U.S.$33,000,000 U.S.$120,000,000 Commercial Paper Program 7.00

INFORMATION MEMORANDUM U.S.$33,000,000

U.S.$120,000,000 Commercial Paper Program 7.00% Notes due 2016 ______We are issuing coupon bearing short-term promissory notes (the “Notes”) in connection with our existing euro commercial paper program (the “Program”) up to a maximum aggregate principal amount outstanding of U.S.$120,000,000. Issue Date – January 28, 2015. Maturity – January 28, 2016. Issue Price – The Notes will be issued at par and bear interest at a rate of 7.00% per year based on a 360-day year comprised of twelve 30-day months, payable semiannually in arrears. Ranking; Security – The Notes are unsecured and will constitute our direct, unsecured and unsubordinated obligations and will rank pari passu with all of our other unsecured and unsubordinated indebtedness including any guarantees given by us, other than obligations preferred by mandatory law. Redemption – There will be no redemption prior to maturity. ISIN – XS1169204762 Investing in the Notes involves a high degree of risk. Please read “Risk Factors” beginning on page 11 of this Information Memorandum. The Notes have not been approved by the U.S. Securities and Exchange Commission or any state securities commission in the United States of America (the “United States” or “U.S.”), nor has the U.S. Securities and Exchange Commission or any U.S. state securities commission passed upon the accuracy or the adequacy of this Information Memorandum. Any representation to the contrary is a criminal offense. The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of any state or other jurisdiction of the United States. The Notes may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act (“Regulation S”)) except as permitted by Regulation S. This Information Memorandum has been prepared by the Issuer (as defined herein) for use in connection with the offer and sale of the Notes outside the United States to non-U.S. persons pursuant to Regulation S. For a description of these and certain further restrictions on offers, sales and transfers of the Notes and distribution of this Information Memorandum, see “Selling Restrictions” and “Transfer Restrictions” below. The Notes have not been and will not be registered with the National Securities Registry (Registro Nacional de Valores or “RNV”) maintained by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores or “CNBV”), and may not be offered or sold publicly, or otherwise be the subject of brokerage activities, in Mexico, except pursuant to a private placement exemption set forth under Article 8 of the Ley del Mercado de Valores (the “Mexican Securities Market Law”). As required under the Mexican Securities Market Law, we will notify the CNBV of the issuance of the Notes, including the principal characteristics of the Notes and the offering of the Notes outside of Mexico. Such notice will be delivered to the CNBV to comply with a legal requirement and for information purposes only, and the delivery to and the receipt by the CNBV of such notice does not constitute or imply any certification as to the investment quality of the Notes, our solvency, liquidity or credit quality or the accuracy or completeness of the information provided in this Information Memorandum. The information contained in this Information Memorandum regarding the Notes is exclusively the responsibility of the Company (as defined herein) and has not been reviewed or authorized by the CNBV. In making an investment decision, all investors, including any Mexican investors who may acquire the Notes from time to time, must rely on their own review and examination of the Company. Dealer

Financial Advisor

Information Memorandum dated February 3, 2015 The information contained in this Information Memorandum relating to Grupo Famsa, S.A.B. de C.V. (the “Issuer” or “Famsa” and, together with its subsidiaries, unless the context requires otherwise, the “Company,” “we,” “us,” “our” or the like) has been obtained from the Issuer, which accepts responsibility for the information contained in this Information Memorandum and, having taken all reasonable care to ensure that such is the case, has confirmed that the information contained in the Information Memorandum is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import.

i TABLE OF CONTENTS

Page

IMPORTANT NOTICE ...... 1 EXECUTIVE SUMMARY ...... 2 RECENT DEVELOPMENTS ...... 9 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS ...... 11 RISK FACTORS ...... 12 EXCHANGE RATES ...... 31 CAPITALIZATION ...... 32 USE OF PROCEEDS ...... 33 SELECTED CONSOLIDATED FINANCIAL INFORMATION ...... 34 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 35 BUSINESS ...... 56 RELATED PARTY TRANSACTIONS ...... 105 MANAGEMENT ...... 107 TAXATION ...... 115 SELLING RESTRICTIONS ...... 118 TRANSFER RESTRICTIONS ...... 121 GENERAL INFORMATION ...... 123 Unaudited Interim Consolidated Financial Statements ...... Exhibit A Audited Consolidated Financial Statements ...... Exhibit B Form of Global Notes ...... Exhibit C Form of Definitive Notes ...... Exhibit D

IMPORTANT NOTICE

This Information Memorandum contains summary information provided by the Company in connection with its issuance of the Notes pursuant to the Program up to a maximum aggregate principal amount outstanding of U.S.$120,000,000. The Issuer has appointed Banco Espírito Santo de Investimento, S.A., Sucursal en España (together with any other dealers appointed by the Issuer under the Program, the “Dealers”) as dealers for the Notes under the Program, and has authorized and requested the Dealers to circulate this Information Memorandum in connection therewith.

The Dealers have not independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Dealers as to the accuracy or completeness of this Information Memorandum or any supplement hereto.

This Information Memorandum is not intended to provide the basis of any credit, taxation, legal, investment or other evaluation and should not be considered as a recommendation by the Issuer or the Dealers that any recipient of this Information Memorandum should purchase any of the Notes. Each recipient contemplating the purchase of any of the Notes is advised to consult its own tax adviser, attorney and business adviser as to tax, legal, business and related matters concerning the purchase of the Notes and to make, and shall be deemed to have made, its own independent investigation in relation to the Program and the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither the Issuer nor the Dealers make any comment about the treatment for taxation purposes of payments or receipts in respect of the Notes to or by a holder of the Notes or the legality of the purchase of the Notes by an investor under applicable investment or similar laws.

Neither the Issuer nor the Dealers accept any responsibility, express or implied, for updating this Information Memorandum. Neither the delivery of this Information Memorandum nor the offering, sale or delivery of any Notes shall, in any circumstances, create any implication that the information contained herein is true subsequent to the date hereof or the date upon which this Information Memorandum has been most recently amended or supplemented or that there has been no adverse change in the financial situation of the Issuer since the date hereof or, as the case may be, the date upon which this Information Memorandum has been most recently amended or supplemented or that any other information supplied in connection with the Program is correct at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same. No person has been authorized to give any information to the contrary or to make any representation not contained in this Information Memorandum or any supplement hereto and, if given or made, such information or representation must not be relied upon as having been authorized.

This Information Memorandum does not, and is not intended to, constitute or contain an offer or invitation to any person to purchase Notes. This Information Memorandum does not obligate the Issuer to accept any offer to purchase the Notes. The distribution of this Information Memorandum and the offering, sale and delivery of the Notes in certain jurisdictions is restricted by law. All persons into whose possession this Information Memorandum or any Notes come are required by the Issuer and the Dealers to inform themselves of, and to observe, any such restrictions. In particular, such persons are required to comply with the restrictions on offers or sales of the Notes and on distribution of this Information Memorandum and other information in relation to the Notes set out under “Selling Restrictions” and “Transfer Restrictions” below. No person or entity shall have authority to make any offer or invitation to purchase Notes in any jurisdiction in which such offer or invitation is not authorized.

EXECUTIVE SUMMARY

The following is a summary of the more detailed information included elsewhere in this Information Memorandum and, accordingly, may not contain all the information that prospective investors may deem relevant. This summary information is qualified in its entirety by reference to, and should be read in conjunction with, the more detailed information, the unaudited interim consolidated financial statements and the audited consolidated financial statements and the notes thereto included elsewhere in this Information Memorandum, including, under the caption “Risk Factors.”

The Company

We are a leading company in the Mexican retail and banking sector, satisfying families’ different purchasing, financing and savings needs. Our target market is the middle- and lower-middle income segments of Mexico’s population and the Hispanic population in Texas and Illinois where we maintain our U.S. operations.

Our Mexican retail operations offer furniture, electronics, household appliances, cellular telephones, computers, motorcycles, clothing and other durable consumer products, which are sold mainly through our Famsa stores. In the states of Texas and Illinois in the United States, we offer furniture and appliances through our subsidiary Famsa, Inc. As of September 30, 2014, we owned and operated 388 stores, including 363 stores in 83 cities throughout Mexico and 25 stores in Texas and Illinois, 17 warehouses and 11 distribution centers. As of September 30, 2014, in Mexico we also operated 290 banking branches within Famsa stores and 201 independent banking branches, including those added in 2013 with the acquisition of Montemex. We believe that over the course of our 43-year history, we have built a strong brand name associated with a broad product offering at low prices and personalized customer service with convenient consumer financing programs. For the nine-month period ended September 30, 2014, furniture, electronics and household appliances accounted for 40.2% of our consolidated total revenues.

In connection with our retail operations, we offer consumer financing to our customers, many of whom do not typically have access to other forms of financing, which allows them to purchase our products and services on credit. As of September 30, 2014, 82% of our retail sales were through our credit sales programs. To enhance our consumer financing business in Mexico, in 2007, we established our own commercial bank, Banco Ahorro Famsa, S.A., Institución de Banca Múltiple (Banco Famsa), allowing us to offer additional banking services to our customers, and generate a lower-cost, more stable form of short-term financing for our operations. According to the CNBV, as of September 30, 2014, Banco Famsa operated one of the 10 largest banking branch networks in Mexico, and managed an aggregate amount of 3.2 million savings accounts and credit accounts.

Retail Operations

Famsa Mexico and Famsa USA manage our retail operations through our network of stand-alone stores and anchor stores. In addition to the products and services provided by our stand-alone stores, our anchor stores serve as administrative centers, providing customer service, credit processing and other support to the stand-alone stores in the same region.

For the nine-month period ended September 30, 2014, 88% of Famsa’s consolidated total revenues were generated in Mexico. Over the last decade, overall demand for goods and services in Mexico has increased as a result of greater purchasing power, increased economic stability and growth in the average annual income of Mexican consumers. Our target market in Mexico is primarily the middle- and lower-middle income segments of the population. We consider these segments to comprise the adult working population that earns a household monthly income of between Ps.3,420 (U.S.$259.59) and Ps.44,200 (U.S.$3,354.92). Based on AMAI’s Mexican Housing Overview of 2012, this group represents approximately 74.0% of the Mexican households living in cities with a population greater than 50,000 inhabitants. For further discussion of our target demographics, see “—Target Markets.” Famsa Mexico

has targeted this large segment of the population since 1970 by offering convenient installment credit plans as well as a broad assortment of products and personalized customer service. As of September 30, 2014, Famsa Mexico serves its customers through 879 business units that are generally located within the metropolitan areas of cities with a population in excess of 50,000, and range in size from 400 to 3,000 square meters, with an average of 1,192 square meters. Each store maintains an average of approximately 2,205 durable consumer products on display, ranging from furniture, electronics and household appliances to clothing and cellular telephones. In addition, we believe that we are also one of Mexico’s largest wholesalers of household appliances and electronic products in Mexico, operating 17 wholesale stores in the principal metropolitan areas of 16 Mexican states.

Famsa USA represented 12% of Famsa’s consolidated total revenues for the nine-month period ended September 30, 2014. Hispanics make up the largest and fastest-growing minority segment in the United States. According to U.S. Census Bureau population estimates as of July 2013, there are approximately 54 million Hispanics living in the United States, representing approximately 17% of the U.S. total population. Between 2000 and 2010, the U.S. Hispanic population grew by approximately 43%, which was four times the growth in the total U.S. population. We operate in two U.S. states, Texas and Illinois, in which approximately 23% of the U.S. Hispanic population resides. Famsa USA has targeted the U.S. Hispanic market by replicating Famsa Mexico’s business model and leveraging the recognition of the Famsa brand. Famsa USA serves its U.S. customers through a 25-store network, developed both organically and through acquisitions in Texas and Illinois. Famsa USA’s stores carry an average of 1,822 products on display, and range in size from 1,400 to 3,000 square meters with an average of 2,322 square meters. In addition, we offer differentiated services, such as Famsa-to-Famsa, through which our customers can purchase merchandise at Famsa stores in the United States and have it delivered to other customers in Mexico through Famsa Mexico, taking advantage of our infrastructure in both countries.

We sell Famsa-brand and third-party brand-name domestic products and imports. The principal brands available in our stores include Sony, White Westinghouse, Panasonic, Whirlpool, LG, Samsung and Mabe, among others, and we continually seek to expand our product and service offerings. Furthermore, Kurazai, our own motorcycle brand, has been ranked as one of Mexico’s four best-selling motorcycle brands, after only three years in the market. Our stores are characterized by our product display, which is designed to maximize sales and the use of space. Most of our stores have their own warehouse capacity to ensure product availability, especially of their most popular products. Each of our stores utilizes integrated inventory management and marketing systems and is connected to STORIS®, which is an advanced supply chain management application that provides real-time information to both stores and vendors relating to inventory levels, purchase order status and other information.

On October 1, 2013, Banco Famsa announced it concluded the acquisition of the rights for the operation of 173 branches, which will provide customers with the option to acquire loans for which items of personal property are used as collateral. The acquisition also contributes significantly to the Company’s expansion plan in Mexico, increasing Grupo Famsa’s presence from 83 to 207 cities across the country. The aforementioned branches are located in the central, Gulf and southeastern regions of Mexico.

Our net sales totaled Ps.10,464, million for the nine-month period ended September 30, 2014, compared to Ps.10,688 million for the nine-month period ended September 30, 2013. Our total retail space consisted of 496,116 square meters as of September 30, 2014, compared to 491,008 square meters as of September 30, 2013. Our earnings before interest expense, depreciation and amortization (“EBITDA”) totaled Ps.1,177 million for the nine-month period ended September 30, 2014, compared to Ps.1,334 million for the nine-month period ended September 30, 2013.

Consumer Finance

Given our product mix of high-ticket items and our focus on middle- and lower-middle income customers, Famsa’s comprehensive value offer has always included the availability of flexible credit sales programs, which enhance our customers’ purchasing power by providing a convenient source of financing for purchasing the retail products we offer. The credit sales programs we offer involve weekly, bi-weekly

or monthly payments with terms that can range from three to 24 months, depending on the customer’s preference and payment capacity. As of September 30, 2014, credit sales accounted for 81.7% of our total revenues. We believe that our credit sales programs improve our retail operations’ profitability and boost our growth prospects.

The retail price of the merchandise we sell in Mexico depends on the market trends of the diverse types of products offered. Sales on credit generally generate higher gross margins than those yielded by our cash sales. In the United States, the purchase price of the merchandise sold on credit is determined based on the suggested retail price plus a finance charge that is reviewed periodically.

With the establishment of our banking operations through Banco Famsa in 2007, we have increased our product and service offering to our customers. As of September 30, 2014, Banco Famsa was the source of 68.9% of our net funding and Banco Famsa’s average cost of funding was 4.8%. Banco Famsa is now fully-funded through its own deposits in the form of savings and checking accounts, certificates of deposit and other consumer investment products.

Business Strategy

Grupo Famsa serves specific consumer, credit and savings needs of the middle- and lower-middle income segments of the Mexican population through a portfolio of complementary businesses. We believe the synergies among our business units, Famsa Mexico, Banco Famsa and Famsa USA enable us to attain competitive advantages that reinforce our position. Our business strategy focuses on maximizing these synergies to provide comprehensive and differentiated value to our customers who value personalized service and require credit options that are not offered to them by the traditional banking sector.

Famsa USA serves the U.S. Hispanic population, successfully replicating Famsa Mexico’s business model in the states of Texas and Illinois. Our objective is to increase our customer base by attracting new customers and maintaining existing ones through the communication of our strengths, such as our credit sales program, name brands, competitive prices, unique promotions and exclusive Famsa-to-Famsa service.

The key elements of our strategy are to (i) enhance our consumer financing operations in Mexico through Banco Famsa, (ii) selectively expand our retail store network in Mexico, (iii) improve our sales and marketing efforts to increase our market share, (iv) continue to improve our margins through the introduction of new products, services and distribution channels and (v) improve profitability of Famsa USA.

We were organized in Monterrey, Nuevo Leon, Mexico on December 27, 1979 under the name Corporación Famsa, S.A. (sociedad anómina), deed 1246. We were issued a mercantile association (sociedad mercantil) under the Mexican law. The public property & trade record is 250, page 41, volume 234, book 3, Commercial section (registro público de la propiedad y del comercio). The registration number granted by the Mexican Ministry of Finance and Public Credit (Secretaria de Hacienda y Crédito Público) is CFA-791227-8T0. In March 07, 1988, the company changed from Corporación Famsa, S.A. to Corporación Famsa, S.A. de C.V. (sociedad anónima de capital variable). The public property & trade record is 1199, volume 189-24, book 4, Commercial section (registro público de la propiedad y del comercio). In November 19, 1997, we changed our corporate name to Grupo Famsa, S.A. de C.V. Its public property & trade record is 102, volume 207-03, book 4, Commercial section (registro público de la propiedad y del comercio). The registration number granted by the Mexican Ministry of Finance and Public Credit (Secretaria de Hacienda y Crédito Público) also changed to GFA-971015-267. When we listed on the Mexican Stock Exchange on December 19, 2006, we changed our corporate name to Grupo Famsa, S.A.B. de C.V. Its public property & trade electronic record is 15680*9 (registro público de la propiedad y del comercio). Our corporate headquarters are located at Avenida Pino Suárez No. 1202 Norte, Colonia Centro, 64000 Monterrey, N.L. Our telephone number is +52 (81) 8389-3405. Our website is http://www.grupofamsa.com. Information on our website is not part of this Information Memorandum.

U.S.$33,000,000 Million U.S.$120.0 Million Commercial Paper Program 7.00% Notes due 2016

Issuer Grupo Famsa, S.A.B. de C.V.

Dealer Banco Espírito Santo de Investimento, S.A., Sucursal en España.

Issue Agent and HSBC Bank plc. Principal Paying Agent

Aggregate Principal Amount U.S.$33,000,000 .

Issue in Series Notes may be issued in different series so long as the aggregate amount issued and outstanding at any time does not exceed the total amount of the Program.

Currency U.S. Dollars.

Form and Delivery Notes will be issued in bearer form and sold in offshore transactions outside the United States in reliance on Regulation S, and will be represented by a coupon bearing global Note, the form of which is attached hereto as Exhibit C. The Notes will be deposited with a common depositary on behalf of, and will be delivered through, the Euroclear system (“Euroclear”) and Clearstream Banking, Société Anonyme (“Clearstream Luxembourg”) and will only be exchangeable into definitive Notes, the form of which is attached hereto as Exhibit D, in the exceptional circumstances contemplated by the Notes.

Issue Date of the Notes January 28, 2015.

Maturity Date of the Notes January 28, 2016.

Coupon The Notes accrue interest from the date of their issuance, January 28, 2015, at a rate of 7.00% per year based on a 360-day year comprised of twelve 30-day months. Interest on the Notes will be payable semi-annually in arrears on each of July 28, 2015 and January 28, 2016.

Issue Price 100%.

ISIN XS1169204762.

Ranking The Notes are unsecured and will constitute direct, unsecured and unsubordinated obligations of the Issuer and will rank pari passu with all other unsecured and unsubordinated indebtedness of the Issuer, including any guarantees given by the Issuer, other than obligations preferred by mandatory law.

Redemption There will be no redemption prior to maturity.

Denomination U.S.$100,000 and higher integral multiples of U.S.$1,000.

Withholding Tax All payments under the Notes will be made net of withholding taxes imposed by Mexico, except as stated in the Notes.

Selling and Transfer Restrictions See “Selling Restrictions” and “Transfer Restrictions.”

Notice to Investors We have not registered, and we are not required to and do not currently plan on registering, the Notes under the Securities Act and, unless so registered, the Notes may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable U.S. state securities laws. See “Selling Restrictions.”

The Notes will not be registered in the RNV maintained by the CNBV and may not be offered or sold publicly or otherwise be subject to brokerage activities in Mexico, except pursuant to the private placement exemption set forth in Article 8 of the Mexican Securities Market Law.

As required under the Mexican Securities Market Law, we will notify the CNBV of the issuance of the Notes, including the principal characteristics of the Notes and the offering of the Notes outside of Mexico. Such notice will be delivered to the CNBV to comply with a legal requirement and for information purposes only, and the delivery to and the receipt by the CNBV of such notice does not constitute or imply any certification as to the investment quality of the Notes, our solvency, liquidity or credit quality or the accuracy or completeness of the information provided in this Information Memorandum.

Listing Application has been made to the Irish Stock Exchange to approve the Information Memorandum as a Listing Particulars and for the notes to be admitted to the Official List of the Irish Stock Exchange for trading on the Global Exchange Market.

Rating The Notes will not be rated.

Use of Proceeds The proceeds of the issuance of the Notes will be used to refinance a portion of the U.S.$60 million notes issued under the euro commercial paper program due on January 28, 2015.

Governing Law New York.

Risk Factors Prospective purchasers of the Notes should carefully read this entire Information Memorandum. Purchasers should consider, among other things, the risk factors with respect to the Company, its business, the Notes and Mexico, which may not normally be associated with investments in other issuers or issuers domiciled in other countries.

Summary Consolidated Financial and Other Information

The following information has been derived from, and should be read in conjunction with, our consolidated annual financial statements as of and for the years ended December 31, 2012 and 2013, which have been audited by our independent auditors PricewaterhouseCoopers, S.C., and our unaudited interim consolidated financial statements as of and for the nine-month periods ended September 30, 2013 and 2014, both prepared in accordance with International Financial Reporting Standards (“IFRS”). The information (other than operating data expressed in percentages or data regarding the number of stores) contained in the following table is stated in thousands of Mexican Pesos.

Until 2011, we issued our consolidated financial statements in conformity with Mexican Financial Reporting Standards (“MFRS”). In accordance with IFRS 1 “First-time adoption of IFRS” we considered January 1, 2011 as our IFRS transition date and January 1, 2012 as our IFRS adoption date. As a result, our consolidated financial statements have been prepared in accordance to IFRS as issued by the International Accounting Standards Board (the “IASB”).

In addition, the preparation of these consolidated financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date as well as the reported amounts of revenues and expenses for the periods presented. Actual results may differ from these estimates, judgments and assumptions.

An accounting estimate in the Company’s consolidated financial statements is a critical accounting estimate if it requires the Company to make assumptions about matters that are highly uncertain at the time the accounting estimate is made, and either different estimates that the Company reasonably could have used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the presentation of the Company’s financial condition, cash flows or results of operations.

Year ended Nine-month period ended December 31, September 30, IFRS IFRS IFRS IFRS 2012 2013 2013 2014 Income Statement Data: Net sales Ps. 14,123,528 Ps. 15,047,874 Ps. 10,687,700 Ps. 10,464,183 Cost of sales 7,536,148 8,143,382 5,593,199 5,512,541 Operating expenses 5,112,280 5,484,923 3,995,858 4,058,998 Net income 325,599 660,487 611,590 323,894

Gross margin 46.6% 45.9% 47.7% 47.3% Balance Sheet Data: Total assets Ps. 29,069,926 Ps. 31,999,747 Ps. 32,942,968 Ps. 34,205,911 Total liabilities 20,780,211 23,105,555 23,999,281 24,964,865 Stockholders’ equity 8,289,715 8,894,192 8,943,687 9,241,046 Other Financial & Operating Data: Number of stores 380 387 383 388 Mexican sales per square meter Ps. 29.2 Ps. 30.9 Ps. 22.1 Ps. 22.9 U.S. sales per square meter(1) Ps. 26.6 Ps. 25.5 Ps. 18.5 Ps. 19.6 Growth in net sales 1.9% 6.0% 8.0% 1.3% Growth in same-store sales 1.6% 5.6% 7.4% -2.9% EBITDA Ps. 1,789,497 Ps. 1,706,340 Ps. 1,333,736 Ps. 1,176,954 Adjusted EBITDA Ps. 2,379,296 Ps. 2,404,631 Ps. 1,850,945 Ps. 1,698,627 Operating margin 10.4% 9.4% 10.3% 8.5% Net margin 2.3% 4.4% 5.7% 3.1% Other Financial Ratios:

Total liabilities/total assets 0.7x 0.7x 0.7x 0.7x Total liabilities/stockholders’ equity 2.5x 2.7x 2.6x 2.7x Current assets/current liabilities 1.8x 1.8x 1.9x 1.8x Current assets/total liabilities 1.1x 1.1x 1.1x 1.1x

(1) Financial information refers to sales per square meter in Texas and Illinois, the two U.S. states in which we operate.

RECENT DEVELOPMENTS

There has not been a material adverse change in our prospects since December 31, 2013, the date of our last published audited financial statements. Other than as set forth below, there has not been any significant change in our financial position as reflected in our September 30, 2014 unaudited consolidated balance sheet, consolidated income statement or consolidated cash flow statement.

On October 16, 2014, Famsa, Inc. renewed a credit facility with Deutsche Bank AG for a maximum principal amount of EUR 6.6 million or its U.S. dollar equivalent. As of November 30, 2014, Famsa, Inc. had a U.S. dollar loan outstanding under this credit facility in an aggregate principal amount of U.S.$8.0 million. This U.S. dollar loan accrues interest at a fixed rate of 1.05% per annum and matures on October 16, 2015. This facility does not impose any restrictive covenants on us.

On November 25, 2014, we held a general ordinary shareholders meeting in which, among other things, we approved an increase in the variable portion of our capital stock through the issuance of 130,434,782. The shares issued as a result of the capital increase were offered to our shareholders for subscription and payment through the exercise of their preemptive right under our current bylaws at a subscription price of Ps.11.50 per share. The subscription period ended on December 18, 2014 resulting in a full subscription of the issued shares for a total amount of Ps.1,500 million. The main purpose of this transaction was to capitalize our growth and profit opportunities by using the funds obtained for the geographical expansion and capitalization of Banco Famsa.

From the outstanding Ps.100 million of the short-term revolving credit line with Banamex, S.A., Institución de Banca Múltiple as of September 30, 2014, the Company amortized Ps.50 million on November 22, 2014 and Ps.50 million on December 22, 2014.

On December 04, 2014, the Company amortized Ps.120.8 million in unsecured short-term debt instruments (GFAMSA 00714, GFAMSA 01014, GFAMSA 01114) .

On December 18, 2014, the Company amortized Ps.130 million in unsecured short-term debt instruments (GFAMSA 00214) .

On December 19, 2014, Famsa accessed its short-term revolving credit line with Banco Mercantil del Norte, S.A., Institución de Banca Múltiple (Banorte), and took out a loan in the amount of Ps.200 million. The balance accrues interest at a fixed annual rate of 6.15% and matures on January 15, 2015.

From the outstanding Ps.200 million loan of the short-term revolving credit line with BBVA Bancomer, S.A., Institución de Banca Múltiple as of September 30, 2014, the Company amortized Ps.50 million on December 19, 2014.

From the outstanding Ps.50 million loan of the short-term revolving credit line with Banco Monex, S.A., Institución de Banca Múltiple as of September 30, 2014, the Company amortized Ps.50 million on December 24, 2014.

From the outstanding Ps.100 million loan of the short-term revolving credit line with Banco Actinver, S.A., Institución de Banca Múltiple as of September 30, 2014, the Company amortized Ps.100 million on December 29, 2014.

From the outstanding Ps.100 million loan of the short-term revolving credit line with CI Banco, S.A., Institución de Banca Múltiple as of September 30, 2014, the Company amortized Ps.50 million on December 30, 2014.

On January 02, 2015, the Company amortized Ps.150 million in unsecured short-term debt instruments (GFAMSA 01914) .

On January 05, 2015, Famsa accessed its short-term revolving credit line with Banco del Bajío, S.A., Institución de Banca Múltiple, and renewed its loan in the amount of Ps.100 million. The balance accrues interest at a fixed rate of 28-day TIIE (Equilibrium Interbank Interest Rate) plus 3.25% per annum, for a period of 28 days, and matures on April 01, 2015.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Information Memorandum contains forward-looking statements. These forward-looking statements include, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we participate or are seeking to participate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will” or “would” or the negative of such terms or other comparable terminology.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution potential investors that forward-looking statements are not guarantees of future performance and are based on numerous assumptions and that our actual results of operations, including our financial condition and liquidity may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this Information Memorandum. In addition, even if our results of operations, including our financial condition and liquidity and the development of the industries in which we operate, are consistent with the forward-looking statements contained in this Information Memorandum, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to:

 risks related to our competitive position;

 risks related to our business, our strategy, our expectations about growth in demand for our products and services and our business operations, financial condition and results of operations;

 our access to funding sources, and the cost of such funding;

 changes in regulatory, administrative, political, fiscal or economic conditions, including fluctuations in interest rates and growth or diminution of the Mexican and U.S. furniture, electronics and household appliances markets;

 risks associated with our subsidiary Banco Famsa, including regulatory, credit, market and any other risks related to financing activities and the Mexican consumer finance market and retail banking market generally;

 variations in loan default rates by our clients, as well as in our recording of provisions for doubtful loans;

 foreign currency exchange fluctuations relative to the U.S. Dollar against the Mexican Peso;

 risks related to Mexico’s social, political or economic environment; and

 risks related to the United States’ social, political or economic environment as it relates to the U.S. Hispanic population.

Potential investors should read the sections of this Information Memorandum entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” for a more complete discussion of the factors that could affect our future performance and the markets in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking events described in this Information Memorandum may not occur. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information or future events or developments.

RISK FACTORS

You should carefully consider the following discussion of risks, as well as all the other information presented in this Information Memorandum before investing in the Notes. These risks are not the only risks that affect our business. Additional risks that are presently unknown to us or that we currently deem immaterial may also impair our business. Any of the following risks, if they actually occur, could materially and adversely affect our business, results of operations, financial condition and prospects.

Risk Factors Related to Our Business

The loss of our market share to competitors may adversely affect our performance.

We face intense competition in each of our product categories. Both the Mexican and U.S. retail markets are highly fragmented, encompassing large retail chains, department stores, household appliance and electronics stores, discount warehouse clubs and a broad range of smaller independent specialty stores targeting both high- and middle- and lower-middle income levels. In Mexico, we compete primarily with two other large domestic retail chains that have nationwide presence and offer similar consumer financing options, Grupo Elektra and Coppel. We also compete with other large retail stores, including Grupo Chedraui, Organización Soriana, Centros de Descuento Viana, Dico, Gala, and with the Mexican subsidiaries or affiliates of international chains such as Wal-Mart and Best Buy, among others. We also compete, to a lesser extent, with several domestic department store chains, including El Puerto de Liverpool, Grupo Palacio de Hierro, Grupo Hermanos Vázquez y Fábricas de Francia and Sears, which do not have a national presence, target population segments different from ours and offer less- flexible and/or non-consumer finance options. In the United States, we compete with large U.S. retailers, such as Ashley Furniture, Rooms to Go, Best Buy and Sears, on cash sales, and with local and regional retailers that directly target U.S. Hispanics with in-house credit, such as Conn’s, Continental, LDF and Lacks. In addition, as a result of the North America Free Trade Agreement (“NAFTA”) and other free trade agreements to which Mexico is a party, other U.S. and European retailers may enter into similar arrangements or alliances in the future. In Mexico and the United States, we also compete, to a certain extent, with informal or “black” markets and street vendors and, in the United States, with online and catalog businesses which handle similar lines of merchandise as we do. Any increase in the existing competition, the consolidation of the retail sector or the entry of new and more sophisticated competitors into our current or future markets could impact our business activities and, accordingly, have an adverse effect on our margins, results of operations, financial condition and prospects. See “Business—Target Markets” and “Business—Competition.”

Our competitiveness and profitability depend on our ability to offer competitive financing terms to our customers.

