______

936,315 740,166 ______

(b) The InRetail Group maintains current accounts in local and foreign banks mainly in Soles and U.S. Dollars that do not accrue interests and are freely available.

(c) Represents cash from sales of the different stores of the Subsidiaries of the Company during the last day of the year, which is transported by a securities service company from the stores of the Company and deposited into its bank accounts the first business day of the following month.

(d) As of December 31, 2020, time deposits are freely available and are kept in Soles and U.S. Dollars, in local banks and bear annual interest rates between 0.1 and 0.12 percent in Soles and 0.05 and 0.1 percent in U.S. Dollars. As of December 31, 2019, time deposits were kept in Soles and U.S. Dollars, in local banks, bear annual interest rates between 2.10 and 2.70 percent in Soles and of 1.20 and 1.30percent in U.S. Dollars. Time deposits had original maturities of less than 90 days.

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Notes to the consolidated financial statements (continued)

7. Financial instruments at fair value through profit or loss Below is the composition of the item as of December 31, 2020 and 2019:

2020 2019 ______Number Quote value Number Quote value Entity of quotes (in soles) S/(000) of quotes (in soles) S/(000)

Mutual funds managed by Fondos Sura SAF S.A.C. SAF In Soles - Sura Corto Plazo Soles FMIV 818,089 162 132,923 - - - Sura Ultra Cash Soles FMIV 223,698 137 30,610 33,603 135 4,526

In U.S. Dollars - Sura Ultra Cash Dólares FMIV 61,168 444 27,188 17,816 362 6,456 Sura Corto Plazo Dólares FMIV 11,618 444 5,155 23,455 400 9,377

Mutual funds managed by Credicorp Capital S.A. SAF - In Soles - Liquidez Soles FMIV 18,376 283 5,200 - - - Corto Plazo Soles FMIV 3,413 132 450 - - -

Mutual funds managed by Interfondos S.A. SAF, related party In Soles - IF Libre Disponibilidad Soles FMIV 70,859 117 8,301 - - -

In U.S. Dollars - IF Libre Disponibilidad FMIV 84,239 387 32,568 4,727 350 1,656 ______

242,395 22,015 ______

In Management's opinion, the investment funds are highly liquid and have a low level of risk.

As of December 31, 2020 and 2019, the value of the financial instruments at fair value through profit or loss includes the effects of the change in the quote price and the level of the exchange rate at the end of the year, these originated a recognition of a gain of approximately S/1,850,000 and S/473,000 during the years ended 2020 and 2019, respectively, presented in the caption "Finance income" in the consolidated income statements, note 26.

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Notes to the consolidated financial statements (continued)

8. Trade receivables, net (a) Below is the composition of the item as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

Manufacturing and distribution (b) 558,690 528,286 Credit card operators (c) 65,392 39,921 Rents receivable (d) 46,410 31,023 Shopping vouchers (e) 17,080 17,049 Provision for accrued revenue (f) 12,476 20,620 Other 2,209 3,062 ______702,257 639,961 Provision for doubtful accounts (g) (77,941) (58,967) ______

624,316 580,994 ______

Trade receivables are mainly denominated in Soles and U.S. Dollars, have current maturity and do not bear interest.

(b) Corresponds to the receivables generated mainly from the manufacture and distribution of different pharmaceutical and mass-market products to entities across Peru and abroad. As of December 31, 2020 and 2019, due to the nature of the InRetail Group's operations, the client portfolio is highly dispersed, and includes laboratories and wholesalers well-known at national and international level, pharmacy chains, independent pharmacies, public and private institutions, supermarkets, among others. It is worth mentioning that the InRetail Group has contracts for the exclusive manufacture and distribution of its products with its major customers.

(c) Correspond mainly to pending deposits in favor of Supermercados Peruanos S.A. and Subsidiaries and InRetail Pharma S.A. for the last day of the month, respectively, held by credit card operators and originated from the sales of goods with credit cards in the different stores of Supermercados Peruanos S.A. and Subsidiaries and InRetail Pharma S.A.

(d) Correspond to accounts receivable for the lease of commercial premises to concession holders inside the stores of Supermercados Peruanos S.A. and the accounts receivable for the rental income of InRetail Real Estate Group.

(e) Correspond mainly to the balance receivable from the sale of shopping vouchers to various companies and public institutions. At the date of this report, these balances were mostly collected.

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Notes to the consolidated financial statements (continued)

(f) Corresponds to services unbilled at year end, mainly due to variable rents. These amounts were billed in January of the following year.

(g) The movements in the provision for doubtful accounts receivable for the years ended on December 31, 2020 and 2019, were as follow:

2020 2019 S/(000) S/(000)

Opening balance 58,967 64,596 Acquisition of subsidiary, note 2(a) 843 - Provision for the period, note 24(b) 23,248 9,079 Recoveries, note 24(b) (1,773) (2,544) Penalties (5,082) (12,116) Exchange difference 1,738 (48) ______Closing balance 77,941 58,967 ______

(h) As of December 31, 2020 and 2019, the aging of trade accounts receivable is as follows:

______2020

Not provisioned Provisioned Total

S/(000) S/(000) S/(000) Not past due - 512,644 480 513,124 Past due From 1 to 30 days 48,515 1,237 49,752 From 31 to 60 days 16,848 911 17,759 From 61 to 120 days 16,507 1,967 18,474 From 121 to 360 days 18,365 12,411 30,776 More than 360 days 11,437 60,935 72,372 ______

624,316 77,941 702,257 ______

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Notes to the consolidated financial statements (continued)

______2019

Not provisioned Provisioned Total

S/(000) S/(000) S/(000) Not past due - 490,424 443 490,867 Past due From 1 to 30 days 49,978 161 50,139 From 31 to 60 days 11,411 70 11,481 From 61 to 120 days 11,873 333 12,206 From 121 to 360 days 10,376 3,817 14,193 More than 360 days 6,932 54,143 61,075 ______580,994 58,967 639,961 ______

(i) In InRetail Group´s opinion, the provision for doubtful accounts receivable as of December 31, 2020 and 2019, appropriately covers the credit risk of this caption at those dates.

9. Other receivables, net (a) Below is the composition of the item as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

By nature - Claims and unsettled advances 77,441 47,320 Operating lease deposits (b) 33,591 28,952 Employee loans and third parties 32,866 4,138 Funds held in Banco de la Nación (c) 26,018 20,910 Discounts and/or refunds receivable To suppliers 14,547 9,399 To representatives - 1,632 Doubtful collection accounts 7,606 5,998 Advances to suppliers 4,381 4,961 Trust fund - 1,602 Other receivables 2,603 9,856 ______199,053 134,768 Minus - Provision for doubtful collection accounts (d) (7,606) (5,998) ______

191,447 128,770 ______

Current portion 128,966 83,833 Non-current portion 62,481 44,937 ______

191,447 128,770 ______

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Notes to the consolidated financial statements (continued)

(b) Includes deposits in guarantee related to the rental of the administrative office, warehouse and drugstores “Inkafarma” and “Mifarma” nationwide, with maturities over twelve months, which is why Management has classified them in the long term. As of December 31, 2020, the balance of deposits in guarantee held by the Company and its Subsidiaries is recorded at discounted value, using a discount rate of 6.0390 percent for guarantees receivable in soles and 4.09 percent for guarantees receivable in US dollars. As of December 31, 2019, using a discount rate of 9.02 percent for guarantees receivable in soles and 6.11 percent for guarantees receivable in US dollars.

(c) In accordance to Resolution of Superintendence N°183-2004/SUNAT, funds held in Banco de la Nación must be used exclusively for the payment of tax debts or requested as cash reimbursement. In the case of the InRetail Group, these funds have been used entirely for tax payments during the months of January and February 2021 and 2020, respectively.

(d) The movement in the provision for doubtful accounts for the years ended on December 31, 2020 and 2019 were as follows:

2020 2019 S/(000) S/(000)

Opening balance 5,998 6,247 Acquisition of Subsidiary, note 2(a) 199 - Provision for the period, note 24(b) 1,697 919 Recoveries, note 24(b) (392) (157) Penalties - (1,011) Conversion effect 104 - ______

Closing balance 7,606 5,998 ______

(e) In opinion of the InRetail Group’s Management, the provision for doubtful accounts receivable as of December 31, 2020 and 2019, appropriately covers the credit risk of this item at those dates.

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Notes to the consolidated financial statements (continued)

10. Inventories, net (a) Below is the composition of the item as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

Goods, note 24(b) 2,012,314 1,773,215 Raw materials, note 24(b) 19,552 15,204 Finished goods, note 24(b) 455 189 Supplies destined for production, note 24(b) 550 1,008 Various supplies 3,914 5,045 Inventory in transit (c) 143,621 55,732 ______2,180,406 1,850,393

Minus - Provision for impairment of inventories (d) (21,885) (15,346) ______

2,158,521 1,835,047 ______

(b) As of December 31, 2020 and 2019, the balance of goods is presented net of the provision for discounts from suppliers (rebates) related to goods not sold at those dates for approximately S/44,960,000 and S/50,417,000, respectively.

(c) Corresponds to various goods and supplies imported by InRetail Group, in order to meet the demand of its customers in the national chains. At the date of this report, the balance of inventories in transit as of December 31, 2020 and 2019 has been mostly received.

(d) The movements in the provision for inventory impairment for the years 2020 and 2019 were as follows:

2020 2019 S/(000) S/(000)

Opening balance 15,346 12,603 Acquisition of Subsidiary, note 2(a) 557 - Provision for the period, note 24(b) 12,862 8,192 Recoveries - (122) Write-off (7,218) (5,288) Translation effect 338 (39) ______

Closing balance 21,885 15,346 ______

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Notes to the consolidated financial statements (continued)

The provision for inventory impairment is determined based on stock turnover, discounts granted for the liquidation of the merchandise and other characteristics based on periodic evaluations performed by InRetail Group’s Management. In opinion of the InRetail Group’s Management, as of December 31, 2020 and 2019, the provision for inventory impairment covers the risk of inventory’s obsolescence as of those dates.

11. Financial instruments at fair value through other comprehensive income During 2018, were acquired fixed income financial instruments issued by Intercorp Perú Ltd. (ultimate holding of the Company), see note 1). The acquisition value of these instruments amounted to US$2,434,000 (around S/8,377,000), their maturity date was February 2025 and they accrued interests at a nominal annual rate of 5.875 percent in U.S. Dollars. During 2019, the fair value update of the aforementioned financial instruments amounted to approximately S/260,000, which were recorded in the caption “Unrealized results” of the consolidated statement of changes in equity.

In June 2019, InRetail Pharma S.A. performed an additional acquisition of such instruments for US$8,724,000 (equivalent to S/29,724,000) at a nominal annual rate of 5.875 percent; subsequently, In July and August 2019, the InRetail Group accepted the offer submitted by Intercorp Perú Ltd. to redeem in advance such bonds at the market value prevailing on the redemption date; therefore, the InRetail Group sold all the aforementioned bonds for US$11,433,000 (equivalent to approximately S/37,812,000) and, as a result of that transaction, the InRetail Group recorded a profit of US$125,000 (approximately S/413,000) in the consolidated statement of comprehensive income, see note 26.

12. Taxes recoverable (a) Below is the composition of the item as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

Income tax payments (b) and 22(e) 87,832 58,425 Tax credit for Valued Added-Tax (c) 42,365 31,970 Selective consumption tax 15,005 12,424 Capital outflow tax (Ecuador) 7,969 10,763 Other 2,637 5,209 ______

155,808 118,791 ______

Current portion 130,775 101,483 Non-current portion 25,033 17,308 ______

155,808 118,791 ______

(b) As of December 31, 2020 and 2019, the InRetail Group maintains a credit for income tax due to payments made during the current period by the InRetail Group’s subsidiaries. InRetail Group’s Management believes that these balances will be used during the following year.

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Notes to the consolidated financial statements (continued)

(c) Corresponds to Valued Added-Tax (“VAT”) credits generated mainly from the expansion and construction of shopping centers in Lima and other cities, as well as other disbursements related to operations performed by Interproperties Holding and Interproperties Holding II. These tax credits will be recovered by offsetting against VAT payable generated by future activities from InRetail Group’s subsidiaries.

13. Derivative financial instruments – “Call Spread” (a) As of December 31, 2020 and 2019, derivative financial instruments have been qualified as effective hedge instruments and are as follows:

Book value of Notional Maturity / the covered Entity amount Settlement item ______Fair value 2020 2019 US$(000) S/(000) S/(000) S/(000)

“Call Spread” Contract - Citibank N.A. (b) 400,000 May 2023 1,449,600 112,273 63,508 J.P. Morgan (c) 350,000 April 2028 1,268,400 100,174 67,405 ______

212,447 130,913 ______

(b) In May 2018, InRetail Pharma S.A. signed a new “Call Spread” contract for a reference value of US$400,000,000 in order to reduce exposure to foreign exchange risk arising from the senior notes issued in foreign currency in May 2018 (see note 21(b)). The price paid for such derivative (premium) was financed by Citibank N.A. in installments that correspond to those of the issuances, thus generating a liability, which balance as of December 31, 2020 amounts to US$9,874,000, equivalent to approximately S/35,785,000 (US$13,413,000, equivalent to approximately S/44,491,000, as of December 31, 2019), see note 20(a). In accordance with IFRS 9, this premium was recorded and charged against the non-current asset in the caption “Derivative financial instrument – ‘Call Spread’” and is recognized in profit or loss using a straight-line method over the hedging term. Consequently, the amount accrued during the fiscal year ended on December 31, 2020 and 2019 is S/12,623,000 and S/11,129,000, respectively, and is recorded in the caption “Finance expenses – ‘Call Spread’ straight-line accrued premium”, see note 26. During 2020, approximately S/61,412,000 (S/12,742,000 during 2019) were recognized into the caption "Unrealized results on derivative financial instruments" in the consolidated statements of changes in equity, representing the derivative financial instrument hedging effect during such year.

As of December 31, 2020 and 2019, this instrument hedges 100 percent of the risk exposure resulting from the issuance of the principal in foreign currency and protects the changes in exchange rates ranging from S/3.26 to S/3.75 per US$1.00.

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Notes to the consolidated financial statements (continued)

(c) In March 2018, InRetail Shopping Malls signed a new “Call Spread” contract with J.P. Morgan for a reference value of US$350,000,000 in order to reduce exposure to foreign exchange risk arising from senior notes issued in foreign currency by InRetail Shopping Malls in April 2018, see note 21(c).

As of December 31, 2020 and 2019, this financial instrument hedges 100 percent of the foreign exchange exposure of the issuance’s principal and protects the exchange rate variations ranging from S/3.26 to S/3.75 per US$1.00.

The premium for the derivative was financed by J.P. Morgan, thus generating a liability which balance as of December 31, 2020 amounts to US$19,431,000, equivalent to approximately S/70,418,000 (equivalent to approximately S/70,086,000, as of December 31, 2019), see note 20(a). In accordance with IFRS 9, the financed premium was recorded and charged against the non-current asset in the caption “Derivative financial instrument – ‘Call Spread’” and is recognized in profit or loss using a straight-line method over the hedging term. Consequently, the amount accrued during the fiscal year ended December 31, 2020 and 2019 was S/9,474,000 and S/8,806,000, respectively, and is recorded in the caption “Finance expenses – ‘Call Spread’ straight-line accrued premium”, see note 26. During 2020, approximately S/79,482,000 (S/19,134,000 during 2019) were recognized into the caption "Unrealized results on derivative financial instruments" in the consolidated statements of changes in equity, representing the derivative financial instrument hedging effect during such year.

