Translation of Independent Auditors' Report and Consolidated Financial Statements Originally Issued in Spanish
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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