The consumer finance segments in both Mexico and the United States are highly competitive. We derive a significant portion of our revenues from our sales on credit. The price of the merchandise sold on credit depends on various factors, such as the repayment period, the customer’s credit history and the type of product. Our sales on credit yield higher margins than our cash sales. Competition in the consumer finance business may increase significantly as a result of the introduction of new banking and other financial products, such as credit card and personal loans targeted towards the lower-middle income class segment of the population, which constitutes our primary target customer base. Banco Famsa has faced and will continue to face strong competition in Mexico from banking institutions associated with Famsa Mexico competitors in the retail market, such as Banco Azteca, S.A., Institución de Banca Múltiple, the consumer financing subsidiary of Grupo Elektra, Bancoppel, S.A., Institución de Banca Múltiple, the consumer financing subsidiary of Coppel, and Banco Wal-Mart de México Adelante, S.A., Institución de Banca Múltiple, the consumer financing subsidiary of Wal-Mart. See “—Risk Factors Related to Banco Famsa.” Any increase in competition could affect our market position if our competitors are able to offer financing terms to our customer base that are more attractive than ours.

In addition, our results of operations and financial condition could be adversely affected by any future imposition of price controls or restrictions on the interest rates that we can charge or other commercial

terms under our credit sales program in either Mexico or the United States, or our inability to adjust our credit approval policies in response to future economic conditions. Any increase in competition could also affect the profitability of the consumer finance segment in general, thereby causing our competitors to adopt more aggressive pricing policies. See “Business—Consumer Lending Operations—Sales on Credit and Credit Approval Process.”

Adverse economic conditions in Mexico and the United States may adversely affect our financial condition and results of operations.

Our continued success depends largely on the economic conditions in the countries in which we operate. The global economy, including Mexico and the United States, continues to experience a period of slowdown and volatility and has been materially and adversely affected by a significant lack of liquidity, loss of confidence in the financial sector, disruption in the credit markets, reduced business activity, rising unemployment, decline in interest rates and erosion of consumer confidence. This situation has had a direct adverse effect on the purchasing power of, and the credit available to, our customers in Mexico and the United States, and has reduced the quality of our loan portfolio. Our vendors, upon which we depend to provide us with financing on our purchases and inventory and services, are similarly affected. In addition, Mexico’s economy is largely influenced by the economic conditions in the United States as a result of various factors, including the volume of commercial transactions under NAFTA and the level of U.S. investments in Mexico. Events and conditions that affect the U.S. economy can also affect our business, results of operations and financial condition. The macroeconomic environment in which we operate is beyond our control, and the future economic environment may experience further periods of slowdown and volatility. Our level of revenues depends to a significant extent on our stores’ ability to maintain high sales volumes, efficient inventory and distribution levels and strict control systems, which in turn depend on the recuperation of the global economy. There is no assurance when such recuperation will take place or the current economic conditions will ameliorate. The risks associated with current and potential changes in the Mexican and United States economies are significant and could have a material adverse effect on our business and results of operations.

Our success depends on our ability to retain certain and attract new key executives and maintain good relations with our employees.

Our continued success will depend on our ability to retain certain key executives. In particular, our senior executives have extensive experience in the retail market for household appliances, furniture and consumer finance services, and the loss of any of these executives could have an adverse effect on us (see “Management—Executive Officers”). Competition to attract these types of qualified individuals is intense, and we may be unable to attract key executives with the requisite experience and skills. We do not maintain key-man insurance on our executive officers and, as a result, we are exposed to the risk of any one or more of such individuals being unable to continue rendering their services to us. Our future success will also depend on our ability to identify, recruit, train and retain qualified sales, marketing and administrative personnel and to manage our personnel turnover. As of September 30, 2014, approximately 28.0% of our employees are affiliated with labor unions and we may be forced to incur increased overhead costs to avoid disruptions in our business operations in the event of a threatened strike or other labor dispute. Any conflict with our labor unions may affect our operations and result in a decrease in our sales volume or an increase in our overhead costs. See “Business—Employees” and “Management—Executive Officers.”

Our operations in the United States are exposed to various risks that differ from those we face in Mexico.

We operate in the U.S. retail industry. For the nine-month period ended September 30, 2014, our total revenues in the United States accounted for 12% of our consolidated total revenues. We are exposed to the risks associated with doing business in the United States, including, but not limited to, the risks of:

 economic recessions;

 changes in U.S. government policies;

 contraction in the employment market for U.S. Hispanics;

 acts of war or terrorism;

 political instability; and

 protectionist government policies, including immigration policy.

Any of these risks may affect our business operations in the United States and, accordingly, the Company as a whole.

The U.S. consumer finance sector is subject to numerous U.S. federal, state and local laws and regulations, including, among others, some that impose information disclosure requirements on retailers engaged in the sale of merchandise on credit and usury laws that limit the amount of interest or interest rates that retailers may charge their customers and other commercial terms. The U.S. government has also enacted legislation regulating, among other things, the U.S. credit markets and established a federal consumer protection agency. We are also subject to numerous laws and regulations applicable to the U.S. retail industry generally, including laws and regulations in connection with the import, marketing and sale of products, consumer protection and zoning. Any change in the regulatory framework in the United States, or the imposition of special authorization requirements in connection with our credit sales program, may adversely affect our U.S. operations and, in turn, our business operations and financial condition.

In addition, our U.S. operations are subject to various immigration laws and regulations that require us to verify the employment eligibility of our personnel in the country and to maintain adequate compliance records. While some of these requirements may change or become more stringent as a result of a proposed overhaul of the U.S. immigration system, the U.S. federal legislative bodies have yet to approve a series of proposals in connection therewith, including certain proposed legislation that would result in the imposition of more severe penalties to any person that enables others to reside or remain in the United States illegally. If these or other proposed reforms are approved and incorporated into law, we may be forced or compelled to adopt stricter employment and credit eligibility requirements and incur additional expenses in order to comply with any such new law.

We may not be able to acquire an adequate supply of high-quality, low-cost merchandise.

Our future success largely depends on our ability to secure a sufficient volume of merchandise at an attractive cost. Historically, we have been able to acquire high-quality merchandise at a low cost, but such merchandise may not be available in the future in amounts sufficient to satisfy our customers’ demands, or at all, or may not be available on favorable terms. We do not rely heavily on any one supplier of merchandise for our stores. However, we purchase a substantial portion of our product inventories from: Whirlpool, Mabe and Electrolux Home Products, which supply household appliances; Sony, Panasonic, Samsung and LG Electronics, which supply electronics; and Movistar and Telcel, which supply cellular telephones. Our business operations may be disrupted if we are unable to secure an adequate supply of merchandise at reasonable prices from these and our other suppliers. See “Business—Suppliers.”

Our success depends on our ability to distribute our products to our stores on a timely and cost- efficient basis.

Our success depends on our ability to distribute products to our stores on a timely and cost-efficient basis. Our nine distribution centers in Mexico and two distribution centers in the United States receive

inventory deliveries from our suppliers for processing and subsequent distribution to our stores and warehouses. The orderly receipt and distribution of our inventory requires the effective management of our distribution centers and an adherence to our logistics guidelines. Our inventory and distribution management could be affected by one or more of the following factors:

 the upgrade and expansion of our existing distribution centers and the installation of new distribution centers to accommodate future growth;

 any disruptions in the operation of, or our ability to improve or upgrade, our information technology infrastructure and management information systems, in particular our supply chain management software system;

 disruptions in the delivery processes; and

 natural disasters or casualties, such as fires, explosions, hurricanes, tornadoes, floods or earthquakes, which are out of our control and may affect our inventory receipt and distribution processes.

See “Business—Distribution Network.”

Price competition may affect our results of operations.

Price competition in the retail industry is intense. We are subject to increasing pressure to reduce our prices as the industry continues to consolidate and more of our competitors are able to benefit from their economies of scale to, among other things, offer lower prices. We may be unable to increase or maintain our current gross margins, and the decrease of such margins would have a negative effect on our business.

Our operating results are affected by seasonality and, accordingly, may fluctuate and be difficult to predict.

In the future, our annual and quarterly results may experience significant fluctuations due to various factors that are beyond our control, including the seasonal nature of our business. Historically, the demand for our products and services tends to increase during the second and fourth quarters of the year as a result of the increase in consumer spending associated with Mothers’ Day, Buen Fin and the Christmas holiday season, respectively. Our quarterly operating results are not indicative of our full-year results. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Overview of Our Results of Operations—Seasonality.”

We are exposed to credit risks in connection with our credit sales program, and our allowance for doubtful accounts may be insufficient to offset such risks.

As of September 30, 2014, on a consolidated basis, sales on credit accounted for 81.7% of our total revenues and our accounts receivable, net of allowance for doubtful accounts, reached Ps.23,161 million. As a result, we are exposed to credit risks and may suffer losses if the customers of our credit sales program, personal loans and business credit products do not meet their payment obligations. As of September 30, 2014, we maintained a relatively low uncollectibility level of approximately 3.5% measured as the percentage of recoveries over total trade accounts receivable. Although we seek to minimize our exposure to this credit risk by subjecting our customers to strict credit approval policies and processes, any impairment in the quality of our loan portfolio or any increase in the amount of our non-performing accounts could affect our results of operations and financial condition if our allowance for doubtful accounts proves insufficient to offset losses therefrom.

The amount of our allowance for doubtful accounts is determined based on risk considerations given our past practices and experience. Although we believe that our allowance for doubtful accounts is

currently adequate and sufficient to cover any losses associated with our loan portfolio, in the future we may be required or may deem it desirable to increase the amount of such provision. Any increase in our allowance for doubtful accounts may have an adverse effect on our results of operations and financial condition. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Allowance for Doubtful Accounts,” “Business— Regulation—Legal Regime Applicable to Banco Famsa” and “Business—Consumer Lending Operations.”

We depend on Banco Famsa deposits as our primary source of financing.

We have traditionally relied on a variety of funding sources, including credit lines with major financial institutions, commercial paper offerings in Mexico and the international markets, and equity offerings in Mexico. We have transformed our funding strategy to rely principally on Banco Famsa’s deposit base as a source of funding for our credit sales program and operations. We are, therefore, subject to the risks associated with Banco Famsa’s deposits. We cannot guarantee that we will be able to continue to rely on Banco Famsa’s deposit base as our primary source of financing or that we will be able to do so on favorable terms. We also cannot assure you that our strategy of relying on Banco Famsa’s deposits as a source of funding will be an acceptable cost-effective and stable form of financing for our needs. See “— Risk Factors Related to Banco Famsa.”

Furthermore, in the event that Banco Famsa’s deposit base is insufficient to finance our credit sales programs or operations, we cannot assure you that we will be able to extend maturities on our current lines of credit, acquire additional financing in the form of credit lines with major financial institutions or continue to access the Mexican or international capital markets on terms acceptable to us. Adverse developments in the Mexican and international credit markets, including higher interest rates, reduced liquidity or decreased interest by financial institutions in lending to us may increase our cost of borrowing or refinancing maturing indebtedness, with adverse consequences to our financial condition and results of operation. We cannot assure you that we will be able to refinance any indebtedness we may incur, including the Notes, or otherwise obtain funds by selling assets or raising equity to make required payments on maturing indebtedness.

Our business operations depend on the integrity of our employees.

Our success and profitability depend largely on the quality and integrity of our employees at every level of our distribution process. Any breach in the quality or integrity of our employees could have an adverse effect on our success and profitability.

Our business operations are dependent, in part, upon the success of our new product and service offerings.

Our success and profitability depend to a certain extent on the market acceptance of our new product and service offerings, such as Internet sales, new consumer financing products, footwear catalog sales, travel packages and automobile financing, in addition to other products and services primarily directed to customers in higher income brackets. Additionally, we expect that – through the continuing development and integration of Banco Famsa – we will be able to offer a growing variety of personal and business financial products and services in Mexico. Our new products and services could fail to gain market acceptance once available in our stores or at Banco Famsa’s branches and we may be unable to anticipate, in a timely fashion or at all, the ever-changing needs of our customers, which could render obsolete our new product and service offerings. If our competitors in the retail and consumer financing sectors are able to anticipate the market trends better than we can, our market share could decrease. See “Business—Our Business Strategy.”

We may not be able to achieve our growth expectations in Mexico.

We expect to achieve growth through the opening of new stores in Mexico, but we may be unable to fully implement our growth strategy in Mexico as a result of numerous factors, including adverse changes

in economic conditions generally, our inability to secure financing on attractive terms and conditions, the unavailability of suitable retail space, difficulties in complying with the regulatory framework applicable in the jurisdictions in which we intend to open new stores and our inability to attract and retain personnel.

In addition, our cash flows may prove insufficient to finance the costs associated with establishing new stores, which may require us to seek other sources of financing or close stores. Our growth and expansion strategy would be hindered if we are unable to secure financing on favorable terms and conditions. Our growth and expansion strategy also calls for the opening of new stores in new markets in Mexico, and the performance of such new stores may fail to meet our expectations and differ from that of our existing stores. Similarly, the opening of new stores in markets in which we already operate could affect the sales volumes of our existing stores. In either case, the performance of our new stores may fail to justify the operating expenses associated with the opening of such stores, which could affect our margins. See “Business—Our Business Strategy” and “Business—Retail Network—Market Expansion Strategy.”

Failures in our information technology systems, or any problem or delay in the installation of new information technology systems, could have an adverse effect on our business operations.

We depend heavily on our information technology (“IT”) systems to conduct our business activities and maintain a cost-efficient operation, including our sales processing, inventory purchase and management, product distribution and customer service functions. Our IT systems experience failures or suffer disruptions from time to time as a result of computer viruses, hacking and other similar events. Any material failure or disruption in our IT systems could result in the loss or damage of our customers’ purchase order information, which could give rise to delays in the delivery of merchandise to our stores and a decrease in sales, particularly during the Christmas holiday season. Furthermore, our ability to remain competitive will depend in part on our ability to upgrade our IT systems on a timely, cost-effective basis. We must continually make significant investments and improvements in our IT systems to remain competitive, in particular as we continue to open new stores and distribution centers in Mexico or in the United States. In the future, we may be unable to develop or acquire the IT systems necessary to address our customers’ needs or meet our needs in conducting our business activities (such as inventory and purchase management). In addition, any future changes in technology could render our IT systems obsolete or unable to accommodate our growth, which could in turn result in a decrease in sales. See “Business—Systems.”

Risk Factors Related to Banco Famsa

We face uncertainties in connection with our banking activities.

Banco Famsa was created in 2007 to provide consumer financing and deposit services to our retail customers. The performance of Banco Famsa and its ability to attract consumer deposits and successfully offer consumer financing services is directly related to its ability to obtain deposits from our existing retail customers. However, Banco Famsa may find it difficult to attract deposits from, or market its services to, our existing retail customers who do not yet bank with Banco Famsa and who generally do not bank with other institutions. Accordingly, Banco Famsa may require additional capital investments in the future. In addition, Banco Famsa’s client portfolio is generally comprised of individuals with no previous or limited credit history who are generally more likely to default on their repayment obligations during periods of economic crisis.

Banco Famsa competes with a number of Mexican banks and Mexican affiliates of foreign financial institutions. The operations and activities of Banco Famsa are subject to the legal regime applicable to the Mexican banking industry, the accounting requirements prescribed by the CNBV and various other laws and regulations not otherwise applicable to our business operations (other than Banco Famsa’s operations). Such laws, regulations and requirements may impose restrictions upon Banco Famsa’s operations and activities and the activities of the Company in general. The application of different accounting standards to Banco Famsa from those standards applicable to the rest of the Company may have an adverse effect on the recognition of our income and expenses, which could reduce our

profitability. Any future change in the legal regime applicable to Banco Famsa could subject it to additional restrictions and affect its business operations and financial results. For more information on the legal regime applicable to Banco Famsa, see “Business—Regulation—Legal Regime Applicable to Banco Famsa.”

We cannot assure you that our banking activities will be successful or profitable. In addition, we cannot guarantee that the results of Banco Famsa will not have an adverse effect on our consolidated results of operations. See “Business—Banco Famsa.”

The short-term nature of Banco Famsa’s financing resources may expose it to liquidity risks.

Since 1994, Mexican banks have at times experienced liquidity shortages in the international financial markets, particularly in connection with the refinancing of their short-term debt. We cannot guarantee that the Mexican financial system will not experience liquidity shortages in the future, or that Banco Famsa will not be affected by any such liquidity shortage. Although we expect that Banco Famsa will be able to repay or refinance its debt, there is no guarantee that it will be able to repay such debt or refinance it on favorable terms.

Banco Famsa intends to use its customer deposits as its primary source of financing, and we anticipate that our Mexican customers will continue to demand deposit services (particularly in the form of on-demand or short-term deposits) and short-term loans. However, we cannot guarantee that our customers will place their deposits with Banco Famsa or that such deposits will provide a stable source of financing for Banco Famsa, which in turn would affect Famsa because it relies on Banco Famsa as a principal source of funding. As of September 30, 2014, substantially all of Banco Famsa’s deposits had current maturities of one year or less or were payable upon demand. In the past, a substantial portion of our bank deposits has been rolled over upon maturity, however, we cannot assure that this practice will continue and that Banco Famsa will be able to maintain the stability or consistency of its deposit base. The withdrawal of deposits by a significant number of Banco Famsa’s customers would affect Banco Famsa’s liquidity position, which would force Banco Famsa to seek financing from other, more expensive sources of short-term or long-term funding to finance Banco Famsa’s operations, which, in turn, may have a material adverse effect on our consolidated financial condition or results of operation.

Changes in the Mexican banking and financial services regulatory framework may affect the results of Banco Famsa.

As a Mexican banking institution, Banco Famsa is subject to comprehensive regulation and supervision by Mexican banking and financial regulatory authorities, such as Mexico’s Central Bank (Banco de México) (the “Mexican Central Bank”), the CNBV and the Mexican Secretariat of Finance and Public Credit (Secretaría de Hacienda y Crédito Público). These regulatory authorities have broad powers to adopt regulations and other requirements affecting or restricting virtually all aspects of Banco Famsa’s capitalization, organization and operations, including the authority to regulate the interest rates and fees that Banco Famsa is allowed to charge and the other terms and conditions of its consumer lending transactions. Moreover, Mexican banking and financial regulatory authorities possess significant power to enforce applicable regulatory requirements in the event of Banco Famsa’s failure to comply with them, including by imposing fines, requiring the contribution of new capital, inhibiting Banco Famsa from paying dividends to us or paying bonuses to its employees, and restricting or revoking authorizations, licenses or permits to operate its business. In the event Banco Famsa encounters significant financial problems or becomes insolvent or in danger of becoming insolvent, Mexican banking authorities would have the power to take over Banco Famsa’s management and operations. The revocation of Banco Famsa’s authorization to operate as a banking institution in Mexico or other government approvals to operate its business, or the imposition of any restrictions on Banco Famsa’s ability to grant consumer loans, may in turn affect the sales volumes of our stores, which rely on the consumer financing supplied by Banco Famsa, and in turn affect our results of operations and financial position. See “Business— Regulation—Legal Regime Applicable to Banco Famsa.”

Mexican banking and financial services laws and regulations are subject to continuing review and changes, and any such future changes may have an adverse impact on, among other things, Banco Famsa’s ability to grant and collect on loans, transfer non-performing loans and otherwise extend credit on terms and conditions and at interest rates that are adequately profitable, which could materially and adversely affect Banco Famsa’s and our consolidated results of operations and financial position.

On January 10, 2014, amendments to banking and financial services laws were published in the Official Gazette of Mexico within the framework of the Pacto por México (Pact for Mexico, a cross-party co-operation pact signed early in Mr. Enrique Peña Nieto's presidency to attempt to enact 95 reforms in which a degree of consensus existed), with the main purpose of broadening credit granting, improving credit conditions, and decreasing the cost of collateral foreclosure. The financial reforms exceed the commitments of the Pacto por México, and include amendments to 34 laws and encompass a broad range of subject matters. In general terms, the reforms grant greater powers to financial authorities and materially increase the level of regulation, penalties and cost of compliance. Most of these amendments became effective as of January 13, 2014, and certain amendments require the implementation of secondary rules and regulations which are yet to be drafted and issued by financial regulators. These and future amendments to financial laws could adversely affect Banco Famsa’s and our financial condition and results of operations. See “Business—Regulation—Legal Regime Applicable to Banco Famsa.”

Future Mexican government restrictions on interest rates and banking fees may affect Banco Famsa’s liquidity and profitability.

Our Mexican consumer finance operations implemented through Banco Famsa are subject to the legal regime applicable to the Mexican banking industry in general, including the Law for the Protection and Defense of the User of Financial Services (Ley de Protección y Defensa al Usuario de Servicios Financieros). This law does not currently impose any limits on interest rates or banking fees, subject to certain exemptions, that a bank may charge. However, the possibility of imposing such limits has been and continues to be debated by the Mexican Congress and Mexican banking authorities. In the future, the Mexican banking authorities could impose restrictions on the interest rates or fees charged by banks or impose additional disclosure requirements regarding interest rates or fee information. We derive a substantial portion of our revenues and operating flows from our consumer lending business, and the imposition of any such restriction or requirement could impact Banco Famsa’s competitiveness and have a material adverse effect on our financial performance.

Any change in the Mexican laws applicable to Banco Famsa, including the imposition of credit approval requirements, could have an adverse effect on our financial condition and results of operations. See “Business—Regulation—Legal Regime Applicable to Banco Famsa.”

Guidelines for loan classification and loan loss reserves in Mexico may be less stringent than those in other countries.

Mexican banking regulations require Banco Famsa to classify each loan or type of loan (other than loans to the Mexican government, the Mexican Central Bank, the Instituto de Protección al Ahorro Bancario (the “IPAB”) and certain international organizations) according to a risk assessment that is based on specified criteria, to establish corresponding reserves and, in the case of some non-performing assets, to write-off certain loans. The criteria to establish reserves include both qualitative and quantitative factors. Mexican regulations relating to loan classification and determination of loan loss reserves are generally different or less stringent than those applicable to banks in the United States. Banco Famsa may be required or deem it necessary to increase its loan loss reserves in the future. Increasing loan loss reserves for Banco Famsa could materially and adversely affect Banco Famsa and our results of operations and financial position.

Banco Famsa may be unable to effectively control the level of non-performing or poor credit quality loans or have insufficient loan loss reserves to cover future loan losses.

Non-performing or low credit quality loans can negatively impact Banco Famsa and our results of operations. We cannot assure you that we will be able to effectively control and reduce the level of the impaired loans in Banco Famsa’s total loan portfolio. In particular, the amount of Banco Famsa’s non- performing loans may increase in the future as a result of growth in Banco Famsa’s total loan portfolio, including as a result of loan portfolios that Banco Famsa may acquire from time to time or otherwise, or factors beyond our control, such as the impact of macroeconomic trends, political events affecting Mexico or changes to accounting principles or other laws or regulations applicable to us or events affecting our target customers. In addition, Banco Famsa’s current loan loss reserves may not be adequate to cover an increase in the amount of non-performing loans or any future deterioration in the overall credit quality of Banco Famsa’s total loan portfolio. As a result, if the quality of Banco Famsa’s total loan portfolio deteriorates Banco Famsa may be required to increase our loan loss reserves, which may adversely affect Banco Famsa’s and our financial condition and results of operations. Moreover, there is no precise method for predicting loan and credit losses, and we cannot assure you that our loan loss reserves will be sufficient to cover actual losses. If we are unable to control or reduce the level of Banco Famsa’s non- performing or poor credit quality loans, Banco Famsa and our financial condition and results of operations could be materially and adversely affected. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Results of Operations at September 30, 2014 compared with Results of Operations for September 30, 2013.”

Mexican banks, such as Banco Famsa, are subject to strict capitalization requirements.

Mexican banks are required to maintain a net capital (capital neto) relative to market risk, risk- weighted assets incurred in its operations and operations risk, which may not be less than the capital required in respect of each type of risk. If Banco Famsa were not to comply with these requirements, two risk scenarios could arise: (i) pursuant to articles 117 and 121 of the Mexican Law of Credit Institutions, the CNBV could impose a minimum corrective measure, or (ii) pursuant to numeral V of article 28 of the Mexican Law of Credit Institutions, and under certain circumstances, the CNBV could revoke the authorization granted to Banco Famsa to operate as a banking institution in Mexico. See “Business— Regulation—Legal Regime Applicable to Banco Famsa.” The imposition of either scenario, or the consequences therefrom, could adversely affect Banco Famsa’s and our financial condition and results of operations.

On September 2010, the Basel Committee on Banking Regulations and Supervisory Practices, or the Basel Committee, proposed comprehensive changes to the capital adequacy framework, known as Basel III. On December 16, 2010 and January 13, 2011, the Basel Committee issued its final guidance on a number of regulatory reforms to the regulatory capital framework in order to strengthen minimum capital requirements, including the phasing out of innovative Tier 1 and 2 Capital instruments with incentive- based redemption clauses and implementing a leverage ratio on institutions in addition to current risk- based regulatory requirements. On November 28, 2012, the Mexican Ministry of Treasury and Public Credit (Secretaría de Hacienda y Crédito Público) published several amendments to the regulations applicable to financial institutions for the implementation of Basel III standards in Mexico, which result in new requirements in respect of regulatory capital, liquidity/funding and leverage ratios applicable to Mexican banks, that could have a material adverse effect on Banco Famsa, including our results of operations. Most of these amendments became effective as of January 1, 2013.

Banco Famsa may be required to make significant contributions to the IPAB.

Under applicable Mexican law, Mexican banks are required to make monthly contributions to the IPAB to support its operations that are equal to 1/12 of 0.4% (the annual rate) multiplied by the average of certain liabilities minus the average of certain assets. The IPAB was created in January 1999 to manage the bank savings protection system and regulate the financial support granted to troubled banking institutions in Mexico. Mexican authorities impose regular assessments on banking institutions covered by the IPAB for funding. Banco Famsa contributed Ps.45.3 million in 2012 and Ps.38.5 million for 2013

(as of September 2013) to the IPAB. In the event that IPAB’s reserves are insufficient to manage the bank savings protection system and provide the necessary financial support granted to troubled banking institutions, the IPAB maintains the limited right to require extraordinary contributions to participants in the Mexican banking system.

Banco Famsa may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which could expose Banco Famsa to additional liability and harm our business.

Banco Famsa is required to comply with applicable anti-money laundering laws and other regulations in Mexico. These laws and regulations require Banco Famsa, among other things, to adopt and enforce “know your customer” policies and procedures and to report suspicious and large transactions to the applicable regulatory authorities. While Banco Famsa has adopted policies and procedures aimed at detecting and preventing the use of Banco Famsa’s banking network for money laundering activities, such policies and procedures may not completely eliminate instances where Banco Famsa may be used by other parties to engage in money laundering and other illegal or improper activities. To the extent Banco Famsa fails to fully comply with applicable laws and regulations, the relevant government agencies to which we report have the power and authority to impose fines and other penalties on Banco Famsa, including revoking Banco Famsa’s authorization to engage in commercial banking activities in Mexico. In addition, Banco Famsa’s and our business and reputation could suffer if we fail to detect and prevent customers who engage in money laundering or other illegal or improper activities. See “Business— Regulation—Legal Regime Applicable to Banco Famsa.”

Failure to successfully implement and continue to upgrade Banco Famsa’s credit risk management system could materially and adversely affect Banco Famsa’s business operations and prospects.

One of the principal types of risks inherent to Banco Famsa’s business is credit risk. We may not be able to accurately implement, or timely upgrade, Banco Famsa’s credit risk management system. For example, an important part of Banco Famsa’s credit risk management system is to employ an internal credit rating system to assess the particular risk profile of a client. Because this process involves a detailed analysis of the client’s credit risk profile that takes into account not just quantitative but qualitative factors that require human judgment to be exercised, the process is subject to human error. In exercising their judgment, Banco Famsa’s employees may not always be able to assign an accurate credit rating to a client, which may result in Banco Famsa’s exposure to higher credit risks than indicated by Banco Famsa’s internal credit rating system. However, Banco Famsa may not be able to timely detect these risks before they occur, or due to limited resources or tools available to Banco Famsa, Banco Famsa’s employees may not be able to effectively implement the system, which may increase Banco Famsa’s credit risk exposure. As a result, failure to implement effectively, consistently follow or continuously refine Banco Famsa’s credit risk management system may result in a higher risk exposure for us, which could materially and adversely affect Banco Famsa’s and our results of operations and financial position.

Reductions in Banco Famsa’s credit ratings would increase its cost of borrowing funds and make its ability to raise new funds, attract deposits or renew maturing debt more difficult.

The credit ratings of Banco Famsa are an important component of its liquidity profile. Among other factors, Banco Famsa’s credit ratings are based on the financial strength, credit quality and concentrations in its total loan portfolio, the level and volatility of its earnings, its capital adequacy, the quality of management, the liquidity of its balance sheet, the availability of a significant base of core retail and commercial deposits and its ability to access funding sources. Banco Famsa currently has a credit rating of 'B' global-scale and ‘mxBBB-/mxA-3’ Mexican national-scale issuer from Standard & Poor’s and 'B+' global-scale and ‘mxBBB/mxA’ Mexican national-scale issuer from Fitch. A downgrade in Banco Famsa’s credit ratings would increase its cost of borrowing funds or renewing maturing debt or could affect its ability to access the capital markets. The ability of Banco Famsa to compete successfully in the marketplace for deposits depends on various factors, including its financial stability as reflected by its

credit ratings. A downgrade in Banco Famsa’s credit rating may adversely affect perception of its financial stability and its ability to raise deposits.

Risk Factors Related to Mexico

Mexican federal governmental policies or regulations, as well as economic, political and social developments in Mexico, could adversely affect our business, financial condition, results of operations and prospects.

We are a Mexican corporation and a significant portion of our assets are located in Mexico. As a result, our business, financial condition, results of operations and prospects are subject to political, economic, legal and regulatory risks specific to Mexico. The Mexican federal government has exercised, and continues to exercise, significant influence over the Mexican economy. Accordingly, Mexican federal governmental actions, fiscal and monetary policy and regulation of state-owned enterprises, such as Pemex, and of private industry could have an impact on Mexican private sector entities, including our company, and on market conditions, prices and returns on Mexican securities, including our securities. We cannot predict the impact that political conditions will have on the Mexican economy. Furthermore, our business, financial condition, results of operations and prospects may be affected by currency fluctuations, price instability, inflation, interest rates, regulation, taxation, social instability and other political, social and economic developments in or affecting Mexico, over which we have no control. We cannot assure potential investors that changes in Mexican federal governmental policies will not adversely affect our business, financial condition, results of operations and prospects. We do not have and do not intend to obtain political risk insurance.

Our business and customers may be negatively affected by the recent global and Mexican financial downturn.

The economic and market conditions of Mexico, as well as the financial condition and operating results of the Company, are greatly affected by worldwide economic conditions. The recent global deterioration of economic conditions has led to reductions in available capital and liquidity, reductions in equity and currency values, extreme volatility in credit, equity and fixed income markets and general economic uncertainty in Mexico and around the world. Continuing deterioration may harm our financial condition, inhibit demand for our services and adversely affect our suppliers and customers. The effects of the current economic situation are extremely difficult to forecast and mitigate.

Weakness in the Mexican economy could adversely affect our business, financial condition and results of operations.

Our business, results of operations and financial condition are dependent in part on the level of economic activity in Mexico. Periods of slow economic growth in Mexico could materially and adversely affect our results of operations and financial position. According to the Mexican Central Bank estimates:

 In 2008, GDP increased by 1.2%;

 In 2009, GDP decreased by 6.2%;

 In 2010, GDP increased by 5.5%;

 In 2011, GDP increased by 3.9%;

 In 2012, GDP increased by 3.9%;

 In 2013, GDP increased by 1.1%

 As of September 2014, GDP for 2014 increased by 1.7%.