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Notes to the consolidated financial statements (continued)

14. Property, furniture and equipment, net (a) Below is the composition of the item as of December 31, 2020 and 2019:

Works in Buildings and Miscellaneous Furniture and progress and Land facilities equipment Vehicles fixture assets in transit Total S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

Useful lives (years) - 10-15 4-10 5 10 - Cost - Balance as of January 1, 2019 813,329 2,402,438 1,286,824 4,374 206,393 127,192 4,840,550 Additions (b) 109,737 96,438 112,358 318 21,167 104,232 444,250 Disposals and/or sales (e) - (6,764) (98,943) (840) (5,217) (1,222) (112,986) Transfers - 5,226 2,205 - 940 (8,371) - Transfers to investment properties, note 15(b) - 54,651 (3,519) - (280) (93,935) (43,083) Transfers to intangible assets, note 16(a) - - - - - (654) (654) Translation effect - (72) (764) (2) (164) (7) (1,009) ______Balance as of December 31, 2019 923,066 2,551,917 1,298,161 3,850 222,839 127,235 5,127,068 ______Acquisition of Subsidiary, note 2(a) 409,671 326,471 51,804 1,353 22,768 4,520 816,587 Additions (b) 804 79,398 97,415 203 15,301 27,387 220,508 Disposals and/or sales (e) (12) (26,008) (55,831) (643) (6,467) (681) (89,642) Sale of Subsidiary, note 2(b) - (1,203) (1,821) - (1,121) - (4,145) Transfers - 94,795 - - - (94,795) - Transfers to investment properties, note 15(b) - (290) - - - - (290) Transfers to intangible assets, note 16(a) - - - - - (489) (489) Translation effect - 377 4,001 4 929 4 5,315 ______Balance as of December 31, 2020 1,333,529 3,025,457 1,393,729 4,767 254,249 63,181 6,074,912 ______Accumulated depreciation - Balance as of January 1, 2019 - 500,418 782,704 2,748 118,709 - 1,404,579 Additions, note 24(b) - 90,350 115,940 552 19,025 - 225,867 Disposals and/or sales (e) - (4,140) (96,649) (651) (3,899) - (105,339) Transfers - - 294 - (294) - - Transfers to investment properties, note 15(b) - 13 (56) - (2) - (45) Translation effect - (158) (606) (3) (152) - (919) ______Balance as of December 31, 2019 - 586,483 801,627 2,646 133,387 - 1,524,143 ______Acquisition of Subsidiary, note 2(a) - 72,459 36,671 834 14,031 - 123,995 Additions, note 24(b) - 90,317 119,235 507 20,668 - 230,727 Disposals and/or sales (e) - (14,413) (50,271) (594) (5,888) - (71,166) Sale of Subsidiary, note 2(b) - (801) (1,668) - (867) - (3,336) Translation effect - 283 2,953 4 768 - 4,008 ______Balance as of December 31, 2020 - 734,328 908,547 3,397 162,099 - 1,808,371 ______

Net book value as of December 31, 2020 1,333,529 2,291,129 485,182 1,370 92,150 63,181 4,266,541 ______

Net book value as of December 31, 2019 923,066 1,965,434 496,534 1,204 89,452 127,235 3,602,925 ______

56 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(b) During 2020 and 2019, InRetail Group constructed and equipped its new stores (mainly from the pharmacy and retail sectors). As of December 31, 2020 and 2019, InRetail Group maintains mortgages on certain lands, buildings and facilities for a net book value of approximately S/879,610,000 and S/702,010,000, respectively, in guarantee of financial obligations, see note 20(a).

(c) The InRetail Group maintains insurance on its main assets in accordance with the policies established by Management. In the opinion of InRetail Group Management, its insurance policies are consistent with international practices in the industry.

(d) As of December 31, 2020 and 2019, the cost and corresponding accumulated depreciation of assets acquired through finance leases are the following:

______December 31, 2020 ______December 31, 2019 Accumulated Accumulated Cost depreciation Net cost Cost depreciation Net cost S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

Buildings and facilities 438,278 (68,262) 370,016 317,127 (43,812) 273,315 Miscellaneous equipment 334,124 (231,123) 103,001 361,338 (236,210) 125,128 Furniture and fixture and other 573 (473) 100 - - - ______

772,975 (299,858) 473,117 678,465 (280,022) 398,443 ______

(e) The net cost of retired and/or sold fixed assets during the years 2020 and 2019 is detailed as follows:

2020 2019 S/(000) S/(000)

Assets sold (1) 4,757 5,683 Assets retired (2) 13,719 1,964 ______

18,476 7,647 ______

(1) During 2020 and 2019, it mainly corresponds to the sale of scrap, for S/1,852,000 and S/1,120,000, respectively, paid in cash, thereby generating a profit of approximately S/2,905,000 and S/4,563,000, respectively.

(2) During 2020 and 2019, corresponds to the write-off of unused assets as a result of the remodeling process of some stores designated by Management. These retirements are included in the caption “Other operating income, net" in the consolidated income statements integral.

(f) Management periodically reviews the residual values, useful life and the depreciation method to ensure that they are consistent with the economic benefits and life expectancy of the property, furniture and equipment. As of December 31, 2020 and 2019, the InRetail Group’s Management performed an evaluation of its property, furniture and equipment, and has not found any indication of impairment.

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Notes to the consolidated financial statements (continued)

15. Investment properties (a) The composition of this caption is presented below as of December 31, 2020 and 2019:

Year of Valuation acquisition or methodology construction ______Valuation profit (loss) 2019/20 20 2020 2019 2020 2019 S/(000) S/(000) S/(000) S/(000)

Shopping malls: Real Plaza Puruchuco (**) Lima 616,068 593,831 2018 (4,415) 45,375 DCF and Appraisal Real Plaza Salaverry (*) Lima 445,897 448,027 2014 (6,347) 13,035 DCF Real Plaza Chiclayo Province 268,736 266,578 2005 (8,948) 27,192 DCF Real Plaza Cuzco (*) Province 272,478 256,541 2013 (20,740) 2,997 DCF Real Plaza Primavera Lima 234,455 239,885 2011 (6,347) 6,813 DCF Real Plaza Piura Province 234,423 235,634 2011 (1,856) 24,421 DCF Real Plaza Trujillo (**) Province 214,980 217,479 2007 (2,977) 19,995 DCF and Appraisal Real Plaza Centro Cívico (*) Province 204,301 202,885 2010 (5,875) 379 DCF Real Plaza Huancayo (*) Province 134,141 142,119 2008 (8,327) 962 DCF Real Plaza Pucallpa (**) Province 109,953 114,465 2018 (4,751) (20,944) DCF and Appraisal Real Plaza Huánuco (*) Province 102,421 103,705 2012 (1,330) 10,254 DCF Real Plaza Cajamarca Province 90,125 90,447 2013 (408) 2,068 DCF Real Plaza Santa Clara Altamirano (**) Lima 84,351 84,477 2010 (531) 8,492 DCF and Appraisal Villa María del Triunfo – La Curva (*) Lima 82,156 82,791 2017 (883) 639 DCF Real Plaza Juliaca (*) Province 75,610 75,025 2011 225 (1,363) DCF Real Plaza Pro Lima 66,783 67,004 2008 (495) 4,467 DCF Real Plaza Guardia Civil Lima 65,813 66,164 2012 (452) 958 DCF Real Plaza Arequipa (*) Province 53,808 56,447 2010 (3,565) (4,156) DCF Plaza Center Lurín (**) Lima 47,211 50,450 2010 (3,275) 926 DCF and Appraisal Real Plaza Nuevo Chimbote (**) Province 39,176 39,018 2011 187 924 DCF and Appraisal Real Plaza Sullana (**) Province 30,813 31,522 2013 (736) 1,383 DCF and Appraisal Plaza Center Moquegua Province 28,041 29,560 2015 (2,464) 2,118 DCF Plaza Center Villa Salvador Lima 28,367 27,927 2011 400 (1,170) DCF Plaza Center Tumbes (*) Province 16,349 19,987 2019 (8,699) (2,805) DCF Plaza Center Tarapoto Province 18,168 19,432 2019 (1,295) 1,915 DCF Plaza Center Tacna Province 18,039 18,870 2010 (1,720) 616 DCF Tiendas Jr. De la Unión Lima 10,382 13,343 2011 (2,962) (10) DCF Plaza Center Comas Lima 11,238 12,553 2006 (1,315) 2,714 DCF Plaza Center Puno Province 6,524 6,483 2011 41 1,690 DCF Plaza Center Ventanilla Lima 3,147 2,761 2014 337 903 DCF Others 5,640 990 2018 (586) (583) DCF

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Notes to the consolidated financial statements (continued)

Year of Valuation acquisition or methodology construction ______Valuation profit (loss) 2019/20 20 2020 2019 2020 2019 S/(000) S/(000) S/(000) S/(000)

Shopping malls under construction: Plaza Center Ilo Project Province 38,702 38,288 2019 - - Appraisal

Lands: Rex Lima 73,927 68,908 2014 4,723 9,124 Appraisal Chacarilla Lima 38,127 35,633 2014 2,507 (626) Appraisal San Miguel Lima 32,822 31,150 2019 1,333 - Appraisal Carabayllo Lima 26,350 23,988 2012 2,362 (432) Appraisal Valle Cañete Lima 18,282 17,089 2010 1,193 (310) Appraisal Tarapoto Province 17,171 16,057 2012 994 (411) Appraisal Zapallal Lima 16,065 14,753 2012 1,311 (264) Appraisal Lurín 2 Lima 13,077 12,246 2018 831 (38) Appraisal Pisco Province 5,392 5,060 2012 335 (90) Appraisal ______

Balance as of December 31 3,899,509 3,879,572 (84,520) 157,158 ______

DCF: Discounted cash flow

(*) It corresponds to shopping malls built using surface rights or usufruct. As of December 31, 2020 and 2019, the usufruct contracts for lands upon which the InRetail Group has built shopping malls have a validity from 20 to 70 years. (**) As of December 31, 2020 and 2019, the fair value includes the value of lands adjacent to operational shopping malls owned by the InRetail Group for future extensions, amounting to S/57,551,000 and S/53,808,000, respectively.

(b) The movement of this caption was as follows:

2020 2019 S/(000) S/(000)

Opening balance 3,879,572 3,299,018 Project – CC Puruchuco (c) 26,651 219,681 Project – CC Tumbes 5,065 22,792 Acquisition of lands (d) - 31,150 Works for expansions and remodeling 72,451 106,735 Transfers of property, furniture and equipment, note 14(a) 290 43,038 (Loss) gain for fair value adjustment (e) (84,520) 157,158 ______

Closing balance 3,899,509 3,879,572 ______

59 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(c) Puruchuco mall is located in the district of Ate, Lima; the land was acquired in 2014. In July 2018, financing was obtained for the construction of a shopping center through the signing of a financial lease agreement between Scotiabank del Perú S.A.A. and Patrimonio en Fideicomiso D.S. N° 0093-2002 – EF Interproperties Perú for an amount of S/380,000,000. On November 13, 2019, the aforementioned shopping center was inaugurated. As of December 31, 2020 and 2019, Scotiabank del Perú S.A.A. has disbursed approximately S/380,000,000 and S/239,970,000, respectively, amounts that are net of its restructuring cost for S/4,622,000 and S/4,462,000, respectively.

(d) In 2019, the acquisitions of lands were made to third parties in cash and at market values prevailing at the acquisition date.

(e) As of December 31, 2020 and 2019, the InRetail Group does not have properties classified within Levels 1 or 2 of the fair value hierarchy. As of said dates, the fair value of investment properties is classified within Level 3 and was determined using the discounted cash flow (DCF) method for the operational shopping malls and properties, and using a valuation made by an independent expert registered in CONATA (National Council of Valuators) and REPEV (Registry of Expert Appraisers) of the SBS (Superintendence of Banking and Insurance) for parcels.

According to note 4.3(I), to estimate the fair values of the investment properties, the Management of the Company and its subsidiaries have used their market expertise and professional judgement.

During 2020 and 2019, the fluctuation of the investment properties’ fair value was a loss and gain for approximately S/84,520,000 and S/157,158,000, respectively; which is shown in the “Changes in fair value of investment property in fair value of investment properties” of the consolidated income statement.

A brief description of the assumptions considered for the cash flows determination, which are prepared on an added and unlevered basis, as of December 31, 2020 and 2019, are presented below:

______Percentage 2020 2019

- Long-term inflation - Increase of the general level of prices expected in Peru for the long term. 2.00 - 2.50 2.00 – 2.50

- Long-term average occupancy rate - Expected occupancy level of tenants in the leased properties. 98.00 – 99.52 97.90 – 99.18

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Notes to the consolidated financial statements (continued)

______Percentage 2020 2019

- Average growth rate of rental income - Rate that expresses the rental income growth and includes growth factors of the industry, inflation rates, stable exchange rate, per capita income and increasing expenses. 2.5 – 7.36 2.50 – 2.75

- Average EBITDA margin - Projected from the rental income from leasable areas by property and marketing income, minus costs related to administration fees, other administrative expenses,

insurance, taxes and other expenses. 71.18 - 82.56 67.31 – 83.36

The fair value of parcels is determined based on the value set by an external appraiser. The external appraiser uses the comparative market analysis, through which the fair value of a property is estimated based on similar transactions. The unit of comparison applied by the InRetail Group is the price per square meter. As of December 31, 2020, the parcels’ price range per square meter and the average price per square meter in the geographical area of the parcels are as follows:

Geographical area Rank Average US$ US$

Rex – Lima 1,305 -1,579 1,466 Cañete 185 – 243 214 Chacarilla – Lima 1,961 – 2,388 2,176 Carabayllo – Lima 138 - 157 147 Carabayllo II – Lima 207 – 245 232 San Miguel – Lima 1,089 1,089 Pisco - Ica 105 – 132 117 Tarapoto – San Martin 294 – 489 361 Zapallal - Lima 222 – 274 246 Lurín 2 - Lima 304 – 343 327 Puruchuco - Lima 1,263 – 1,400 1,315 Santa Clara - Lima 744 - 784 771 Trujillo - La Libertad 800 – 886 840 Sullana - Piura 299 – 585 412 Pucallpa - Pucallpa 372 – 402 391 Lurín - Lima 230 – 250 240 Nuevo Chimbote - Ancash 216 – 225 222

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Notes to the consolidated financial statements (continued)

(f) The sensitivity analysis of the investment properties valuation, in front of changes in the factors that management considers relevant, are presented below:

Rate change 2020 2019 S/(000) S/(000)

Average growth rate in rental income (basis) – 2.50% - 3.00% Increase +0.25% 100,410 119,439 Decrease -0.25% (112,920) (111,317) Discount rate (basis) – 9.00% - 9.17% Increase +0.5% (246,159) (255,504) Decrease -0.5% 280,885 292,962

(g) The future amounts of the fixed minimum rents by currency corresponding to leases are as follows:

______2020 ______Related parties ______Third parties ______Total US$(000) S/(000) US$(000) S/(000) US$(000) S/(000)

2021 5,465 88,398 4,071 168,181 9,536 256,579 2022 5,469 88,084 4,051 135,155 9,520 223,239 2023 5,475 85,024 4,051 112,329 9,526 197,353 2024 5,143 83,128 4,051 82,580 9,194 165,708 2025 5,061 82,616 4,051 61,328 9,112 143,944 2026-2076 81,428 1,461,004 75,937 1,097,531 157,365 2,558,535 ______

108,041 1,888,254 96,212 1,657,104 204,253 3,545,358 ______

______2019 ______Related parties ______Third parties ______Total US$(000) S/(000) US$(000) S/(000) US$(000) S/(000)

2020 2,583 36,365 7,808 238,724 10,391 275,089 2021 2,985 33,286 7,602 208,581 10,587 241,867 2022 3,035 31,575 7,587 173,651 10,622 205,226 2023 3,085 30,608 7,587 153,720 10,672 184,328 2024 3,136 29,096 7,587 127,461 10,723 156,557 2025-2076 84,988 625,166 136,597 2,109,496 221,585 2,734,662 ______

99,812 786,096 174,768 3,011,633 274,580 3,797,729 ______

As of December 31, 2020 and 2019, the minimum rents are calculated on the basis of a time horizon between 1 and 76 years.

The Companies maintain insurance on its investment properties in accordance with the policies established by Management.

62 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

16. Intangible assets, net (a) The table below presents the movements and composition of this caption as of December 31, 2020 and 2019:

______2020 ______Brands Software and Definite useful Indefinite useful Goodwill (c) Relationships Contracts with Work in licenses life life (b) with clients (d) represented (d) progress Total S/(000) S/(000) S/(000) S/(000) S/ (000) S/ (000) S/(000) S/(000)

Useful lives (years) - 10 20 - - 12 - 31 1 - 26 -

Cost - Balance as of January 1, 2019 252,767 41,328 805,135 1,982,106 46,300 204,800 39,902 3,372,338 Additions (e) 5,629 - - - - - 17,008 22,637 Write-downs, note 25 (2,236) - - - - - (813) (3,049) Transfers 7,414 - - - - - (7,414) - Transfers of property, installations, furniture and equipment, note 14(a) ------654 654 Translation effect (86) - - - - - (8) (94) ______Balance as of December 31, 2019 263,488 41,328 805,135 1,982,106 46,300 204,800 49,329 3,392,486 ______Acquisition of Subsidiary, note 2(a) 58,946 - 57,293 739,968 - - - 856,207 Additions (e) 32,170 - - - - - 12,446 44,616 Write-downs, note 25 (173) - - - - - (2,393) (2,566) Disposal to Subsidiary, note 2(b) (525) ------(525) Transfers 36,545 - - - - - (36,545) - Transfers of property, installations, furniture and equipment, note 14(a) 323 - - - - - 166 489 Translation effect 355 ------355 ______Balance as of December 31, 2020 391,129 41,328 862,428 2,722,074 46,300 204,800 23,003 4,291,062 ______

Accumulated amortization - Balance as of January 1, 2019 149,443 7,678 - - 1,720 22,534 2,660 184,035 Additions, note 24(b) 25,979 847 - - 1,877 24,582 400 53,685 Write-downs, note 25 (1,506) - - - - - (471) (1,977) Translation effect (58) - - - - - (4) (62) ______Balance as of December 31, 2019 173,858 8,525 - - 3,597 47,116 2,585 235,681 ______Acquisition of Subsidiary, note 2(a) 54,212 ------54,212 Additions, note 24(b) 28,493 2,298 - - 1,877 41,182 636 74,486 Write-downs, note 25 (173) ------(173) Disposal to Subsidiary, note 2(b) (525) ------(525) Translation effect 309 ------309 ______Balance as of December 31, 2020 256,174 10,823 - - 5,474 88,298 3,221 363,990 ______

Net book value as of December 31, 2020 134,955 30,505 862,428 2,722,074 40,826 116,502 19,782 3,927,072 ______

Net book value as of December 31, 2019 89,630 32,803 805,135 1,982,106 42,703 157,684 46,744 3,156,805 ______

63 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(b) The InRetail Group Management has estimated the fair value of this intangible assets using the “Relief from royalty” method, which constitutes a usual method of discounted cash flows used for the valuation of commercial brands. The main assumption of this method is that the company owner of the brand saves the royalty payment to other hypothetical owner, therefore the value of this brand would be represented by the amount that is avoided to pay for these royalties. The detail of the brands with indefinite useful live is presented below:

Amount S/(000)

Brands with indefinite life - Inkafarma, acquired in 2011 373,054 Mifarma, acquired in 2018 395,355 Química Suiza, acquired in 2018 17,791 Ninet, acquired in 2018 15,911 Makro, note 2(a) 57,293 Other 3,024 ______862,428 ______

The factors considered to determine that the brand has an indefinite life are the following:

- History and expected use of the asset by the Company: this is the most important factor to consider in the definition of the useful life of the brands “Inkafarma”, “Mifarma”, “Química Suiza”, “Ninet”, “CiFarma”, “CIPA” and “Makro”, considering that those are the most recognized brands in the pharmacy and food retail industries in Peru and the InRetail Group expects to further strengthen them in the market in the long term.

- Legal, regulatory or contractual limits to the useful life of the intangible asset: there are no legal regulatory or contractual limits linked to the brands. The brands are duly protected, and the pertinent registrations remain valid.

- Effect of obsolescence, demand, competition and other economic factors: “Inkafarma”, “Mifarma”, “Química Suiza”, “Ninet”, “CiFarma”, “CIPA” and “Makro”, are the most recognized brands in the pharmacy and food retail industries in Peru. This implies a low risk of obsolescence.

- Maintenance of the necessary investment levels to produce the projected future cash flows for the brands are based on investments in marketing, technology and the growth and revamping of the pharmacy and food retail chains infrastructure. Furthermore, efficiencies are expected as a result of synergies and the growth in scale of the operations, which are compatible and reasonable for the industry. However, an increase in general administration expenses is also contemplated to sustain the projected increase in sales.

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Notes to the consolidated financial statements (continued)

- Relationship of the useful life of an asset or group of assets with the useful life of an intangible asset: The brands do not depend on the useful life of any asset or group of assets as they exist independently, and are not related to sectors subject to technological obsolescence or other causes.

(c) Goodwill is initially measured at cost, which corresponds to the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests, if existing, over the net identifiable assets acquired and liabilities assumed. The details of goodwill are presented below:

Amount S/(000)

Goodwill - Inkafarma, acquired in 2011 709,472 Quicorp, acquired in 2018 1,272,634 Makro, note 2(a) 739,968 ______2,722,074 ______

Management carries out an annual recoverability test to its indefinite-life assets, composed of goodwill and brands. To do so, the goodwill and the brands acquired in business mergers were allocated to the cash generating unit (CGU) “Pharmacies” and “Food Retail” from the acquisition date.

When the CGU’s recoverable amount is less than its carrying amount, an impairment loss is recognized. The impairment losses related to goodwill cannot be reversed in future periods.

The recoverable amount of the “Pharmacies” and “Food Retail” have been determined based on fair value minus cost to sales calculated using cash flow projections from financial budgets approved by senior management covering a ten-year period.

The cash flows that continue beyond the period indicated in the projections were extrapolated using a specific growth rate similar to the average long-term growth rate for the country in which each entity operates.

Following are the key assumptions used in the impairment assessment for each CGU as of December 31, 2020 and 2019:

- Sales growth rate – A sales growth rate was considered for each CGU between 3 and 11 percent. This growth rate is based on expected operational plans for each CGU and brand.

- EBITDA margins – A margin from 13.0 to 14.4 percent was considered for sales. EBITDA margins are based on historical values recorded in years prior to the beginning of the budgeted period and increases during the budgeted period with the normal expected efficiency improvements.

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Notes to the consolidated financial statements (continued)

- Royalty rate - A royalty rate from 0.9 to 1.9 percent was considered. Royalty rates are based on values considered in the purchase price allocation of Quicorp. In addition, these rates were corroborated with information of similar transactions in purchase price allocation processes.

- Discount rates – Discount rates used for each CGU are between 8.06 as of December 2020 (between 8.7 and 9.7 percent as of December 2019). Discount rates represent the current market assessment of the risks specific to each CGU and brand, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the CGU and brands and represents its weighted average cost of capital (WACC). The beta factors are evaluated annually based on publicly available market data. The factors that have an impact on the discount rate calculation, as country risk, free discount rate, beta, market premium and cost of debt are evaluated annually based on publicly available market data.

In the opinion of the InRetail Group’s Management, the aforementioned assumptions are, in general terms, aligned to information of the sector in which each CGU and brand operates.

As of December 31, 2020 and 2019, the book value of goodwill related to each CGU has been compared with the recoverable value and Management has determined that it is not necessary to record any impairment.

The key assumptions described above may change if market conditions and the economy change. The Company estimates that changes in these assumptions, which would be reasonable to expect, would not cause the recoverable amount of "Pharmacies" and “Food Retail” CGU to decrease below their book value.

(d) For the valuation of customer relationships and contracts with represented companies, the “Multi Period Excess Earning Method” was applied. It reflects the present value of the surplus cash flows generated by the intangible asset during their lifespan after deducting tax charges for the tangible or intangible operating assets used.

Customer relationships result from the provision of a service for the manufacture of one or more specific products. To determine the lifespan, the historical loss of customers in each business operation and its consistency with the characteristics of the business and the market in which it operates were analyzed.

On the other hand, contracts with represented companies mainly define the exclusivity for the distribution of a product, as well as the inventory levels required to maintain the operation. To determine the lifespan, the remaining lifespan of contracts in force at the transaction date and the history of renewals were considered.

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Notes to the consolidated financial statements (continued)

(e) During 2020 and 2019, additions correspond mainly to disbursements made for the acquisition of computer programs, commercial programs, and other logistic programs and the corresponding licenses of use for the computer equipment. Such disbursements include the costs of acquisition of the software and licenses, development costs and other directly attributable costs. In Management's opinion, the ongoing projects as of December 31, 2020, will be substantially completed during 2021.

(f) As of December 31, 2020 and 2019, the InRetail Group does not maintain guarantees on their intangible assets.

(g) In the case of intangible assets with a definite useful life, in the opinion of Management, there is no indication of impairment in those assets as of December 31, 2020 and 2019. Likewise, as of December 31, 2020 and 2019, Management performed an impairment test for brands with an indefinite useful life (detailed in (b), above), and as a result of said test, it has determined that it is not necessary to recognize any provision for impairment.

17. Leases (a) The InRetail Group maintains leasing contracts for land, buildings, facilities and vehicles used for its operations. Leases of land, buildings and facilities generally have terms of 1 to 60 years, and leases of vehicles have terms of 2 to 4 years. The Companies obligations under its leases are guaranteed by the lessor's title of the leased assets.

There are several leases that include extension and termination options and variable payments.

The InRetail Group has also entered into certain leases of premises with terms of 12 months or less and leases of low-value office equipment. The Companies apply the short-term and low-value lease exemptions for this kind of leases.

(b) The carrying amounts of right-of-use assets and movements recognized during the period are detailed below:

Buildings and Land facilities Vehicles Total S/(000)

Cost - Balance as of January 1, 2019, note 4.2 147,767 1,427,413 1,679 1,576,859 Additions 5,676 140,470 289 146,435 Disposals, note 25 - (14,709) - (14,709) Translation effect - (415) (21) (436) ______Balance as of January 1, 2020 153,443 1,552,759 1,947 1,708,149 ______

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Notes to the consolidated financial statements (continued)

Buildings and Land facilities Vehicles Total S/(000)

Acquisition of Subsidiary, note 2(a) - 27,873 - 27,873 Additions 932 281,408 2,343 284,683 Disposals, note 25 - (20,797) (365) (21,162) Disposals Subsidiary, note 2(b) - (3,271) - (3,271) Translation effect - 2,225 117 2,342 ______Balance as of December 31, 2020 154,375 1,840,197 4,042 1,998,614 ______

Accumulated depreciation - Balance as of January 1, 2019 - - - - Additions, (e) and note 24(b) 7,463 298,849 550 306,862 Disposals, note 25 - (1,570) - (1,570) Translation effect - (27) 2 (25) ______Balance as of January 1, 2020 7,463 297,252 552 305,267 ______Acquisition of Subsidiary, note 2(a) - 3,989 - 3,989 Additions, (e) and note 24(b) 7,406 297,848 968 306,222 Disposals, note 25 - (9,207) (194) (9,401) Disposals Subsidiary, note 2(b) - (2,380) - (2,380) Translation effect - 1,142 49 1,191 ______Balance as of December 31, 2020 14,869 588,644 1,375 604,888 ______

Net book value of December 31, 2020 139,506 1,251,553 2,667 1,393,726 ______

Net book value of December 31, 2019 145,980 1,255,507 1,395 1,402,882 ______

(c) The carrying amounts of lease liabilities and movements during the period are detailed below:

2020 2019 S/(000) S/(000)

Balance at the beginning of the year 1,402,280 1,540,878

Acquisition of Subsidiary, note 2(a) 26,404 -

Additions 284,684 146,435

Increase for accrued interest, (e) and note 26 97,317 97,076

Payments -

Leases (371,788) (349,838)

Payments made at the beginning of the contract (4,456) -

Rent paid in advance (1,326) -

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Notes to the consolidated financial statements (continued)

2020 2019 S/(000) S/(000)

Disposal of Subsidiary, note 2(b) (890) -

Cancellation of contracts, note 25 (11,990) (13,061)

Exchange rate variation 92,996 (18,825)

Translation effect 1,304 (385) ______

Balance at the end of the year ______1,514,535 ______1,402,280

Current portion 226,749 306,145

Non-current portion 1,287,786 1,096,135 ______

1,514,535 1,402,280 ______

(d) As of December 31, 2020 and 2019, the payment schedule of these obligations is as follows:

2020 2019 S/(000) S/(000)

2020 - 306,145

2021 226,749 218,522

2022 218,382 196,199

2023 to 2024 281,341 273,362

2025 onwards 788,063 408,052 ______

Total 1,514,535 1,402,280 ______

(e) The following table presents the amounts recognized in the consolidated income statement:

2020 2019 S/(000) S/(000)

Depreciation expense on right-of-use assets, (b) and note

24(b) 306,222 306,862

Interest expense on lease liabilities, (c) and note 26 97,317 97,076

Expenses related to variable, short-term and low-value

leases (included as “Selling expenses” and

“Administrative expenses”, note 24(b) 58,529 30,239 ______

Total amount recognized in profit and loss ______462,068 ______434,177

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Notes to the consolidated financial statements (continued)

(f) The InRetail Group leases commercial premises and these leases contain variable payments based on sales. Management's objective is to align lease expenses with income.

Information on the variable lease payments made by the Companies, including a comparison with fixed payments, is presented below:

2020 2019 ______Fixed Variable Fixed Variable payments payments Total payments payments Total S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

Fixed lease 371,349 - 371,349 349,439 - 349,439

Variable lease - 58,529 58,529 - 30,239 30,239 ______

______371,349 ______58,529 ______429,878 349,439______30,239 379,678______

18. Trade payables (a) Below is the composition of the item as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

Bills payable for purchase of goods (b) 2,904,495 2,549,796 Bills payable for commercial services 312,678 322,827 Provision for services and maintenance 105,954 90,467 ______

3,323,127 2,963,090 ______

Current portion 3,317,632 2,946,832 Non-current portion 5,495 16,258 ______

3,323,127 2,963,090 ______

(b) This caption mainly includes the obligations to non-related local and foreign suppliers, denominated mainly in local currency and U.S. Dollars, with current maturities and that do not bear any interest. There have been no guarantees on these obligations.

InRetail Group offers to its supplier’s access to an accounts payable services arrangement provided by third party financial institutions. This service allows the suppliers to sell their receivables to the financial institutions in an arrangement separately negotiated by the supplier and the financial institution, enabling suppliers to better manage their cash flow and reduce payment processing costs. The InRetail Group has no direct financial interest in these transactions. All InRetail Group’s obligations, including amounts due, remain due to its suppliers as stated in the supplier agreements.

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Notes to the consolidated financial statements (continued)

19. Other payables (a) The table below presents the composition of this caption as of December 31, 2020 and 2019

2020 2019 S/(000) S/(000)

Taxes payable 117,207 20,800 Provision for contingencies, note 30(b) 104,272 94,168 Employees profit sharing (b) 106,493 86,992 VAT payable 57,144 45,789 Interest payable of financial obligations and senior notes, notes 20(f) and 21(f) 56,293 50,781 Salaries and social benefits 56,059 36,503 Vacations accrual 49,681 46,314 Penalty to pay (d) 23,000 - Pensions reserve (c) 21,131 19,865 VAT withholdings in purchases 12,774 8,723 Shopping voucher pending to be used 11,305 15,223 Deposits from third parties 10,216 8,513 Rent payable 6,674 1,360 Provisions for unbilled construction and maintenance services 2,924 15,485 Other 59,436 33,010 ______

694,609 483,526 ______

Current portion 671,161 462,237 Non-current portion 23,448 21,289 ______694,609 483,526 ______

The above items have mostly current maturities, do no bear interest and have no guarantees granted on them.

(b) In accordance with the employee profit sharing regime in force regulated by the Legislative Decree 677, the employees in Peru have the right to receive a participation between 5 and 8 percent of taxable income, 50 percent of that amount is distributed pro rata amongst all the employees on the basis of the days worked and the remaining balance in proportion with the basic remunerations perceived in the period.