Although in the last few years, interest rates have fallen gradually, historically Mexico has had high real and nominal interest rates. The interest rates on 28-day Mexican government treasury securities (certificados de la tesorería or “CETES”) averaged approximately 4.4%, 4.2%, 4.2% and 3.9%, and 2.91% for 2010, 2011, 2012, 2013 and as of September 2014, respectively. Relative to the U.S. Dollar, the Peso depreciated by 26.7% in 2008, appreciated by 5.5% in 2009, appreciated by 5.5% in 2010, depreciated by 12.9% in 2011, appreciated by 7.0% in 2012, depreciated 1.54% and depreciated 2.55% as of September 2014 all in nominal terms. Accordingly, to the extent that we incur Peso-denominated debt in the future, it could be at interest rates higher than the current rates.

As a consequence of the global recession and economic slowdown of 2008, the Mexican economy entered into recession. In the last few years, the economy has shown recovery, but Mexico’s main macroeconomic indicators continue to be negatively affected, including a rise in unemployment, decline of interest rates, higher inflation and a devaluation of the Peso against the U.S. Dollar. As a result, consumer purchasing power may decrease and demand for furniture, electronics and household appliances may also decrease. This global economic downturn and/or any other future downturns, including those that could occur in the United States and Europe, could negatively affect our revenues and profit to the extent that we are unable to reduce our costs and expenses in response to falling demand.

Mexico may experience high levels of inflation in the future, which could adversely affect our business, financial condition, results of operations and prospects.

Mexico has a history of high levels of inflation and may experience high inflation in the future. Historically, inflation in Mexico has led to higher interest rates, depreciation of the Mexican Peso and the imposition of substantial government controls over exchange rates and prices, which at times has adversely affected our operating revenues and margins. The annual rate of inflation for the last four years, as measured by changes in the NCPI, as provided by the Mexican Central Bank, was 4.4% in 2010, 3.8% in 2011, 3.6% in 2012, 3.97 in 2013 and 4.22% for the nine-month period ended September 30, 2014. Although inflation is less of an issue today than in past years, we cannot assure you that Mexico will not experience high inflation in the future, including in the event of a substantial increase in inflation in the United States. A substantial increase in the Mexican inflation rate could adversely affect consumer purchasing power, thereby negatively impacting demand for our products, and would increase some of our costs, which could adversely affect our business, financial condition, results of operations and prospects.

Fluctuations in the exchange rate between the Peso and the U.S. Dollar could lead to an increase in our cost of financing and have an adverse effect on our financial condition and results of operations.

Approximately 88% of our revenues are Peso-denominated and therefore, any decrease in the value of the Peso against the U.S. Dollar would increase the cost of our products and our U.S. Dollar- denominated debt, which totals Ps.4,308 million as of September 30, 2014, and would have an adverse effect on our financial condition and results of operations. The value of the Mexican Peso has been subject to significant fluctuations with respect to the U.S. Dollar in the past and may be subject to further fluctuations in the future. In 2011, as a consequence of the global economic and financial crisis, the Peso depreciated 12.9% against the U.S. Dollar in nominal terms. However, in December 2012, the Peso had appreciated 7.0% against the U.S. dollar in nominal terms. As of September 30, 2014, the Peso had depreciated by 0.72.55 against the U.S. Dollar in nominal terms. A depreciation of the Peso in the future may result in a disruption of the international foreign exchange markets. This could limit our ability to transfer or convert Pesos into U.S. Dollar and other currencies and adversely affect our ability to meet our current U.S. Dollar-denominated obligations, including the Notes issued hereby, and any other U.S. Dollar-denominated obligations that we may incur in the future. See “Liquidity and Capital Resources— Debt.”

While the Mexican federal government does not currently restrict the ability of Mexican or foreign persons or entities to convert Pesos into U.S. Dollars or other currencies, the Mexican federal government could institute restrictive exchange control policies in the future.

Political events in Mexico may affect our operations.

Significant changes in laws, public policies and/or regulations could affect Mexico’s political and economic situation, which could adversely affect our business. Any change in the current consumer protection or consumer finance regulatory policies could have a significant effect on Mexican retailers and consumer finance services providers (including us), variations in interest rates, demand for our products and services, market conditions and the prices of and returns on Mexican securities.

Enrique Peña Nieto won Mexico’s July 1, 2012 presidential election, and took office on December 1, 2012. Mexico’s president has submitted proposals to Congress to implement changes to laws and regulations covering different sectors and has implemented significant changes in public policy. Congress has passed some of these proposed bills, including structural reforms related to energy, political elections, labor telecommunications, financial services and taxes. There is no certainty about the impact of these reforms on Mexico’s economy or our business. Any such changes may have an adverse effect on us.

These and other future developments in the Mexican political or social environment may cause disruptions to our business operations and decreases in our sales and net income.

Mexico has experienced a period of increased criminal activity and such activities could adversely affect the country’s economy and, in turn, our results of operations.

Mexico has experienced a period of increased criminal activity and violence, primarily due to organized crime. These activities, the violence associated with them and their escalation could have a negative impact on Mexico´s business environment. This impact may cause disruptions in our business operations and negatively affect our results of operations.

Terrorist activities, violence and geopolitical events and their consequences could adversely affect our business, financial condition, results of operations and prospects.

Violence or the continued threat of violence or organized crime within Mexico, or terrorist activities in the United States and elsewhere, and the potential for military action and heightened security measures in response to such threats and activities, may cause significant disruption to commerce throughout the world, including restrictions on cross-border transport and trade. In addition, related political events may cause a lengthy period of uncertainty that may adversely affect our business. Political and economic instability in Mexico and the United States could negatively impact our operations. The consequences of violence or terrorism and the responses to such threats and activities are unpredictable and could have an adverse effect on our business, financial condition, results of operations and prospects.

Developments in other countries could adversely affect the Mexican economy, the market value of our securities and our results of operations.

The market value of securities of Mexican companies is, to varying degrees, affected by economic and market conditions in other emerging market countries. Although economic conditions in these countries may differ significantly from economic conditions in Mexico, investors’ reactions to developments in any of these other countries may have an adverse effect on the market value of securities of Mexican issuers. In recent years, for example, prices of both Mexican debt securities and Mexican equity securities dropped substantially as a result of developments in Russia, Asia and Brazil.

In addition, the correlation between economic conditions in Mexico and the United States has sharpened in recent years as a result of the implementation of NAFTA and increased economic activity

between the two countries. We are exposed to changes or re-negotiations of NAFTA, which may affect the Mexican economy. Therefore, adverse economic conditions in the United States, the termination or re-negotiation of NAFTA or other related events could have a significant adverse effect on the Mexican economy. As a result of the slowing economy in the United States and the uncertainty surrounding the impact of such slowdown on the general economic conditions in Mexico and the United States, our financial condition and results of operations could be adversely affected. In addition, due to recent developments in the international credit markets, capital availability and the cost of capital could be significantly affected and could restrict our ability to obtain financing or refinance our existing indebtedness on favorable terms, if at all.

High interest rates in Mexico could increase our financing and operating costs.

Historically, Mexico has had high real and nominal interest rates. The interest rates on 28-day Mexican CETES averaged 21.3%, 15.3% and 11.3% for 1999, 2000 and 2001, respectively. Although average rates for 2008, 2009, 2010, 2011, 2012, 2013 and as of September 2014 were 7.7%, 5.4%, 4.4%, 4.2%, 4.2%, 3.40% 2.9% respectively, we cannot assure you that they will remain at their current levels. Thus, if we are to incur Mexican Peso-denominated debt in the future, it may be at interest rates higher than the current rates.

The recent Mexican tax reforms may have an adverse effect on our clients, which in turn may adversely affect our business.

On October 31, 2013, the Mexican Congress approved a general tax reform, effective as of January 1, 2014 that includes the elimination of the consolidation regime for corporations, the elimination of the flat rate business tax (Impuesto Empresarial a Tasa Única), or IETU, and the tax on cash deposits (Impuesto a los Depósitos en Efectivo), the preservation of the corporate income tax at 30%, the increase of the income tax for individuals and foreign residents to a maximum rate of 35%, the creation of a 10% withholding tax on dividends distributed by companies to their Mexican individual and non-Mexican shareholders, and the increase of the value added tax rate applicable to the border region from 11% to 16%, among other changes. Such tax reforms could adversely affect our business, consumption of our products and the financial position of some of our customers. These and future tax reforms, which could be broad or narrow in scope, could negatively affect the economy of Mexico or our financial condition and results of operations.

Developments in Mexican class action laws could adversely affect our operations.

Mexican Congress has approved amendments to applicable laws that expressly permit class action lawsuits. These new laws may cause our customers and other market participants to initiate class action lawsuits against us, thereby increasing our exposure liability. Due to the lack of judicial precedent in interpreting and applying these laws, we cannot predict the possible outcome of any actions initiated under such laws, including the extent of any liability we may face and the impact of such liabilities on our financial condition and results of operations.

Risk Factors Related to the Notes

The Notes are unsecured.

The Notes will be unsecured obligations of the Company and will be subordinate to the Company’s secured indebtedness and obligations given preference by mandatory provisions of law (including certain claims relating to taxes and labor) and will rank equally with all other unsecured indebtedness of the Company.

If we become insolvent or are liquidated, or if payment under any secured debt is accelerated, the lenders thereunder would be entitled to exercise the remedies available to a secured lender. Accordingly, the lender would have priority over any claim for payment under the Notes to the extent of the value of the

assets that constitute its collateral. If this were to occur, it is possible that there would be no assets remaining from which claims of the holders of the Notes could be satisfied. Further, if any assets did remain after payment of these lenders, the remaining assets might be insufficient to satisfy the claims of the holders of the Notes and holders of other unsecured debt that is deemed the same class as the Notes, and potentially all other general creditors who would participate ratably with holders of the Notes.

Our indebtedness could adversely affect our financial condition and impair our ability to fulfill our obligations under the Notes.

Our ability to meet our debt service requirements will depend on our future performance, which is subject to a number of factors, many of which are outside our control. We cannot assure you that we will generate sufficient cash flow from operating activities to meet our debt service and working capital requirements.

As of December 31, 2013, we had Ps.6,037 million of net debt, and our ratio of net debt to Adjusted EBITDA for December 31, 2013 was 2.5 to 1.0. As of September 30, 2014, we had Ps.6,642 million of net debt, and our ratio of net debt to Adjusted EBITDA for the last twelve months at the close of September 30, 2014, was 2.9 to 1.0. Our level of indebtedness may have important negative effects on our future operations, including:

 impairing our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes;

 requiring us to dedicate a substantial portion of our cash flow to the payment of principal and interest on our indebtedness, which reduces the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes;

 subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates, including our borrowings under our credit facilities;

 increasing the possibility of an event of default under the financial and operating covenants contained in the agreements governing our outstanding indebtedness; and

 limiting our ability to adjust to rapidly changing market conditions, reducing our ability to withstand competitive pressures and making us more vulnerable to a downturn in general economic conditions or our business than our competitors with less debt.

If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to refinance all or a portion of our existing debt or to obtain additional financing. We cannot assure you that any such refinancing would be possible or that any additional financing could be obtained on terms acceptable to us or at all. Our inability to obtain such refinancing or financing may have a material adverse effect on us.

Famsa’s ability to repay the Notes and Famsa’s other debt depends on cash flow from our subsidiaries.

Famsa is a holding company whose only material assets are our ownership interests in our subsidiaries. Consequently, Famsa depends on distributions or other inter-company transfers of funds from our subsidiaries to meet Famsa’s debt service and other obligations, including with respect to the Notes. Famsa’s subsidiaries are not obligated to make funds available to Famsa for the payment on the Notes. The ability of Famsa’s subsidiaries to pay dividends or make other distributions to Famsa may be limited on the basis of contractual and other restrictions, and Famsa cannot assure you that the operating results of Famsa’s subsidiaries will be sufficient to enable Famsa to make payments on the Notes. Additionally, Banco Famsa’s ability to pay dividends or make other distributions to Famsa may be limited by applicable banking regulations.

We may incur substantially more debt, which could further exacerbate the risks associated with our indebtedness.

We may be able to incur substantial additional debt in the future. Although the agreements governing our outstanding indebtedness contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Also, these restrictions do not prevent us from incurring obligations that do not constitute “indebtedness” as defined in the relevant documents. Adding new debt to our current indebtedness levels would increase our leverage. The related risks that we now face could intensify.

Restrictive covenants in our debt agreements may restrict the manner in which we can operate our business.

The agreements governing our outstanding indebtedness limit, among other things, our ability to:

 incur additional indebtedness or issue guarantees;

 pay dividends on our capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness;

 make investments;

 create liens;

 create any consensual limitation on the ability of our restricted subsidiaries to pay dividends, make loans or transfer property to us;

 engage in transactions with affiliates;

 sell assets, including capital stock of our subsidiaries; and

 consolidate, merge or transfer assets.

If we fail to comply with these covenants, we would be in default under our credit facilities, and the principal and accrued interest on our outstanding indebtedness may become due and payable. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Peso- Denominated Credit Facilities,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Commercial Paper Programs” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—U.S. Dollar-Denominated Credit Facilities.” In addition, our future indebtedness agreements may contain additional affirmative and negative covenants, which could be more restrictive than those contained in the instruments governing our existing indebtedness.

These restrictions could limit our ability to seize attractive growth opportunities for our businesses that are currently unforeseeable, particularly if we are unable to incur financing or make investments to take advantage of these opportunities.

We may not be able to make payments in U.S. Dollars.

In the past, the Mexican economy has experienced balance of payments deficits and shortages in foreign exchange reserves. While the Mexican government does not currently restrict the ability of Mexican or foreign persons or entities to convert Pesos to foreign currencies, including U.S. Dollars, it has done so in the past and could do so again in the future. We cannot assure you that the Mexican government will not implement a restrictive exchange control policy in the future. Any such restrictive exchange control policy could prevent or restrict our access to U.S. Dollars to meet our U.S. Dollar

obligations and could also have a material adverse effect on our business, financial condition and results of operations. We cannot predict the impact of any such measures on the Mexican economy.

The Notes are subject to restrictions on transfer within the United States or to U.S. persons and may be subject to transfer restrictions under the laws of other jurisdictions.

We have not and do not intend to register the Notes under the Securities Act or any U.S. state securities laws, and we have not registered the Notes under any other country’s securities laws. It is your obligation to ensure that your offers and sales of the Notes within the United States and elsewhere comply with applicable securities laws. See the cover page to this Information Memorandum, “Seller Restrictions” and “Transfer Restrictions.”

There may be no public trading market for the Notes.

No active trading market currently exists for the Notes, and it is possible that none will develop following this offering. Application has been made to the Irish Stock Exchange to approve the Information Memorandum as a Listing Particulars and for the Notes to be admitted to the Official List of the Irish Stock Exchange for trading on the Global Exchange Market. We do not intend to list the Notes on any other stock exchange or seek their admission for trading on any automated quotation system. The lack of an active trading market for the Notes would have a material adverse effect on the market price and liquidity of the Notes. Furthermore, even if a market for the Notes develops, the Notes may trade at a discount from their initial offering price.

In addition, you may not be able to sell your Notes at a particular time or at a price favorable to you. Future trading prices of the Notes will depend on many factors, including:

 our operating performance and financial condition;

 the interest of securities dealers in making a market;

 the market for similar securities;

 prevailing interest rates;

 changes in earnings estimates or recommendations by research analysts who track our Notes or the notes of other companies in our industry;

 changes in general economic conditions;

 acquisitions, strategic alliances or joint ventures involving us or our competitors; and

 other developments affecting us, our industry or our competitors.

You may not be able to effect service of process on the Issuer, our subsidiaries or directors or to enforce in Mexican courts judgments obtained against us in the United States.

Famsa is a publicly-traded variable capital corporation (sociedad anónima bursátil de capital variable) and our subsidiaries (except for Famsa Inc., a subsidiary organized under the laws of the State of California, and Famsa Financial, Inc., a subsidiary organized under the laws of the State of Texas) are variable capital corporations (sociedades anónimas de capital variable) and in the case of Banco Famsa, a corporation (sociedad anónima) authorized to conduct banking activities as an institución de banca múltiple, organized under the laws of Mexico, and headquartered, managed and operated outside of the United States (principally in Mexico). Almost all of our directors and officers reside outside the United States. Substantially all of the assets of such persons are located outside the United States. Furthermore, a majority of our assets are located in Mexico. As a result, it may not be possible for investors to effect

service of process within the United States or in any other jurisdiction outside of Mexico upon us, our directors or officers or our subsidiaries (except for Famsa Inc.) or to enforce against such parties in any jurisdiction outside of Mexico judgments predicated upon the laws of any such jurisdiction, including any judgment predicated upon the federal and state securities laws of the United States. The statute of limitations of enforcement of claims under the notes is six years. We have been advised by our Mexican counsel, Mijares, Angoitia, Cortés y Fuentes, S.C., that there is doubt as to the enforceability in Mexican courts of civil liabilities under the laws of any jurisdiction outside of Mexico, including any judgment predicated solely upon the federal and state securities laws of the United States.

Payment of judgments entered against us in Mexico will be in Pesos, which may expose you to exchange rate risks.

Under Article 8 of the Ley Monetaria de los Estados Unidos Mexicanos (the “Mexican Monetary Law”), in the event that proceedings are brought in Mexico seeking to enforce in Mexico our obligations under the Notes, we would not be required to discharge such obligations in Mexico in a currency other than the Mexican Peso. Pursuant to Article 8 of the Mexican Monetary Law, an obligation which is payable in Mexico in a currency other than the Mexican Peso, as a result of an action initiated in Mexico or of the enforcement of a judgment in Mexico or otherwise, may be satisfied in Pesos at the rate of exchange in effect on the date when payment is made. Such exchange rate currently is determined by the Mexican Central Bank every business banking day in Mexico and published the following business banking day in the Official Gazette of Mexico. It is unclear, however, whether the applicable rate of exchange applied by a Mexican court to determine the amount owed will be the rate prevailing at the time when the judgment is rendered or when the judgment is paid. Provisions purporting to limit our liability to discharge our obligations as described above, or purporting to give any legitimate party an additional course of action seeking indemnity or compensation for possible deficiencies arising out of or resulting from variations in rates of exchange may not be enforceable in Mexico.

If we were to be declared bankrupt, holders of the Notes may find it difficult to collect payment on the Notes.

Under Mexico’s Ley de Concursos Mercantiles (the “Mexican Bankruptcy Law”), upon our declaration of insolvency (concurso mercantil) or bankruptcy, or in the event that actions and claims are initiated in the courts of Mexico, our obligations under the Notes:

(i) would be converted into Pesos at the exchange rate published by the Mexican Central Bank prevailing at the time of such declaration and would subsequently be converted into Unidades de Inversión (“UDIs”), which is a unit pegged to the consumer price index determined by the Mexican Central Bank, and payment would occur at the time claims of our other creditors are satisfied;

(ii) would be subject to any provisional remedy (“providencia precautoria”), which may be issued in such proceedings;

(iii) would be dependent upon the outcome of the insolvency or bankruptcy proceedings;

(iv) would not be adjusted to take into account depreciation of the Peso against the U.S. Dollar occurring after such declaration of insolvency or bankruptcy; and

(v) would be subject to certain statutory preferences, including tax, social security and labor claims and secured creditors.

Under the Mexican Bankruptcy Law, it is possible that in the event we are declared insolvent or bankrupt, any amount by which the stated principal amount of the Notes exceeds their accreted value may be regarded as not mature and, therefore, claims of holders of the Notes may be allowed only to the extent of the accreted value of the Notes. Any provision that aggravates or makes more onerous the obligations of the insolvent entity by virtue of the filing of a petition of bankruptcy or insolvency (whether

voluntary or involuntary) is considered invalid and may be deemed as if not included in the agreement under Mexican Law. It is believed that there are no Mexican precedents in insolvency or bankruptcy addressing this matter and there exists significant uncertainty as to how a Mexican court would measure the claims of holders of the Notes.

The collection of interest on interest may not be enforceable in Mexico.

Mexican law does not permit the collection of interest on interest and, therefore, the accrual of default interest on past due ordinary interest accrued in respect of the Notes may be unenforceable in Mexico.

The laws of New York may not be recognized in a judicial proceeding in Mexico.

Although the choice of the laws of New York governing the Notes would be recognized by the competent courts of Mexico, in the case of a dispute before a Mexican court, the Mexican court would only recognize the substantive laws of New York and would apply the laws of Mexico with respect to procedural matters. The application of any foreign law in Mexico is subject to Mexican procedural rules of evidence. Further, a Mexican court may refuse to apply and/or to enforce provisions governed by the laws of New York if the respective provision is contrary to the public policy (orden público) of Mexico.

A trustee has not been appointed to act as agent for the holders of the Notes.

A trustee has not been appointed to act as agent for the holders of the Notes. As such, holders of the Notes do not have a centralized third party to handle the administrative aspects of the Notes or to provide directions to or to otherwise direct the time, method or place of conducting any proceeding for any remedy available to holders of the Notes for failure to pay scheduled principal and interest on the Notes.

EXCHANGE RATES

Mexico has a free market for foreign exchange, and the Mexican government allows the Peso to float freely against the U.S. Dollar. There can be no assurance that the Mexican government will maintain its current policies with regard to the Peso or that the Peso will not depreciate or appreciate significantly in the future.

The following table sets forth, for the periods indicated, the high, low, average and period-end noon buying rate in New York City for cable transfers in Pesos published by the Federal Reserve Bank of New York, expressed in Pesos per U.S. Dollar.

Federal Reserve Rate(1)

Period High Low Average(2) Period End

Year Ended December 31, 2007 ...... 11.2692 10.6670 10.9281 10.9169 2008 ...... 13.9350 9.9166 11.1425 13.8320 2009 ...... 15.4060 12.6318 13.4978 13.0576 2010 ...... 13.1940 12.1556 12.6236 12.3825 2011 ...... 14.2542 11.5050 12.4270 13.9510 2012…………………………... 14.3650 12.6250 13.1547 12.9880 2013 ...... 13.4330 11.9760 12.7584 13.0980 2014 ...... 14.794 12.8455 13.3022 14.806 ______(1) Source: U.S. Federal Reserve. (2) Average of the daily exchange rates during the applicable period.

On January 2, 2015, the noon buying rate was Ps.14.8060 to U.S.$1.00.

CAPITALIZATION

The following table sets forth, as of September 30, 2014, our cash and cash equivalents and our consolidated capitalization on a historical, actual basis. This table should be read together with our unaudited interim consolidated financial statements and the notes thereto included elsewhere in this Information Memorandum. This table does not reflect borrowings incurred since September 30, 2014. See “Recent Developments.”

Solely for the convenience of the reader, Peso amounts appearing in the table below have been converted to U.S. Dollar amounts at an exchange rate of Ps.13.4330 to U.S.$1.00. The exchange rate conversions contained in this Information Memorandum should not be construed as representations that the Peso amounts actually represent the U.S. Dollar amounts presented or that the Peso amounts could be converted into U.S. Dollars at the rate indicated as of the dates mentioned herein or at any other rate.

As of September 30, 2014(1) Actual Actual (in millions (in millions of Mexican Ps.) of U.S.$)

Cash and cash equivalents 1,304.8 97.1 Short-term debt (including current portion of long-term debt) 3,615.7 269.2

Long-term debt 4,331.5 322.5

Total stockholders’ equity 9,241.0 687.9

Total capitalization 17,188.2 1,279.6

______

(1) Financial information is unaudited. See “Recent Developments” above.

USE OF PROCEEDS

The proceeds of the issuance of the Notes will be used to refinance a portion of the U.S.$60 million notes issued under the euro commercial paper program due on January 28, 2015.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following information has been derived from and should be read in conjunction with our consolidated annual financial statements as of and for the years ended December 31, 2012 and 2013, which have been audited by PricewaterhouseCoopers, S.C. and our unaudited interim consolidated financial statements as of and for the nine-month periods ended September 30, 2013 and 2014, both prepared in accordance with International Financial Reporting Standards (IFRS). The information (other than per share data or operating data expressed in percentages or data regarding the number of stores) contained in the following table is stated in thousands of Pesos.

Year ended December 31, Nine-month period ended September 30, IFRS IFRS IFRS IFRS 2012 2013 2013 2014 Income Statement Data: Net sales Ps. 14,123,528 Ps. 15,047,874 Ps. 10,687,700 Ps. 10,464,183 Cost of sales 7,536,148 8,143,382 5,593,199 5,512,541 Gross margin 6,587,380 6,904,492 5,094,501 4,951,642 Operating expenses 5,112,280 5,484,923 3,995,858 4,058,998 Operating income 1,475,100 1,419,569 1,098,644 892,645 Comprehensive financing expense, net 658,375 985,408 675,355 699,027 Net income 325,599 660,487 611,590 323,894 Net earnings per share 0.74 1.49 Balance Sheet Data: Assets: Current assets Ps. 23,874,423 Ps. 26,311,241 Ps. 27,057,954 Ps. 27,691,342 Property, leasehold improvements and furniture and equipment 2,370,018 2,307,232 2,568,243 2,451,032 Other assets 2,285,485 3,381,274 3,316,771 4,063,537 Total assets 29,069,926 31,999,747 32,942,968 34,205,911 Liabilities: Current liabilities 13,398,206 14,147,265 15,037,986 15,281,091 Long-term liabilities 7,382,005 8,958,290 8,961,295 9,683,774 Total liabilities 20,780,211 23,105,555 23,999,281 24,964,865 Stockholders’ equity 8,289,715 8,894,192 8,943,687 9,241,046 Other Financial & Operating Data: Number of stores 380 387 383 388 Total sales area (in square meters) 487,923 494,608 491,008 496,116 Mexican sales per square meter Ps. 29.2 Ps. 30.9 Ps. 22.2 Ps. 22.9 U.S. sales per square meter(1) Ps. 26.26 Ps. 25.5 Ps. 18.5 Ps. 19.6 Growth in net sales ----1.9% 8.0% -2.1% Famsa growth in same-store sales 1.6% 5.6% 7.4% -2.9% Mexico growth in same-store sales 2.6% 7.2% 8.6% -3.5% U.S. growth in same-store sales(2) -4.0% 4.6% 0.4% 2.6% Gross margin 46.6% 45.9% 47.7% 47.3% Operating margin 10.4% 9.4% 10.3% 8.5% Net margin 2.3% 4.4% 5.7% 3.1% ______

(1) Financial information for the nine-month periods ended September 30, 2013 and 2014 includes only sales per square meter in Texas and Illinois, the two U.S. states in which we operate.

(2) Financial information for the nine-month periods ended September 30, 2013 and 2014 refers only to same store sales in Texas and Illinois, the two U.S. states in which we operate.

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

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and unaudited interim consolidated financial statements and the notes thereto included elsewhere in this Information Memorandum.

Critical Accounting Policies and Estimates

Until 2011, we issued our consolidated financial statements in conformity with MFRS. In accordance with IFRS 1 “First-time adoption of IFRS,” we considered January 1, 2011 as our IFRS transition date and January 1, 2012 as our IFRS adoption date. As a result, the Financial Statements have been prepared in accordance to IFRS as issued by the IASB.

This section contains a discussion of our critical accounting policies to provide a better understanding of our operating results.

Allowance for Doubtful Receivables

We maintain an allowance for doubtful receivables related to customer receivables for estimated losses resulting from our customers’ inability to make timely payments, including interest on finance receivables. The amount of our allowance for doubtful receivables is based on whether there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the receivable (a loss event) and if that loss event (or events) has an impact on the estimated future cash flows of the receivable that can be reliably estimated. The objective evidence can be based on various factors, including the length of past overdue payments, the current business environment, past practices (represented as a percentage of sales), historical experience and the estimated recoverable value of the item sold, since, in some cases, the item is pledged as collateral under the applicable sales contract.

Although we believe that our allowance for doubtful receivables is adequate and sufficient to cover any losses associated with our accounts receivable, in the future we may be required or may deem it necessary to increase the amount of such provision. The adequacy and sufficiency of our allowance for doubtful receivables in the future could be affected by changes in our consumer lending policies, our customer profiles and the prevailing macroeconomic conditions both in Mexico and the United States. Any increase in our allowance for doubtful receivables may have an adverse effect on our results of operations and financial condition.

Allowance for Income Taxes

Our income tax expense includes both our accrued and deferred income tax obligations. Deferred income taxes represent our future income tax obligations or credits due to temporary differences between the tax and accounting treatment of certain balance sheet items, including our allowance for doubtful

receivables, buildings, leasehold improvements and furniture and equipment and sales on credit. We report these temporary differences and unrealized tax losses or credits as deferred income tax assets and liabilities on our balance sheet. We report the corresponding change in the amount of our deferred income tax assets or liabilities as a charge or credit in our income statement depending on their nature.

For purposes of determining the deferred tax, the Company prepares tax projections to determine whether the Company will pay income tax or flat rate tax, and then determines deferred income tax or deferred flax tax, as appropriate.

Depreciation and Impairment of Property, Leasehold Improvements and Furniture and Equipment

Depreciation is calculated in accordance with the straight-line method based on the estimated useful life of the relevant assets. Any change in circumstances, including any change in our business model, could give rise to differences between the actual and estimated useful lives of such assets. In those instances where we shorten the useful life of a given item of property, leasehold improvements and furniture and equipment, we depreciate the portion of the net book value of such item that exceeds its recoverable value over the course of its remaining adjusted useful life, thus increasing our depreciation expense. We review the estimated useful lives and residual values of property, leasehold improvements and furniture and equipment at the end of each annual period.

We review property, leasehold improvements and furniture and equipment for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether impairment has occurred typically requires various estimates and assumptions, including determining which cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount and the asset’s residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We use internal discounted cash flow estimates and independent appraisals as appropriate to determine fair value. We derive the required cash flow estimates from our historical experience and our internal business plans and apply an appropriate discount rate.

Revenue recognition, installment sales

For the purposes of identifying the applicable discount rate to determine the present value of installment sales, we use an imputed interest rate, which is either: (i) the prevailing rate in the market for a similar instrument available for our customers with a similar credit rating or (ii) the interest rate that equals the nominal value of the sale, properly discounted to the cash price of the goods sold, as appropriate.

When making this determination, we consider the interest rates used by the principal financial institutions in Mexico to fund programs of installment sales.

Employee Benefits

We determine the cost of employee benefits that qualify as defined benefit plans using independent actuarial valuations. The valuations involve actuarial assumptions about discount rates, future salary increases, employee turnover rates and mortality rates, among other things. Any changes in these assumptions will impact the carrying value of our pension obligations. Due to the long-term nature of these defined benefit plans, such estimates are subject to a significant amount of uncertainty.

Overview of Our Results of Operations

Revenues

We generate revenues from our retail operations primarily through the sale of recognized brand name products (such as furniture, electronics, household appliances, cellular telephones, computers,

motorcycles, clothing and other durable consumer products), as well as the issuance of personal loans and other financial services offered through Banco Famsa.

Revenue from retail sales is recognized when merchandise is shipped or delivered to customers in accordance with the terms of a sales contract, when there is a fixed or determinable sales price, when title and risk of loss have been transferred, and when collectability is reasonably assured. Most of these conditions are satisfied at the time of delivery to customers and upon issuance of the sales receipt.

We offer our customers an option to pay in weekly, bi-weekly or monthly installments rather than in cash at the time of purchase. As of September 30, 2014, sales under our credit sales program accounted 81.7% of our total sales.