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Notes to the consolidated financial statements (continued)

(c) In accordance with the labor law in Ecuador, the workers who meet certain conditions during their labor period, will have the right to be retired by their employers or to receive a pension in case the labor relationship has been produced by eviction. The provision for retirement and eviction pensions is determined by an external qualified actuarial, using market factors and estimation in accordance with the actuarial methodology and considering the labor law in Ecuador. The provision for retirement and eviction pensions as of December 31, 2020 and 2019, covers appropriately the amount that was estimated in the actuarial valuation.

(d) Corresponds to a penalty related to a loan held by Makro Supermayorista S.A. with CrediScotia Financiera S.A. at the purchase date of Makro (see Note 2(a)); according the respective purchase contract signed between Supermercados Peruanos S.A., InRetail Foods S.A.C. and the former principal shareholder of Makro, these last ones will reimburse the aforementioned penalty. As of December 31, 2020, Makro holds an account receivable from third parties included in “Employee loans and third parties”, which is part of the line item “Other account receivables, net” amounting to S/23,000,000; as of the date of this report, it was entirely paid off.

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Notes to the consolidated financial statements (continued)

20. Interest–bearing loans and borrowings (a) The table below presents the composition of this caption as of December 31, 2020 and 2019:

Original currency Interest rate Maturity Original amount 2020 2019 ______% US$(000) $(000) S/(000) S/(000) S/(000) Leasing (b) Scotiabank Perú S.A.A, note 15(c) S/ 5.51 2025 - - 380,000 367,378 239,970 Banco International del Perú S.A.A.- Interbank, note 27(b) US$ and S/ Between 4.53 and 4.98 2022-2024 50 - 101,963 101,335 101,152 Banco de Crédito del Perú S/ Between 5.05 and 6.60 2021-2025 - - 40,231 32,508 3,992 Banco Interamericano de Finanzas S/ Between 5.240 and 2021 - 2022 - - 36,111 15,557 - 7.50 BBVA Banco Continental S.A. S/ 4.95 2021-2024 - - 18,279 12,026 71 Hewlett Packard S.R.L. (c) US$ Between 1.45 and 6.20 2021-2025 17,178 - - 32,574 21,041 Banco Santander del Perú S.A. S/ Between 6.92 and 7.65 2022 - - 1,419 644 1,043 Scotiabank Perú S.A.A. S/ 6.75 2020 - - 24,831 - 3,064 Others US$ Between 4.53 and 9.50 2021 301 - - 404 687 ______562,426 371,020 ______Promissory notes and loans (d) J.P. Morgan Chase Bank N.A., note 2(a) US$ 1.44 2021 375,000 - - 1,344,679 - Scotiabank Perú S.A.A, S/ Between 1.18 and 5.07 2021-2027 - - 1,175,550 954,458 991,572 Banco Internacional del Perú S.A.A.– Interbank, note 27(b) S/ Between 1,76 and 4.98 2021-2025 - - 429,987 370,286 322,965 BBVA Banco Continental S.A. S/ 4.15 2025 - - 120,000 119,103 - Banco de Crédito del Perú S/ Between 0.82 and 1.48 2021-2023 - - 63,000 63,000 144,152 Citibank S.A. US$ 5.00 2022 10,000 - - 30,203 33,170 Banco de Bogotá COP 6.03 2023 - 2,900,000 - 3,061 2,935 Banco Pichincha S.A. (Ecuador) US$ 8.95 2021 300 - 1,087 1,659 BBVA Colombia S.A. (Bogotá) COP 6.10 2021 - 89,968 - 94 - Citibank S.A. S/ 2.79 2020 - - 33,000 - 26,000 BBVA Banco Continental S.A. S/ 3.99 2020 - - 15,000 - 15,000 - ______2,885,971 1,537,453 ______Financed premium “Call Spread”, note 13 JP Morgan S.A. US$ 10.205 2028 23,440 - - 70,418 70,086 Citibank S.A. US$ 6.473 2023 18,297 - - 35,785 44,491 - ______106,203 114,577 ______3,554,600 2,023,050 ______

Current portion 1,773,620 386,266 Non-current portion 1,780,980 1,636,784 ______3,554,600 2,023,050 ______

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Notes to the consolidated financial statements (continued)

(b) As of December 31, 2020 and 2019, leasing contracts are in local and foreign currency, intended mainly for the equipment of commercial stores and warehouses of the Company and its subsidiaries. In accordance with the provisions of the leasing contracts, the guarantees that the Company and its subsidiaries maintain with the financial entities are the same assets related to those contracts, see note14(b).

Financial leasing operations are guaranteed by the assets related to them, see note 14(d). Future minimum payments for the leasing described in paragraph (a) above, net of future finance expenses, are as follows:

______2020 ______2019 Present value of Present value of Minimum the leasing Minimum the leasing payments installments payments installments S/(000) S/(000) S/(000) S/(000)

Up to 1 year 94,573 66,427 24,978 19,137 Between 1 and 5 years 573,664 495,999 372,308 351,883 ______Total minimum payments 668,237 562,426 397,286 371,020 Minus-amounts representing finance charges (105,811) - (26,266) - ______Present value of future minimum payments 562,426 562,426 371,020 371,020 ______

(c) Corresponds to the debt related to the purchase and leasing of computers. These obligations do not have specific guarantees.

(d) Promissory notes and bank loans are used to finance working capital and do not have any specific guarantee.

The main financial requirements (“covenants”) maintained for loans acquired with Banco Internacional del Perú S.A.A., Banco de Crédito del Perú and Scotiabank Perú S.A.A., during their duration, are measured as follows using the financial statements of InRetail Pharma S.A. and Supermercados Peruanos S.A., as applicable:

- The net debt ratio resulting from dividing (i) the net financial debt by (ii) the LTM (last twelve months) EBITDA must not be greater than 3.50 in the case of Banco Internacional del Perú S.A.A., Banco de Crédito del Perú and Scotiabank Peru S.A.A.

- The ratio of number of years to pay off the structural debt resulting from dividing (i) the structural debt by (ii) the theoretical cash generation (last twelve months) must not be greater than 8.00 in the case of Banco de Crédito del Perú.

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Notes to the consolidated financial statements (continued)

Likewise, as of 2020, the following financial requirements (“covenants”) are maintained for certain promissory notes and financial leasing contracts acquired by InRetail Real Estate and subsidiaries with Scotiabank Perú S.A.A., which are measured using the financial statements of InRetail Shopping Malls:

- The debt ratio, resulting from dividing (i) total debt, by (ii) total assets, must not be less than 60 percent.

- The guaranteed debt ratio, resulting from dividing (i) guaranteed debt, by (ii) total assets, must not be less than 30 percent.

- The net interest coverage ratio, resulting from dividing (i) EBITDA, by (ii) financial expenses (last twelve months), must not be greater than 1.75.

- The debt service coverage ratio, resulting from dividing (i) EBITDA, by (ii) debt service (last twelve months), must not be greater than 1.25.

Finally, the bridge loan acquired with J.P. Morgan Chase Bank, N.A. contains covenants, which include restrictions on the contraction of debt and maintenance of certain financial ratios, among others.

As of December 31, 2020 and 2019, the InRetail Group has complied with the financial requirements (“covenants”) indicated above, except for the net interest coverage ratio and the debt service coverage ratio committed by InRetail Real Estate and subsidiaries, which as of December 31, 2020 were below the minimum values described above; However, InRetail Real Estate obtained the respective waiver and, in that sense, as of December 31, 2020, the debt classification has been made in accordance with the payment schedule originally agreed with the bank.

(e) Debts and interest – bearing loans are payable as follow:

2020 2019 S/(000) S/(000)

2020 - 386,266 2021 1,773,620 195,951 2022 432,283 189,959 2023 forward 1,348,697 1,250,874 ______

Total 3,554,600 2,023,050 ______

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Notes to the consolidated financial statements (continued)

(f) During the year 2020, accrued interests for these loans amounted approximately to S/102,030,000 (approximately to S/106,832,000 during the year 2019) and are presented in “Finance expenses” caption of the consolidated income statements, see note 26. Likewise, as of December 31, 2020 and 2019, the balance of interest payable on these obligations amounted to S/2,895,000 and S/9,392,000, respectively, see note 19(a).

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Notes to the consolidated financial statements (continued)

21. Senior notes issued (a) The table below presents the composition of this caption as of December 31, 2020 and 2019:

Type of obligation Original Interest ______Original amount ______Total Entity (bonds) currency rate Maturity (*) 2020 2019 % US$(000) S/(000) S/(000) S/(000)

InRetail Pharma S.A. (b) Senior Notes Unsecured US$ 5.375 2023 400,000 - 1,436,872 1,310,706 InRetail Pharma S.A. (b) Senior Notes Unsecured S/ 6.438 2025 - 385,800 384,041 383,707 InRetail Shopping Malls (c) Senior Notes Unsecured US$ 5.750 2028 350,000 - 1,195,204 1,087,035 InRetail Shopping Malls (d) Senior Notes Unsecured S/ 6.563 2028 - 313,500 310,202 309,859 InRetail Shopping Malls (e) Senior Notes Unsecured S/ 7.875 2034 - 141,000 135,588 135,514 ______

Total 3,461,907 3,226,821 ______

(*) The payment of the principal of the senior notes is at maturity, consequently, balances as of December 31, 2020 and 2019 are considered long-term.

(b) In May 2018, InRetail Pharma S.A. issued “Senior Notes Unsecured” in the international market for US$400,000,000 and S/385,800,000, respectively. These borrowings were recorded in the consolidated financial statements at their amortized cost at a 5.778 and 6.559 percent effective interest rate, respectively, after considering the respective up-front fees for approximately US$3,512,000 equivalent to a total amount of approximately S/12,728,000 as of December 31,2020 (approximately US$4,852,000 equivalent S/16,094,000 as of December 31, 2019) and S/1,759,000 as of December 31,2020 (S/2,093,000 as of December 31, 2019), respectively.

The funds obtained from the issuances were mainly used to pay the bridge loan used in the acquisition of Quicorp S.A. and Subsidiaries. As a result of these issuances, certain obligations and restrictive clauses must be complied until its maturity and settlement. InRetail Pharma S.A. and Quicorp S.A. and its subsidiaries (guarantors) will always represent jointly at least 85 percent of Consolidated Adjusted EBITDA of InRetail Pharma S.A. and its Subsidiaries. In the opinion of Management, these clauses do not limit the operations of InRetail Pharma S.A. and its subsidiaries and have been complied with as of December 31, 2020 and 2019.

(c) In April 2018, InRetail Shopping Malls, Subsidiary of the Company, issued corporate bonds called “5.750 Unsecured Senior Notes” for US$68,312,000, under the Rule 144A and the Regulation S of the U.S. Securities Act of 1993. The amount resulting from this issuance was used to pre-pay the bond holders that chose not to participate in the bonds exchange, as explained in the following paragraph.

InRetail Shopping Malls made a bond exchange offer aimed at holders of corporate bonds named “6.500% Senior Notes due 2021”, issued in 2014, thus exchanging bonds for US$263,723,000 and generating financial charges for around US$17,965,000 in the caption “Interest-bearing loans and borrowings" of the consolidated statement of financial position; therefore, the total effect on the aforementioned caption for the bond exchange was US$281,688,000. Consequently, considering the bond issuance of April 2018 (US$68,312,000) and the bonds exchange explained before, the total issuance amount of bonds “5.750 Senior Unsecured Notes” was US$350,000,000.

This obligation was recorded in the consolidated financial statements at amortized cost at an annual effective interest rate of 6.752 percent, after considering the structuring costs amounting to approximately US$20,198,000, equivalent to S/73,196,000 (US$22,283,000, equivalent to S/73,915,000, as of December 31, 2019).

The Company’s Management concluded that the aforementioned bond exchange did not generate a significant modification in the terms and conditions of the financial liability; therefore, it did not recognize a new financial liability. The original costs of the transaction related to the exchanged bonds will continue to be amortized based on the calendar of the new bond.

77 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(d) In April 2018, debt instruments (“Notes”) in Soles were issued for S/313,500,000, with interest paid every six months and which principal is paid in one installment at their maturity date. This obligation is recorded in the consolidated financial statements at amortized cost at an effective annual rate of 6.730 percent, after considering structuring costs of approximately S/3,298,000, as of December 31, 2020 (S/3,641,000, as of December 31, 2019).

(e) In July 2014, InRetail Shopping Malls made a private offering of “Senior Notes Unsecured” in the local market and abroad for S/141,800,000. This obligation was recorded at amortized cost and includes issuance charges for approximately S/1,412,000, as of December 31, 2020 (S/1,486,000, as of December 31, 2019). This obligation was recorded in the consolidated financial statements at amortized cost at an effective annual interest rate of 7.988 percent. Additionally, as of December 31, 2020 and 2019, it is presented net of S/4,000,000, corresponding to the “Senior Notes Unsecured” maintained by InRetail Shopping Malls.

(f) The accrued interests during 2020 for these obligations amounted to approximately S/205,626,000 (approximately S/198,213,000, during 2019) and are presented in the caption “Finance expenses” of the consolidated income statements, see note 26. Likewise, as of December 31, 2020 and 2019, the outstanding amounts of interests payable were to S/53,398,000 and S/41,389,000, respectively, see note 19(a).

(g) During 2020 and 2019, the InRetail Group recognized structuring commission expenses for approximately S/17,316,000 and S/15,627,000, respectively, and are presented in the “Finance expenses” caption of the consolidated income statements, note 26.

(h) International issuances are listed in the Luxembourg Stock Exchange. Furthermore, the local and international issuances hold certain financial and operating covenants, which, according to Management, do not limit its operations and were complied with as of the dates of the consolidated statement of financial position, with the exception of the financial ratio "debt service" corresponding to InRetail Shopping Malls, which is operative and it does not generate the enforceability of the debt. In this regard, Management has been managing the breach of said covenant and, in its opinion, it will not have significant negative impacts on its operations.

78 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

22. Deferred income tax (a) The table below presents the composition of this caption by Subsidiary:

______2020 ______201______9 Deferred asset, Deferred Deferred asset, Deferred net liability, net net liability, net S/(000) S/(000) S/(000) S/(000)

Supermercados Peruanos S.A. and Subsidiaries 3,758 58,975 2,379 80,108 InRetail Real Estate Corp. and Subsidiaries 4,637 35,916 2,667 43,432 InRetail Pharma S.A. and Subsidiaries 84,887 48,915 46,294 44,251 IR Management S.R.L. 82 - - 140 ______93,364 143,806 51,340 167,931 Consolidation adjustments (*) 6,669 332,073 592 297,657 ______

Deferred, net 100,033 475,879 51,932 465,588 ______

(*) As of December 31,2020 and 2019, corresponds to eliminations and adjustments of consolidation, such as treasury shares, Senior Notes purchases, reclassification of investment properties to fixed assets, among others.