In accordance with IAS 18, “Revenue,” the Company recognizes the following as revenues: (a) installment sales at present value using the imputed interest rate; and (b) sales of life insurance, which are recorded net, since their associated cost is recognized.

In Mexico, the retail prices of our products depend on the market trends of the diverse types of products offered. In addition, our installment payment program considers various factors, such as the repayment period, the customer’s credit history and the type of product. The actual installment payments result from the division of the retail price by the number of payments within the desired repayment period. Installment payments are typically calculated using 12- or 18-month terms. As a result, sales on credit generate higher gross margins than those yielded by cash sales.

In the United States, the retail price of our merchandise sold on credit is determined based on the suggested retail price plus a finance charge that is reviewed periodically. Cash purchases at our U.S. stores generally are not subject to discounts.

Our total revenues per square meter reflect the performance of our Famsa stores and factor into our determinations regarding expansion and growth. The following table shows our stores’ sales area and performance.

Nine-Month Period Ended September 30,

IFRS IFRS IFRS IFRS 2012 2013 2013 2014 Stores in Mexico 355 362 358 363 Stores in U.S. 25 25 25 25 Total number of stores 380 387 383 388

Total sales area in Mexico(1) 423,489 430,174 426,574 431,682 Total sales area in U.S. Il (1) 64,434 64,434 64,434 64,434 Total sales area(1) 487,923 494,608 491,008 496,116

Mexican sales per square meter(2) Ps. 29.2 Ps. 30.9 Ps. 22.1 Ps. 21.2 U.S. sales per square meter (2)(3) Ps. 26.6 Ps. 25.5 Ps. 18.5 Ps. 19.6 Famsa growth in same-store sales 1.6% 5.6% 7.4% -2.9% Mexico growth in same-store sales 2.6% 7.2% 8.6% -3.5% U.S. growth in same-store sales(3) --4.0% -4.6 0.4% 2.6% ______(1) In square meters. (2) In thousands of Pesos. (3) Financial information for the nine-month periods ended September 30, 2013 and 2014 includes only sales per square meter in Texas and Illinois, the two U.S. states in which we operate.

We provide sales by category as of September 30, 2014, in the table below.

2014 2013 (millions of Pesos)

Interest earned from customers Ps. 3,153 Ps. 3,364 Furniture 1,383 1,579 Electronics 1,163 1,145 Appliances 1,194 1,142 Mobile phones 969 854 Motorcycles 585 571 Computer equipment 454 549 Clothing and footwear 317 329 Seasonal articles (air conditioners, heaters, etc.) 270 302 Income from commercial banking 143 140 Small appliances 109 101 Sport articles 71 77 Children’s articles and accessories 17 20 Other (1) 635 515 Ps. 10,464 Ps 10,688

As of September 30, 2014, we owned and operated 388 stores, including 363 stores in 83 cities throughout Mexico and 25 stores in Texas and Illinois, 17 warehouses, 11 distribution centers and had a total sales area of 496,116 square meters. In 2013, we increased the total number of our stores from 380 on December 31, 2012, to 387 as of yearend, increasing our sales area by 6,685 square meters, or (1.4)%, to 494,608 square meters as of December 31, 2013. The store openings took place in Mexico.

Mexican retail sales per square meter decreased by Ps.288, or 3.1%, to Ps.9,133 million as of September 30, 2014 from Ps.9,421 million as of September 30, 2013. Famsa Mexico’s Same Store Sales (SSS) declined 1.5% in the third quarter of 2014 compared to the third quarter of 2013, and 3.5% during the first nine months of the year, reflecting a challenging environment for consumption. During the quarter, cash sales were decreasing its growth year-over-year and credit sales were gradually recovering despite still being below those of the third quarter of 2013. U.S. retail sales per square meter in Texas increased by Ps.72, or 6.0% to Ps.1,265 as of September 30, 2014, from Ps.1,193 as of September 30, 2013.

Seasonality

We recognize a substantial percentage of our net sales across all of our business segments in the second and fourth quarters of the year as a result of the increase in consumer spending associated with Mother’s Day, the “Good Weekend” shopping weekend (Buen Fin) and the Christmas holiday season. Unlike our revenues, our operating costs (excluding the cost of the merchandise sold), distribution costs and a portion of our marketing and advertising expenses are relatively stable throughout the year and, therefore, generally do not correspond to our sales fluctuations.

Cost of Sales

As of September 30, 2014, the consolidated Cost of Sales was Ps. 5,512 million, a decline of 1.4% compared to Ps. 5,593 million from the nine month period of 2013. During 2013 consolidated Cost of Sales totaled Ps. 8,143 million, a growth of 8.0% compared to Ps. 7,536 during 2012. The main component of our cost of sales is the acquisition of the merchandise offered by our Famsa Mexico and Famsa USA stores and the merchandise we sell at wholesale prices. IFRS provide that the cost of inventories includes all costs derived from their acquisition and transformation. Import duties, transportation, commercial discounts, rebates and other similar items affect the acquisition cost. It is important to note that due to our transition from MFRS to IFRS, which took place in 2012, the allowance for doubtful accounts is now a component of cost of sales.

We recognize our cost of sales as of the date of sale of the relevant products.

Operating Expenses

The main components of our operating expenses, which comprise selling expenses and administrative expenses, are employees’ salaries and benefits, depreciation, rent, marketing and advertising expenses, and service and maintenance costs.

Financial Expenses, Net

Our financial expenses, net has a material effect on our financial statements during periods of high inflation or fluctuation in the exchange rate of the Peso against the U.S. Dollar. Our financial expenses, net consist of interest income, interest expense, foreign exchange gains or losses attributable to our foreign-denominated monetary assets and liabilities and gains or losses in monetary position from the holding of monetary assets and liabilities exposed to inflation. Our foreign exchange position is affected by our foreign-denominated assets and liabilities. We recognize a foreign exchange gain or loss in the event of an increase or decrease in the exchange rate of the Peso against the currencies in which our assets and liabilities are denominated.

Income Tax

The main components of our income tax expense are Mexican income tax and U.S. federal and state income taxes. Income tax rates vary from one country or state to another and are subject to changes in the tax laws of each such country or state. Our income tax expense includes both our accrued and deferred taxes and we use the comprehensive asset and liability method to determine the deferred tax asset or liability, and related income/expense for deferred income taxes, for all temporary differences between the carrying values for financial reporting and tax values of assets and liabilities.

Operating Results by Geographic Segment

Famsa manages and evaluates its continuing operations through three business segments: Famsa Mexico (stores, personal car financing and financial sector in Mexico), Famsa USA (stores) and other businesses in Mexico (wholesale, manufacturing of furniture and the footwear catalog business). The Company controls and evaluates its continuing operations on a consolidated basis since the goods and services mix and the target markets are similar. Its operations are carried out through its subsidiary companies.

The following table shows our net sales by geographic segment, as a percentage of our total revenues, and our Adjusted EBITDA (explained below) by geographic segment, for the years ended December 31, 2012 and 2013 and for the nine-month periods ended September 30, 2013 and 2014.

Nine-Month Period Ended September 30, IFRS IFRS IFRS IFRS 2012 2013 2013 2014

Amount % Amount % Amount % Amount % Net Sales by Segment: Famsa Mexico Ps. 12,353.3 87.5 13,300.6 88.4 Ps. 9,421.3 88.2 Ps. 9,132.8 87.2 Famsa USA 1,715.2 12.1 1,643.5 10.9 1,193.1 11.2 1,265.1 12.08 Other 948.9 6.7 860.4 5.7 642.4 6.0 547.3 5.22 Subtotal 15,017.5 106.3 15,804.5 104.7 11,256.8 105.3 10,945.2 104.5 Intersegment sales (893.9) (6.3) (756.6) (4.7) (569.1) (5.3) (481.0) (5.3)(4.5) Total net sales 14,123.5 100.0 15,047.8 100.0 10,687.7 10,464.1 100.0

Adjusted EBITDA: Famsa Mexico Ps. 2,257.8 94.9 2,318.8 96.4 Ps. 1,787.3 96.6 Ps. 1,619.3 93.2 Famsa USA 121.7 5.1 55.5 2.3 67.4 3.6 93.8 7.9 Other 8.7 0.4 30.4 1.3 (3.6) (0.2) (14.5) 1.2 Subtotal 2,388.2 100.4 2,404.7 100 1,851.0 100 1,698.6 100.0 Intersegment EBITDA (8.9) (0.4) (0.1) 0 (0.1) (0.0) (0.7) (0.0) Total EBITDA 2,379.3 100.0 2,44.65 100.0 1,850.9 1,698.6 100.0

Adjusted EBITDA Reconciliation

Adjusted EBITDA is a non-GAAP financial measure computed under IFRS. Adjusted EBITDA, as such term is used in this Information Memorandum consists of adding to the operating profit: interest expense on bank deposits, depreciation and amortization.

In accordance with IFRS, the effect of discontinued operations has been separated from continuing operations and is presented as an extraordinary item before net income. Thus, in order to measure Adjusted EBITDA for the years ended December 31, 2012 and 2013, net income also excludes income (loss) from discontinued operations.

We believe that Adjusted EBITDA can be useful to facilitate comparisons of operating performance between periods and with other companies in our industry, but it has the following material limitations: (i) it does not include interest expense, which, because we have borrowed money to finance some of our operations, is a necessary and ongoing part of our costs and has assisted us in generating revenue; (ii) it does not include taxes, which are a necessary and ongoing part of our operations; and (iii) it does not include depreciation, which, because we must utilize property and equipment in order to generate revenues in our operations, is a necessary and ongoing part of our costs.

We provide a reconciliation of operating profit to Adjusted EBITDA in the table below.

Years Ended Nine-Month Period Ended September 30, December 31, IFRS IFRS IFRS IFRS 2012 2013 2013 2014

Net income attributable to controlling interest 322.9 657.6 608.5 322.0 Depreciation and amortization 314.4 286.7 235.1 284.3 Interest expenses on bank deposits & financial expenses, excluding foreign Exchange loss, net 1,312.1 1,630.2 1,153.8 1,184.6

Income tax (107.3) (226.3) (188.3) (130.3) Interest income (1.8) (1.5) (1.0) (1.0) Foreign exchange gain (loss), net (62.2) 55.0 39.8 37.1 Net income attributable to non- controlling interest 2.7 2.8 3.0 1.8 Loss from discontinued operations 598.5 0 0.0 0.0 Adjusted EBITDA 2,379.2 2,404.6 1,850.9 1,698.6

Results of Operations for the Nine-Month Period Ended September 30, 2014, compared with our Results of Operations for the Nine-Month Period Ended September 30, 2013 and Balance Sheet Data as of September 30, 2014 compared with September 30, 2013

Our unaudited interim consolidated financial statements as of and for the nine-month periods ended September 30, 2013 and 2014 are prepared in accordance with IFRS.

Total Revenues

Consolidated total revenues for the nine-month period ended September 30, 2014 totaled Ps.10,464 million, 2.1% below consolidated net sales during the same period in 2013. Famsa Mexico’s total revenues for the nine-month period ended September 30, 2014 declined 3.1%, to Ps.9,133 million, as compared to Ps.9,421 million during the same period in 2013. Famsa USA’s total revenues for the nine- month period ended September 30, 2014 increased 6.0%, to Ps.1,265 million, as compared to Ps.1,193 million during the same period in 2013 contributing positively to the consolidated result. Same Store Sales, which represent the sales of those of our stores that have been in operation longer than 12 months, and isolate the effect of the Peso/U.S. Dollar exchange rate, decreased 2.9% for the nine-month period ended September 30, 2014 over the nine-month period ended September 30, 2013, from an increase of 7.4% for the nine-month period ended September 30, 2013 over the nine-month period ended September 30, 2012. Famsa Mexico’s Same Store Sales declined 1.5% in the third quarter of 2014 compared to an increase of 6.7% in the third quarter of 2013 and 3.5% decrease during the nine-month period ended September 30,2014, driven by the implementation of initiatives directed at stimulating demand, enhancing the shopping experience at our stores and adjusting our operating capacity to prevailing market conditions. Famsa USA’s Same Store Sales grew 4.0% during the third quarter of 2014 and 2.6% during the period of January to September 2014.

Cost of Sales and Gross Profit

During the third quarter of 2014, interest on Bank Loans amounted to Ps.178 million, a decline of 0.7% when compared to the third quarter of 2013. For the nine-month period ended September 30, 2014, interest on Bank Loans grew 0.9% to Ps.522 million. This growth is attributed to a year-to-year increase of 8.0% in bank deposits as of September 30, 2014, since the funding cost has been stable in levels of 4.8% during the year. Consolidated Cost of Sales fell 0.9% to Ps.1,901 million in the third quarter of 2014

compared to the same period in 2013. During the third quarter of 2014, consolidated Gross Income increased by 0.4%, to Ps.1,697 million, while Consolidated Gross Margin increased from 46.8% to 47.2%.

As of September 30, 2014, Consolidated Cost of Sales was Ps.5,512 million, a decrease of 1.4% when compared to the same period in 2013. Consolidated Gross Income for the nine-month period ended September, 30, 2014 declined by 2.8%, to Ps.4,952 million due to a lower sales volume. Consolidated Gross Margin for the nine-month period ended September 30, 2014 was 47.3%, a decrease of 40 basis points when compared to the same period in 2013.

Our consolidated gross profit for the nine-month period ended September 30, 2014 was Ps.4,952 million, 2.8% less than our consolidated gross profit during the same period in 2013. The increase in gross profit and gross margin have been largely driven by the growth in revenues from Famsa Mexico.

Operating Expenses and Adjusted EBITDA

Our operating expenses increased by 2.6% from Ps.3,980 million during the nine-month period ended September 30, 2013, to Ps.4,083 million during the same period in 2014, derived from a rise in general and advertising expenses registered mainly during the third quarter of 2014.

Our consolidated Adjusted EBITDA, which is a non-GAAP financial measure computed under IFRS and consists of adding to the operating profit: interest expense on bank deposits, depreciation and amortization, for the nine-month period ended September 30, 2014 totaled Ps.1,698.6 million, 8.2% below that during the same period in 2013. Consolidated EBITDA margin as of September 30, 2014 declined from 17.3% in 2013 to 16.2% in 2014. See “Management´s Discussion and Analysis of Financial Condition and Results of Operations – Adjusted EBITDA Reconciliation.”

Consolidated Operating Expenses increased 3.7% during the third quarter of 2014 and 2.6% in the nine-month period ended September 30, 2014. It is important to note that the company maintains a strict control of expenses. Although these grew globally in the third quarter of 2014, certain expenses declined and others were used to drive key areas of the company, such as the granting of credit and collection activities.

Financial Expenses, net

Derived from the MFRS to IFRS transition, several accounts were reclassified in 2012. As a result, financial expenses, net now comprise interest expense related to bank debt, debt certificates, and factoring. Therefore, the accumulated net financial expenses of Grupo Famsa as of September 30, 2014 were Ps.699 million, a 3.5% increase compared to the nine-month period ended September 30, 2013. Consolidated Financial Expenses, net for the third quarter of 2014 grew 6.3% year-over-year, to Ps.293 million. This increase largely reflects a foreign exchange loss that accounted for Ps.55 million during the period.

Income Tax

Our income tax decreased by 30.8% from Ps.188 million during the nine-month period ended September 30, 2013 to Ps.130 million during the same period in 2014, primarily as a result of deferred income tax.

Net Income

Our consolidated net income decreased by 47.0%, from Ps.612 million as of September 30, 2013 to Ps.324 million as of September 30, 2014. This decrease is primarily explained by lower operating leverage achieved during the first semester of 2014.

Trade Receivables, net

The balance of current and non-current trade receivables as of September 30, 2014, net of impairment allowances, grew 4.5% when compared to the year ended December 31, 2013, totaling Ps.23,161 million, mainly due to the increase in Famsa Mexico Consumer Loan portfolio, which expanded by 5.3% to Ps.18,604 million as of September, 30, 2014. Famsa Mexico Commercial Loan portfolio remained at similar levels to those as of December 31, 2013, with a 1.3% increase. The balance of Famsa USA Consumer Loans totaled Ps.1,866 million as of September 30, 2014, 1.4% above the balance posted in December 31, 2013. Grupo Famsa applies stringent credit criteria to evaluate the credit quality of its trade receivables, both with respect to loans offered by Banco Famsa and the company’s consumer financing through its stores. The credit quality of trade receivables is assessed based on historical default rates by the company’s counterparties. The non-performing loans ratio (NPL) was 16.2% in the third quarter of 2014, 140 basis points below the NPL posted as of June 30, 2014. It is important to note that the company’s calculation of NPL includes the heading of “Collection Rights” in the total bank portfolio, in order to make it comparable to that of 2013. These rights correspond to loans that are discounted via payroll. Because of an accounting reclassification that came into effect in July 2013, they are excluded from the credit portfolio used by the bank to calculate the aforementioned indicator for the Mexican Securities Commission (CNBV). The graph below shows how this indicator has evolved:

17.5% 17.4% 17.6% 17.5% 16.5% 16.6% 16.1% 17.1% 16.9% 16.2% 14.8% 15.6% 15.1% 14.8% 14.7% 15.7%

Jun´13 Jul´13 Aug´13 Sep´13 Oct´13 Nov´13 Dec´13 Jan´14 Feb´14 Mar´14 Apr´14 May´14 Jun´14 Jul´14 Aug´14 Sep´14

NPL Includes Collection Rights

Inventories

The balance of inventory as of September 30, 2014 increased by 2.1%, to Ps.2,255 million, when compared to Ps.2,209 million as of December 31, 2013.

Net Debt and Bank Deposits

Net debt reached Ps.6,642 million as of September 30, 2014, 10.0% above than the net debt posted as of December 31, 2013. This increase is mainly due to a decrease in cash and equivalents of 13.5% compared to the close of December 2013. As of September 30, 2014, bank deposits totaled Ps.14,721 million, which was 5.7% above the balance as of December 31, 2013. In addition, Banco Famsa’s average cost of funding was 4.8% as of the close of the third quarter of 2014. Bank deposits continue to offer an optimum source of funding for the credits extended to our Mexican customers. The diverse financing products that make up Banco Famsa’s bank deposit base (demand deposits, short- and medium-term investments and certificates of deposit) mitigate the Company’s exposure to conventional credit market volatility and have also contributed significantly to reducing the Company’s consolidated cost of funding.

Total Stockholders’ Equity

The balance of stockholders’ equity as of September 30, 2014 grew by 3.3%, to Ps.9,241 million, as compared to stockholders’ equity of Ps.8,894 million as of September 30, 2014.

Results of Operations for the Year Ended December 31, 2013, compared with Results of Operations for the Year Ended December 31, 2012 and Balance Sheet Data as of December 31, 2013 compared with December 31, 2012

Our consolidated annual financial statements as of and for the years ended December 31, 2012 and 2013, which have been prepared in accordance with IFRS.

Total Revenues

During the year ended December 31, 2013, our total revenues increased by 6.5%, to Ps.15,048 million, from Ps.14,124 million during the year ended December 31, 2012. Famsa Mexico reported total revenues of Ps.13,301 million during the year ended December 31, 2013, which represented a 7.7% increase in total revenues from Ps.12,353 million during the year ended December 31, 2012, primarily as a result of the combination of the progressive recovery of core categories such as furniture, household appliances and cellular telephones and the strength of personal loan origination. Same-store sales at Famsa Mexico grew 7.2% during the year ended December 31, 2013, compared to 2.6% during the year ended December 31, 2012. Famsa Mexico’s Same Store Sales (SSS) had an annual increase of 7.2%, exceeding the low end of the 2013 Guidance range of 6.0%. During 2013, Famsa Mexico focused on stimulating demand for durable goods categories, through promotions designed to boost credit sales, and on enhancing the productivity of its network. These efforts had a significant effect on a number or core categories such as cellular Phones, Household Appliances and Electronics, which posted growths in accumulated 2013 sales of 36.8%, 23.6% and 13.3% respectively.

Famsa USA’s total revenues and same-store sales in terms of U.S. Dollars both decreased by 4.6% during the year ended December 31, 2013. Due to a severe winter period across the eastern and southern states of the U.S. during the fourth quarter of 2013, Famsa USA’s SSS fell 7.0% when compared to the same period in 2012. At least 15 of our stores in the cities of San Antonio, Houston, Dallas and Chicago closed their doors for several days due to the extreme weather. To offset this effect, we maintained a strict control of expenses during this quarter. The growing recovery of Hispanic consumers and the rise in demand for some of our core product categories, such as household

appliances and furniture, had a significant impact on sales volumes of Famsa USA during the fourth quarter of 2012.

Cost of Sales and Gross Profit

In 2012, several accounts were reclassified as a result of the MFRS to IFRS transition. Consequently, interest expense in bank deposits is now registered under Cost of Sales.

The accumulated consolidated Cost of Sales as of December 31, 2013 was Ps.8,143 million, 8.0% above the previous year. This increase largely reflects an 18.4% growth in interest on bank deposits compared to 2012, to a total of Ps.698 million. This rise was mainly originated by growth in the deposit base during the year.

Consolidated Gross Income grew 4.8% in 2013 to Ps.6,904 million, with a slight 70-basis-point contraction in consolidated Gross Margin when compared to the same period in 2012.

During the fourth quarter of 2013, the consolidated Cost of Sales totaled Ps.2,550 million, an increase of 8.2% when compared to the same period in 2012. Quarterly Gross Income decrease 3.1%, compared to the fourth quarter of 2012. Consolidated Gross Margin contracted 2.7 percentage points, from 44.2% in the fourth quarter of 2012 to 41.5% in the fourth quarter of 2013. A higher share of cash sales, combined with a reduction in the percent of Personal Loans in the consolidated sales mix, were the main factors affecting this result.

During the year ended December 31, 2013, consolidated gross profit reached Ps.6,904 million, 4.8% above that of the year ended December 31, 2012. As a percentage of sales, gross profit was reduced by 2.7% largely driven by a growth in noncredit sales as well as a decrease in personal credits.

Operating Expenses

Consolidated operating expenses, which comprise selling expenses and administrative expenses, grew 6.0% during the year ended December 31, 2012, to Ps.5,494 million. During the year ended December 31, 2013, salaries and employee benefits and rent represented 59.9% of total operating expenses and the remaining amount corresponds to advertising, maintenance and depreciation expenses, among others. As a percentage of sales, operating expenses reached 36.5% during the year ended December 31, 2013, which represents a decrease of 60 basis points compared to the same period in 2012.

Financial Expenses, net

Derived from the MFRS to IFRS transition, several accounts were reclassified in 2012. As a result, financial expenses, net now comprise interest expense related to bank debt, debt certificates, and factoring. Therefore, the financial expenses, net of Grupo Famsa as of year ended December 31, 2013 were Ps.985 million, a 49.7% increase compared to 2012. This increase reflects a Foreign Exchange Loss of Ps. 55 million during the year and Financial Expenses of Ps.932 million, 29.0% above those of 2012.

Most of the annual increase in Financial Expenses corresponds to payment of interest premium on the offer for acquisition and amortization of the senior notes due 2015 that was executed in May 2013 and payment of a premium paid on July 2013 on unredeemed capital from the senior notes due 2015 amounted to Ps.2.9 billion as of September 30, 2013.

Income Tax

Our income tax increased by 111.2%, from Ps.107 million during the year ended December 31, 2012 to Ps.226 million during 2013, primarily as a result of deferred income tax.

Net Income

Our consolidated income increased by 103.7%, from Ps.326 million during the year ended December 31, 2012 to Ps.660 million as of December 31, 2013. This increase results from an increase in net income and differed income tax compared to 2012.

Trade Receivables, net

The balance of trade receivables, net as of December 31, 2013, net of impairment allowances, grew 15.4% compared to the year ended December 31, 2012, totaling Ps.22,167 million. The rise in Famsa Mexico Consumer Loan portfolio, which grew 18.2% to Ps.17,670 million in 2013, contributed to this increase due to a higher credit sales volume and the incorporation of the credit portfolio of from the pawn- broking branches of Monte de Mexico, S. A. de C. V. Furthermore, Famsa Mexico Commercial Loan portfolio also drove the increase of the consolidated portfolio balance by registering a 13.9% growth in 2013.

Grupo Famsa applies stringent credit criteria to evaluate the credit quality of its trade receivables, both with respect to loans offered by Banco Famsa and the company’s consumer financing through its stores.

Inventories

The balance of inventories as of December 31, 2013 increased by 11.5%, to Ps.2,174 million when compared to Ps.1,951 million as of December 31, 2012,

Net Debt and Bank Deposits

Net debt was Ps.6,037 million as of December 31, 2013, 30.7% more than the net debt posted as of December 31, 2012, largely due to an increase in Gross debt attributable to an increase in working capital. As of December 31, 2013, bank deposits totaled Ps.13,930 million, which was 16.1% above the balance as of December 31, 2012. In addition, Banco Famsa’s average cost of funding was 4.8% as December 31, 2013. Bank deposits continue to offer an optimum source of funding for the credits extended to our Mexican customers. The diverse financing products that make up Banco Famsa’s deposit base (demand deposits, short- and medium-term investments and certificates of deposit) mitigate the Company’s exposure to conventional credit market volatility and have also contributed significantly to reducing the Company’s consolidated cost of funding.

Total Stockholders’ Equity

The balance of total stockholders’ equity as of December 31, 2013 grew by 7.9%, to Ps.8,944 million, as compared to stockholders’ equity of Ps.8,290 million as of December 31, 2012.

Liquidity and Capital Resources

General

Our primary sources of liquidity are the cash flow generated by our operating activities, Banco Famsa bank deposits, the funds available under our existing credit facilities and the issuance of debt instruments, such as our commercial paper programs in international and Mexican capital markets (certificados bursátiles), including the Program. We require liquidity primarily to fund our working capital needs, including our sales on credit and the opening of new stores, and to satisfy our debt service obligations.

Changes in Financial Condition

The change in our resources from our operating activities during the year ended December 31, 2013 was primarily attributable to the decrease in income before income tax.

The change in our resources from our financing activities during the year ended December 31, 2013 was attributable to an increase in short-term debt and bank loans.

The change in our resources from our investing activities during the year ended December 31, 2013 was attributable to an increase in investments in leasehold improvements and fixed assets.

Cash Flows

The following table shows the generation and use of cash for the years ended December 31, 2012 and 2013 and for the nine-month period ended September 30, 2014.

Year Ended Nine-Month Period Ended December 31, September 30, IFRS IFRS IFRS 2012 2013 2014

Net cash flow provided by operating activities Ps. 995.3 Ps. 165.6 Ps. 229.9 Net cash flow provided (used in) by financing activities (522.5) 321.0 (300.0) Net cash flow used in investing activities (209.8) (496.6) (129.9) (Decrease) increase in net cash and cash equivalent Ps. 263.1 Ps. (10.0) Ps. 200.1

Net cash flow provided by operating activities for the year ended December 31, 2013 was Ps.165.6 million and net cash flow provided by operating activities for the year ended December 31, 2012 was Ps.995.3 million. The Ps.829.7 million decrease in cash provided by operating activities in 2013 was primarily a result of the 53.2% decrease in income before income tax, of Ps.382.6 million.

Net cash flow used by financing activities for the years ended December 31, 2013 was Ps.321.0 million and net cash flow provided by financing activities for the year ended December 31, 2012 was Ps.(522.5) million. The Ps.843.5 million increase in our cash provided by financing activities in 2013 was attributable to a increase in short-term debt and bank loans, which rose 1,528%, from Ps.300.0 million in 2012 to Ps.4,586.4 million in 2013.

Net cash flow used in investing activities for the years ended December 31, 2013 and 2012 was Ps.(496,6) million and Ps.(209.8) million, respectively. The Ps.286.8 million, or 136.7%, increase in our cash used in investing activities in 2013 was attributable mainly to an increase in investments in leasehold improvements and fixed assets, which rose by Ps.324.3 million, or 160.8%, from Ps.201.6 million in 2012, to Ps.525.9 million in 2013.

Net cash flow provided by operating activities for the nine-month period ended September 30, 2014 was Ps.229.9 million and net cash flow provided by operating activities for the nine-month period ended September 30, 2013, totaled Ps.185.7 million. The Ps.44.1 million increase in cash used in operating activities as of September 30, 2014 was primarily a result of a decrease in trade receivables and inventories.

Net cash flow provided by financing activities for the nine-month period ended September 30, 2014 was Ps.(300.0) million and net cash flow used by financing activities for the nine-month period ended September 30, 2013 was Ps.332.0 million. This was due to a decrease in proceeds from current and non-current debt and bank loans from Ps.4,344.4 million in the nine-month period ended September 30, 2014 to Ps.382 million in the nine-month period ended September 30, 2014. As of September 30, 2014, payment of current and non-current debt and bank loans decreased to (Ps.91) million as of September 30, 2014 from (Ps.3,324) million as of September 30, 2013.

Net cash flow used in investing activities for the nine-month period ended September 30, 2014 and 2013 was Ps.(129.9) million and Ps.(165.2) million, respectively. The Ps.35.3 million decrease in our cash used in investing activities as of September 30, 2014 was attributable mainly to a lower acquisition of property, leasehold improvements, furniture and equipment from Ps.159.9 million for the nine-month period ended September 30, 2013 to Ps.117.9 million for the nine-month period ended September 30, 2014.

Capital Investments

In 2013 and 2012, we made capital investments of Ps. 594.3 million and Ps. 207.1 million, respectively, including:

 leasehold improvements in the amount of Ps. 120.2 million in 2013 and Ps. 25.4 million in 2012;

 the acquisition of furniture and equipment in the amount of Ps 247.0 million in 2013, and Ps 18.1 million in 2012.

 the acquisition of data-processing equipment in the amount of Ps. 40.9 million in 2013, and Ps. 20.8 million in 2012.

For the nine-month period ended September 30, 2014, we made capital investments of Ps.124.4 million, including:

 leasehold improvements in the amount of Ps 46.5 million;

 the acquisition of furniture and equipment in the amount of Ps 20.3 million;

 the acquisition of data-processing equipment in the amount of Ps. 13.7 million.

The following table contains a more detailed breakdown of our capital investments during the years ended December 31, 2012 and 2013 and for the nine-month periods ended September 30, 2013 and 2014.

Year Ended Nine-Month Period Ended December 31, September 30, IFRS IFRS IFRS IFRS 2012 2013 2013 2014

Capital Investments Land Ps. 26,192 Ps. 2,850 Ps. 2,850 -- Construction in process 65,906 71,136 56,810 7,015 Buildings and construction 25,933 64,705 150 -- Leasehold improvements 25,362 120,241 20,715 46,521 Furniture and equipment 18,063 246,990 21,726 20,346 Transportation equipment 24,837 47,525 28,860 36,775 Data-processing equipment 20,788 40,879 32,131 13,745 Total capital investments Ps. 207,081 Ps. 594,328 Ps. 163,242 124,402

In 2012, 2013 and as of September 30, 2014, we financed our capital investments through a combination of our operating resources, loans and borrowings under our existing credit facilities.

Bank Deposits (Banco Famsa)

Bank Deposits as of the close of the third quarter of 2014 totaled Ps.14,721 million, 5.7% above the balance as of December 31, 2013.

The balance of Net Debt as of September 30, 2014 was Ps.6,642 million, a growth of 10.0% compared to December 31, 2013. This increase is mainly due to a decrease in cash and equivalents of 13.5% compared to the close of December 2013. Up to date, Grupo Famsa has successfully financed its working capital needs by maintaining a close relationship with multiple sources of funding.

The breakdown of Banco Famsa’s deposits as of December 31, 2012 and 2013 and September 30, 2014 is as follows:

Nine-Month Period Ended Year Ended December 31, September 30, IFRS IFRS IFRS 2012 2013 2014 (millions of Pesos) Demand Deposits: Saving deposits (interest bearing) 2,191 2,640 3,195 Checking accounts (non-interest bearing) 314 371 411 Time deposits: From the general public 9,494 10,918 11,115 Total Bank Deposits 11,999 13,930 14,721

Debt

As of December 31, 2013, we had outstanding debt in the aggregate amount of Ps.7,546 million, respectively. As of September 30, 2014, we had outstanding debt in the aggregate amount of Ps.7,947.2 million. Debt from affiliates is described under “Related Party Transactions.” The following table contains a summary of our third-party debt as of September 30, 2014. See “Recent Developments” for a summary of our borrowings incurred since September 30, 2014.

As of September 30, 2014

Amount Interest Outstanding(1) Rate(2) Maturity Date

Grupo Famsa Mexican pesos: Financial factoring : Financiera Bajío, S.A. SOFOM ER Ps. 149,906 6.17% December 2014 Arrendadora y Factor Banorte, S.A. de C.V. SOFOM, ER 346,855 5.79% December 2014 Banco Monex, S.A. 199,511 5.92% December 2014 BBVA Bancomer 64,267 6.29% July 2015 760,539

Amounts drawn down from short-term revolving credit lines: Banco del Bajío, S.A. 100,000 6.55% October 2014 Banorte, S.A. 249,795 6.17 October 2014 BBVA Bancomer,S.A. 200,000 6.18% Oct, Nov 2014 and Mar 2015 CI Banco, S.A. 100,000 6.04% November 2014 Banamex, S.A. 100,000 6.44% October 2014 Actinver 100,000 6.79% November 2014 Banco Monex, S.A. 50,000 5.9% December 2014

Issuance of debt certificates: Short-term 978,752 6.21% Oct, Nov, Dec, 2014, and Mar, Jul 2015 Long-term 1,000,000 6.28% Nov 2014 and Jan, Feb, Mar, Aug 2015

U.S. Dollars: Issuance of foreign debt: Senior notes 2020 3,271,064 7.25% June 2020 Euro-commercial paper 805,980 6.125% January 2015 4,077,044

Famsa USA U.S. Dollars: Business property lending, Inc. 60,458 6.07% October 2014 Capital One, National Association 63,135 5.00% October 2015 Deutsche Bank AG 107,464 2.175% October 2016

Total debt 7,947,187 Short -term debt (3,615,665) Long-term debt Ps. 4,331,522

______(1) All amounts expressed in thousands of Pesos. (2) Nominal rates as of September 30, 2014. (3) Weighted average of all outstanding debt pursuant to short-term local bond issuances.

The following sections briefly summarize material terms of certain of our credit arrangements, including credit arrangements of our subsidiary Banco Famsa. These descriptions are only summaries and do not purport to describe all of the terms of the credit arrangements that may be important.

Grupo Famsa Peso-Denominated Debt

Banco del Bajío, S.A. Credit Facility

As of September 30, 2014, we had a credit facility with Banco del Bajío, S.A., Institución de Banca Múltiple, for a maximum amount of Ps.100 million with a maturity date of September 25, 2015. As of September 30, 2014, we had borrowed Ps.100.0 million under this credit facility at a variable interest rate, which as of October 7, 2014 was 6.55% per annum. We are subject to standard terms, covenants and conditions pursuant to this credit facility, with which we were in compliance as of September 30, 2014.

Banco Mercantil del Norte, S.A. Loan

As of September 30, 2014, we had a loan from Banorte with an aggregate principal amount outstanding of Ps. 249.8 million, a variable interest rate as of September 30, 2014 of 6.17%, and with a maturity date of October 10, 2014. We are not subject to restrictive covenants pursuant to this loan.

BBVA Bancomer, S.A. Loan

As of September 30, 2014, we had a loan from BBVA Bancomer, S.A., Institución de Banca Múltiple, with an aggregate principal amount outstanding of Ps.200 million, a variable interest rate as of September 30, 2014 of 6.18%, and with a maturity dates of October 13, 2014, December 19, 2014, March 20, 2015 and March 30, 2015. We are not subject to restrictive covenants pursuant to this loan.

CI Banco

As of September 30, 2014, we had a credit facility with CI Banco S.A., for a maximum amount of Ps.150 million. As of September 30, 2014, we had borrowed Ps.100 million under this credit facility at a variable interest rate, which as of September 30, 2014 was 6.04% per annum, with a maturity date of November 10, 2014. We are not subject to restrictive covenants pursuant to this loan.

Banamex

As of September 30, 2014, we had a loan from Banamex, S.A., Institución de Banca Múltiple, with an aggregate principal amount outstanding of Ps.100 million, a variable interest rate as of September 30, 2014 of 6.44%, per annum, with a maturity date of October 15, 2014. We are not subject to restrictive covenants pursuant to this loan.

Actinver

As of September 30, 2014, we had a loan from Actinver S.A., Institución de Banca Múltiple, for a maximum amount of Ps.150 million with an aggregate principal amount outstanding of Ps.100 million, a variable interest rate as of September 30, 2014 of 6.79% per annum, with a maturity date of November 25, 2014.

Monex

As of September 30, 2014, we had a loan from Banco Monex S.A., Institución de Banca Múltiple, with an aggregate principal amount outstanding of Ps.50 million, a variable interest rate as of September 30, 2014 of 5.90% per annum, with a maturity date of December 24, 2014.

Commercial Paper Programs

We have established various Peso- and U.S. Dollar-denominated commercial paper programs. As of September 30, 2014, we had Ps. 1,978.8 million outstanding under the following Peso-denominated commercial paper programs:

Long-term local bonds (certificados bursátiles de Largo Plazo)

 Ps.2,000 million long-term local bonds program established on March 22, 2011, for a five year term.

We issued bonds in an aggregate principal amount of Ps.1,000 million under this program on March 13, 2014, in an offering through the Mexican stock exchange (Bolsa Mexicana de Valores S.A.B. de C.V. or “BMV”). These bonds were priced at a spread of 300 bps over the 28-day TIIE interbank rate, mature on March 10, 2016, and were assigned “BBB(mex)” and “HR BBB” ratings by Fitch Mexico S.A. de C.V. and HR Ratings de Mexico S.A. de C.V., respectively. The net proceeds of this issuance, which amounted to Ps.982.8 million, were used by the Company to repay outstanding debt.

Certain of our subsidiaries acted as guarantors of the long-term local bonds.

Additionally, the long-term local bonds contain certain restrictive covenants which, among other things, limit our ability to:

 modify the main business purpose or activities of the Company;

 incur additional debt;

 sell assets, pay dividends, repay certain debts, carry out certain investments and agree to merge, consolidate or engage in certain sale-leaseback transactions;

 guarantee third party obligations, except for obligations assumed by our employees, subsidiaries and affiliates; and

In addition, the long-term local bonds contain standard default provisions, including a change of control provision, as well as cross-default provisions.

Short-term local bonds (certificados bursátiles de corto plazo)

 Ps.500 million local unsecured bonds program established January 24, 2013, for a two-year term. As of September 30, 2014, we had issued bonds for Ps. 478.8 million under this program, which matured on different dates in October, November, December 2014, March and July 2015 pursuant to the terms established for each issuance.

 Ps.500 million local unsecured bonds program established July 04, 2013, for a two-year term. This program enables us to issue both Peso and/or UDI-denominated bonds. As of September 30, 2014 we had issued bonds for Ps.500 million under this program, which have matured or will mature on different dates in October and December 2014 pursuant to the terms established for each issuance.

The interest rate to be paid under these programs is determined on a case-by-case basis, pursuant to the terms established for each issuance. The weighted average interest rate for all the short-term local bonds issuances, as of September 30, 2014, was 6.25%. In addition, the short-term local bonds programs contain standard default provisions, including a change of control provision, as well as cross- default provisions.

Both the long- and short-term local bonds have been registered with the RNV maintained by the CNBV.

Grupo Famsa U.S.-Dollar Denominated Debt

Euro Commercial Paper Program

We established a U.S.$100.0 million Euro commercial paper program in December 18, 2009. As of September 30, 2014, we had issued short-term notes in an aggregate principal amount of U.S.$60.0 million under this program. These notes are coupon-bearing, have an interest rate of 6.125% per annum, and mature on January 28, 2015.

Senior Notes

On May 31, 2013, Famsa issued senior notes for an amount of U.S.$250 million, under Rule 144A/Regulation S, in the foreign market, at a rate of 7.25%, maturing in May 31, 2020. These notes received a rating of “B” from Standard & Poor’s and “B+” by Fitch Ratings. Approximately 88% of the proceeds of the issuance were used (i) to pay the consideration for the tender offer and consent solicitation and accrued and unpaid interest on the senior notes due 2015, (ii) to redeem any senior notes due 2015 that were not purchased under the tender offer and consent solicitation, (iii) and to pay fees and expenses incurred in connection with the tender offer and consent solicitation.

Additionally, the indenture governing our senior notes due 2020 contains certain restrictive covenants which, among other things, limit our ability to:

 incur additional indebtedness;

 pay dividends on our capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness;

 make investments;

 create liens;

 create any consensual limitation on the ability of our restricted subsidiaries to pay dividends, make loans or transfer property to us;

 engage in transactions with affiliates;

 sell assets, including capital stock of our subsidiaries; and

 consolidate, merge or transfer assets.

If the notes obtain investment grade ratings from both Standard and Poor’s Ratings Group and Fitch Ratings Inc. and no default has occurred and is continuing, the foregoing covenants will cease to be in effect with the exception of covenants that contain limitations on liens and on, among other things, certain consolidations, mergers and transfer of assets for so long as each of the foregoing rating agencies maintains its investment grade rating.

In addition, the indenture comprises standard default provisions.

Famsa USA Debt

Deutsche Bank N.Y.

On October 16, 2012, Famsa, Inc. renewed a credit facility with Deutsche Bank AG for a maximum principal amount of EUR 6.6 million or its U.S. dollar equivalent. As of September 30, 2014, the Company had drawn down a total of U.S.$8 million; this borrowing bears interest at an annual rate of 2.175% maturing on October 16, 2014. This facility does not impose on us any restrictive covenants.

Capital One

Famsa, Inc. renewed a credit facility with Capital One Bank for a maximum principal amount of US. $4.7 million. These U.S. dollar loans accrue interest at a fixed rate of 5.00% per annum and mature on October 31, 2015. This facility does not impose on us any restrictive covenants.

Business Property Lending

Famsa, Inc. renewed a credit facility with Business Property Lending for a maximum principal amount of U.S. $4.5 million. As of September 30, 2014 we had an outstanding amount of Ps.60.5 million. This. U.S. dollar loans accrue interest at a fixed rate of 6.07% per annum and mature on October 2014. This facility does not impose on us any restrictive covenants.

Off-Balance Sheet Arrangements

As of the date of this Information Memorandum, we do not have any off-balance sheet arrangements.

Contractual Obligations and Other Commitments

The following table contains a description of our contractual obligations and other commitments as of September 30, 2014.

Maturity Total Less than 1 Yr. 1-3 Yrs. 3-5 Yrs. 6+ Yrs. (in thousands of Pesos) Long-term debt ...... Ps. 4,331.5 Ps. 1,060.5 Ps. Ps. 3,271.1 Ps. — Capital lease obligations ...... — — — — — Operating lease obligations .... 2,424.4 484.9 1,939.5 — — Purchase commitments ...... — — — — — Total ...... Ps. 6,755.9 Ps. 1,545.4 Ps. 1,939.5 Ps. 3,271.1 Ps. —

Market Risk Disclosures

Market risk represents our exposure to adverse changes in the value of our financial instruments as a result of fluctuations in the prevailing interest rates, foreign exchange rates and inflation. The following information contains certain statements that are subject to risks and uncertainties. Our actual results may differ from those referred to in such statements.

Risk Management Policies and Procedures

We are exposed to the market risks associated with potential fluctuations in the prevailing interest rates, foreign exchange rates and inflation in both Mexico and the United States.

Given our business activities and the short-term nature of our sales on credit, we believe that our level of market risk for potential changes in interest rates is low. We manage our interest rate risk by refinancing the short-term debt that we incur to fund our sales on credit. In addition, we have certain options to pay interest at either fixed or variable rates on some of our debt instruments. This enables us to match our debt maturities with the maturities of our customers’ repayment obligations and to use a mix of fixed and variable interest rates.

We do not use financial derivative instruments to hedge our exposure to the market risk associated with potential fluctuations in interest rates, foreign exchange rates and inflation.

For a description of Banco Famsa’s risk management policies and procedures, see “Business―Regulation― Legal Regime Applicable to Banco Famsa―Risk Management Policies and Procedures.”

Internal Controls

We have established internal control policies and procedures that we believe are sufficient to provide reasonable assurance that our business operations are carried out, reported and disclosed in accordance with the guidelines established by our management. We believe that our information technology platform and our organizational structure provide us with the necessary tools with which to ensure adherence to our policies and procedures. We have also established, and from time to time perform, internal audit procedures in respect of our various operating processes.

Our internal control systems include a number of policies and procedures that cover all aspects of our operations, from the provision of services to the method employed in connection with the acquisition of our merchandise and services.

New Accounting Pronouncements

As of January 1, 2012 we adopted IFRS for the preparation of our consolidated financial statements. Standards, amendments and interpretations issued but not yet effective as of March 31, 2013 and which have not been early adopted by us include:

IFRS 9 - “Financial instruments”; addresses the classification, recognition and measurement of financial assets and liabilities. IFRS 9 was issued in November 2009 and October 2010. This standard partially replaces IAS 39 “Financial instruments: recognition and measurement” on issues relating to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified in either of the following two categories: those assets measured at fair value and those measured at amortized cost. The determination must be made at initial recognition of these assets. The classification depends on the business model of the entity used to manage its financial instruments and the contractual characteristics of the cash flows of the instruments. For financial liabilities, the standard retains most of the requirements of IAS 39. The main change is that in the case of the election of the option to use the fair value, the valuation effect related to own credit risk should be recognized as part of comprehensive income, unless it causes an accounting mismatch. We expect to adopt this standard on January 1, 2015. The IASB intends to expand IFRS 9 during 2011 and 2012 to add new requirements for de-recognition of financial instruments, impairment and hedge accounting, so that by the end of 2012 IFRS 9 will be a complete replacement of IAS 39.

IAS 32 (amended) “Financial instruments: Presentation,” offsetting of assets and liabilities. These amendments are the application guidance of IAS 32 and clarify some of the requirements for offsetting financial assets and financial liabilities in the statement of financial position. The standard is mandatory from January 1, 2014.

Our management believes that the adoption of the new standards and amendments discussed above will have no significant impact on our consolidated financial statements.

BUSINESS

Overview

Our Mexican retail operations offer furniture, electronics, household appliances, cellular telephones, computers, motorcycles, clothing and other durable consumer products, which are sold mainly through our Famsa stores. In the states of Texas and Illinois in the United States, we offer furniture and appliances through our subsidiary Famsa, Inc. As of September 30, 2014, we owned and operated 388 stores, including 363 stores in 83 cities throughout Mexico and 25 stores in Texas and Illinois, as well as 17 warehouses and 11 distribution centers. As of September 30, 2014, in Mexico we also operated 290 banking branches within Famsa stores and 201 independent banking branches, including those added in 2013 with the acquisition of Montemex. We believe that over the course of our 43-year history, we have built a strong brand name associated with a broad product offering at low prices and personalized customer service with convenient consumer financing programs. As of September 30, 2014, furniture, electronics and household appliances accounted for 40.2% of our consolidated total revenues.

In connection with our retail operations, we offer consumer financing to our customers, many of whom do not typically have access to other forms of financing, which allows them to purchase our products and services on credit. In 2013, 81.2% of our retail sales were through our credit sales programs. To enhance our consumer financing business in Mexico, in 2007, we established our own commercial bank, Banco Famsa, allowing us to offer additional banking services to our customers, and generate a lower- cost, more stable form of short-term financing for our operations. According to the CNBV, as of September 30, 2014, Banco Famsa operated one of the 10 largest banking branch networks in Mexico, and managed an aggregate amount of 3.2 million savings and credit accounts.

Our total revenues were Ps.14,124 million for the year ended December 31, 2012 and Ps.15,048 million for the year ended December 31, 2013. Our U.S. operations represented 11.2% of total revenues during 2013, comprising 13.0% of our total retail space. Our EBITDA totaled Ps.1,789 million for the year ended December 31, 2012 and Ps.1,706 million for the year ended December 31, 2013.

Our total revenues totaled Ps.10,464 million and Ps.10,688 for the nine-month periods ended September 30, 2014 and 2013, respectively. Our total retail space as of September 30, 2014 consisted of 542,271 square meters, a 3.5% increase compared to the same period in 2013. Our U.S. operations represented 12% of total revenues during the nine-month period ended September 30, 2014 with 11.9% of the total retail space during that period. Our EBITDA totaled Ps.1,177 million for the nine-month period ended September 30, 2014 and Ps.1,334 million for the nine-month period ended September 30, 2013.

The following table shows certain of our financial and operating data for the years ended December 31, 2012 and 2013 and for the nine-month periods ended September 30, 2013 and 2014 in accordance with IFRS.

Year ended December 31, Nine-Month Period ended September 30, IFRS IFRS IFRS IFRS 2012 2013 2013 2014

Number of stores 380 387 383 388 Total sales area(1) 487,923 494,608 491,008 496,116 Total revenues(2) Ps. 14,123.5 Ps. 15,047.8 Ps. 10,687.7 Ps. 10,464.2 Same-store sales 1.6% 5.6% 7.4% -2.9% Sales on credit, as a percentage of our total sales 81.2% 82.8% 83.0% 81.2% Famsa USA sales, as a percentage of total sales 12.2% 10.9% 11.2% 11.9% Adjusted EBITDA(2)(3) Ps. 2,379.3 Ps. 2,404.6 Ps. 1,851.0 Ps. 1,698.6 Adjusted EBITDA margin (%)(4) 16.8% 16.0% 17.3 16.23% ______(1) In square meters, except for percentage amounts. (2) In millions of Pesos. (3) Adjusted EBITDA is a non-GAAP financial measure computed under IFRS. Adjusted EBITDA consists of adding to the operating profit; interest expense on bank deposits, depreciation and amortization. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Adjusted EBITDA Reconciliation.” (4) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Total revenues.

Famsa Mexico and Famsa USA manage our retail operations through our network of stand-alone stores and anchor stores. In addition to the products and services provided by stand-alone stores, our anchor stores serve as administrative centers, providing customer service, credit processing and other support to the stand-alone stores in the same region.

For the nine-month period ended September 30, 2014, 88% of Famsa’s consolidated total revenues were generated in Mexico. Over the last decade, Mexican consumers have increased their overall demand for goods and services as a result of greater purchasing power, increased economic stability and income growth. Our target market in Mexico is primarily the middle- and lower-middle income segments of the population. We consider these segments to comprise the adult working population that earns a household monthly income of between Ps.3,420 (U.S.$259.59) and Ps.44,200 (U.S.$3,354.92). Based on AMAI´s Mexican Housing Overview of 2012, this group represents approximately 74.0% of the Mexican households living in cities with a population greater than 50,000 inhabitants. For further discussion of our target demographics, see “—Target Markets.” Famsa Mexico has targeted this large segment of the population since 1970 by offering convenient installment credit plans, a broad assortment of products and personalized customer service. Currently, Famsa Mexico serves its customers through 388 stores that are generally located within the metropolitan areas of cities with a population in excess of 50,000, and range in size from 400 to 3,000 square meters, with an average of 1,192 square meters. On average, each store maintains approximately 2,205 durable consumer products on display, ranging from furniture, electronics and household appliances to clothing and cellular telephones. In addition, we believe that we are also one of Mexico’s largest wholesalers of household appliances and electronic products in Mexico, operating 17 wholesale stores in the principal metropolitan areas of 16 Mexican states.

Famsa USA represented 12% of Famsa’s consolidated total revenues for the nine-month period ended September 30, 2014. Hispanics make up the largest and fastest-growing minority segment in the United States. According to U.S. Census Bureau estimates, in 2010 the Hispanic population reached 50.5 million (16% of the US) and, between 2000 and 2010, grew by 43 percent, which was four times the growth in the total U.S. population. We operate in two U.S. states, Texas and Illinois, in which approximately 23% of the U.S. Hispanic population resides. Famsa USA has targeted the U.S. Hispanic market by replicating Famsa Mexico’s business model and leveraging the recognition of the Famsa brand. Famsa USA serves its customers through a 25-store network, developed both organically and

through acquisitions in two of the U.S. states with large Hispanic populations. Famsa USA’s stores carry an average of 1,822 products on display, and range in size from 1,400 to 3,000 square meters with an average of 2,322 square meters. In addition, we offer differentiated services, such as Famsa-to-Famsa, through which our customers can purchase merchandise at Famsa stores in the United States and have it delivered to others in Mexico through Famsa Mexico, taking advantage of our infrastructure on both sides of the U.S.-Mexico border.

We sell Famsa-brand and third-party brand name domestic products and imports. The principal brands available in our stores include Sony, White Westinghouse, Panasonic, Whirlpool, LG, Samsung and Mabe, among others, and we continually seek to expand our product and service offerings. Furthermore, Kurazai, our own motorcycle brand, has been ranked as one of Mexico’s four best-selling motorcycle brands, after only three years in the market. Our stores are characterized by their display method, which is designed to maximize sales and the use of space. Most of our stores have their own warehouse capacity to ensure product availability, especially of their most popular products. Each of our stores is outfitted with integrated inventory management and marketing systems and connected to STORIS®, which is an advanced supply chain management application that provides real-time information on inventory levels, purchase order status and other information to both stores and vendors.

Given our product mix of high-ticket items and our focus on middle- and lower-middle income individuals, Famsa’s comprehensive value offer has always included the availability of flexible credit sales programs, which enhance our customers’ purchasing power by providing a convenient source of financing for purchasing the retail products we offer. The credit sales programs we offer involve weekly, bi-weekly or monthly payments with terms that can range from three to 24 months, depending on the customer’s preference and payment capacity. As of September 30, 2014, credit sales accounted for 81.2% of our total revenues. We believe that our credit sales programs improve our retail operations’ profitability and boost our growth prospects.

The retail price of the merchandise sold in Mexico depends on the market trends of the diverse types of products offered. In addition, our installment payment program considers various factors, such as the repayment period, the customer’s credit history and the type of product. Sales on credit generally generate higher gross margins than those yielded by our cash sales. In the United States, the purchase price of the merchandise sold on credit is determined based on the suggested retail price plus a finance charge that is reviewed periodically. Cash purchases at our U.S. stores generally are not subject to discounts.

All customers who wish to enter into a credit sales program go through our credit approval process, which has been honed throughout our 43 years of experience in consumer financing. This process includes a proprietary credit application, credit bureau analysis, telephone confirmation and, in some cases, physical address verification. Additionally, our credit approval process involves the determination of the customer’s payment capacity based upon various factors such as monthly income, prior outstanding credit commitments and credit history. The payment capacity figure is one of the most important outputs of the entire credit approval process. This amount represents the maximum aggregate amount and number of installments a customer can commit to at any given time. For instance, if a customer has a payment capacity of Ps.1,000, he or she can purchase any amount of products for which aggregate installments at any time are equal to or less than Ps.1,000. Customers of our personal loans undergo the same credit approval process as those purchasing retail goods, though personal loans are only granted to existing credit sales customers with proven payment capacity. During the past four years, we have centralized the credit approval process from 78 different offices to three supervised and controlled offices to ensure that credit policies are carried out properly and to obtain feedback from our internal audit area. Currently, all credit applications are evaluated by an antifraud division that detects suspicious customer profiles based on established policies, and by an analytics division, that centralizes information necessary to update the Management Information System, and performs analyses, models and forecasts.

With the establishment of our banking operations through Banco Famsa in 2007, we have increased our product and service offering to our customers. Banco Famsa leverages Famsa’s expertise to serve our customer base and our target market, which has limited access to banking services. We believe this

represents an opportunity for growth given that approximately 60% of our customer base has never used banking services before. We have incorporated our banking operations within our stores, and as of September 30, 2014, in Mexico we also operated 290 banking branches within Famsa stores and 201 independent banking branches, including those added in 2013 with the acquisition of Montemex., becoming one of the 10 largest bank networks in the country, according to the CNBV. Our expansion into the banking sector through Banco Famsa has allowed us to create additional consumer finance products, which diversify our product offering and thereby partially hedge our exposure to the sensitivity of durable goods demand caused by the economic downturn during recent years. In addition to our credit sales programs, we offer Banco Famsa customers several savings and checking accounts and other investment products, as well as personal and business loan products. Personal loans are unsecured cash loans used to meet needs not offered in our stores. As of September 30, 2014, interest earned on personal loans offered by Banco Famsa represented 23.4% of Famsa Mexico’s total revenues. Business loan products comprise commercial loans issued by Banco Famsa to micro, small and medium enterprises, as well as to other financial institutions. As of September 30, 2014, the commercial loans portfolio in Mexico increased 7.0% compared to September 30, 2013. The integration of Banco Famsa branches into our stores also provides us an enhanced opportunity to cross-sell our retail products and banking products and services in our Banco Famsa branches and our stores, respectively.

Through these banking branches, we have been able to obtain deposits by offering several savings and checking accounts and other investment products to our customers. Bank deposits, distributed across more than 1.13 million accounts, have grown consistently since 2007, and continue growing at a double-digit pace per year, from the year ended December 31, 2007 to the year ended December 31, 2013. As of September 30, 2014, bank deposits reached Ps.14,721 million, an 8.0% increase compared to September 30, 2013. Furthermore, Banco Famsa supports the sale of merchandise in Famsa Mexico’s stores. Banco Famsa had a capitalization ratio of 12.37% as of September 30, 2014, which results from dividing net equity by the assets at risk (including credit, market and operational risk). As a result of the stability of its operations, Banco Famsa has a capitalization ratio well in excess of any Mexican statutory requirements. The capitalization rules for financial institutions establish requirements for specific levels of net equity, as a percentage of assets subject to both market and credit risk. The capitalization index required for Banco Famsa is a minimum of 8.0%.

In addition, customers’ deposits have provided us with a stable and less expensive source of funding for our Mexican retail operations, further enhancing consumer financing profitability. The average interest rate of Banco Famsa’s deposit base has fallen from 8.1% as of December 31, 2009 to 4.8% as of September 30, 2014.

Our Business Strengths

We believe our business has the following strengths:

Strong Market Position and Growth Platform in the Mexican Retail Industry

Our extensive network of stores and distribution centers covering most of the major metropolitan areas in Mexico provides what we believe to be an extensive distribution channel to launch new products and services to our target market. Moreover, our established retail store and distribution infrastructure, in particular the location and geographic coverage of our stores and distribution centers, allows us to efficiently continue our expansion plans and gives us a significant advantage over existing and new competitors.

We offer a broad assortment of well-recognized brands, low prices, personalized customer service and convenient credit sales programs, which we believe have strengthened our customer loyalty. We believe the Famsa name has strong brand recognition, particularly in the middle- and lower-middle income segments, which we continually reinforce through an aggressive multi-media advertising program with national scope in Mexico. Our sales systems and marketing efforts are further supported through initiatives such as our “Gran Crédito” direct marketing program, whereby our credit representatives visit the homes of potential customers in an effort to set up new accounts both in areas where we currently

operate stores and in advance of new store openings. Other initiatives we carry out to reinforce our position include telemarketing, direct mail, cashier pitches and our “Cambaceo” door-to-door sales program. In addition, we believe that our strong market position in the retail industry in Mexico has enhanced our ability to negotiate better prices with our suppliers.

Proven Track Record in Consumer Financing

We have 43 years of experience providing consumer financing, with an emphasis on offering flexible credit sales programs to our retail customers while maintaining prudent risk management and credit evaluation policies and procedures. See “—Consumer Lending Operations.”

Our target markets’ financing needs have typically been underserved by the traditional financial sector. Since 1970, we have been developing the necessary skill set and infrastructure to capitalize on the growing credit needs of this large segment of the population. As of September 30, 2014, we managed a total of 2.11 million active credit accounts with a team of over 3,172 credit-related personnel, including approximately 329 call-center agents, all of whom are dedicated to making credit accessible to our customers while ensuring the quality of our loan portfolio. We also provide convenient options for our customers to manage their credit account payments, including our “Promobien” program, which offers customers the option to make payments on their Famsa credit accounts through an automatic payroll deduction with participating employers. As of September 30, 2014, we maintained a relatively low uncollectibility level of approximately 3.5%, measured as the percentage of recoveries over total trade accounts receivable. Combined with our in-depth knowledge of the retail industry, we believe that our extensive experience with risk management and consumer financing represents a competitive advantage that we will continue to enhance through Banco Famsa.

Funding through Banco Famsa

In the past, we funded our credit sales program through multiple credit lines with major financial institutions and international and Mexican securities markets. However, with the establishment of Banco Famsa and the growth of its deposit base, we now have access to a more stable and less expensive source of short-term funding to support our credit sales portfolio and other growth initiatives. As of September 30, 2014, Banco Famsa was the source of 68.9% of our net funding and Banco Famsa’s average cost of funding was 4.8%. Initially funded in part through financial intermediaries and interbank loans, Banco Famsa is now almost fully-funded through its own deposits in the form of savings and checking accounts, certificates of deposit and other consumer investment products. The combination of our diversified funding platform with our risk management experience and knowledge of the retail industry represents a unique competitive advantage.

Integrated Consumer-Targeted Banking Services

Through the development of Banco Famsa we are able to offer our customers targeted banking products and services that are normally not available to a large portion of the customer base. Based on our estimates, approximately 60% of Famsa Mexico’s customers have never used banking services. As a result of the credit evaluation and monitoring to which our retail credit sales account customers are already subject and the associated records that we keep, we believe that we are in a better position than other banking services providers to offer our retail customers first-time banking services and develop products tailored to their needs. The integration of Banco Famsa with our retail operations provides a variety of cost-saving synergies, including joint product marketing through mailings, telemarketing, cashier sales pitches, television and other marketing campaigns, advertising on bank statements and cross- selling in general. Banco Famsa now manages over 3,369 point-of-sale terminals, which accept Famsa and third-party credit and debit cards, along with our 198 in-store ATMs. Banco Famsa also handles online payroll services for five Famsa companies and 50 third-party companies. Additionally, the integration of our Banco Famsa branches into our retail stores increases our customers’ familiarity with our stores and personnel and allows us to provide longer hours of operation than other banking services providers.

Our product and service diversification strategy includes the making of loans to support micro, small and medium-sized enterprises. This search for new ways to generate value has positioned Banco Famsa as an attractive alternative for customers seeking productive working capital loans. Our success with these loans reflects a series of initiatives we implemented during 2014, including the opening of 11 service centers in the Mexican cities of Monterrey, San Luis Potosi, Torreon and Saltillo to serve the micro, small and medium enterprises segment. At these service centers, our specialized personnel help customers from a wide range of industries, including the construction, financial services and commercial sectors.