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Notes to the consolidated financial statements (continued)

(b) The table below presents the detail of the deferred income tax assets and liabilities by nature:

(Debit)/credit (Debit)/credit to the to the Balance as of consolidated Balance as of consolidated Balance as of January 1, statement of December 31, statement of Subsidiary Sale of December 31, 2019 income Equity Translation 2019 income Equity Translation Acquisition Subsidiary 2020 S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

Deferred asset - Leases - 5,886 - 3 5,889 17,753 - 31 - (6) 23,667 Fair Value Update - Call Spread ------19,528 - - - 19,528 Differences in depreciation rates 10,613 2,731 - - 13,344 5,031 - - - - 18,375 Provisions 10,410 (1,990) - (48) 8,372 7,868 - 185 - (2) 16,423 Tax loss 27,244 (10,042) - - 17,202 (4,642) - - - - 12,560 Provision for holidays 4,083 (131) - (3) 3,949 4,600 - 10 - (37) 8,522 Rebates estimate 4,249 (3,651) - (5) 593 6,074 - 29 - - 6,696 Others 11,653 1,803 (2,271) (54) 11,131 9,452 - 411 - (35) 20,959 ______

68,252 (5,394) (2,271) (107) 60,480 46,136 19,528 666 - (80) 126,730 ______

Deferred liability - Higher book value of property, furniture and equipment (5,511) - - - (5,511) - - - - - (5,511) Effect of hedging and linear accrual – Call Spread - - - - - (5,349) - - - - (5,349)

Higher depreciation for lease and leaseback - - - - - (4,698) - - - - (4,698) Accrual of structuring costs - - - - - (3,743) - - - - (3,743) Leases - (2,347) - 1 (2,346) 81 - (24) - - (2,289) Others (588) (103) - - (691) (4,416) - - - - (5,107) ______(6,099) (2,450) - 1 (8,548) (18,125) - (24) - - (26,697) ______Total deferred income tax asset, net 62,153 (7,844) (2,271) (106) 51,932 28,011 19,528 642 - (80) 100,033 ______

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Notes to the consolidated financial statements (continued)

(Debit)/credit (Debit)/credit to the to the Balance as of consolidated Balance as of consolidated Balance as of January 1, statement of December 31, statement of Subsidiary Sale of December 31, 2019 income Equity Translation 2019 income Equity Translation Acquisition Subsidiary 2020 S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

Deferred asset - Leases - 45,166 - - 45,166 1,683 - - 744 - 47,593 Loss due to theft of goods 35,245 (634) - - 34,611 (3,766) - - 2,459 - 33,304 Unrealized gain on merchandise sales - 4,557 - - 4,557 28,388 - - - 32,945 Provisions 11,444 917 - - 12,361 (909) - - 2,682 - 14,134 Rebates estimate 13,221 1,599 - - 14,820 (4,410) - - - - 10,410 Provision for holidays 9,697 245 - - 9,942 (3,766) - - 847 - 7,023 Differences in depreciation rates 1,438 3,061 - - 4,499 (5,194) - - 809 - 114 Others 7,214 2,794 (3,758) - 6,250 (251) (1,411) - 5,597 - 10,185 ______

78,259 57,705 (3,758) - 132,206 11,775 (1,411) - 13,138 - 155,708 ______

Deferred liability - Higher value of intangibles generated in business combination (321,769) 7,795 - - (313,974) 12,787 - - (75,107) - (376,294) Higher depreciation for lease and leaseback (104,382) (6,496) - - (110,878) (6,744) - - (19,851) - (137,473) Higher book value of property, furniture and equipment (46,200) 280 - - (45,920) (438) - - (5,000) - (51,358) Gain from valuation of investment properties (20,649) (2,917) - - (23,566) (6,079) - - - - (29,645) Attributed cost for land appraisal (15,531) - - - (15,531) - - - - - (15,531) Gain from valuation of investment properties (17,273) (7,032) - - (24,305) 10,400 - - - - (13,905) Leases - (42,394) - - (42,394) 36,914 - - - - (5,480) Hedging effect "Call Spread" (14,042) - - - (14,042) 14,042 - - - - - Others (20,029) 12,845 - - (7,184) 5,406 - (123) - - (1,901) ______(559,875) (37,919) - - (597,794) 66,288 - (123) (99,958) - (631,587) ______Total deferred income tax liability, net (481,616) 19,786 (3,758) - (465,588) 78,063 (1,411) (123) (86,820) - (475,879) ______

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Notes to the consolidated financial statements (continued)

(c) The table below presents the income tax expenses reported in the consolidated statements of income of 2020 and 2019:

2020 2019 S/(000) S/(000)

Current - In Peru (312,086) (222,956) Tax related to special purpose entities, note 31(e) 1,995 (100,269) Abroad (6,774) (9,918) ______(316,865) (333,143) ______

Deferred (*) - In Peru 103,835 10,470 Abroad 2,239 1,472 ______106,074 11,942 ______(210,791) (321,201) ______

(*) The deferred income tax has been calculated on all temporary differences, considering the effective income tax rate where the Company and its subsidiaries are located.

(d) The following is the determination of the income tax:

______2020 ______2019 S/000 % S/000 %

Income before income tax 550,142 100.00 918,039 100.00 ______Theoretical expense 162,292 29.50 270,822 29.50

Effect of permanent differences ______48,499 ______8.82 ______50,379 ______5.49

Expense for income tax 210,791 38.32 321,201 34.99 ______

(e) The income tax asset corresponds to the subsidiaries that, as of December 31, 2020, maintain a credit for this tax, which, at those dates, amounts to approximately S/87,832,000 (approximately S/58,425,000 as of December 31, 2019), see note 12(a).

As of December 31, 2020 and 2019 the provision for current income tax payable, net of advanced payments, amounts to approximately S/73,684,000 and S/21,282,000, respectively.

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Notes to the consolidated financial statements (continued)

Likewise, as of December 31, 2020 and December 31, 2019, the current income tax payable related to special-purpose entities amounted to S/326,683,000 and S/318,848,000, respectively, arising from the net taxable income of Assets in Trusts and the Group’s subsidiaries, see note 31(e).

23. Equity, net (a) Capital stock – The Company’s authorized capital is 800,000,000 of ordinary registered shares without par value. As of December 31, 2020 and 2019, the capital stock of InRetail Perú Corp. is represented by 102,807,319 shares entirely subscribed and paid with an initial issuance value of US$10.00, equivalent to S/2,138,566,000.

(b) Capital premium - Corresponds to the difference between the initial issuance value of US$10.00 and the issuance value of US$20.00, which corresponds to its subscription value for the international offer of the new shares, net of the expenses related to the issuance (professional fees to lawyers, investment bankers, transaction commissions, among others).

(c) Treasury shares - As of December 2020 and 2019, 1,750,005 treasury shares are held, respectively, for a nominal value of S/57,636,000.

(d) Dividends declared and paid – In December 2020 and 2019, Supermercados Peruanos S.A. distributed dividends, corresponding S/19,000 and S/3,000, respectively, to minority shareholders.

In February, April, August and December, 2020, InRetail Pharma S.A distributed dividends to minority shareholders for an amount of S/27,186,000 (in April and October, 2019, distributed dividends to minority shareholders for an amount of S/17,929,000).

In the General Shareholders' Meeting of April 7, 2020, it was agreed to distribute cash dividends for US$58,000,000 equivalent to S/197,896,000, which corresponds to a dividend of S/0.56416217 per share, which was distributed in May 2020. Of this amount, S/3,369,000 corresponds to the dividends related to treasury shares held by the InRetail Group. In March 26, 2019, it was agreed to distribute cash dividends for US$35,000,000 equivalent to S/115,640,000, which corresponds to a dividend of S/0.34044269 per share, which was distributed in May 2019. Of this amount, S/1,969,000 corresponds to the dividends related to treasury shares held by the InRetail Group.

(e) Unrealized profit or loss- As of December 31, 2020 and 2019, the unrealized profit or loss was generated due to the financial instruments at fair value through other comprehensive income and due to the derivative– “Call spread”, see notes 11 and 13, respectively.

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Notes to the consolidated financial statements (continued)

24. Operating expenses (a) The table below presents the composition of this caption as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

Cost of sales and services 10,240,703 9,121,810 Selling expenses 2,454,124 2,362,403 Administrative expenses 497,947 427,749 ______13,192,774 11,911,962 ______

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Notes to the consolidated financial statements (continued)

(b) The table below presents the components of operating expenses included in cost of sales and services, selling and administrative expenses captions:

2020 2019 ______Cost of sales Selling Administrative Cost of sales Selling Administrative and services expenses expenses Total and services expenses expenses Total S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

Initial balance of goods, note 10(a) 1,773,215 - - 1,773,215 1,696,905 - - 1,696,905 Initial balance of raw material, note 10(a) 15,204 - - 15,204 12,129 - - 12,129 Initial balance of supplies, note 10(a) 1,008 - - 1,008 1,075 - - 1,075 Initial balance of finished products, note 10(a) 189 - - 189 672 - - 672 Acquisition of subsidiaries 121,621 - - 121,621 - - - - Purchase of goods 10,128,622 - - 10,128,622 8,933,636 - - 8,933,636 Closing balance of goods, note 10(a) (2,012,314) - - (2,012,314) (1,773,215) - - (1,773,215) Closing balance of raw material, note 10(a) (19,552) - - (19,552) (15,204) - - (15,204) Closing balance of supplies, note 10(a) (455) - - (455) (189) - - (189) Closing balance of finished products, note 10(a) (550) - - (550) (1,008) - - (1,008) Impairment of inventories, note 10(d) 12,862 - - 12,862 8,192 - - 8,192 Manufacturing overhead 30,122 - - 30,122 27,790 - - 27,790 Real estate cost of services (e) 171,068 - - 171,068 214,333 - - 214,333 Personnel expenses (f) - 951,267 328,748 1,280,015 - 905,856 279,244 1,185,100 Depreciation, note 14(a) 6,187 206,440 18,100 230,727 4,330 202,632 18,906 225,867 Depreciation of asset for right of use, note 17(b) 11,906 286,950 7,366 306,222 12,295 288,200 6,367 306,862 Amortization, note 16(a) 419 56,902 17,165 74,486 69 41,975 11,641 53,685 Services provided by third parties (c) - 402,785 82,040 484,825 - 423,311 68,944 492,255 Advertising - 106,728 26 106,754 - 139,512 67 139,579 Taxes - 36,696 8,865 45,561 - 43,952 10,470 54,422 Packing and packaging - 30,909 1,017 31,926 - 42,302 172 42,474 Leasing, note 17(e) 1,151 47,680 9,698 58,529 - 25,043 5,196 30,239 Insurance - 22,018 1,620 23,638 - 20,533 1,725 22,258 Provision for doubtful accounts, net of recoveries, notes 8(g) and 9(d) - 22,336 444 22,780 - 6,772 525 7,297 Provision for doubtful accounts for accounts receivable from related parties, note 27(b) - 576 (32) 544 - 2,023 - 2,023 Other charges (d) - 282,837 22,890 305,727 - 220,292 24,492 244,784 ______

10,240,703 2,454,124 497,947 13,192,774 9,121,810 2,362,403 427,749 11,911,962 ______

(c) Corresponds mainly to expenses for electricity, water, telephone, premises maintenance services in stores and transport services.

(d) Mainly includes general expenses in stores and supplies consumption.

(e) Corresponds to costs directly related to the real estate services, which mainly include electricity, advertising, maintenance, cleaning, among other in shopping centers.

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Notes to the consolidated financial statements (continued)

(f) The table below presents the components of the personnel expenses:

2020 2019 S/(000) S/(000)

By nature - Remunerations 788,234 729,198 Legal bonuses 143,517 144,700 Employees profit sharing 97,809 79,184 Contributions 76,429 74,810 Compensation for time of service 64,701 62,994 Holidays 57,074 53,596 Severance indemnity 9,409 5,507 Other 42,842 35,111 ______1,280,015 1,185,100 ______

By components - Selling expenses 951,267 905,856 Administrative expenses 328,748 279,244 ______1,280,015 1,185,100 ______

The average number of directors and employees in the Companies and its Subsidiaries was 44,658 and 40,453 for the year 2020 and 2019, respectively.

25. Other operating income, net Below is the composition of the item:

2020 2019 S/(000) S/(000)

Other operating income - Disposal of lease liability, note 17(c) 11,990 13,061 Sale of Subsidiary, note 2(b) 7,233 - Disaster recovery 3,167 160 Sale of property, plant and equipment, note 14(e) 1,852 1,120 Earnings from the increase in value of the joint venture, note 27(c) 1,580 - Income from joint venture, note 27(a) and (d) - 33,422 Other 10,028 9,436 ______

35,850 57,199 ______

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Notes to the consolidated financial statements (continued)

2020 2019 S/(000) S/(000)

Other operating expenses - Disposal expense of property, plant and equipment, note 14(e) (18,476) (7,647) Disposal of right-of-use assets, note 17(b) (11,761) (13,139) Loss of intangible assets, note 16(a) (2,393) (1,072) Earnings from consortium, note 27(a) and (d) (2,195) - Subsidiary disposal cost, note 2(b) (1,428) - Loss from valorization of the joint venture, note 27(c) (390) (2,242) Other (2,765) (5,583) ______

(39,408) (27,441) ______

(3,558) 29,758 ______

26. Finance income and expenses Below is the composition of this caption:

2020 2019 S/(000) S/(000)

Finance income - Interest from cash and short-term deposits 5,172 10,771 Interests and other 2,634 7,832 Gain on financial instruments at fair value through profit or loss, note 7 1,850 473 Gain on financial instruments at amortized cost, note 4.3(c.i) 389 - Gain of financial instruments at fair value with changes in other comprehensive income, note 11 - 413 ______

10,045 19,489 ______

Finance expenses - Interests for senior notes issued, note 21(f) (205,626) (198,213) Interests for loans and borrowings, note 20(f) (102,030) (106,832) Interest on lease liabilities, note 17(c) (97,317) (97,076) Linear accrual “Call Spread”, note 13(b) and 13(c) (22,097) (19,935) Structuring costs accrued, note 21(g) (17,316) (15,627) Interests for related parties’ loans, note 27(a) (233) (244) Other finance expenses (19,666) (28,921) ______

(464,285) (466,848) ______

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Notes to the consolidated financial statements (continued)

27. Transactions with related parties (a) The following table provides the total amount of transactions that have been entered into the consolidated statements with related parties during the years 2020 and 2019:

2020 2019 S/(000) S/(000)

Income - Rent income 82,436 125,008 Expenses refund (basic services, maintenance, expenses and promotions) 36,597 31,354 Sale of goods 30,866 4,241 Rendering of services 16,252 15,859 Collection services 9,146 15,233 Key money income 1,507 592 Earnings from the increase in value of the joint venture 1,189 - Interest income 468 2,773 Sale of fixed assets 5 - Revenue related to contract between Supermercados Peruanos S.A. and Financiera Oh! (d) and note 25 - 33,422 Others 13,527 7,722

Expenses - Minor services 2,441 1,037 Related expense to Financiera Oh! agreement (d) and note 25 2,195 - Renting of premises and land 1,939 183 Joint venture expenses 1,509 2,693 Common expenses 1,383 2,254 Interests, note 26 233 244 Commissions 154 524 Others 21,162 3,352

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Notes to the consolidated financial statements (continued)

(b) As a result of the transactions with related companies, the InRetail Group recorded the following balances of receivables and payables as of December 31, 2020 and 2019:

2020 2019 S/(000) S/(000)

Receivables - Homecenters Peruanos S.A. 32,524 32,269 Financiera Oh! S.A. 29,547 9,095 Tiendas Peruanas S.A. 8,964 9,649 Tiendas Peruanas Oriente S.A. 6,575 6,991 Banco Internacional del Perú S.A.A. – Interbank 4,127 2,059 Cineplex S.A. 3,841 613 Bembos S.A.C. 751 751 Interseguro Compañía de Seguros S.A. 314 1,154 Intercorp Retail Inc. 223 226 Others 20,892 19,884 ______107,758 82,691 Less - Provision for doubtful collection accounts, note 24(b) (2,700) (2,156) ______105,058 80,535 ______

Current portion 78,494 50,283 Non–current portion 26,564 30,252 ______105,058 80,535 ______Payables - Homecenters Peruanos S.A. (c) 40,314 42,908 Financiera Oh! S.A. (d) 18,676 23,011 Banco Internacional del Perú S.A.A. – Interbank (e) 3,393 6,634 Others 4,964 4,598 ______67,347 77,151 ______

Current portion 24,830 36,891 Non–current portion 42,517 40,260 ______67,347 77,151 ______

Debts and loans bearing interest, note 20(a) Banco Internacional del Perú S.A.A. – Interbank 471,621 424,117 ______

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Notes to the consolidated financial statements (continued)

The policy of InRetail Group is to make transactions with related parties at terms equivalent to those that prevail in arm’s length transactions.

Outstanding balances at the year-end are unsecured and interest free, except for the financial obligations explained in this note. There have been no guarantees provided or received for any related party receivables or payables. For the year ended December 31, 2020, the Group has not recorded any impairment of receivables relating to S/544,000 (S/2,023,000 as of December 2019), see note 24(b). This assessment is undertaken each financial year by examining the financial position of the related party and the market in which the related party operates.