Product Diversification and Cross-Sales

Our expansion into the banking sector through Banco Famsa has allowed us to create additional consumer finance products, which have helped us to diversify our product offering and thereby hedge our exposure to the sensitivity of durable goods demand caused by the economic downturn during recent years. In addition to our credit sales programs, we offer Banco Famsa customers several savings and checking accounts and other investment products, as well as personal (unsecured cash loans used to meet our customer’s personal needs) and business loan products. As of September 30, 2014, personal loans offered by Banco Famsa represented 23.4% of Famsa Mexico’s total revenues. Business loan products comprise commercial loans issued by Banco Famsa to micro, small and medium enterprises, as well as to other financial institutions. As of September 30, 2014, the commercial loan portfolio in Mexico represented 11.6% of Famsa Mexico’s total trade accounts receivable, net of allowances. The integration of Banco Famsa branches into our stores also provides us an enhanced opportunity to cross-sell our retail products and banking products and services in our Banco Famsa branches and our stores, respectively.

Personalized Quality Customer Service and Point-of-Sale Marketing

We are dedicated to providing the highest-quality customer service. We believe our desire to serve our customers is evidenced by our ability to continually exceed their expectations for offering high-quality products at competitive prices. We actively manage client relationships through:

 a well-trained, motivated sales force focused on delivering quality personalized service;  customer service centers in each of our anchor stores;  a call center to provide customer service;  our “Gran Crédito” and “Cambaceo” (or “canvassing”) programs; and  a wide range of post-sale services, including repair services and home delivery.

Customer satisfaction is measured through surveys conducted by an external provider and may be conducted either in our stores or by telephone. In-store surveys are conducted near the exit at five of our stores during high seasons (December, Mother's Day, Buen Fin), and include questions regarding service, wait times and products, among other topics. Telephone surveys are conducted on a monthly basis to approximately 2,800 customers with the objective of obtaining information regarding customer preferences.

We believe our commitment to customer service is a significant factor in increasing our customer loyalty and expanding our customer base. Additionally, our dedication to high-quality, personalized customer service has been critical to the sale of complementary products such as extended warranties and the introduction of new products, including life and car insurance (which we sell for a commission) and personal loans.

Advanced Information Technology and Systems

We operate STORIS®, a complete supply chain management software system that, among other functions, provides us with key real-time information regarding retail sales, inventory levels, product availability and purchase order status, enhancing our decision-making process. Our technology improves the efficiency of our supply chain by allowing us to manage detailed information in such a way as to increase the likelihood that our customers will find exactly the products they wish to purchase while optimizing the associated inventory levels. Moreover, we are able to track the interests, needs and buying habits of our customers, anticipating changes in consumer demand.

Customer service has benefited from our technology by having:

 readily available access to important product information such as technical product descriptions and product availability;  the ability to identify and prevent potential service problems (e.g., incorrect or inaccurate product information) in connection with matters such as inventory availability and returns; and  a reliable source for registering and handling customer complaints.

In addition, during the past few years we have complemented our information technology infrastructure with SAP to manage our human resources, accounting and soft good retail operations. We use advanced operational information technology to support Banco Famsa’s operations, including ICBS- FISERV, Metacard (credit card processing FISERV module) and eBanking. In addition to providing a more sophisticated consumer financing management platform, our bank’s systems enable us to identify cross-selling opportunities across credit and deposit customer databases by integrating virtually all of Famsa Mexico’s existing credit accounts with Banco Famsa’s growing deposit base.

Systems

We have traditionally made significant capital investments in the acquisition, installation and upgrade of IT (Information Technology) and software applications. In the past three years, we invested more than Ps.20 million each year, in our IT systems. Our capital investments in IT from period to period is primarily a reflection of our growth in terms of number of stores, the creation of our banking division and a number of new functionalities and business initiatives in order to offer more and better services to our customers.

We have a long-term contract pursuant to which IBM will provide the necessary infrastructure for the optimal operation of our enterprise resource planning (ERP) for the Commercial Division, SAP systems and the Core Banking systems for Banco Famsa.

Our communications network that links all of our branches, distribution centers and warehouse facilities, enables them to maintain ongoing, real-time communication to operate and maximize their processes and support. We have a long-term contract with one of the main carriers in Mexico to get the service, including the update and maintenance for the equipment (e.g., routers and switches) and the management to monitoring and secure the optimal service levels.

The ERP for the commercial division is STORIS® (www.storis.com) based in the United States, operates on IBM pSeries platform (AIX) housed in Apodaca-Triara (IBM) including the recovery capacity.

The Banco Famsa network architecture is built around an IBM iSeries system with immediate recovery capacity, which is housed in Apodaca-Triara and Redit-Monterrey. The Banco Famsa’s Core Banking System (ICBS) and the consumer credit system (CMS) were provided and are supported by FISERV (www.fiserv.com) based in the United States. We also use additional applications to complete the bank institution requirements and meet the Mexican regulations.

Human Resources and Finance for the Famsa divisions are using SAP products and operating on IBM pSeries platform (AIX) housed in Apodaca-Triara (IBM) including the recovery capacity.

We have recently implemented the Customer Relationship Management software from SAP. In addition, we put new marketing software from SAP into service, which allows us to plan and administer marketing campaigns, administer telemarketing operations and manage our contact with customers, and administer media advertising and customer service.

Strong Management Team and Motivated Employees Focused on Continuous Improvement

Our executive officer team has over 25 years of accumulated specialty retail experience and a solid track record of sustainable growth. Additionally, top management has successfully fostered a work culture based on teamwork and focused on continuous improvement and commercial innovation. Each of our employees has individual objectives, which serve as a basis for measuring performance and are associated with broader corporate goals. Pursuant to our compensation system, our employees who have met operational and financial objectives are eligible for bonuses. We believe our goal-oriented culture and incentive programs have contributed to the development of a motivated and well-aligned team that is dedicated to serving our customers’ needs and ensuring the sustainability of our business. The positive performance of the Company rests on practices of sound corporate governance. Famsa was one of the few finalists in the second edition of the “Affinitas” Awards for Good Corporate Governance in Latin America, held on November 22, 2007 as part of the 9th Latibex Forum in Madrid, Spain. More than 580 companies were evaluated by the jury and 12 finalists were chosen on the basis of such criteria as shareholders’ rights, equality, stakeholder involvement, communication and transparency and responsibilities of the board of directors.

Our Business Strategy

Grupo Famsa serves specific consumer, credit and savings needs of the middle- and lower-middle income segments of the population through a unique portfolio of complementary businesses. We believe the synergies among our business units, Famsa Mexico, Banco Famsa and Famsa USA enable us to attain competitive advantages that reinforce our position. Our business strategy focuses on maximizing these synergies to provide a comprehensive and differentiated value offer to our customers who value personalized service and require credit options that are not offered to them by the traditional banking sector.

Famsa USA serves the U.S. Hispanic population, replicating Famsa Mexico’s business model in the states of Texas and Illinois. Our objective is to increase our customer base by attracting new customers and maintaining existing ones through the communication of our strengths, such as our credit sales program, name brands, competitive prices, unique promotions and exclusive Famsa-to-Famsa service.

The key elements of our strategy are the following:

Enhance Our Consumer Financing Operations in Mexico through Banco Famsa

We continue enhancing our consumer financing operations in Mexico through the development of Banco Famsa. We believe that further development of Banco Famsa will lead to an additional decrease in our cost of financing, allowing us to apply greater financial resources to other areas of our operations. We believe the inclusion of Banco Famsa branches in our stores and the opening of independent banking branches, as well as the recent acquisition of Montemex branches, will enable us to increase our customer base in Mexico and enhances our ability to sell additional products to our consumers. Besides acting as a catalyst for further growth in our retail operations, we believe Banco Famsa will increasingly become a source of independent growth through expansion of existing and development of new financial products and services. Furthermore, we believe Banco Famsa’s personal and business loan programs and other financial products will help us further diversify our product offerings to hedge our exposure to durable goods demand sensitivity. We intend to continue building upon our experience and knowledge of providing consumer financing to further successfully establish, expand and operate Banco Famsa.

Selectively Expand Our Retail Store Network in Mexico

We believe our current retail store network provides an important platform for our selective expansion in Mexico. Our expansion strategy includes opening new stores in areas better served by full-format stores to selectively replace smaller stores, opening additional stores in strategic, high-demand areas of cities in which we already operate and opening new stores in regions which we believe offer a substantial growth opportunity. Based on our estimates, there are approximately 395 cities in Mexico with populations exceeding 50,000 inhabitants, and most are currently underserved by us. We currently operate in only 83 (or 21%) of these cities. Furthermore, our expansion strategy also encompasses the opening of independent banking branches, which require a lower level of investment due to their smaller retail space, on average of 150 square feet. These independent banking branches offer Banco Famsa’s current portfolio of financial products and services, in addition to door-to-door credit origination (“Gran Crédito”), door-to-door sales program (“Cambaceo”) and durable goods sales through electronic catalogs maintained within the independent banking branches.

Improve Our Sales and Marketing Efforts to Increase Our Market Share

We plan to continue improving our sales force productivity through more effective training programs and attractive compensation systems and enhance our marketing efforts to attract new customers and increase our market share. We also plan to improve our information technology systems, databases and customer relationship management system in order to enhance our ability to anticipate consumer demand and promote commercial innovation. While our marketing strategy emphasizes mass media advertising, we also intend to further expand our telemarketing program and explore other new direct marketing channels. In addition, we will continue our commitment to customer service and customer satisfaction by providing a combination of personalized service, high-quality products and services at competitive prices and with flexible consumer financing options.

Our marketing program includes different channels, among them: digital marketing (social media, e- marketing and famsa.com website); customer service (FAQ 1-800 number); direct marketing (telemarketing, SMS, e-mailing and interactive voice response telephone marketing); marketing intelligence (research, benchmarking and price monitoring); customer relationship management (loyalty program, cross marketing channels, customer data warehouse, customer segmentation, and marketing campaigns management); and finally, marketing communications (above-the line, below-the line, media, digital and production).

Continue to Improve Our Margins through the Introduction of New Products, Services and Distribution Channels

We plan to take advantage of the strong growth platform provided by our extensive retail store network to continue developing new products, services and distribution channels that satisfy our customers’ needs, such as Internet sales, new consumer financing products, footwear catalog sales, and motorcycle and automobile financing, in addition to other products and services primarily directed to customers in higher income brackets. Furthermore, we expect that through the continued development and integration of Banco Famsa, we will be able to offer a growing variety of personal and business financial products and services in Mexico. We believe that the continued development of new products, services and distribution channels will allow us to cross-sell a broader range of products and services more effectively, which should lead to improvements in our margins and increase our competitiveness, further strengthening our growth platform. Additionally, we expect that the continuing development and integration of Banco Famsa will provide a lower-cost source of financing and expand our products offering, which may lead to an increase in our profitability.

Our product and service diversification strategy includes the making of loans to support micro, small and medium-sized enterprises. This search for new ways to generate value has positioned Banco Famsa as an attractive alternative for customers seeking productive working capital loans. Our success with these loans reflects a series of initiatives we implemented during 2012, including the opening of 11 service centers in the Mexican cities of Monterrey, San Luis Potosi, Torreon and Saltillo to serve the micro, small and medium enterprises segment. At these service centers, our specialized personnel help customers from a wide range of industries, including the construction, financial services and commercial

sectors.

Improve profitability of Famsa USA

Precipitated by the economic downturn beginning in 2008 that adversely affected Hispanic consumers, and despite our efforts over the past few years to improve profitability, we posted recurring operating losses in California, Nevada and Arizona and elected to close our stores in those states. As a result, in 2012 we began a comprehensive review of Famsa USA’s operations in an effort to improve its profitability. We are consolidating our operations in the profitable regions of Texas and Illinois and have already implemented several initiatives, including increasing our product assortment, enhancing our personalized service, supporting the origination of personal loans, re-launching an attractive advertising campaign and reducing operating expenses. Our objective is to increase our customer base by attracting new customers and maintaining existing ones through the communication of our strengths, such as our credit sales program, name brands, competitive prices, unique promotions and the exclusive Famsa-to- Famsa service. As of September 30, 2014, we had 22 stores in Texas and 3 stores in Illinois.

History

The origin of our business dates to 1970, with the opening of a household appliances, furniture and electronics store in the city of Monterrey, Nuevo León, in northern Mexico, followed by additional stores in Monterrey and other markets in the states of Nuevo León and Coahuila over the course of the next decade. The Company was formally organized in 1979, under the name Corporación Famsa, S.A., in order to centralize the then-existing stores’ merchandise purchasing process and attain economies of scale.

During the 1980s, we began expanding into other business segments. In 1980, we ventured into the wholesale market with the establishment of our subsidiary Mayoramsa, S.A. de C.V. (“Mayoramsa”), and in 1983 we created Impulsora Promobien, S.A. de C.V. (“Promobien”) to offer consumer loans to the employees of our affiliates. In 1987, we began our furniture manufacturing operations through our subsidiary, Expormuebles, S.A. de C.V. (“Expormuebles”).

The year 1990 marked the beginning of a significant growth period for the Company. During the 1990s, we established a number of subsidiaries and expanded our geographical presence to other cities in central Mexico, including San Luis Potosí, Querétaro, León, Celaya and San Juan del Río. In 1991, we opened six stores within the metropolitan areas of Guadalajara, Ciudad Obregón, Los Mochis, Navojoa and Hermosillo. Between 1995 and 1996, we implemented a strategic expansion plan to capitalize on the then-ongoing Mexican economic recovery process, opening additional stores in the States of Nuevo León, Puebla and Aguascalientes. By the decade’s end, we had a total of 185 stores located in 49 cities throughout Mexico. Concurrent with this geographic expansion, we also diversified our lines of products. For instance, in 1994 we began selling clothing, footwear, cosmetics and jewelry.

In 1999 and 2000, Tapazeca, S.L., a joint venture between Soros Fund Management and Mr. Fernando Chico Pardo, and Monterrey Venture Holding, L.L.C., an affiliate of General Electric Pension Trust, acquired in the aggregate a 13.78% interest in the Company. The proceeds of these transactions enabled us to further pursue our strategic expansion plan. The participation of these investors through Tapazeca, S.L. was sold to the public in May 2006 when we became a public company.

Between 2002 and 2010, we opened 103 additional stores throughout Mexico, primarily in the country’s Gulf and Central regions, including Veracruz, Tabasco, Mexico City, Pachuca, Toluca, Cuernavaca, Yucatan, Campeche and Colima, among others. As of the date of this Information Memorandum, we had a total of 355 stores located throughout Mexico.

Concurrent with our geographic expansion in Mexico, in 2001 we entered the United States market with the opening of a store in California, aimed at catering to the needs of the U.S. Hispanic population. Our expansion plan in the United States led to the acquisition and integration into our operations in 2006 of the five “National” furniture stores in San Antonio, Texas and in 2007 of the 12 “La Canasta” furniture stores in the cities of Los Angeles, California and Houston, Texas.

In May 2006, we became a public company through an initial public offering of our shares on the BMV and also established Banco Famsa in order to further our consumer lending operations and enter the banking business. Banco Famsa commenced operations in Monterrey, Nuevo León, in 2007, and in the same year we opened 167 Banco Famsa branches within our stores in 12 states in Mexico. In 2008, we opened an additional 101 Banco Famsa branches in our stores in the states of Nuevo León, Sonora, Sinaloa, Puebla, Coahuila, Veracruz, San Luis Potosí, Aguascalientes, Baja California, Michoacán, Morelos, Toluca, Hidalgo, Tamaulipas, Jalisco, Campeche, Tabasco, México, Zacatecas, Colima, Chihuahua and Guanajuato. As of September 30, 2013, Banco Famsa had a total of 311 bank branches located throughout Mexico.

In 2008, we opened 13 new stores and acquired and integrated into our operations Edelstein’s Better Furniture’s eight stores in the Rio Grande Valley of Texas. Precipitated by the economic downturn beginning in 2008 that adversely affected Hispanic consumers, and despite our efforts over the past few years to improve profitability, we posted recurring operating losses in California, Nevada and Arizona and elected to close our stores in those states. As a result, in 2012 we began a comprehensive review of Famsa USA’s operations in an effort to improve its profitability. We are consolidating our operations in the profitable regions of Texas and Illinois and have already implemented several initiatives, including increasing our product assortment, enhancing our personalized service, supporting the origination of personal loans, re-launching an attractive advertising campaign and reducing operating expenses. As of the date of this Information Memorandum, we have 22 stores in Texas and 3 stores in Illinois. With regard to the states of California, Nevada and Arizona, we are focusing our efforts in these states on collecting the remaining balance of our receivables portfolio through kiosks and third party collectors. We believe that our decision to refocus our U.S. operations on Texas and Illinois will bring long-term benefits

Organizational Structure

We conduct our business operations through 15 operating subsidiaries. The following chart shows our organizational structure and our subsidiaries, all of which are substantially wholly owned, directly or indirectly by us (we hold a 53.75% interest in Geografía Patrimonial, S.A. de C.V.):

Operating Subsidiaries

We operate our 388 stores in Mexico and the United States through our subsidiaries listed below:

 Famsa Mexico S.A. de C.V., which is responsible for the operation of Famsa Mexico’s 363 stores;  Famsa, Inc., which operates our 25 stores in the United States and is a corporation organized under the laws of the State of California, and Famsa Financial, Inc., which maintains the requisite licenses in connection with the issuance of regulated loans in the State of Texas;  Promobien, which serves as administrator for our Promobien program;  Auto Gran Crédito Famsa S.A. de C.V., which is engaged in the personal car loan business;  Verochi S.A. de C.V. (“Verochi”), which is engaged in the sale and distribution of footwear and other related products both directly and through third parties;  Expormuebles, a manufacturer and distributor of furniture and related products; and  Mayoramsa, which is engaged in the wholesale and distribution of household appliances and furniture through its 17 warehouse clubs.

Financial, Administrative and Other Subsidiaries

We conduct our banking and consumer lending businesses, receive administrative support and services and are engaged in other business activities through our subsidiaries listed below:

 Banco Ahorro Famsa, S.A., Institución de Banca Múltiple, or Banco Famsa, which is responsible for our banking business and providing financing services to our retail customers;  Promotora Sultana, S.A. de C.V., Corporación de Servicios Ejecutivos, S.A. de C.V., Suministro Especial de Personal, S.A. de C.V. and Corporación de Servicios Ejecutivos Famsa S.A. de C.V., which provide administrative, accounting, audit, financial planning, personnel and IT systems development and maintenance services, as well as consulting services in connection with a variety of areas, including technical assistance, research and development, statistical information and analysis, marketing and public relations; and  Geografía Patrimonial, S.A. de C.V., which was incorporated and began operations in November 2009 and which is engaged primarily in leasing real estate to related parties.

Target Markets

Our target market in Mexico is primarily the lower-middle and middle income segments of the population. We consider these segments to comprise the adult working population that earns a household monthly income of between Ps.3,420 (U.S.$259.59) and Ps.44,200 (U.S.$3,354.92). Based on the Asociación Mexicana de Agencias de Investigación de Mercado y Opinión Pública (“AMAI”), this group represents approximately 724 of the Mexican households living in cities with a population greater than 50,000 for the year 2012.

The table below shows the breakdown of the Mexican population inhabiting cities with a population greater than 50,000, according to the AMAI for the year 2012:

Percentage Demographic of Total Household Income per Group Population Month

“A/B” ...... 6.8% Ps.108,000 and above “C+”...... 14.2% Ps.44,300 - Ps.107,000

“C” ...... 17.0% PS.14,700 - PS.44,200 “C-” ...... 17.1% PS.11,700 - PS.14,600 “D+”...... 18.5% PS.8,610 - PS.11,600 “D” ...... 21.4% PS.3,420 - PS.8,600

“E” ...... 5.0% Less than PS.3,420 ______Source: AMAI

Our stores target customers who are primarily in the C, C-, D+ and D groups. However, we also offer a variety of products and services that primarily appeal to consumers from the A/B group (LED and or LCD flat screen televisions, etc.). The age distribution of Mexico’s population favors the maintenance of high levels of consumption and offers significant opportunities for growth. According to the INEGI (Instituto Nacional de Estadística y Geografía), as of December 31, 2010, approximately 57.5% of the Mexican population was aged between 20 and 74, our primary consumer group, and approximately 38.8% was under the age of 20, which we believe represents future growth potential for our customer base.

In addition, Mexico’s low- and middle-low income housing industry has historically reported strong performance levels, contributing to the increase in the demand for household appliances and other products. We currently operate full-format stores in 83 cities in Mexico.

Hispanics make up the largest and fastest-growing minority segment in the United States. According to U.S. Census Bureau estimates, in 2010 the Hispanic population reached 50.5 million (16% of the U.S.) and, between 2000 and 2010, grew by 43 percent, which was four times the growth in the total U.S. population. We operate in two U.S. states, Texas and Illinois, in which approximately 23% of the U.S. Hispanic population resides.

Retail Network

As of the date of this Information Memorandum, we owned and operated a total of 388 stores and 17 warehouses in Mexico and the U.S. 363 stores are located in 83 cities throughout Mexico and 25 stores in the U.S. states of Texas and Illinois. In addition, as of September 30, 2014, in Mexico we also operated 290 banking branches within Famsa stores and 201 independent banking branches, including those added in 2013 with the acquisition of Montemex. Furthermore, we operate under a dual-store format that encompasses both stand-alone and anchor stores. Anchor stores function as administrative centers that provide customer service, credit processing and other support to our stand-alone stores in the same region. Each of the other cities in which we operate has one anchor store or is located close to another city with an anchor store.

The following map and table show the geographical distribution of our stores in Mexico and the United States as of the date of this Information Memorandum.

State Number of Stores Square Meters Nuevo León 63 84,375 San Luis Potosi 8 9,108 Queretaro 6 6,367 Guanajuato 19 16,992 Veracruz 13 17,415 Toluca 4 5,221 Hidalgo 6 8,374 Villahermosa 9 11,192 Campeche 1 1,240 Yucatán 5 6,975 Quintana Roo 2 2,388 Sonora 11 16,466 Sinaloa 10 12,930 Chihuahua 13 18,987 Baja California 17 26,068 Tamaulipas 32 34,125 Coahuila 26 33,856 Durango 4 4,829 Jalisco 20 19,457 Puebla 9 9,560 Aguascalientes 2 3,735 Michoacan 4 5,435 Colima 2 1,309 Morelos 5 6,693 Zacatecas 2 1,928 Nayarit 1 656 CD. Mexico 69 66,001 Mexico Total 363 431,682

USA State Number of Stores Square Meters Texas 22 55,154 Illinois 3 9,280 USA Total 25 64,434 TOTALS 388 496,116

Famsa Mexico’s stores are located within the metropolitan areas of cities with a population in excess of 50,000 people and range in size from 400 to 3,000 square meters, with an average of 1,193 square meters per store. Each of our Mexican stores maintains an average of 2,205 products on display. As of the date of this Information Memorandum, we had a total of 306 stand-alone and 57 anchor stores in Mexico. Furthermore, as of September 30, 2014, in Mexico we also operated 290 banking branches within Famsa stores and 201 independent banking branches, including those added in 2013 with the acquisition of Montemex.

In the United States, we had 23 stand-alone and two anchor stores as of the date of this Information Memorandum. Our U.S. stores range in size from 2,000 to 3,000 square meters, with an average of 2,577 square meters per store. Each store maintains an average of 2,000 products on display.

Famsa USA has targeted the U.S. Hispanic market by replicating Famsa Mexico’s business model and leveraging the recognition of the “Famsa” brand. As of September 30, 2014, Famsa USA served its customers through a 25-store network, developed both organically and through acquisitions in two U.S. states with large Hispanic populations. Famsa USA’s stores carry an average of 1,750 products on display, and range in size from 1,400 to 3,000 square meters with an average of 2,322 square meters. Our main product categories are furniture, electronics and household appliances. In addition, we also offer differentiated services, such as Famsa-to-Famsa, through which our customers can purchase merchandise at Famsa stores in the United States and have it delivered to family members in Mexico through Famsa Mexico, taking advantage of our infrastructure on both sides of the U.S.-Mexico border.

Our stores in both Mexico and the United States are characterized by their display method, which is designed to maximize sales and the use of space. Most of our stores have their own warehouse capacity to ensure product availability, especially of their most popular products. Each of our stores is outfitted with integrated inventory management and marketing systems and is connected to STORIS®, which is an advanced supply chain management application that provides real-time information on inventory levels, purchase order status and other information to both stores and vendors. Most of our stores are open from 9:00 a.m. to 9:00 p.m., seven days a week (other than December 25 and January 1), except stores located within shopping centers, which are subject to the shopping center’s business hours.

We lease most of the properties where our stories are located. As of September 30, 2014, 87.5% of our stores were located on real property owned by independent third parties, 10.4% were located on property leased from related third parties and 2.1% located on property we own. Property leased from related third parties was leased pursuant to long-term lease agreements with our controlling shareholders and various entities controlled thereby, in respect of the retail space used by several of our stores. We select the retail space used by our stores based upon various considerations, including our desire to convey a uniform corporate image and the need for total sales and warehouse areas sufficient to accommodate our increasing number of product lines and services and merchandise volumes.

Market Expansion Strategy

Our expansion strategy has enabled us to achieve significant growth levels in terms of both our net sales and net income over the past years. As part of our ongoing expansion strategy, we continue to consider opening additional stores in Mexico, both in cities in which we are already present and in other regions, such as the southeastern part of the country, where we believe there are significant growth opportunities given the number of cities with a population in excess of 50,000 that are not currently served by us or our competitors. We also periodically consolidate our operations and close older, smaller stores and other stores located in areas that are not adequately served by our larger full-format stores. In 2009, for example, we optimized our retail store network by selectively closing fifteen stores while opening four larger, full-format stores, resulting in a net square meter reduction of 0.5% in our total sales area and operation savings of over Ps.200 million. Furthermore, in 2011, we adjusted the display area allocation at 50 Mexican stores which had a limited clothing offer in order to boost the productivity of our sales floor space. This change mainly reinforced our furniture category with over 20,000 square meters of exhibition space, equivalent to more than 10 full-format Famsa stores.

The following chart illustrates our growth in terms of our total number of stores in Mexico and the United States during the periods indicated. The following chart also illustrates our growth in terms of our total sales area, in thousands of square meters, in Mexico and the United States during the periods indicated.

Products and Services

We offer a broad assortment of brand name and third-party domestic and imported durable goods, including furniture, electronics, household appliances, cellular telephones, computers, motorcycles, and clothing, and we seek to constantly expand our product and service offerings. Imports account for approximately 5% of our product portfolio.

The following table shows our accumulated net sales by type of product as of September 30, 2013 and 2014:

% of Total Sales % of Total Sales Product Category as of September 30, 2013 as of September 30, 2014 Famsa Total Famsa Total Mexico Famsa USA Consolidated Mexico Famsa USA Consolidated Furniture 12.2 50.7 16.4 10.0 50.6 14.8 Electronics 11.2 17.8 11.9 12.0 16.6 12.5 Household Appliances 12.0 11.8 11.9 12.9 12.9 12.9 Mobile phones 10.0 - 8.9 11.9 - 10.5 Computers 5.7 5.8 5.7 4.9 4.7 4.9 Personal Loans 25.9 3.9 23.5 23.4 5.6 21.3 Famsa-to-Famsa - 3.5 0.4 -3.8 0.4 Motorcycles 6.7 - 6.0 7.2 - 6.3 Others 16.3 6.5 15.3 17.7 5.8 16.4 Total 100% 100% 100% 100% 100% 100%

Our product and service portfolio includes:

 Furniture, including living, dining and bedroom sets, chairs, tables, armoires, headboards, mattresses, cushions, rocking chairs, dressers, book cases and sofas. The main brands carried by our Famsa Mexico stores are Simmons, Selther, Mónaco, Sealy, Emman, Muebles Liz, Anffer, Chavoya, MobilKraft, Taosa and Dafel. In addition, our Famsa Mexico stores offer an exclusive brand-name line of furniture manufactured by our subsidiary Expormuebles. Famsa USA furniture brands include Ashley Furniture, Wickline Bedding, Michels & Company, International Furniture, Golden Oaks, Acme Furniture and Sandberg Furniture.

 Electronics, including cameras, TV sets, home theater systems, DVD players, as well as sound systems (car stereos, modular stereo systems, and recorders) of international brands such as Sony, Panasonic, LG, Samsung, Hitachi and Pioneer, among others.

 Major household appliances, including refrigerators, washers, freezers, dryers, ovens and stoves of internationally-recognized brands such as Whirlpool, Mabe, Maytag, General Electric, Easy, IEM, Acros, among others.

 Small household appliances, including microwave ovens, blenders, toasters, irons, coffee makers, vacuum cleaners, mixers and other small appliances of brands such as Oster, Panasonic, Black & Decker, T-fál, and LG, among others. We also sell fans, air conditioning units and boilers, including those manufactured by Impco, Whirlpool, Lenomex, LG and Mytek.

 Mobile phones and accessories, including those distributed by Telcel, Movistar, and Unefon. These are sold by us in our stores and we receive marketing support from the providers. Customers contract with the providers separately.

 Computers, including laptops, desktops, tablets, and video game consoles and games, of internationally-recognized brands like Sony, Lenovo, Toshiba, Acer, Dell and Asus, among others.

 Personal loans, which are unsecured cash loans that our customers use to meet needs not offered in our retail floor, including medical care and house remodeling. These loans are normally offered to our existing customers and are very similar in amount and duration to other credits that we issue.

 Motorcycles, including scooters, semiautomatic, chopper, dual purpose, sports, ATV 4 wheels, and work motorcycles. We carry our own brand, Kurazai, which is currently among the top four

motorcycle brands in Mexico. Manufacturing takes place in China through our supplier Moto Road, with which we have an exclusivity agreement.

 Others, which include motorcycles and scooters, clothing and accessories, sporting goods and other products not captured above.

Leveraging on our large merchandise purchase volumes, we entered into agreements with some of our vendors, under which they manufacture products according to our specifications for inclusion in our stores’ product portfolio. For instance, Lester manufactures the mattresses sold in our stores under our proprietary “CisiAmo” label.

In addition to our conventional product categories described above, our stores offer a variety of other products and services, including the following:

 Catalog sales. In 2004, we entered the sales-by-catalog business within the footwear segment, through our subsidiary Verochi. Our customers place their orders either through our call center or through an informal network of independent, door-to-door sales people who are primarily housewives and other women in search of a source of additional income. We offer these independent sales persons the ability to pay for their merchandise purchases in up to eight weeks and to return unsold merchandise. Currently, our Verochi footwear is available only through a limited number of Famsa stores in the northeast region of Mexico, although we plan to expand this business to the rest of the country.

 Famsa-to-Famsa. Our Famsa-to-Famsa services allow our customers in the United States to purchase merchandise at any of our Famsa USA stores and have it delivered to others in Mexico through Famsa Mexico, taking advantage of our infrastructure on both sides of the border. Though the product is delivered in Mexico, the sale is treated as a sale in the United States. The products most frequently purchased for delivery in Mexico through this service are household appliances, furniture and electronics. For the nine-month period ended September 30, 2014, sales under our Famsa-to-Famsa program accounted for 3.5% of Famsa USA’s sales.

 Electronic transfer of funds and foreign exchange. Our Famsa Mexico stores offer electronic money transfer and foreign exchange services, charging a commission that is payable by the sender. Although we do not directly offer these types of services in the United States, Famsa USA has entered into an agreement with U.S. Dollar Express, Inc. (“DolEx”), under which DolEx provides such services to our customers through kiosks located within our stores. In exchange for these business referrals, DolEx pays Famsa USA a fixed monthly rent for the space used by its kiosks. In addition, we have entered into a series of agreements with DolExEnvíos, SA. de C.V., Western Union and other providers of international money transfer services, under which we deliver their intended recipients, at our Famsa Mexico stores, the proceeds of the transactions processed by them, in exchange for a commission from the provider for each completed transaction. We do not charge any fee or commission to the recipients.

 Auto Gran Crédito. In 2005, we began offering personal car financing services under our “Auto Gran Crédito” brand. We finance the purchase of new vehicles only, through a lottery system that requires the customer to pay at the due dates of each of the first six installments on their purchase before they can receive the vehicle. If a customer fails to pay any of such six first installments, then delivery of the vehicle is delayed until the customer’s name is drawn in the lottery. We hold lottery drawings on a monthly basis. As in the case of our other consumer finance services, customers make weekly payments in amounts that vary depending on their individual payment ability over a 48-month period.

 Banco Famsa Products. Through Banco Famsa, we offer a variety of consumer and business finance banking products, which are designed to target the banking needs of our retail customers. Our deposit and investment products include traditional savings and checking accounts and a variety of short- and medium-term investment products, including certificates of deposit that offer a wide range of terms to maturity and returns. Our credit offerings include personal and business

products, including a Famsa private-label credit card for use only at Famsa stores, personal cash loans and both long- and short-term business loans and revolving credit facilities. For additional discussion of Banco Famsa’s products, see “Banco Famsa—Products and Services.”

As part of our business strategy, we continually seek new products and services to offer our customers, and from time to time we introduce new products or services through trials before incorporating them into our portfolio. The products and services offered can vary from store to store based on layout as well as specific demographics and regional and customer preferences.

Sales

Sales in Cash. Our sales in cash include the sales paid in hard currency and the sales paid by check or credit card. Cash sale prices at our Mexican stores are established at a discount off the suggested retail price, depending on the type of product and the product’s credit sale terms. Cash purchases at our U.S. stores generally are not subject to discounts. We offer to our institutional customers a 30-day credit line and account for these sales in the same manner as sales paid for in cash given the short repayment period associated therewith.

Sales on Credit. As an alternative to traditional sales in cash, we offer to our customers an option to pay in installments, providing weekly, bi-weekly or monthly payments over a three- to 24-month period. The retail price of the merchandise sold in Mexico depends on the market trends of the diverse types of products offered. In addition, our installment payment program considers various factors, such as the repayment period, the customer’s credit history and the type of product. Sales on credit generally generate higher gross margins than those yielded by our cash sales. In the United States, the purchase price of the merchandise sold on credit is determined based on the suggested retail price plus a finance charge that is reviewed periodically. Because many of our clients do not generally have access to other sources of credit, we believe that our installment payment program contributes to increasing the number of our potential customers, enhances our existing customers’ purchasing power and, as a result, contributes to our growth in net sales and net income. As of September 30, 2014, our sales on credit accounted for approximately 82.1% of our total sales.

Our customers can make payments on their accounts at any of our stores and, in the United States, customers also have the option of paying by mail or by website.

Prices

Our price strategy seeks to offer our products at low, competitive prices in each of our markets. To ensure the maintenance of competitive market prices, our marketing department monitors on a daily basis the prices advertised by our competitors and adjusts and determines the discounts applicable to the price of the merchandise that we sell in cash or on credit. Our store managers are authorized to reduce the cash purchase price of our products to match the prices offered by our competitors, within certain specified parameters.

Distribution Network

Following our customer service strategy and looking to strengthen our delivery policy, we have developed a series of administrative procedures, information technology systems and personnel training programs to maximize the efficiency of our distribution operations. Starting on January 2011, the QS-LyD Quality Management System, based on the ISO-9000 standard, was implemented to improve operations and productivity in all of our distribution centers in Mexico. The final certification was obtained on December 2011.

We currently operate 9 distribution centers that are strategically located throughout Mexico in the cities of Monterrey, Nuevo León; Hermosillo, Sonora; Chihuahua, Chihuahua; Guadalajara, Jalisco; Tijuana, Baja California; Mexico City, D.F.; Irapuato, Guanajuato; Villahermosa, Tabasco; and Culiacán, Sinaloa. In the United States, we have one distribution center in Texas and one in Illinois.

Our distribution centers receive our merchandise purchases directly from our suppliers and also provide merchandise return processing support to our stores. Upon its arrival at our distribution centers, the merchandise is transported to the point of sale through proprietary routes generated upon automated consolidation of our stores’ daily sales by type of product and destination. To ensure an efficient delivery process, our distribution centers maintain permanent on-line communication with our stores. Famsa also entered into approximately 35 contracts with third parties that provide delivery services to assist Famsa in the delivery of merchandise to other regions.

In the last few years the Company has implemented a supply program for its transfer centers through its own high capacity fleet. This program is employed only on certain routes where a high demand justifies it as necessary: Monterrey – Reynosa, Monterrey – Matamoros, Monterrey – Tampico, Monterrey – Cd. Victoria – Cd. Mante, Monterey – Monclova, Monterrey – Saltillo, Irapuato – San Luis Potosí, Irapuato - Aguascalientes, México – Veracruz, México – Toluca, Culiacán – Mazatlán, Culiacán – Los Mochis.

The current distribution system has allowed a reduction in costs, maintaining a time delivery to customers in less than 48 hours, and ensuring reliability in inventory availability. This has been achieved through the close adherence to productivity and efficiency standards, which has resulted in a 9% reduction in our distribution vehicle fleet in the last two years. On average, 18,933 cubic meters of merchandise leave distribution centers each week, reaching on average 29,765 cubic meters during peak seasons. The use of a bar code system through radio frequency in our distributions centers has contributed to a higher level of assurance in inventory management and control, reaching a 99.8% confidence level. In addition, we have implemented an automatic routing system to increase efficiency of both human and mechanic resources.

As of September 30, 2014, we operate various merchandise transfer centers throughout Mexico and the United States, with an average warehouse area of 600 square meters. These centers receive merchandise deliveries from our distribution centers for their subsequent shipment to our stores or our customers’ homes. Our transfer centers are located along certain routes characterized by large merchandise traffic volumes. Additionally, we operate three warehouses in the United States that receive merchandise from our distribution centers for their subsequent delivery to our stores and customers.

For the majority of our sales, we rely on our own fleet of transportation vehicles. As of December 31, 2013, our fleet consisted of 210 vehicles, mainly 3.5-ton trucks, in addition to other trucks equipped with compartments for the proper handling of products. For additional security, our distribution fleet and lightweight tractors are equipped with satellite tracking.

To address low demand given the economic situation, and optimize our costs, we have reduced our warehouse capacity by 50% in Chihuahua, and we have sublet 50% of our warehouse space in Cedis Guadalajara.

Customer Service

We believe our commitment to excellence in pre-sale and post-sale customer service sets us apart from our competitors and provides us with a distinctive feature upon which to retain and expand our customer base. The broad range of services that we offer our customers includes home delivery and extended guaranties on all other products. We operate a customer service center that is open every day of the year except December 25 and January 1. In addition, each of our anchor stores includes a customer service department that supports our stand-alone stores in the region. In the United States, we employ many bilingual speakers to service our customers.

Suppliers

A critical element of our marketing strategy is our ability to offer a broad range of high-quality products at low prices to our customers. We secure our merchandise purchase requirements from a network of approximately 195 domestic and international suppliers. We have developed strong business

relationships with several of the world’s largest manufacturers of electronic products, as well as with domestic manufacturers of furniture and other products.

In order to centralize our merchandise purchasing process and maximize the efficiency of our distribution network, we have integrated into our retail operations the STORIS® supply chain management system, an advanced software application that provides real-time information on our inventory levels, historic purchases, purchase order status and other information to both our stores and vendors, who can access this system through our web page, thereby enabling us to remain in permanent communication with them. This helps us reduce the risk of inventory shortages and obsolescence, while enabling us to obtain optimum prices and other purchase conditions. We believe that we conduct business with our suppliers on terms that are no less favorable than those of our competitors.

The following table shows Famsa Mexico’s and Famsa USA’s 10 largest suppliers and the percentage of our merchandise purchases represented by each such supplier as of September 30, 2014:

Suppliers % Famsa Mexico: Radiomóvil Dipsa, S.A. de C.V. 21.7% Comercial Acros Whirlpool 13.4% Moto Road, S.A. de C.V. 10.1% Mabe, S.A. de C.V. 8.2% Panasonic de Mexico, S.A. de C.V. 3.7% LG Electronics Mexico, S.A 3.7% Samsung Electronics Mexico 3.5% Sony de Mexico S.A. de C.V. 3.5% Pegaso PCS S.A. de C.V. 2.4% Inno Digital Stream Mex S.A. 2.1%

Famsa USA: LG Electronics USA Inc 15.9% Electrolux 9.6% E&S International Enterp Inc 8.6% Ashley Furniture Inds., Inc. 8.0% Acme Furniture Industry Inc 7.9% Sandberg Furniture MFG Co Inc 4.6% Sony Electronics Inc 4.5% Restonic Bedding 3.7% National Bedding Company LLC 2.6% General Electric Company 2.3%

Consumer Lending Operations

Sales on Credit and Credit Approval Process

As an alternative to the traditional in-cash sales system, we offer our customers an installment payment program that provides them with a convenient source of financing to satisfy their credit needs, which helps increase our number of potential customers and enhance the purchasing power of our existing customers, which in turn translates into an increase in our sales volume and profitability. New credit sales accounts and credit approval processes in Mexico are managed by Banco Famsa, whereas in the United States they are managed through Famsa, Inc.

generate higher gross margins than those yielded by our cash sales. In the United States, the purchase price of the merchandise sold on credit is determined based upon a suggested retail price plus a finance charge that is reviewed periodically. In general terms, cash purchases in the United States are not subject to discounts. Our installment payment program calls for weekly, bi-weekly or monthly payments over a three- to 24-month period, depending on the customer’s preference and payment ability, which is determined based upon various factors, including the customer’s credit history, monthly income and the purchase price of the merchandise. We also offer several product-specific financing options, including financing for the purchase of clothing items exclusively, which are targeted towards our younger customers. Our customers can make payments on their accounts at any of our stores or, in the United States customers also have the option of paying by mail or by website.

As of September 30, 2014, Famsa Mexico, through Banco Famsa, had approximately 2.0 million active customer accounts, and Famsa USA had approximately 109,996 active customer accounts. Our Consumer Loans Portfolio in Mexico and our Consumer Loans Portfolio in the United States (continuous operations) totaled Ps.18,423 million and Ps.2,216 million respectively, as of September 30, 2014.

Our customer credit approval process entails the submission of a credit application and certain support documentation, including photo identification and proof of income and address, and the execution of a credit agreement and a promissory note by the customer. In 2012, we centralized the credit underwriting process through three credit centers establishing additional controls and increasing efficiency. This efficiency has been derived by taking advantage of powerful decision engines that provide origination scores for our credit portfolio and by developing projects in order to automate the credit underwriting process. On a regular basis, the Company representative pays a visit to the customer’s residence in order to verify the accuracy of the information contained in the application. Absent adequate proof of income, the application is approved or declined based on the outcome of such visit and of the verification of the customer’s credit references. In general terms, the amount of the weekly installments under our consumer loans does not exceed 30% of the customer’s gross weekly income. The credit approval process, which takes 24 hours in most cases, is managed by anchor stores, and process is run by one of the three credit centers. Sales in excess of a pre-determined threshold amount must be approved by a higher ranked manager at the credit centers. Depending on the customer’s credit worthiness and repayment ability, we may require a down payment of between 5% and 20% of the purchase, and the balance is subject to repayment in weekly, bi-weekly or monthly installments that can be made at any of our stores. If a customer’s application is initially declined, the customer can offer a larger down payment to reduce the amount of the loan and increase the likelihood of approval. This credit verification process yields a valuable data base that is used to improve our customer relations functions.

Our credit agreements and promissory notes provide for interest on the loan at a fixed rate that varies depending on the type of product and the length of the repayment period. In addition, we assess late interest upon any installment not paid when due. The amount of late interest is determined on a daily basis taking into consideration the number and amount of missed payments, until the account is brought to date.

In 2008, we began transferring to Banco Famsa our consumer credit accounts. In 2012, the Company completed the migration of these credit accounts, and any new customer credit accounts will be originated and managed by Banco Famsa. Management procedures and collection protocols are not affected by the transfer of credit accounts to Banco Famsa, as delinquent credit accounts are transferred back to the originating subsidiary for collection purposes. However, the transfer of credit accounts to Banco Famsa will enable our customers to obtain financing and other services directly from Banco Famsa. See “―Banco Famsa” below.

Account Collection Procedure

Past due accounts in Mexico are maintained at Banco Famsa, where, starting the second semester of 2012, they are subject to preliminary collection procedures, until they are over 270 days delinquent, whereupon they are transferred at a discount to the Famsa retail subsidiary where they were originated for additional and, in some cases, legal collection procedures. Such retail subsidiary receives any

revenues derived from such collection procedures. Past due accounts in the United States are maintained at Famsa, Inc. throughout the collection process.

Notice Procedures.

We operate a call center in Mexico to handle the collection of our past due Mexican and U.S. customer account portfolio. As of September 30, 2014, our call center was staffed with 329 representatives. When an account has gone past due for a period of up to 20 days, one of our call center representatives places a telephone call to the relevant customer to remind him or her of the amount due and payable and the date by which payment must be received. In most instances, the issue is settled at this point and the customer arranges payment. Otherwise, if the account goes over 20 days past due, a call center representative telephones the customer once again to make payment arrangements. Our call center uses various customized telephone call formats for specific stores, cities and customer profiles. In 2012, Banco Famsa implemented a preventive campaign (7 days before payment due date) in order to remind the customer its payment due date to avoid the entry rate. If the account goes one day past due, Banco Famsa begins a predictive dialing process (through AVAYA’s predictive dialer), to contact the customer and negotiate a promise to pay and get a payment to return the account back to current portfolio. If after several attempts the customer is not located, Banco Famsa Contact Center has a skip process in order to find other phone numbers and contact the client.

In addition to the efforts of our call center, we periodically mail reminders, demands for payment and default notices to our past due account holders through virtual technology (SMS/Blaster/emails). Default notices are sent on the 15th day from the date on which payment was due and at various intervals thereafter. The procedure for recovery on our past due accounts varies depending on the relevant customer’s risk profile, the amount owed and other factors as we may deem relevant. Any customer whose account has gone past due for over 60 days is assigned to a “door to door” process collection.

Legal Procedures.

In general terms, we do not resort to litigation until after an account has gone past due for over 120 days. If an account is not settled following notice or personal contact with the customer, we may decide to bring legal action against the customer or transfer the account to an independent collection agency. We base our decisions as to whether to pursue legal action upon a cost/benefit analysis and the likelihood of recovery. If we decide to engage in litigation in Mexico and the outcome of such litigation favors us, we may seize or repossess the relevant merchandise based upon the applicable court resolution. The repossessed merchandise is then sold at a discount through one of our stores. In contrast, our past due account recovery process in the United States provides for the attachment of the customer’s wages rather than the repossession of the merchandise.

Our account collection and recovery procedures in Mexico are subject to the Código de Comercio (the “Commerce Code”), the Consumer Protection Law, and the Código Civil Federal (“Federal Civil Code”). Our account collection procedures in the United States are subject to the Federal Fair Debt Collection Practices Act, the Federal Trade Commission Act and various other provisions applicable to the retail industry and the origination of and collection on accounts payable. Our uncollectibility level has generally been higher in the United States than in Mexico, primarily as a result of the effects of the U.S. economic downturn on U.S. Hispanic unemployment as well as our ability to repossess merchandise in Mexico.

Promobien

We established our Promobien program in 1983, to offer an alternative source of consumer financing products and services to the employees of the program’s participating entities. Under the Promobien program, employees of participating entities are able to purchase merchandise at our stores or from kiosks installed in their workplace and to have the purchase price of such merchandise deducted from their salaries over a 3- to 24-month period. As of September 30, 2014, the Promobien program had approximately 4,000 participants in 73 cities throughout Mexico. The Promobien program’s participants include private sector entities, government entities and universities. For the nine-month period ended

September 30, 2014, our sales under the Promobien program accounted for 24.6% of our total revenues. For the nine-month period ended September 30, 2014, approximately 28% of our sales under the Promobien program were attributable to private sector entities, 29% to government entities, 27% to teachers’ and oil industry workers’ unions and 16% to health professionals.

To be eligible to participate in the Promobien program, a company must have been in operation for at least two years, have a minimum of 50 full-time employees and be based in a city with at least one Famsa store. In turn, the employee must have been employed with the participating entity for at least one year (two years in the case of employees of in-bond manufacturers (maquiladoras) based in the Mexico-U.S. border region) and provide a copy of his most recent payroll stub and certain personal identification documentation, together with a pre-approved merchandise purchase order. Any participating individual switching jobs while maintaining an outstanding balance under his account in the Promobien program may have his account information forwarded to the new employer and continue to have the applicable amount deducted from his salary, so long as the new employer is a Promobien participant.

The Company and the relevant participating entity review on a case-by-case basis the amount of financing requested by the latter’s employees, to ensure that such amount does not exceed the employee’s payment ability. The Company provides the participant with a list of all the Promobien accounts established by its employees, the outstanding balances under each such account and the amount to be deducted from the employees’ salaries.

Competition

The retail industry is highly competitive, particularly as it concerns the household appliances, furniture and electronics segments. Both the Mexican and U.S. retail markets are highly fragmented, encompassing large store chains, department stores, household appliance and electronics stores, discount warehouse clubs, factory outlets, online retailers and a broad range of smaller independent specialty stores. In Mexico, we compete primarily with two other large domestic retail chains that have nationwide presence and offer similar consumer financing options, namely Grupo Elektra and Coppel. We also compete with other large retail stores, including Grupo Chedraui, Organización Soriana, Centros de Descuento Viana, Dico, Gala, and with the Mexican subsidiaries or affiliates of international chains such as Wal-Mart and Best Buy. Although to a lesser extent, we also compete with several domestic department store chains, including El Puerto de Liverpool, Grupo Palacio de Hierro, Grupo Hermanos Vázquez y Fábricas de Francia and Sears, which do not have national presence, are targeted towards other population segments and offer less-flexible and other non-consumer finance options, as well as with informal or “black” markets and street vendors. In the United States, we compete with large U.S. retailers, such as Ashley Furniture, Rooms to Go, Best Buy and Sears, on cash sales, and with local and regional retailers that directly target U.S. Hispanics with in-house credit, such as Conn’s, Continental, LDF and Lacks.

We believe that our focus in the furniture, electronics and household appliances segments, our broad geographical presence and our ability to offer competitive pricing and financing options to our customers, backed by our 43 years of experience and what we believe to be the broad market recognition enjoyed by the Famsa brand, provide us with a significant competitive advantage based upon which we continue to grow and expand.

In addition, we believe our pre- and post-sale personalized customer service and our convenient locations coupled with our unique banking services provide us with a competitive advantage. Furthermore, we employ many promotional programs, including, among others, our “Gran Credito” and “Cambaceo” (or “canvassing”) door-to-door sales programs coupled with a nationwide marketing campaign. We also provide convenient options for our customers to manage their credit account payments, including through our Promobien program, which gives customers the option to make payments on their Famsa credit accounts through an automatic payroll deduction with participating employers.

The banking segment in Mexico is also highly competitive. For more information on the competition in the banking segment in Mexico, see “—Banco Famsa—Competition.”

Banco Famsa

Overview

Banco Famsa, our own retail bank, was established in 2006 as part of a plan to maximize our consumer finance operations and complement our product portfolio with banking services and loan products and, in addition, to serve as a source of funding for Famsa’s credit sales and operations. Banco Famsa began operations in Monterrey in January 2007. As of September 30, 2014, in Mexico we operated 290 banking branches within Famsa stores and 201 independent banking branches, including those added in 2013 with the acquisition of Montemex.

Within our overall business strategy, Banco Famsa seeks to achieve the following objectives:

 Ensure a constant and reliable source of low-cost, short-term funding through customer deposits to finance our Mexican consumer finance operations, which we had traditionally financed through a combination of credit facilities with banking and other financial institutions and the issuance of debt; and

 Foster the cross-selling of products and services within the Company with the introduction of personal loans and other financial services to our Mexican customers, who typically do not have access to credit or other financial services from the traditional banking sector.

As of September 30, 2014, Banco Famsa was the source of 68.9% of our net funding and Banco Famsa’s average cost of funding was 4.8%. Initially funded in part through financial intermediaries and interbank loans, Banco Famsa is now fully-funded through its own deposits in the form of savings and checking accounts, certificates of deposit and other consumer investment products. The combination of our diversified funding platform with our risk management experience and knowledge of the retail industry represents a unique competitive advantage.

Through Banco Famsa, we are achieving our objective of providing a viable source of funding for our consumer credit operations in Mexico. At the same time, the diverse financing options that make up our bank deposit base, including savings and checking deposits, certificates of deposit and other investment vehicles, mitigate our exposure to conventional credit markets and have begun to reduce significantly our cost of financing. Banco Famsa offers a growing assortment of its own financial products and services, including a variety of personal, commercial and microcredit loans. As of September 30, 2014, according to a report published by the CNBV, Banco Famsa’s total loan portfolio was almost three times larger than that of Banco Wal-Mart’s.

The credit quality of trade receivables, both with respect to loans offered by Banco Famsa and our consumer financing through our retail stores, is assessed based on the historical default rates of the counterparties.

Products and Services

Banco Famsa offers traditional deposit and other banking services through branches located within Famsa Mexico’s stores, taking advantage of their existing credit processing and customer service facilities and infrastructure, such as internet banking services, money orders, ATMs, POS terminals and other financial services.

In addition, Banco Famsa has incorporated our pre-existing consumer finance operations and is engaged in an ongoing process of developing its products and services, expanding its bank deposits base and improving its systems and procedures, including developing an information technology and risk management platform to meet regulatory requirements, competing in the Mexican financial industry and supporting its expansion plans. Some examples of the actions taken towards this objective are: i) implementation and continuous upgrading of card core and bank core systems based on the IBM e-Series platform served by FISERV, ii) implementation of state of the art Call Center telephone technology by Avaya, iii) implementation of ERP SAP to support accounting, human resources and CRM processes, iv)

web based services to offer internet banking and smart phone services to support origination and collections processes and v) implementation of SAS to develop information analysis and business intelligence.

Banco Famsa’s financial products include traditional demand deposit accounts and short- and medium-term investments, including certificates of deposit, personal loans and business loans, each of which is described below.

Demand Deposits

 Famsa Ahorro. Banco Famsa offers a traditional savings account that pays between 1%–2% interest based on the deposit amount, requires no annual fee and may be opened with a minimal amount (Ps.1). It offers free withdrawal and deposit service at any Banco Famsa branch along with free transfers among Banco Famsa accounts. Same-day transfers to accounts of other persons or accounts at other banks are offered for a fee. Withdrawals from certain other banks and third-party ATMs are provided for a fee after the first three transactions each month, which are offered for free.

 Mi Chequera Famsa. Banco Famsa’s checking feature provides essentially the same features as the Famsa Ahorro with the exception that it requires a higher minimum deposit (Ps.1,000). Checks are provided without fee.

 Ahorro Niños. Banco Famsa offers savings accounts targeting first-time account holders, adolescents and children, with similar features as the Famsa Ahorro, but additionally requires parental consent.

 Payroll. Banco Famsa offers a payroll and savings account that requires no annual fee, no minimum average balance and no account management fee.

Short- and Medium-Term Investments

 InverFamsa and InverFamsaPlus. Banco Famsa’s fixed rate investment products provide a variety of options including 15 different possible terms under one year, different associated rates of return and the option to reinvest returns, to increase the amount of the investment during a term, to receive monthly or end-of-term interest payments and to withdraw principal during the term of the investment for a reduction in the final return. Minimum required deposits vary from Ps.4,000 to Ps.5,000 (U.S.$297.77 to U.S.$ 372.22) depending on the product.

 InverCedeFamsa. Banco Famsa offers fixed-rate certificates of deposit with 6, 9, 12, 18 and 24-month terms, offering respectively greater returns for longer terms. Interest may be paid out monthly or reinvested at the customer’s option, and the minimum deposit is Ps.25,000 (U.S.$ 1,861.09, based on the fixed exchange rate on September 30, 2014).

The following table sets forth the maturity profile of our deposits, stated in millions of Pesos as of September 30, 2013:

Balance 0–6 months Ps. 6,473 43,9% 6-12 months 3,135 21.3% 13-24 months 5,124 34.8% Total Ps. 14,732 100.0% Credit  Tarjeta Famsa. Banco Famsa offers a credit card that may be used for purchases at any Famsa store or for personal loans, Préstamos en Efectivo, through cash withdrawals. Cardholders are subject to our credit approval procedures only at the time of issuance of the

card, rather than at the time of purchase. Payments and cash withdrawals (personal loans) on the card may be made at any Banco Famsa branch. Banco Famsa offers fixed-rate personal loans through Tarjeta Famsa for up to a term of 18 months. Besides including no pre-payment penalty, the personal loan product includes disability, life and unemployment insurance covering principal amounts up to Ps.25,000, Ps.25,000 and Ps.5,000 (U.S.$ 1,861.09, U.S.$ 1,861.09 and U.S.$ 372.22), respectively.

 Crédito PYME. Banco Famsa offers both fixed-term and revolving small- and medium-sized business loans with a variety of features including terms from six to 60 months, fixed interest rates, commission-free origination and a number of payment options including amortization and bullet payments.

o Credinero. During the third quarter of 2013, Banco Famsa developed a new credit product directed at a higher income segment of the population that seeks financing for medium and long-term personal projects.

Subject to the exceptions provided under Article 10 of the IPAB, all of Banco Famsa’s deposit accounts benefit from the guarantee of the IPAB covering deposits up to the amount of 400,000 UDIs (or approximately Ps.2.1 million (U.S.$ 154,206) as of September 30, 2014).

Competition

Banco Famsa competes with various Mexican banks and other financial institutions that cater to the same segment of the Mexican population and offer similar products and services. After 6 years of operation, Banco Famsa is already one of the ten largest banking branch networks in Mexico, according to the CNBV, as of September 30, 2014, and enjoys a number of competitive advantages relating to its products and synergies with Famsa Mexico’s retail operations.

Banco Famsa has faced and will continue to face strong competition from banking institutions associated with Famsa Mexico competitors in the retail market, such as Banco Azteca, S.A., Institución de Banca Múltiple, the consumer financing subsidiary of Grupo Elektra, Bancoppel, S.A., Institución de Banca Múltiple, the consumer financing subsidiary of Coppel, and Banco Wal-Mart de México, the consumer financing subsidiary of Wal-Mart, each of which targets customers in Famsa’s Mexican population segments. According to information published by the CNBV, several of Banco Famsa’s more direct competitors currently offer more banking branches. As of September 30, 2014 Banco Azteca operated 2,201 branches, Bancoppel 856 branches and Banco Wal-Mart 130 branches, as compared to Banco Famsa’s 350 branches (including 22 Montemex branches that have became bank branch). Additionally, stand-alone bank institutions (not associated with any retailer) such as Banorte, Bancomer and Santander, have recently shown an increased interest in lower-income segments of the population. Competition in the consumer finance business may increase significantly as a result of the introduction of new banking and other financial products, such as credit card and personal loans targeted towards the lower-middle income class segment of the population, which constitutes our primary target customer base. Any increase in competition could affect our market position if our competitors are able to offer financing terms more attractive than ours.

Competition in the consumer finance business may increase significantly as a result of the introduction of new banking and other financial products, such as credit card and personal loans targeted towards the lower-middle income class segment of the population, which constitutes our primary target customer base. Any increase in competition could affect our market position if our competitors are able to offer financing terms more attractive than ours.

Commercial banks in Mexico also compete in the retail market with non-banking institutions known as Sofoles and Sofomes, which focus primarily on offering consumer and mortgage loans to middle- and low-income individuals. Sofoles and Sofomes are Mexican corporations (sociedades anónimas) that expressly include as their main corporate purpose in their by-law, engaging in lending and/or financial leasing and/or factoring services, but are prohibited from engaging in many banking operations, including foreign trade financing, taking deposits, offering checking accounts and engaging in foreign currency

operations. Until recently, the commercial credit market for middle and low-income individual customers has been serviced almost exclusively by Sofoles and Sofomes; however, traditional banks have begun to extend their credit services to the markets previously dominated by Sofoles and Sofomes.

In July 2006, the Mexican Congress enacted certain reforms to deregulate lending activities, including financial leasing and factoring activities, pursuant to which, the Ministry of Finance and Public Credit has ceased to authorize the creation of new Sofoles, and all existing Sofol authorizations automatically terminated on July 19, 2013. On or prior to that date, existing Sofoles must cease operating as a Sofol. Failure to comply with this requirement will result in dissolution or liquidation of the Sofol. Existing Sofoles also have the option of converting to Sofomes or otherwise extending their corporate purposes to include activities carried out by Sofomes.

On January 10, 2014, the Mexican Law for Organizations and Credit Associated Activities (Ley General de Organizaciones y Actividades Auxiliares del Crédito) was amended to, among other things, extend the concept of regulated Sofomes to include those with financial ties with Mexican credit institutions (i.e., private or public banks), certain popular financial companies (sociedades financieras populares), certain community financial companies (sociedades financieras comunitarias), certain savings and loans companies (sociedades cooperativas de ahorro y préstamo), and Sofomes that issue registered debt securities (directly or through trusts), as well as those that obtain approval by the CNBV for such purpose. Regulated Sofomes are regulated and supervised by the CNBV, and are required to comply with a number of provisions and requirements applicable to credit institutions, such as capital adequacy requirements, risk allocation requirements, related party transactions rules, write-offs and assignment provisions, reporting obligations as well as anti-money laundering provisions.

All other entities whose main purpose is engaging in lending, financial leasing and factoring activities are non-regulated Sofomes. Non-regulated Sofomes are not subject to the supervision of the CNBV, and therefore are not subject to the same extensive federal banking regulation, including capitalization, reserve requirements and anti-money laundering provisions. As a result, certain of our competitors may have advantages in conducting certain businesses and providing certain services because they are subject to fewer regulations.

The Mexican Law of Credit Institutions grants authority to the CNBV (with the assistance of other regulators, but with CNBV having primary responsibility) to authorize the creation of banks solely to engage in certain activities (which is intended to incentivize competition, reduce required capital and improve the attention to certain industries and regions) in contrast to so-called “universal” banks. As a result of the reduced capital requirements and potential reduced operational costs that are likely to apply to this type of bank, there could be increased competition as a result of the creation of more banks to target specific market niches.

Our banking services target a segment of the population that has historically had limited access to the regulated banking sector. Despite the recent growth in the number of competitors pursuing Mexico’s middle and lower-middle income segments, banking service penetration among Mexicans is significantly low. Based on our estimates, approximately 60% of Mexico’s middle and lower-middle income segments have never used banking services.

Banco Famsa has positioned itself by focusing on our target customers’ needs to develop several key competitive advantages, which include a comprehensive portfolio of simple banking products, an accessible network of banking branches with extended hours of operation and a number of Famsa synergies. Given the lack of access to financial services of our target market, Banco Famsa offers a wide variety of simple, straight-forward deposit and credit products that are intended to simplify our customers’ selection process. Furthermore, as of September 30, 2014, in Mexico we operated 290 banking branches within Famsa stores and 201 independent banking branches, including those added in 2013 with the acquisition of Montemex. Lastly, the integration of our Banco Famsa branches within our retail stores provides an inviting environment for our customers and allows us to offer longer hours of operation than other banking services providers. In addition, with the implementation of independent banking branches across the country, Banco Famsa will also be able to target customers’ consumption needs of durable

goods categories, since Grupo Famsa’s door-to-door sales program “Cambaceo” (or “canvassing”) will also be offered through these banking branches.