(c) Supermercados Peruanos S.A. and its subsidiaries maintain joint venture contracts with Homecenters Peruanos S.A. (hereinafter “the associates”). The objective of these contracts is the construction, development and exploitation of the Strip center projects “Lurin” and “Tarapoto”.

Lurin Tarapoto Total S/(000) S/(000) S/(000)

Contract’s term (*) - 60 years 30 years

Balance as of January 1, 2019 20,513 12,094 32,607

Contributions (**) - 5,422 5,422 Fair value (***) 327 1,915 2,242 Exchange difference effect - (12) (12) ______Balance as of December 31, 2019 20,840 19,419 40,259

Fair value (***) 106 (1,296) (1,190) Exchange difference effect - 55 55 ______Balance as of December 31, 2020 20,946 18,178 39,124 ______

(*) Due to the term of the contracts, they are considered as a long-term liability. (**) Corresponds to capital contributions granted to associates, for the culmination and construction of strip centers. The total amount agreed corresponds to the “Participation in Association contract”. Construction of "Tarapoto" strip center was in 2019, year in which the store opened. (***) Corresponds to the fair value percentage allocated to each Associate, based in the interest shareholder of the strip center, the total effect is shown in the “changes in fair value investment properties” caption of the consolidated comprehensive results statement.

As a result of the joint venture, Supermercados Peruanos S.A., as of December 31, 2020, presents a total amount payable to Homecenters Peruanos S.A., for S/39,124,000 (S/42,908,000 as of December 31, 2019).

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Notes to the consolidated financial statements (continued)

(d) On June 30, 2013, Supermercados Peruanos S.A. and Financiera Oh! S.A. signed the “Contract of Issuance and Administration of the ‘Oh!’ Credit Card”. This contract established that Financiera Oh! S.A. can exclusively operate its “Oh!” credit card in the Supermercados Peruanos S.A. stores. Such contract and their modifications were in force until March 31 of 2020. The distribution of the result was performed taking into consideration the share interest of each party in respect of contract contributions.

(e) It corresponds to the guarantee deposit that Supermercados Peruanos S.A. received for the rental of financial modules located in its stores to Banco Internacional del Perú S.A.A. - Interbank for US$2,000,000. As of December 31, 2020 and 2019, Supermercados Peruanos S.A. credited the updated present value of said balances under “Financial income” of the consolidated income statement. The net present values of the balances related to guarantee deposits amount to S/3,393,000 and S/6,634,000 as of the dates indicated above, respectively.

(f) As of December 31, 2020 and 2019, InRetail Group holds the following balances with related parties in cash and cash equivalent captions and financial instruments at fair value through profit or loss:

2020 2019 S/(000) S/(000)

Cash and short-term deposits - Banco Internacional del Perú– Interbank S.A.A. 283,755 332,284 Inteligo Bank Ltd. 824 1,514

Financial instruments at fair value through profit or loss, note 7 - Interfondos S.A. Sociedad Administradora de Fondos SAF 40,869 1,655

Financial instruments at amortized cost, note 4.3(c(i)) - Colegios Peruanos S.A. 24,624 -

(g) The compensation of key management personnel of the InRetail Group is detailed below:

2020 2019 S/(000) S/(000)

Short term employee benefits 63,625 45,238 Insurance and medical benefits 1,695 1,109 Benefits per term of employment relationship 4,523 2,191 ______

69,843 48,538 ______

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Notes to the consolidated financial statements (continued)

28. Deferred revenue (a) The table below presents the composition of this caption:

2020 2019 S/(000) S/(000)

Key money (b) 28,409 27,176 Other deferred revenue (c) 18,546 14,937 Other operating leases as lessor 5,586 12,722 ______

52,541 54,835 ______

Current portion 20,263 19,139 Non-current portion 32,278 35,696 ______

52,541 54,835 ______

(b) As of December 31, 2020 and 2019, mainly corresponds to the entrance fee received from the tenants of the Shopping Centers of InRetail Group, which are accrued based on contractual terms.

(c) It mainly corresponded to the “Monedero del ahorro” (“Savings Purse”) customer loyalty program by which the Company and its Subsidiaries reward customers with points for their purchases that can be later redeemed for products. As of December 31, 2020 and 2019, Management estimates that the deferred income as of that date fairly reflects the future exchanges of their clients.

29. Earnings per share Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical:

Number of days Outstanding Outstanding until end of shares shares year

Number as of January 1, 2019 101,057,314 365 101,057,314 ______

Number as of December 31, 2019 101,057,314 101,057,314 ______

Number as of January 1, 2020 101,057,314 365 101,057,314 ______

Number as of December 31, 2020 101,057,314 101,057,314 ______

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Notes to the consolidated financial statements (continued)

______2020 Net profit Shares Earnings per (numerator) (denominator) share S/(000) (000) S/

339,351 101,057 3.36 Basic and diluted earnings per share ______

______2019 Net profit Shares Earnings per (numerator) (denominator) share S/(000) (000) S/

Basic and diluted earnings per share 596,838 101,057 5.91 ______

30. Commitments and contingencies (a) Commitments - The main commitments assumed are presented below:

- As of December 31, 2020 and 2019, the InRetail Group have signed rental contracts with third parties for the premises in which some of its stores operate. The assumed commitments correspond to fixed and/or variable monthly rents base on sales, whichever is highest.

The assumed commitments calculated on the basis of the leasing fixed amounts will be paid until 2076. The total commitments assumed up until 2076, calculated on the basis of the fixed rental amounts is presented in note 17(d).

- As of December 31, 2020, InRetail Group agreed with several financial entities to issue solidarity and irrevocable letters of guarantee for amounts amounting to approximately S/63,094,000, US$6,785,000 and b$104,000 (S/91,735,000, US$9,739,000 and b$646,000, as of December 31, 2019) for compliance with the payment for purchase of goods to foreign suppliers and commitment of contract compliance; in addition, they guarantee the compliance of obligations arising from contractual agreements related to real estate projects of Interproperties Holding and Interproperties Holding II.

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Notes to the consolidated financial statements (continued)

(b) Contingencies – (b.1) As of December 31, 2020, the Tax Authority has completed the audit of the income tax returns and the monthly statements of the general sales tax presented by Supermercados Peruanos S.A in taxable exercises from 2004 to 2013 and has requested information regarding 2014 and 2016. Those examinations resulted in Resolutions generating higher taxes, fines and interests for an approximate total of S/163 million to date (S/173 million as of December 2019). The resolutions issued by the years 2004 to 2010 have been challenged and are pending before the Tax Court. In Management’s opinion and its legal advisors, Supermercados Peruanos S.A. has sufficient grounds supporting its case.

(b.2) Eckerd Amazonia S.A.C. is in the process of claiming against the Tax Authority for determinations of debts and fines related to VAT for the period between January 2003 and June 2005 for approximately S/17,698,000. In Management’s opinion and its legal advisors, these contingencies are considered as “Possible” and significant liabilities will not arise as result of these as of December 31, 2020 and 2019.

(b.3) InRetail Pharma S.A. maintains the following processes: As of December 31, 2020, InRetail Pharma S.A., Albis S.A.C., Química Suiza S.A.C., Mifarma S.A.C., Jorsa de la Selva S.A.C. and Cifarma S.A.C. maintain various civil, labor and tax legal processes for a total amount of approximately S/75,983,000 (S/40,673,000 as of December 2019). In Management’s opinion and its legal advisors, such legal processes must be resolved favorably for these components; consequently, it is not necessary to recognize additional related liabilities as of December 31, 2020 and 2019.

The InRetail Group maintains labor demands that correspond mainly to compensation for arbitrary dismissals, non-payment of social benefits, reinstatement in the workplace, among others, which, in the opinion of Management and its legal advisors, must be resolved favorably to the InRetail Group, so in the opinion of Management, it is not necessary to register additional liabilities for these concepts

As of December 31, 2020 and 2019, the InRetail Group, in coordination with its legal advisors, maintains contingency provisions for S/104,272,000 and S/94,168,000, respectively, see note 19(a). It should be noted that, in 2019, Supermercados Peruanos S.A. paid approximately S/33,032,000 and S/23,532,000 as a result of paragraph (b.1) above, which is presented under “Claims and unsettled advances” in the caption “Other receivables, net” of the consolidated statements of financial position; however, said payment will be claimed from the Tax Authority and Management and its legal advisors are of the opinion that the matter will be resolved in a favorable manner for Supermercados Peruanos S.A.

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Notes to the consolidated financial statements (continued)

31. Tax situation (a) InRetail Perú Corp. and InRetail Real Estate Corp. are incorporated in Panama thus they are not subject to any Income Tax.

The subsidiaries Supermercados Peruanos S.A. and its Subsidiaries, InRetail Pharma S.A. and its Subsidiaries, Real Plaza S.R.L. and its Subsidiaries and IR Management S.R.L. are subject to the tax regime of the country in which they operate and are taxed on the basis of their separate profit and loss. As of December 31, 2020 and 2019, the income tax rate on taxable income in the main countries in which the Company and its Subsidiaries operate is presented below:

______Tax rates 2020 2019 % % Peru 29.50 29.50 Ecuador (i) 25.00 25.00 Colombia (ii) 32.00 33.00 Bolivia 25.00 25.00

(i) In accordance with the Organic Act for the Reactivation of the Economy dated December 29, 2017, Strengthening of Dollarization and Modernization of Financial Management, the corporate income tax rate in Ecuador from tax year 2018 onwards is 25 percent. (ii) Act No. 1819 established that the income tax rate would be 33 percent from tax year 2018 onwards. Act No. 1943 of 2018, by which financing regulations were issued to restore the general budget balance, established that the general income tax rate for tax year 2020 would be 32 percent and would gradually decrease in the coming years.

In accordance with current legal provisions as of December 31, 2020 and 2019, in some countries, cash dividends of non-domiciled shareholders are subject to income tax at the following rates:

______Tax rates 2020 2019 % %

Peru (i) 5.0 5.0 Ecuador (ii) 10.0 10.0 Colombia (iii) 10.0 10.0 Bolivia 12.5 12.5

(i) By Legislative Decree No. 1261, published on December 10, 2016, the 5 percent withholding rate applicable to dividends and any other form of profit distribution from Peruvian sources was modified. The aforementioned rate is applicable to the distribution of dividends or profits adopted or made available, whichever occurs first, as of January 1, 2017. The aforementioned rate does not apply to accumulated income or other liable to generate taxable dividends obtained between January 1, 2015 and December 31, 2016 –in which case a 6.8 percent withholding rate is applied – or to accumulated income as of December 31, 2014 – in which case a 4.1 percent withholding rate is applied.

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Notes to the consolidated financial statements (continued)

(ii) The Internal Tax Regime Act indicates that, in general, dividends distributed after income tax are not subject to withholding, unless the beneficial owner is an Ecuadorian natural person – in which case a withholding tax (7 or 10 percent, depending on the applied corporate rate) is applied. In addition, when the income tax rate applied by the company is 25 percent or less, the withholding percentage applicable to the dividends distributed to companies domiciled in tax havens is 10 percent. Resolution No. NAC-DGERCGC20-00000013, published in February 2020, introduced other cases subject to withholding tax at source on distributed dividends.

(iii) Act No. 1943 of 2018, by which financing regulations were issued to restore the general budget balance, established that the special rate for dividends or interest received by Colombian companies would be 7.5 percent from tax year 2019 onwards. It should be noted that in case of dividends for non-domiciled companies, a 10 percent rate is applied.

(b) In Peru, non-domiciled entities are subject to income tax only in case of income taxed from a Peruvian source; e.g., those obtained by the indirect alienation of capital shares or interest representative of the capital of legal entities domiciled in the country. For these purposes, it should be considered that an indirect alienation occurs when shares or interest representative of the capital of a non-domiciled legal person that owns – directly or through another legal person or persons – shares or interest representative of the capital of one or more legal entities domiciled in the country are alienated, provided that the conditions established by the Income Tax Act are met. It also defines the cases in which legal persons domiciled in Peru have joint and several liability.

The Income Tax Act provides that an indirect transfer of shares occurs when the following conditions are met:

(i) In any of the 12 months prior to the alienation, the market value of the shares or interest of the domiciled legal person was equal to 50 percent or more of the market value of the shares or interest of the non-domiciled legal person; and,

(ii) In any 12-month period, shares or interest representing 10 percent or more of the capital of a non-domiciled legal person are alienated.

In addition, as of January 1, 2019, a new indirect alienation regulation entered into force. It is applicable when in any 12-month period, the indirect alienation of shares or interest of legal entities domiciled in Peru have a transaction value equal or greater than 40,000 Tax Units (ITU).

(c) In Peru, transfer pricing regulations are applicable to determine the market value of transactions made by domiciled legal entities with related companies from, to or through non-cooperative countries or territories or those with low or no taxes, or those made with subjects whose income, profit or gains from said transactions are subject to a preferential tax regime.

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Notes to the consolidated financial statements (continued)

The valuation methods applied, as well as the criteria used to determine the market value, shall be properly documented and supported. Based on the analysis of the operations, Management and its legal advisors believe that, as a consequence of the application of these standards, no significant contingencies will arise for the InRetail Group as of December 31, 2020 and 2019.

(d) During the years following the year of filing the tax return, the tax authorities have the power to review and, as applicable, correct the income tax computed by InRetail Group. The Income Tax and Value Added Tax returns for the following years are open to review by the Tax Authorities:

Income tax Valued added - tax

Supermercados Peruanos S.A. From 2014 to 2020 From 2016 to 2020 Plaza Vea Oriente S.A.C. From 2018 to 2020 From 2018 to 2020 Plaza Vea Sur S.A.C. From 2014 to 2020 From 2016 to 2020 Desarrolladora Strip Center S.A.C. From 2013 to 2020 From 2016 to 2020 Makro Supermayorista S.A. From 2015 to 2020 From 2015 to 2020 InRetail Pharma S.A. From 2015 to 2020 From 2015 to 2020 Eckerd Amazonía S.A.C. From 2015 to 2020 From 2015 to 2020 Boticas del Oriente S.A.C. From 2015 to 2020 From 2015 to 2020 Quicorp S.A. From 2015 to 2020 From 2015 to 2020 Química Suiza S.A.C. From 2016 to 2020 From 2016 to 2020 Cifarma S.A.C. From 2015 to 2020 From 2015 to 2020 Mifarma S.A.C. From 2015 to 2020 From 2015 to 2020 Albis S.A.C. From 2016 to 2020 From 2016 to 2020 Jorsa de la Selva S.A.C. From 2015 to 2020 From 2015 to 2020 Vanttive S.A.C. From 2015 to 2020 From 2015 to 2020 Superfarma Mayorista S.A.C. From 2016 to 2019 From 2016 to 2019 Quimiza Ltda. (Bolivia) From 2013 to 2020 From 2013 to 2020 Química Suiza Colombia S.A.S. From 2013 to 2020 From 2013 to 2020 Quifatex S.A. (Ecuador) From 2019 to 2020 From 2019 to 2020 Vanttive Cía. Ltda. (Ecuador) From 2016 to 2020 From 2016 to 2020 Farmacias Peruanas S.A. From 2016 to 2018 From 2016 to 2018 Boticas Torres de Limatambo S.A.C. From 2015 to 2018 From 2016 to 2018 Droguería La Victoria S.A.C. From 2015 to 2018 From 2015 to 2018 Química Suiza Comercial S.A.C. From 2015 to 2018 From 2015 to 2018 Droguería InRetail Pharma S.A.C From 2019 to 2020 From 2019 to 2020 Farmacias Peruanas S.A.C. 2020 2020 InRetail Foods S.A.C. 2020 2020 Real Plaza S.R.L. 2015 and 2017 to 2020 From 2016 to 2020 IR Management S.R.L. From 2015 to 2020 From 2016 to 2020 Inmobiliaria Puerta del Sol S.A. From 2015 to 2020 From 2016 to 2020 Inversiones Real Estate S.A. From 2015 to 2020 From 2016 to 2020 Centro Comercial Estación Central S.A. From 2015 to 2020 From 2016 to 2020

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Notes to the consolidated financial statements (continued)

In case of Peru, the Tax Administration Authority has a term to perform the reviews or audits to the sworn declarations submitted by taxpayers, which have a statute of limitations of 4 years, as of January 1 of the following year after the submission of the sworn declaration.

Due to possible interpretations that tax authorities can give to the current legislation, it is not possible to determine whether or not future reviews will result in tax liabilities for the InRetail Group, therefore, any major tax or surcharge that may result from eventual revision by the tax authority would be charged to the income statements of the period in which that tax or surcharge is determined.

As of the date of this report, some Subsidiaries are being reviewed; however, in opinion of InRetail Group’s Management and its legal advisors, any additional tax assessment would not be significant to the consolidated financial statements as of December 31, 2020 and 2019.

(e) According to Peruvian law, Interproperties Holding I, Interproperties Holding II, InRetail Consumer and InRetail Shopping Malls are not considered as income taxpayers due to its status as special purpose entities (SPE). Such entities attribute their generated results, the net losses and Income Tax credits on foreign source income, to the holders of its certificates of participation or whoever holds those rights.

Therefore, to reflect this obligation, InRetail Perú Corp. has provisioned 30 percent for long-term income tax on profits to date. Consequently, as of December 31, 2020 and 2019, the income tax liability related to special purpose entities is comprised of:

2020 2019 S/(000) S/(000)

Opening balance as of January 1 318,848 226,493 Tax related to SPE, recorded as income tax expense, note 22(c) (1,995) 100,269 Income tax for dividend distribution - (4,959)

Tax related to SPE, presented in other comprehensive income for: Derivative financial instrument, note 13 9,830 (2,955) ______

Balance as of December 31 326,683 318,848 ______

(f) The main Peruvian tax regulations issued during 2020 are the following:

- Superintendence Resolution No. 185-2019/SUNAT provided that legal entities domiciled in the country with status of Principal Taxpayer as of November 30, 2019, had to file the ultimate beneficial owner’s tax return in December, considering the maturities established for compliance with tax obligations for November.

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Notes to the consolidated financial statements (continued)

To date, it is expected that SUNAT issues the Superintendence’ Resolutions that regulate the due date for the submission of the final beneficiary declaration for other legal persons and legal entities.

- The income tax exemption (by Emergency Decree 005-2019) provided for capital gains obtained from the disposal of certain securities through centralized negotiation mechanisms (Lima Stock Exchange) is valid until December 31, 2022. In addition, requirements provided to have access to said exemption (stock market presence) were modified.

- Modifications to the Regulations of the Income Tax Act, effective as of January 1, 2020, were included to improve tax treatment applicable to credits against income tax (Legislative Decree No. 1424).

- Emergency Decree No. 025-2019 implemented the following amendments, which came into force on December 12, 2019:

(a) One of the criteria established for the identification of the ultimate beneficial owners of legal entities was modified. It was established that in the case of trusts or investment funds, such responsibility falls on the natural person acting as trustor, fiduciary, trustee or group of beneficial owners, or any other natural person that having the status of interested party or investor exercises final effective control on the assets or is entitled to the profit or loss of a trust or investment fund, as appropriate.

(b) Distributors of ownership shares of mutual funds investing in securities were incorporated as withholding agents. Such withholding activity, as well as that carried out by mutual fund administrators, investment fund administrators, trust asset securitization companies, trustees of bank trusts and private pension administrators – concerning contributions without social security purposes – applied to profits, income or capital gains paid to or generated for the holders of the securities issued under the name of the funds or assets of trustors in bank trusts or affiliates in the pension fund.

(c) A special depreciation regime was established, through which buildings and constructions, as of the taxable fiscal year 2021, may be depreciated for income tax purposes, applying an annual depreciation percentage of 20 percent until its total depreciation, whenever assets are exclusively used for business development and comply with the following conditions (Legislative Decree No. 1488):

(i) Construction started January 1, 2020. The start date of construction is understood as the moment in which building permit is obtained.

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Notes to the consolidated financial statements (continued)

(ii) At least 80 percent of construction is completed by December 31, 2022. If constructions were not completed by December 31, 2022, the progress of such construction is considered lower than 80 percent, unless proven otherwise. The construction is considered to be completed when a certificate of construction or other document required by the Regulations is obtained from the corresponding municipal department.

The aforementioned regime can also be applied by those who, during 2020, 2021 and 2022, acquire assets that comply with the above-mentioned conditions ― a) and b). When said assets have been totally or partially built before January 1, 2020, such regime cannot be applied.

In addition, new maximum depreciation percentages were established for movable property.

(d) As of the fiscal year 2021, the limit for the deduction of financial expenses will be equal to 30 percent of the entity’s EBITDA (Legislative Decree No. 1424).

32. Business segments For management purposes, InRetail Group is organized into business units based on their products and services. As of December 31, 2020 and 2019, it has four reportable segments: i) Food Retail, ii) Pharmacies, iii) Manufacturing, Distribution and Marketing and iv) Shopping Malls. The InRetail Group does not maintain operating segments that have been accumulated to form reportable segments. The Manufacture, Distribution and Marketing segment was incorporated after the acquisition of the Quicorp Group, note 2.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

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Notes to the consolidated financial statements (continued)

32.1. Holding accounts, combination adjustments and intercompany eliminations - The following table presents the financial information of InRetail Perú Corp. and Subsidiaries by business segments for 2020 and 2019: Holding accounts, combination Manufacturing adjustments and distribution and Shopping Total intercompany Food Retail Pharmacies marketing centers segments eliminations Consolidated S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) 2020 - Revenue External income 6,904,495 5,293,952 1,865,173 329,796 14,393,416 15,988 14,409,404 Inter - segment 12,288 39,062 659,932 55,254 766,536 (766,536) - ______Total revenue 6,916,783 5,333,014 2,525,105 385,050 15,159,952 (750,548) 14,409,404 Cost of sales (5,117,399) (3,415,688) (1,551,768) (151,022) (10,235,877) (4,826) (10,240,703) Inter - segment (1,390) (28,526) (658,303) (506) (688,725) 688,725 - ______Gross profit 1,797,994 1,888,800 315,034 233,522 4,235,350 (66,649) 4,168,701

Gain on valuation at fair value of investment properties (15,458) - - (82,748) (98,206) 13,686 (84,520) Selling expenses (1,206,935) (1,062,312) (174,375) (19,571) (2,463,193) 9,069 (2,454,124) Administrative expenses (160,652) (214,081) (75,363) (31,117) (481,213) (16,734) (497,947) Other operating expenses (11,647) 9,817 (334) (710) (2,874) (684) (3,558) ______Operating profit 403,302 622,224 64,962 99,376 1,189,864 (61,312) 1,128,552 Financial income 2,816 102,463 94,981 32,657 232,917 (222,872) 10,045 Financial costs (148,442) (182,529) (17,219) (154,056) (502,246) 37,961 (464,285) Exchange difference net (75,695) (43,857) (652) (15,509) (135,713) 11,543 (124,170) ______Profit before income tax 181,981 498,301 142,072 (37,532) 784,822 (234,680) 550,142

Income tax expense (62,418) (124,193) (17,153) 8,552 (195,212) (15,579) (210,791) ______

Net profit 119,563 374,108 124,919 (28,980) 589,610 (250,259) 339,351 ______

Attributable to: InRetail Perú Corp. 119,563 374,108 124,919 (28,980) 589,610 (286,960) 302,650 Non-controlling interests - - - - - 36,701 36,701 ______

119,563 374,108 124,919 (28,980) 589,610 (250,259) 339,351 ______

Other information Operating assets (*) 6,732,139 5,037,335 1,475,836 5,425,857 18,671,167 (412,236) 18,258,931 Operating liabilities 5,435,719 4,086,394 994,155 2,987,993 13,504,261 40,651 13,544,912 Additions to non-current assets - Property, furniture and equipment 137,801 67,556 10,890 7,074 223,321 (2,814) 220,507 Investment properties 7,760 - - 96,770 104,530 (363) 104,167 Intangible assets 16,106 21,001 2,205 5,409 44,721 (105) 44,616 Increase on revaluation of investment properties (15,458) - - (87,248) (102,706) 18,186 (84,520) Depreciation and amortization 163,435 108,867 16,637 6,598 295,537 9,676 305,213

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Notes to the consolidated financial statements (continued)

Holding accounts, combination Manufacturing adjustments and distribution and Shopping Total intercompany Food Retail Pharmacies marketing malls segments eliminations Consolidated S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

2019 - Revenue External income 5,751,177 5,029,907 1,787,488 488,192 13,056,764 12,848 13,069,612 Inter - segment 11,244 4,154 677,354 54,758 747,510 (747,510) - ______Total revenue 5,762,421 5,034,061 2,464,842 542,950 13,804,274 (734,662) 13,069,612 Cost of sales (4,246,827) (3,232,237) (1,464,066) (175,301) (9,118,431) (3,379) (9,121,810) Inter - segment - (3,004) (657,791) (623) (661,418) 661,418 - ______Gross profit 1,515,594 1,798,820 342,985 367,026 4,024,425 (76,623) 3,947,802

Gain on valuation at fair value of investment properties 7,117 - - 176,786 183,903 (26,745) 157,158 Selling expenses (1,113,595) (1,072,734) (200,139) (9,394) (2,395,862) 33,459 (2,362,403) Administrative expenses (141,867) (170,528) (70,211) (32,185) (414,791) (12,958) (427,749) Other operating expenses 19,441 2,754 4,016 47 26,258 3,500 29,758 ______Operating profit 286,690 558,312 76,651 502,280 1,423,933 (79,367) 1,344,566 Financial income 2,487 125,489 52,710 31,300 211,986 (192,497) 19,489 Financial costs (142,121) (199,578) (20,700) (149,666) (512,065) 45,217 (466,848) Exchange difference net 13,243 9,423 (865) 2,494 24,295 (3,463) 20,832 ______Profit before income tax 160,299 493,646 107,796 386,408 1,148,149 (230,110) 918,039

Income tax (59,633) (140,347) (19,515) (120,042) (339,537) 18,336 (321,201) ______

Net profit 100,666 353,299 88,281 266,366 808,612 (211,774) 596,838 ______Attributable to: InRetail Perú Corp. 100,666 353,299 88,281 266,366 808,612 (250,039) 558,573 Non-controlling interests - - - - - 38,265 38,265 ______100,666 353,299 88,281 266,366 808,612 (211,774) 596,838 ______Other information Operating assets (*) 5,003,156 5,033,775 1,532,217 5,223,750 16,792,898 (1,039,512) 15,753,386 Operating liabilities 3,916,840 4,119,326 1,060,702 2,699,124 11,795,992 (759,521) 11,036,471 Additions to non-current assets - Property, furniture and equipment 374,500 45,877 10,338 5,511 436,226 8,029 444,255 Investment properties 37,238 - - 343,410 380,648 (290) 380,358 Intangible assets 14,289 5,945 2,240 2,904 25,378 (2,741) 22,637 Increase on revaluation of investment properties 7,117 - - 176,786 183,903 (26,745) 157,158 Depreciation and amortization (154,221) (68,121) (16,477) (4,240) (243,059) (36,494) (279,553)

(*) As of December 31, 2020 and 2019, the “Food Retail” and "Pharmacies" segments correspond to trademarks and goodwill, as a result of the acquisitions of Makro in the year 2020, Inkafarma in the year 2011 and Quicorp in the year 2018, see note 16.

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Notes to the consolidated financial statements (continued)

Income and expenses of the Company are not allocated to individual segments as the underlying instruments are managed at the InRetail Group level and are reflected in the adjustments and eliminations column. Additionally Inter-segment revenues are eliminated upon consolidation and reflected also in the adjustments and eliminations column.

32.2 Geographic information – The geographic information analyses the Group’s revenue and non-current assets by the Companies’ country of domicile and other countries. In presenting the geographic information, segment revenue was based on the geographic location of customers and segment assets were based on the geographic location of the assets, as follows.

Revenue:

2020 2019 S/(000) S/(000)

Peru 13,528,941 12,204,150 Ecuador 730,913 703,093 Other countries 149,550 163,552 ______

14,409,404 13,070,795 ______

Non-current assets (*):

2020 2019 S/(000) S/(000)

Peru 11,133,763 10,294,664 Ecuador 53,001 49,839 Other countries 3,831 7,125 ______

11,190,595 10,351,628 ______

(*) Non-current assets exclude goodwill.

33. Objectives and policies of financial risk management The risk is inherent to InRetail Group’s activities, but it is 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 InRetail Group’s continuing profitability and each individual within InRetail Group is accountable for the risk exposures relating to his or her responsibilities.

InRetail Group is exposed to market risk, credit risk and liquidity and capital management risk.

The independent risk control process does not include business risks such as changes in the environment, technology and industry. These are monitored through the Group’s strategic planning process.

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Notes to the consolidated financial statements (continued)

(a) Risk management structure - The Group’s Board of Directors is ultimately responsible for identifying and controlling risks; however, there are separate independent bodies in the subsidiaries responsible for managing and monitoring risks, as further explained bellow:

(i) Board of Directors The Group’s Board of Directors is responsible for the overall risk management approach and for the approval of the policies and strategies currently in place. The Board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, liquidity risk and capital management.

(ii) Internal Audit Risk management processes throughout InRetail Group are monitored by the internal audit functions, which examine both the adequacy of the procedures and the compliance of them. Internal Audit discusses the findings and recommendations to the Management and Board of Directors.

(iii) Management InRetail Group’s management oversees the management of the Company’s risks. The Financial Managers provide assurance to InRetail Group’s senior management that the procedures and those financial risks are identified, measured and managed in accordance with the Board of Directors guidelines. The Board of Directors reviews and agrees policies for managing each of these risks which are summarized below.

(b) Mitigation of risks - As part of the risk management, the InRetail Group constantly assesses the different scenarios and identifies the different strategies to manage the expositions resulting from changes in interest rates, foreign currency risk, capital risk and credit risk.

33.1 Credit risk - Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. InRetail Group is exposed to credit risk from its operating activities (primarily for trade receivables) and from its financing activities, including deposits with banks, investments and derivative instruments.

This risk is managed by the Financial Managers in accordance with the Board’s principles to minimize risk concentration and, consequently, mitigate financial losses from potential defaults of the counterpart. The maximum exposure to credit risk of the components of the consolidated financial statements as of December 31, 2020 and 2019, comes from the captions accounts “Cash and cash equivalent”, “Accounts receivable”, “Accounts receivable from related parties”, “Financial instruments at fair value through profit or loss”, “Financial instruments at amortized cost”, “Financial Instruments at fair value through other comprehensive income” and “Derivative financial instruments - Call spread”. The maximum exposure to credit risk of the components of the consolidated financial statements as of December 31, 2020 and 2019, is their book value, net of the respective provisions for impairment.

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Notes to the consolidated financial statements (continued)

(a) Credit risk associated with: (a.1) Trade accounts receivable - InRetail Group assesses the risk concentration of the trade accounts receivable and other accounts receivable. In general, the Company does not hold significant concentrations of accounts receivable with any entity in particular. The Company assesses the collectability risk of the accounts receivable in order to determine the respective provision.

In case of the trade accounts receivable for retail sales, which are mainly generated by sales with credit cards, the credit risk is minimum because they have a period from 2 to 7 days to become cash.

Accounts receivable from the manufacture and distribution of different pharmaceutical and mass-market products are periodically reviewed to ensure their recovery. Trade accounts receivable are collectible from clients with credit solvency and strength and large credit lines, which ensure the timely collection of receivables.

In case of leases receivable and merchandise coupons, payment contracts are maintained currently in force.

(a.2) Bank deposits, derivatives financial instruments and financial instruments at fair value through profit or loss, financial instruments at amortized cost and financial instruments at fair value through other comprehensive income - The balances of cash and derivative financial instruments are held in top-level financial entities, including a related financial entity. Likewise, the InRetail Group’s financial instruments at fair value through profit or loss have fast settlements and are managed by renowned entities. In the case of financial instruments at amortized cost, they were redeemed and collected in full in January 2021. Finally, financial instruments at fair value through other comprehensive income, as explained in note 11, corresponding to senior notes issued by a related entity.

33.2 Market risk - Market risk is the risk of suffering losses in the consolidated statements of financial position due to fluctuations in market prices. These prices comprise three risk types: (i) exchange rate; (ii) interest rate; and (iii) commodity prices and others. The financial instruments of the InRetail Group are affected by exchange rate risk and interest rate risk. (i) Foreign currency risk - Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Financial Managers of the Subsidiaries are responsible for identifying, measuring, controlling and informing on the exposure to global exchange rate risk of the Group. As of December 31, 2020 and 2019, the InRetail Group maintains "Call Spread” contracts for a total notional amount of US$750,000, to reduce its foreign currency risk related to a part of senior notes issued. These derivative financial instruments have been qualified as effective hedging instruments; see further detail in note 13.

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Notes to the consolidated financial statements (continued)

The following chart shows the sensitivity analysis on U.S. Dollars, Bolivian bolivianos and Colombian pesos the only currencies different from the functional currency due to which the InRetail Group has a significant exposure in monetary assets and liabilities and estimated cash flows as of December 31, 2020 and 2019. The analysis determines the effect of a reasonably possible variation in the exchange rate of those currencies, considering other constant variables in the consolidated income statement before income tax. A negative amount in the chart reflects a net potential reduction in the consolidated income statement, while a positive amount reflects a net potential increase.

Change in Gain/(loss) Sensitivity analysis exchange rates ______before taxes % 2020 2019 S/(000) S/(000)

Devaluation - U.S. Dollars 5 125,575 35,242 U.S. Dollars 10 251,151 70,485 Boliviano 5 (1,074) (340) Boliviano 10 (2,274) (680) Colombian peso 5 (125) (72) Colombian peso 10 (251) (145)

Revaluation - U.S. Dollars 5 (125,575) (35,242) U.S. Dollars 10 (251,151) (70,485) Boliviano 5 1,074 340 Boliviano 10 2,274 680 Colombian peso 5 125 72 Colombian peso 10 251 145

(ii) Interest rate risk - The interest rate risk is the risk that the future fair values of cash flows of a financial instrument fluctuate due to changes of the market interest rates. The InRetail Group’s policy is to hold financial instruments that accrue fixed interest rates; therefore, the operating cash flows of the InRetail Group are substantially independent of changes in the market’s interest rates. In this sense, in the opinion of the InRetail Group’s Management, they are not significantly exposed to interest rate risk.

(iii) Price risk - The InRetail Group's exposure to this risk is given by changes in the prices of variable income financial instruments, classified in the consolidated statement of financial position as financial instruments at fair value through profit or loss.

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Notes to the consolidated financial statements (continued)

As of December 31, 2020 and 2019, Management conducted sensitivity tests on the market prices of mutual funds. The effect on the consolidated statement of comprehensive income would be as follows:

Sensitivity analysis Prices 2020 2019 % S/(000) S/(000)

Mutual funds +/-10 24,190 2,203 Mutual funds +/-20 48,425 4,406 Mutual funds +/-30 72,660 6,609

Management believes that future fluctuations in the exchange rate, interest rate and prices of its capital securities will not significantly affect the future profit and loss of its operations.

33.3 Liquidity risk - It is the risk that InRetail Group could not comply with their payment obligations related to financial liabilities at maturity. The consequence would be the default in the payment of their obligations to third parties.

Liquidity risk management implies maintaining sufficient cash and availability of funding through an adequate amount of committed credit sources and the ability to settle transactions, mainly debt. To that respect, Management of InRetail Group focuses its efforts to maintain funding sources through the availability of credit lines. Likewise, the InRetail Group assesses medium- term and long-term liquidity through a structural analysis of its funds inflows and outflows in different maturity terms. This process allows to know, for each currency, the various funding sources, how liquidity needs increase and which terms are mismatched.

The InRetail Group has evaluated and implemented the necessary measures in order to mitigate in their operations and financial situation the effects caused by COVID-19 in Peru and the countries where operates.

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Notes to the consolidated financial statements (continued)

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:

______As of December 31, 2020 Less than 3 months From 3 to 12 months 1 - 5 years More than 5 years Total S/(000) S/(000) S/(000) S/(000) S/(000)

Senior notes issued and interest-bearing loans and borrowings - Principal payments 190,744 1,582,876 3,531,399 1,711,488 7,016,507 Interest payments flow 63,458 274,521 835,608 313,138 1,486,725 Trade payables 3,174,171 143,461 5,495 - 3,323,127 Accounts payable to related parties 2,272 22,558 39,094 3,423 67,347 Other payables and current income tax 669,707 75,138 2,317 21,131 768,293 Lease liability - Principal payments 61,235 165,514 670,674 617,112 1,514,535 Interest payment flow 22,836 73,785 278,842 440,459 815,922 ______

Total liabilities 4,184,423 2,337,853 5,363,429 3,106,751 14,992,456 ______

______As of December 31, 2019 Less than 3 months From 3 to 12 months 1 - 5 years More than 5 years Total S/(000) S/(000) S/(000) S/(000) S/(000)

Senior notes issued and interest-bearing loans and borrowings - Principal payments 209,902 176,364 3,259,720 1,603,885 5,249,871 Interest payments flow 51,039 259,695 1,144,676 296,003 1,751,413 Trade payables 2,917,543 29,289 16,258 - 2,963,090 Accounts payable to related parties 23,239 13,652 7,767 32,493 77,151 Other payables and current income tax 477,557 14,111 1,424 338,713 831,805 Lease liability - Principal payments 62,723 243,422 532,108 564,027 1,402,280 Interest payment flow 20,521 77,124 257,302 190,758 545,705 ______

Total liabilities 3,762,524 813,657 5,219,255 3,025,879 12,821,315 ______

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Notes to the consolidated financial statements (continued)

33.4 Capital management risk - The objectives of the InRetail Group when managing capital are to ensure they have a strong credit qualification and to maintain sound capital ratios to support the business and maximize the value for shareholders.

The InRetail Group manages their capital structure and makes pertinent adjustments depending on changes in economic conditions. In order to maintain and adjust their capital structure, the InRetail Group might modify the payments of dividends to shareholders, reimburse them capital stock or issue new shares. During 2020 and 2019 there were no modifications in the objectives, policies or processes related to capital management.

The InRetail Group controls the capital using a debt ratio, defined as the quotient between the net debt and equity plus net debt. The InRetail Group has the policy of maintaining the debt ratio between 60 and 80 percent. The InRetail Group includes in the net debt the interest-bearing loans and borrowings, trade accounts payable, accounts payable to related parties, other payables, income tax liabilities and senior notes issued, less cash and short-term deposits.

2020 2019 S/(000) S/(000)

Interest-bearing loans and borrowings (note 20) 3,554,600 2,023,050 Trade accounts payable, accounts payable to related parties, other accounts payable and income tax liability (notes 18, 27(b), 19 and 22(e)) 4,411,766 3,842,615 Lease liabilities, note 17(c) 1,514,535 1,402,280 Senior note issued, note 21 3,461,907 3,226,821

Minus: cash and short-term deposits (note 6) (936,315) (740,166) Net debt (a) 12,006,493 9,754,600 Equity 4,714,019 4,716,915 Capital stock and net debt (b) 16,720,512 14,471,515 Leverage ratio (a/b) 72% 67%

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Notes to the consolidated financial statements (continued)

33.5 Changes in liabilities arising from financing activities: The table below presents the changes in liabilities arising from financing activities:

Balance from Structuring Balance at Subsidiary Dividends Accrued New Cash Foreign currency commission Balance beginning of year NIIF 16 acquisition declared interests leasing flows movement accrual Others at end of year S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)

As of December 31, 2020 - Dividends payable - - - 221,732 - - (221,732) - - - - Financial obligations 5,249,871 - - - - 53,492 1,415,030 300,168 (2,054) - 7,016,507 Lease liabilities 1,402,280 - 25,514 - 97,317 284,684 (371,349) 94,300 - (18,211) 1,514,535 Interests for financial obligations 50,633 - - - 307,656 - (306,676) - - - 51,613 ______Total liabilities related to financing activities 6,702,784 - 25,514 221,732 404,973 338,176 515,273 394,468 (2,054) (18,211) 8,582,655 ______

As of December 31, 2019 - Dividends payable - - - 131,603 - - (131,603) - - - - Financial obligations 5,069,140 - - - - 142,881 74,306 (48,161) 11,705 - 5,249,871 Lease liabilities - 1,604,261 - - 97,076 146,435 (349,439) (19,210) - (76,843) 1,402,280 Interests for financial obligations 50,633 - - - 305,045 - (302,761) (2,136) - - 50,781 ______Total liabilities related to financing activities 5,119,773 1,604,261 - 131,603 402,121 289,361 (709,497) (69,552) 11,705 (76,843) 6,702,932 ______

33.6 Property risk: Property risk is the possibility of loss as a result of variations or volatility in the market prices of investment properties.

The InRetail Group, through the InRetail Real Estate Group, has identified the following risks associated to its investment properties:

- The cost of projects being executed or that will be executed can increase if the planning process is delayed. InRetail Real Estate is provided with services by advisors that are expert in the requirements for project planning and execution.

- The principal tenant can be insolvent, thereby causing a significant loss in rental income and the decrease of the related property value. To reduce this risk, InRetail Real Estate reviews the financial situation of all possible tenants, determines the adequate level of security and requests security deposits or any other type of guarantee, if necessary.

- The fair value of investment properties can be affected by the cash flows generated by occupants and/or tenants, significant variations in the assumptions used for fair value estimation (see note 16(h)) or fluctuations in the real estate market due to factors outside the Company.

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Notes to the consolidated financial statements (continued)

34. Fair value of financial instruments The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

When a financial instrument is traded in an active and liquid market, its quoted market price in an actual transaction provides the best evidence of its fair value. When a quoted market price is not available or may not be indicative of the fair value of the financial instrument, other estimation techniques may be used to determine such fair value, including the current market value of another financial instrument that is substantially similar, discounted cash flow analysis or other techniques applicable, all of which are significantly affected by the assumptions used. Although Management uses its best judgment in estimating the fair value of these financial instruments, there are inherent weaknesses in any estimation technique. As a result, the fair value may not be indicative of the net realizable or settlement value.

The following methods and assumptions were used to estimate the fair values of the main financial instruments:

(a) Financial instruments whose fair value is similar to book value - Assets and liabilities that are liquid or have short maturities (less than three months), such as cash and short-term deposits, trade and other receivables, trade and other payables and other current liabilities, approximate to their carrying amounts largely due to the short-term maturities of these instruments. This assumption is applicable too for the time deposits and savings accounts with no specific maturity. These instruments are classified in the Level 1 of the hierarchy of fair value.

(b) Fixed-rate financial instruments - The fair value of financial assets and liabilities at fixed interest rates and amortized cost is determined by comparing market interest rates at their initial recognition to current market rates related to similar financial instruments. The estimated fair value of interest-bearing deposits is determined through discounted cash flows by using market interest rates in the prevailing currency with similar maturities and credit risks. These instruments are classified in the Level 2 of the hierarchy of fair value.

(c) Financial instruments at fair value through other comprehensive income and financial instruments at fair value through profit or loss - The fair value of financial instruments at fair value through other comprehensive income or through profit or loss is based on the quoted prices of active markets, if available; in the case they are not available, the fair value is estimated using the discounted cash flow method. These instruments are classified in the Level 2 of the hierarchy of fair value.

111 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

(d) Derivative financial instruments, interest-bearing loans and borrowings, lease liabilities and senior notes issued - These fair values were determined by level 3 of the hierarchy, their fair values were determined by comparing the market interest rates at the time of initial recognition with the current market rates related to similar financial instruments. The comparison between the book values and the fair values of these financial instruments, is presented below:

2020 2019 ______Book value Fair value Book value Fair value S/(000) S/(000) S/(000) S/(000)

Derivative financial instrument – “Call Spread” 212,447 212,447 130,913 130,913 Interest-bearing loans and borrowings 7,016,507 7,118,801 5,249,871 5,276,177 Lease liabilities 1,514,535 1,514,535 1,402,280 1,402,280

Based on the criteria described above, Management estimates that there are no significant differences between the book value and the fair value of the financial instruments of the Companies as of December 31, 2020 and 2019.

Fair value hierarchy - The InRetail Group uses the fair value accounting hierarchy to record or disclose, as required by the International Financial Reporting Standards, the fair value of its financial instruments. A detailed description of the accounting hierarchy of fair value is presented in note 4.3(e) to the consolidated financial statements.

InRetail Group has not performed transfers of financial instruments from Level 3 to Level 1 or to Level 2 during the years 2020 and 2019. The financial instruments and its level of hierarchy for the determination of the fair value, to record or disclose, are the following:

- Financial instruments at fair value with changes in other comprehensive income, Level 2 of the hierarchy. - Financial instruments at fair value with changes in results, Level 2 of the hierarchy - Derivative financial instruments, Level 2 of the hierarchy. - Senior notes issued, debts and loans that accrue interest, Level 2 of the hierarchy.

InRetail Group has determined the fair value of the investment properties through the Level 3 hierarchy the fair value, see note 15.

112 Translation of consolidated financial statements originally issued in Spanish - Note 36

Notes to the consolidated financial statements (continued)

35. Subsequent events On January 22 and February 26, 2021, InRetail Pharma S.A. transferred 100 percent of its participation in Química Suiza Colombia S.A.S. and Cifarma S.A.C. for approximately US$1,958,000 (equivalent to S/7,092,000) and US$9,399,000 (equivalent to S/34,298,000), to non-related entities, respectively. In the General Shareholder’s Meeting of Supermercados Peruanos S.A. and InRetail Foods S.A.C., dated February 15, 2021, the merger of both companies was agreed, as mentioned before. InRetail Foods S.A.C. was the entity absorbed, see note 3(a).

On March 10 and 11, 2021, InRetail Consumer performed a placement of international bonds in soles and dollars amounting to S/555,000,000 and US$600,000,000, respectively. Said bonds will accrue interests at a nominal annual interest rate of 4.9 and 3.25 percent, respectively, and will be due in March 2028. The funds obtained from the aforementioned issuances will be mainly used for settling the bridge loan obtained from J.P. Morgan Chase Bank, N.A. to finance the purchase of Makro Supermayorista S.A., see note 2(a), and for InRetail Pharma to make repurchase and exchange offers to holders of senior notes in dollars and due in 2023.

The Company's Management and its Subsidiaries continue monitoring the evolution of the situation and the guidance of national and international authorities, since events beyond Management's control may arise that require modifying the established business plan. Further spread of COVID-19 and subsequent measures taken to limit the spread of the disease could affect the ability to conduct business in the normal way and therefore affect financial condition and results of operations.

36. Additional explanation for English translation The accompanying consolidated financial statements were originally issued in Spanish and are presented on the basis of International Financial Reporting Standards “IFRS” as described in Note 4.1. These consolidated financial statements should be read in conjunction with the Spanish consolidated financial statements, in the event of a discrepancy the Spanish language version prevails.

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00072

COLEGIO DE CONTADORES PUBLICOS DE

LIMA

Constancia de Habilitación

El Decano y el Director Secretario del Colegio de Contadores Públicos de Lima, que suscriben, declaran que, en base a los registros de la institución, se ha verificado que: PAREDES, BURGA & ASOCIADOS S. CIVIL DE R.L. REGISTRO DE SOCIEDAD: SO761

Se encuentra HABIL, para el ejercicio de las funciones profesionales que le faculta la Ley N.º 13253 y su modificación Ley N.º 28951 y conforme al Estatuto y Reglamento Interno de esté Colegio; en fe de lo cual y a solicitud de parte, se le extiende la presente constancia para los efectos y usos que estime conveniente. Esta constancia tiene vigencia hasta el 31 de MARZO del 2021.

Lima 07 de Mayo de 2020.

CPC. GUILLERMINA ZAVALA PAUCAR CPC. GLADYS MILAGROS BAZAN ESPINOZA DECANA DIRECTORA SECRETARIA

Sede Administrativa: Jr. José Díaz N° 384 Urb. Santa Beatriz Cercado de Lima Celular: 977 197 467 [email protected] www.ccpl.org.pe

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