Synergies between Banco Famsa and Famsa’s Mexican retail operations provide unique competitive advantages. For instance, as a result of the credit evaluation and monitoring to which our existing retail credit customers are already subject, we believe, we are in a better position than other competitors to cross-sell first-time banking services and develop products tailored to our target customers’ needs. Additionally, we believe Banco Famsa benefits from the Famsa brand’s widespread recognition and good standing among its target segment. Furthermore, the integration of Banco Famsa with our retail operations provides a variety of cost-saving synergies, including rent expense, utilities and joint product marketing through direct mail, telemarketing, cashier pitches, television or advertising on bank statements.

In order to comply with the applicable bank secrecy provisions, we have established different operating systems, which restrict information to be shared between our retail business and Banco Famsa. The only information of Banco Famsa’s loan portfolio that is provided to Famsa is the information regarding specific loans, which are effectively transferred to Famsa as part of the credit transfer-back process of account receivables that are more than 120 days past due. See “—Regulation—Legal Regime Applicable to Banco Famsa—Bank Secrecy Provisions; Credit Bureaus.”

Other Businesses

Wholesale Business

Famsa operates its wholesale business, which specializes in sales of home appliances, electronics and household goods, through its subsidiary, Mayoramsa. For the nine-month period ended September 30, 2014, our wholesale segment generated Ps.351.9 million in net sales, or 3.9% of our total consolidated revenues.

Our customers in this segment consist principally of small and mid-sized furniture stores. As of September 30, 2014, we had approximately 1,785 customers.

As of September 30, 2014, Famsa operated 17 warehouses in the principal metropolitan areas of 16 Mexican states, including Veracruz, Guadalajara, Monterrey, Mérida, Puebla, Culiacán, Torreón, Tijuana, Tuxtla Gutiérrez, León, México D.F., San Luis Potosí, Hermosillo, Reynosa, Chihuahua, Chilpancingo and Tampico. As of September 30, 2014, the floor space of these warehouses totaled 6,200 square meters. Each warehouse includes a customer service department responsible for, among other things, issues relating to product guarantees. Once our distribution centers receive merchandise, they deliver it directly to our customers. Our delivery routes are determined using a database generated from sales occurring throughout the day at our wholesale locations. Famsa wholesale customers can pay for goods in installments for periods ranging from 30 to 90 days. Before each sale on credit, customers are subject to a credit investigation, which Famsa conducts from the nearest distribution center. Collections are carried out at the premises of customers regularly and by the same vendor that performed the initial sale.

Mayoramsa customers can pay for goods in installments for periods ranging from 30 to 90 days. Before each sale on credit, customers are subject to a credit investigation, which the Company conducts from the nearest distribution center. Collections are carried out at the premises of customers regularly and by the same vendor that performed the initial sale.

Mayoramsa offers a wide range of wholesale products, mainly home appliances, electronics, heaters, air conditioners, household goods and bicycles. Products can be domestic or imported, and most are of recognized brands. Most wholesale products we sell have a manufacturer’s guaranty.

As of September 30, 2014, our sales of wholesale products were distributed in the following percentages: home appliances, 52.4%; electronic devices, 21.5%; air conditioners and heaters, 13.7%; and household goods accounted for 12.4% of total wholesale product sales.

Furniture Manufacturing

Through our Monterrey-based subsidiary Expormuebles, we produce two lines of home furniture that are sold exclusively in our Famsa stores: living room and dining room sets and tubular furniture, which includes bunk beds and sofa beds. We also sell a portion of Expormuebles’ production through our wholesale operations.

Expormuebles’ production facilities have total area in excess of 10,000 square meters, with capacity to produce 65,760 living room and dining room sets and 142,320 tubular items annually.

Marketing

Our marketing strategy seeks to strengthen our customer base at our existing stores, assist in the development of a solid clientele for our new store openings and increase the demand for additional locations, by emphasizing our broad catalog of low-priced, high-quality merchandise always in stock, easily accessible consumer finance products, convenient locations, excellence in customer service and high levels of customer satisfaction. As part of our marketing strategy, we are constantly engaged in aggressive advertising efforts, primarily through prime-time TV commercials and the distribution of fliers, which are designed to allow us flexibility to adapt to the size and profile of each particular market.

In 2012 and 2013, our marketing and advertising expenses (consolidated basis) accounted for 2.0% and 2.4%, respectively, of our total revenues. In the nine-month period ended September 30, 2014, our marketing and advertising expenses (consolidated basis) accounted for 1.6% of our total revenues.

In addition, our web site, www.famsa.com, enables our clients to make on-line purchases and perform research with respect to our products for their subsequent purchase from our stores. In 2013, we continued to develop the following strategic areas of famsa.com: the overall shopping experience, the shopping cart feature, development of additional payment methods and privacy & data security. We also consolidated our business relationships with key partners, including Banamex, Blockbuster and Estafeta, and for the second consecutive year, we had an increase in the total number of visits to our website, which totaled 6.3 million, a 72.2% growth compared to 2011. Although on-line sales currently represent a relatively small percentage of our total retail sales, we believe that our web site helps to foster consumer loyalty and encourages consumer spending.

In recent periods, we have focused our marketing and advertising efforts on countering the effects of the decrease in consumer spending as a result of the economic crisis, by engaging in outdoor advertising to redirect the flows of street traffic to our stores and introducing cross-business promotions.

Systems

We have traditionally made significant capital investments in the acquisition, installation and upgrade of IT (Information Technology) and software applications. In the past three years, we invested more than Ps.20 million in our systems. Our capital investments in IT from period to period is primarily a reflection of our growth in terms of number of stores, the creation of the Bank division and a number of new functionalities and business initiatives in order to offer more and better services to our customers.

The ERP for the commercial division is STORIS® (www.storis.com) based in US, operates on IBM pSeries platform (AIX) housed in Apodaca-Triara (IBM) including the recovery capacity.

Banco Famsa network architecture is built around an IBM iSeries system with immediate recovery capacity, which is housed in Apodaca-Triara and Redit-Monterrey. The Banco Famsa’s Core Banking System (ICBS) and the consumer credit system (CMS) were provided and are supported by FISERV (www.fiserv.com) based in the United States. We also use additional applications to complete the bank institution requirements and meet the Mexican regulations.

Human Resources and Finance for the Famsa divisions are using SAP products and operating on IBM pSeries platform (AIX) housed in Apodaca-Triara (IBM) including the recovery capacity.

Trademarks

As of December 12, 2014, we owned the rights to more than 1,477 registered trademarks and trade names used in connection with our business operations, including, among others, “Famsa,” “Famsa.com,” “Auto Gran Crédito Famsa,” “CisiAmo,” “De Famsa a Famsa” (Famsa-to-Famsa), “GarantiMax,” “Giovanni Paolo,” “Gran Crédito Famsa,” “Verochi,” "Kurazai," “Kultur," “Prendinero” and “Univercel.”

In addition, pursuant to certain agreements with some of our vendors and suppliers, we hold licenses to various trademarks used in connection with the sale and distribution of their products at our stores.

Regulation

This section contains a summary of the legal regime applicable to our retail and consumer finance operations in Mexico and the United States, as well as the laws and regulations applicable to Banco Famsa.

Operations in Mexico

Securities Market Law

Corporations whose equity and debt securities are registered with the RNV and trade on the BMV, such as the Company, are subject to the Mexican Securities Market Law and the rules and regulations issued thereunder and are otherwise governed by the provisions of the General Law of Commercial Corporations (Ley General de Sociedades Mercantiles).

Consumer Protection Laws

Our consumer financing services not carried out through Banco Famsa are subject to the Federal Consumer Protection Law (Ley Federal de Protección al Consumidor), which promotes and protects consumer rights and seeks to establish equality and legal certainty in relationships between consumers and commercial suppliers.

On July 29, 2010, Article 17 of the Mexican Constitution was amended in order to allow class actions to be brought in federal courts in connection with civil actions on matters related, among others, to consumer protection. Consequently, on August 30, 2011, the Federal Code of Civil Procedure and the Federal Law for Consumer Protection (Ley Federal de Protección al Consumidor), among others, were amended to incorporate class actions. 93 Such amendments became effective on March 1, 2012. As of the date of this information memorandum, no class action has been resolved in connection with consumer protection matters.

Collection Procedures

Our account collection and recovery procedures in Mexico are subject to the Commerce Code, the Consumer Protection Law and the Federal Civil Code.

Legal Regime Applicable to Banco Famsa

General

As a Mexican banking institution, Banco Famsa is subject to regulation and oversight by the SHCP, the Mexican Central Bank, the CNBV, the IPAB and the National Commission for the Protection of Users (Comisión Nacional para la Defensa de los Usuarios de las Instituciones Financieras) (“CONDUSEF”).

Banco Famsa’s operations are primarily subject to the Mexican Law of Credit Institutions (Ley de Instituciones de Crédito), the General Provisions Applicable to Credit Institutions (Disposiciones de Carácter General Aplicables a las Instituciones de Crédito) (the “General Bank Rules”), as amended, and other rules and regulations issued by the SHCP, the Mexican Central Bank, the CNBV and the IPAB.

The Ministry of Finance and Public Credit, either directly or through the CNBV, the role of which has been expanded and enhanced, possesses broad regulatory powers over the Mexican banking system. Banks are required to report regularly to the financial regulatory authorities, principally the CNBV and the Mexican Central Bank. Reports to bank regulators are often supplemented by periodic meetings between banks’ senior management and the CNBV’s senior officials. Banks must submit their unaudited monthly and quarterly and audited annual financial statements prepared in accordance with accounting rules and practices established by the CNBV to the CNBV for review, and must publish on their website and in a national newspaper their unaudited quarterly balance sheets and audited annual balance sheets. The CNBV may order a bank to modify and republish such balance sheets upon the occurrence of any event considered relevant by the CNBV, pursuant to established accounting principles.

The CNBV has authority to impose fines for failing to comply with the provisions of the Mexican Law of Credit Institutions or regulations promulgated thereunder. In addition, the Mexican Central Bank has the authority to impose certain fines and administrative sanctions for failure to comply with the provisions of the Ley del Banco de México (the “Central Bank Law”), the regulations that it promulgates and the Law for the Transparency and Ordering of Financial Services (Ley para la Transparencia y Ordenamiento de los Servicios Financieros), particularly as violations relate to interest rates, fees and the terms of disclosure of fees charged by banks to clientele. Violations of specified provisions of the Mexican Law of Credit Institutions are subject to administrative sanctions and criminal penalties.

On July 11, 2008, the Mexican Central Bank published new rules that regulate the issuance and use of credit cards and include certain consumer protection provisions.

On January 10, 2014, amendments to banking and financial services laws were published in the Official Gazette of Mexico within the framework of the Pact for Mexico (Pacto por México), a cross-party co-operation pact signed early in Mr. Enrique Peña Nieto's presidency to attempt to enact 95 reforms in which a degree of consensus existed, with the main purpose of broadening credit granting, improving credit conditions, and decreasing the cost of collateral foreclosure. The financial reforms exceed the commitments of the Pact for Mexico, and include amendments to 34 laws, encompassing a broad range of subject matters. The reforms generally grant greater powers to financial authorities and materially increase the level of regulation, penalties and cost of compliance. Most of these amendments became effective as of January 13, 2014, and certain amendments require the implementation of secondary rules and regulations which are yet to be drafted and issued by financial regulators.

Relevant Provisions Applicable to Banco Famsa

Among other things, under the Mexican Law of Credit Institutions, the General Bank Rules and other rules and regulations, Mexican banks are subject to the following provisions:

Licensing Requirements. Mexican government authorization is required to conduct banking activities in Mexico. The CNBV, subject to the prior favorable opinion of the Mexican Central Bank, has the power to authorize the establishment of new banks, subject to minimum capital standards, among other things. Approval of the CNBV is required prior to the opening, closing or relocating offices, including branches, of any kind, outside of Mexico, transfer of assets or liabilities between branches or any amendments to a bank’s bylaws or increase or decrease of its capital.

Capitalization. The minimum equity capital requirement applicable to full service commercial banks (including newly-chartered banks) is 90,000,000 UDIs (approximately Ps.466.1 million, as of September 30, 2014).

Banks are required to maintain a net capital (capital neto) relative to market risk, risk-weighted assets incurred in its operation and operations risk, which may not be less than the capital required in respect of each type of risk. The Mexican Law of Credit Institutions, the General Rules for Banks as well as the Rules for Capitalization Requirements of Commercial Banks and National Credit Institutions (Reglas para los requerimientos de Capitalización de las Instituciones de Banca Múltiple y las Sociedades Nacionales de Crédito, Instituciones de Banca de Desarrollo) (the “Mexican Capitalization Requirements”) set forth the methodology to determine the net capital relative to market risk, risk- weighted assets and operations risk. Under the relevant regulations, the CNBV may impose additional capital requirements and the Mexican Central Bank may, with the CNBV’s recommendation, grant temporary exceptions to such requirements.

The Mexican Capitalization Requirements provide capitalization standards for Mexican banks similar to international capitalization standards, particularly with respect to the recommendations of the Basel Committee on Banking Supervision. On November 28, 2012, the Mexican Ministry of Treasury and Public Credit (Secretaría de Hacienda y Crédito Público) published several amendments to the regulations applicable to financial institutions for the implementation of Basel III standards in Mexico. Most of these amendments became effective as of January 1, 2013.

Under the Mexican Capitalization Requirements, Mexican banks are required to maintain a minimum capital ratio of 10.0% to avoid the imposition of any of the corrective measures described below. Aggregate net capital consists of a basic portion (parte básica) or Tier 1 capital and an additional portion (parte complementaria) or Tier 2 capital of the net capital. At all times, Tier 1 capital must represent at least 50.0% of our aggregate net capital. Failure to meet the capital requirements may result in the imposition of corrective measures as described below. As of the date of this Information Memorandum, we believe we are in compliance with all applicable Mexican Capitalization Requirements.

On January 10, 2014, the Mexican Law of Credit Institutions was amended to, among other things, create the Committee of Banking Liquidity Regulation (Comité de Regulación de Liquidez Bancaria) with the purpose of drafting the guidelines to be used for setting the liquidity requirements applicable to Mexican banks.

Every Mexican bank must create certain legal reserves (fondo de reserva de capital), included as part of Tier 1 capital. Banks must allocate 10.0% of their net income to such reserve each year until the legal reserve equals 100.0% of their paid-in capital (without adjustment for inflation). The balance of net income, to the extent not distributed to shareholders, is added to the bank’s retained earnings account. Under Mexican law, dividends may not be paid out of the legal reserve. As of September 30, 2014, Banco Famsa had legal reserves of Ps.90 million and had paid-in capital of Ps.1,840 million (without adjustment for inflation).

Intervention. The CNBV may declare managerial intervention (intervención) of a banking institution pursuant to Articles 129 through 141 of the Mexican Law of Credit Institutions and in such case the Governing Board of IPAB will appoint a peremptory manager (administrador cautelar) (a “CNBV Intervention”).

A CNBV Intervention pursuant to Articles 129 through 141 of the Mexican Law of Credit Institutions, will occur only when (i) during a calendar month, the capitalization ratio of a bank falls below

a level equal to or above the minimum capital ratio required and thereby does not comply with the Mexican Capitalization Requirements; or (ii) a bank does not comply with the minimum capitalization ratio and is not operating under the conditional management regime (See “—Conditional Management Regime”). In addition, a CNBV Intervention may occur when the CNBV, in its sole discretion, determines irregularities exist that affect the stability or solvency of the bank, the public interest or the bank’s creditors.

During a CNBV Intervention, the peremptory manager appointed by IPAB will assume the authority of a bank’s board of directors. The peremptory manager will have the authority to represent and manage the bank with the broadest powers under Mexican law and will not be subject to control by the bank’s board of directors or its shareholders. The appointment of the peremptory manager shall be effective upon its publication with the Official Gazette of Mexico and two newspapers of wide distribution in Mexico, regardless of the future registration of such appointment with the Public Registry of Commerce.

IPAB. The Mexican Law of Credit Institutions, the Banking Deposit Insurance Law (Ley de Protección al Ahorro Bancario, the “IPAB Law”), which became effective January 20, 1999, provides for the creation, organization and functions of the IPAB, the new bank savings protection agency. The IPAB is a decentralized public entity that regulates the financial support granted to banks for the protection of bank deposits. The IPAB may grant financial support to banking institutions only in exceptional circumstances.

According to the IPAB Law, the IPAB will manage and sell the loans, rights, shares and any other assets that it acquires from banks in the performance of its activities to maximize their recovery value. The IPAB must ensure that the sale of such assets is made through open and public procedures. The Mexican President is required to present an annual report to the Mexican Congress prepared by the IPAB with a detailed account of the transactions conducted by the IPAB in the prior year.

The IPAB has a governing board of seven members: (i) the Minister of Finance and Public Credit, (ii) the Governor of the Mexican Central Bank, (iii) the President of the CNBV and (iv) four other members appointed by the President of Mexico, with the approval of two-thirds of the Mexican Senate.

The deposit insurance to be provided by the IPAB to a bank’s depositors will be paid upon determination of the dissolution and liquidation or bankruptcy of a bank. The IPAB will act as liquidator or receiver in the dissolution and liquidation or bankruptcy of banks either directly or through designation of a representative. The IPAB will guarantee obligations of banks to certain depositors and creditors only up to the amount of 400,000 UDIs (or approximately U.S.$154,206, as of September 30, 2014), per person per bank. Banks have the obligation to pay the IPAB ordinary and extraordinary contributions as determined from time to time by the Governing Board of IPAB. Under the IPAB Law, banks are required to make monthly ordinary contributions to the IPAB, of no less than 0.4% of the average daily outstanding liabilities of the respective bank in a specific month, less (i) holdings of term bonds issued by other commercial banks; (ii) financing granted to other commercial banks; (iii) financing granted by the IPAB; and (iv) subordinated debentures that are mandatorily convertible in shares representing the capital stock of the banking institution. The IPAB’s Governing Board also has the authority to impose extraordinary contributions in the case that, given the conditions of the Mexican financial system, the IPAB does not have available sufficient funds to comply with its obligations. The determination of the extraordinary contributions is subject to the following limitations: (i) may not exceed, on an annual basis, the amount equivalent to 0.003% multiplied by the total amount of the liabilities outstanding of the banking institutions that are subject to IPAB contributions and (ii) the aggregate amount of the ordinary and extraordinary contributions may not exceed, in any event, on an annual basis, an amount equivalent to 0.008% multiplied by the total amount of the liabilities outstanding of the applicable banking institution.

The Mexican Congress allocates funds to the IPAB on a yearly basis to manage and service the IPAB’s liabilities. In emergency situations, the IPAB is authorized to incur additional financing every three years in an amount not to exceed 6% of the total liabilities of Mexican banks.

On January 10, 2014, certain amendments to the IPAB Law and the full amendment of the Financial Groups Law (Ley para Regular las Agrupaciones Financieras) were published in the Official Gazette of Mexico to provide, among other things, improvements to the legal framework to resolve and grant financial support to commercial banking institutions undergoing financial difficulties.

Revocation of Banking License. If the CNBV revokes a bank institution’s license to organize and operate as a banking institution, the IPAB’s Governing Board will determine the manner under which the corresponding banking institution shall be either liquidated or judicially liquidated (as the case may be) in accordance with Articles 165 through 270 of the Mexican Law of Credit Institutions. In such a case, the IPAB’s Governing Board may determine to undertake the liquidation through any or a combination of the following transactions: (i) transfer the liabilities and assets of the banking institution in liquidation to another banking institution; (ii) constitute, organize and manage a new banking institution owned and operated directly by the IPAB, with the exclusive purpose of transferring the liabilities and assets of the banking institution in liquidation; or (iii) any other alternative that may be determined within the limits and conditions provided by the Mexican Law of Credit Institutions that the IPAB considers as the best and least expensive option to protect the interest of bank depositors.

On January 10, 2014, the Mexican Law of Credit Institutions was amended to provide, among other things, the legal framework for the judicial liquidation of commercial banking institutions, applicable in the event the banking license of any such commercial banking institution has been revoked and whose assets are not sufficient to pay its liabilities. The judicial liquidation may only be requested by the IPAB, which will act as liquidator or receiver. Upon commencement of a judicial liquidation, the commercial banking institution shall suspend its operations and close its offices.

Causes to Revoke a Banking License. The following are among the most common events upon which the CNBV may revoke a banking license:

(1) if the banking institution is dissolved or initiates liquidation procedures;

(2) if the banking institution (a) does not comply with any minimum corrective measures ordered by the CNBV pursuant to Article 122 of the Mexican Law of Credit Institutions; (b) does not comply with any special corrective measure ordered by the CNBV pursuant to such Article 122; or (c) consistently does not comply with an additional special corrective measure ordered by the CNBV;

(3) if the banking institution does not comply with the minimum capital ratio required under the Mexican Law of Credit Institutions and the Mexican Capital Requirements;

(4) if the banking institution defaults with respect to any of the following payment obligations (a) in the case of obligations in an amount greater than 20,000,000 UDIs or its equivalent: (1) loans granted by other banking institutions, foreign financial institutions or the Mexican Central Bank; or (2) payments of principal or interest on securities issued that have been deposited with a clearing system, and (b) in the case of obligations in an amount greater than 2,000,000 UDIs or its equivalent, if during two business days or more, (1) it does not pay its obligations owed to one or more participants in clearing systems or central counterparts, or (2) it does not pay in two or more of its branches, banking deposits claimed by 100 or more of its clients; and

(5) if the banking institution´s assets are not sufficient to pay its liabilities.

Upon publication of the resolution of the CNBV revoking a banking license in the Official Gazette of Mexico and two newspapers of wide distribution in Mexico and registration of such resolution with the corresponding Public Registry of Commerce, the liquidation of the relevant banking institution will be initiated. Upon liquidation of a banking institution, the IPAB shall proceed to make payment of all ‘‘guaranteed obligations’’ of the relevant banking institution.

On the liquidation date, all liabilities of the relevant banking institution will be treated as follows:

(1) term obligations will become due (including interest accrued);

(2) unpaid principal amounts, interest and other amounts due in respect of unsecured obligations denominated in Pesos or UDIs will cease to accrue interest;

(3) unpaid principal amounts, interest and other amounts due in respect of unsecured obligations denominated in foreign currencies, regardless of their place of payment, will cease to accrue interest and will be converted into Pesos at the prevailing exchange rate determined by the Mexican Central Bank;

(4) secured liabilities, regardless of their place of payment will continue to be denominated in the agreed currency, and will continue to accrue ordinary interest, up to an amount of principal and interest equal to the value of the assets securing such obligations;

(5) obligations subject to a condition precedent, shall be deemed unconditional; and

(6) obligations subject to a condition subsequent, shall be deemed as if the condition had occurred, and the relevant parties will have no obligation to return the benefits received during the period in which the obligation subsisted.

Liabilities owed by the banking institution in liquidation will be paid in the following order of preference: (i) labor liabilities related to salaries or severance payments, (ii) secured liabilities, (iii) labor liabilities other than those related to salaries or severance payments, (iv) liabilities with a special privilege, (v) liabilities for bank deposits and loans up to the amount of 400,000 UDIs, as well as any other liabilities in favor of the IPAB, (vi) liabilities for bank deposits and loans exceeding the amount of 400,000 UDIs, (vii) any other liabilities different from those referred above, (viii) preferred subordinated debentures, (ix) non-preferred subordinated debentures, and (x) the remaining amounts, if any, shall be distributed to stockholders.

Financial Support. Determination by the Banking Stability Committee. With the January 10, 2014 amendments to the Mexican Law of Credit Institutions, the recently-created Financial Stability Committee changed its name to the Banking Stability Committee (the ‘‘BSC’’). If the BSC determines that if a bank were to default on its payment obligations and such default may (i) generate (directly or indirectly) severe negative effects in one or more commercial banks or other financial entities, endangering their financial stability or solvency, and such circumstance may affect the stability or solvency of the financial system, or (ii) put the operation of the payments’ system at risk, then the BSC may determine that a percentage of all of the outstanding obligations of the troubled bank that are not considered ‘‘guaranteed obligations’’ under the IPAB Law and guaranteed obligations in amounts equal to or higher than the amount set forth under Article 11 of the IPAB Law (i.e., 400,000 UDIs per person per entity), be paid as a means to avoid the occurrence of any of such circumstances. Notwithstanding the foregoing, under no circumstance may the transactions referred to in Sections II, IV and V of Article 10 of the IPAB Law (which include transactions such as liabilities or deposits in favor of shareholders, members of the board of directors and certain top level officers, and certain illegal transactions) or the liabilities derived from the issuance of subordinated debentures be covered or paid by IPAB or any other Mexican governmental agency. The BSC may increase such percentage at a later date if appropriate due to a change of circumstances.

The members of the BSC are representatives of the Ministry of Finance and Public Credit, the Mexican Central Bank, the CNBV and the IPAB.

Conditional Management Regime. As an alternative to revoking a banking institution’s banking license, a new conditional management regime was created, which may apply to commercial banks with a capital ratio below the minimum required pursuant to the Mexican Capitalization Requirements. To adopt this regime, a banking institution must voluntarily make a request to the CNBV, with prior approval of its shareholders, for the application of the conditional management regime. In order to qualify for such regime, the requesting bank must (i) deliver to the CNBV a plan for the reconstitution of its capital and (ii) transfer at least 75% of its shares to an irrevocable trust.

Banking institutions that do not comply with the minimum capital ratio required by the Mexican Capitalization Requirements may not adopt the conditional management regime.

Corrective Measures. Pursuant to the Mexican Capitalization Requirements, the CNBV classifies Mexican banks in several categories based on their capital ratio and other capital requirements, and based on the category of the relevant Mexican bank, orders corrective measures to prevent and correct problems that may affect the stability or solvency of banks if a bank fails to meet the minimum required capital ratio or any other capital requirement. Some of these corrective measures, include, among others:

(1) informing the board of directors of the bank’s classification (and the circumstances that resulted in such classification), based on the capital ratio thereof, and submitting a detailed report containing an evaluation of the bank’s overall financial status and its level of compliance with applicable regulation, including the principal regulatory ratios, that reflect the bank’s degree of stability and solvency (together with any determinations or indications made by any of the CNBV or the Mexican Central Bank); the bank shall provide written notice to the general director and the chairman of the board of directors of the bank’s regulated holding company with respect to such events and the status thereof;

(2) within a period not to exceed seven (7) days, filing with the CNBV, for its approval, a capital recovery plan to increase the bank’s capital ratio (which may include improving operating efficiencies, rationalizing expenses, increasing profitability, receiving new capital contributions and limiting the bank’s operations); the bank’s capital recovery plan shall be approved by such bank’s board of directors before it is submitted to the CNBV for approval; subject to certain exceptions, the plan is required to be satisfied within 270 days counted from the date of its approval by the CNBV;

(3) suspending (totally or partially) any payment of dividends to its shareholders, as well as any mechanism or action for the making of any distributions or the granting of any economic benefits to shareholders;

(4) suspending (totally or partially) any share repurchase programs;

(5) deferring or cancelling (totally or partially) payments of interest and deferring or cancelling (totally or partially) the payment of principal on outstanding subordinated debt or, if applicable, exchanging, outstanding convertible subordinated debt into shares of the bank in the amount necessary to cover the capital deficiency; in the event that the bank issues subordinated debt, the bank is obligated to include in the documentation evidencing the relevant debt, in the applicable indenture and in the applicable offering documents, that such deferral of payment of principal or deferral and cancellation of payments of interest shall apply upon the occurrence of certain events, as provided in the general rules of Article 121 of the Mexican Law of Credit Institutions set forth under the General Rules for Banks, and that the implementation of such measures shall not be considered a default under the relevant debt documentation;

(6) suspending payment of any extraordinary benefits and bonuses that are not a component of the ordinary salary of the general director or any officer within the next two levels, and suspending the granting of new benefits and bonuses to the general director and the officers mentioned above until the bank complies with the minimum capital ratio set forth under the Mexican Capitalization Requirements;

(7) abstaining from increasing outstanding amounts under any loans granted to any party who is a related party to the bank; and

(8) any other corrective measures that, in each case, are provided by the general rules of Article 121 of the Mexican Law of Credit Institutions set forth under the General Rules for Banks.

Reserve and Compulsory Deposit Requirements. The compulsory reserve requirement is one of the monetary policy instruments used as a mechanism to control the liquidity of the Mexican economy to reduce inflation. The objective of the Mexican Central Bank’s monetary policy is to maintain the stability of the purchasing power of the Mexican Peso and, in this context, to maintain a low level of inflation. Given the historic inflation levels in Mexico, the efforts of the Mexican Central Bank have been directed towards a restrictive monetary policy.

Under the Central Bank Law, the Mexican Central Bank has the authority to order the percentage of the liabilities of financial institutions that must be deposited in interest-bearing or non-interest-bearing deposits with the Mexican Central Bank. These deposits may not exceed 20% of the aggregate liabilities of the relevant financial institution. The Mexican Central Bank also has the authority to order that 100% of the liabilities of Mexican banks resulting from specific funding purposes or pursuant to special legal regimes be invested in specific assets created in respect of any such purpose or regime.

To manage its maturity exposures to the Mexican financial markets, the Mexican Central Bank has been extending the terms of its liabilities to avoid the need for continuing refinancing of its liabilities. Those liabilities have been restructured into voluntary and compulsory deposits (Depósitos de Regulación Monetaria) and into investment securities such as longer-term government bonds (Bondes) and compulsory monetary regulatory bonds (Brems). At the same time, the Mexican Central Bank has elected to hold short-term assets, thus allowing it the ability readily to refinance its positions of assets and reduce its maturity exposure to the financial markets.

Classification of Loans and Allowance for Loan Losses. The loan classification and rating rules set forth under the General Rules for Banks, provide a methodology to classify (i) consumer loans (i.e., each of credit card exposure and loans to individuals, divided as separate groups) considering as principal elements (a) for credit card exposure, the possibility of non-payment and potential losses (taking into account collateral received), and (b) for loans to individuals, the possibility of non-payment, potential losses (taking into account collateral received) and credit exposure (net of reserves created), (ii) mortgage loans (i.e., residential, including loans for construction, remodeling or improvements), considering as principal elements delinquency periods, possibility of non-payment and potential losses (taking into account collateral and guarantees received), and (iii) commercial loans, based principally on an evaluation of the borrower’s ability to repay its loan (including country risk, financial risk, industry risk and payment history) and an evaluation of the related collateral and guarantees.

The loan classification and rating rules require that consumer loans to individuals be stratified, considering the number of unpaid billing periods applicable to the relevant loans, and that a statutory percentage be applied to loans that are past due for each level, as a means to create reserves; reserves may be decreased as the maturity of the applicable loan approaches and past due payments are made. Credit card loans must be reserved, on a loan-by-loan basis, considering amounts due, amounts paid to the relevant date, credit limits and minimum payments required. Consumer loans to individuals may be classified as A, B, C, D or E, depending upon the percentage of reserves required (from 0% to 100%); credit card consumer loans may be classified as A, B-1, B-2, C, D or E also depending upon the percentage of reserves required.

The loan classification and rating rules establish the following categories corresponding to levels of risk, applicable reserves and set forth procedures for the grading of commercial loans: A-1, A-2, B-1, B- 2, B-3, C-1, C-2, D and E. The loan classification and rating rules require that Mexican banks grade their commercial loan portfolio (except loans made to or guaranteed by the Mexican federal government) as of the end of each quarter and the classification must be reported to the CNBV. The classification of mortgage and consumer loans is required to be made monthly and reported to the CNBV.

The loan loss reserves are held in a separate account on the balance sheet and all write-offs of uncollectible loans are charged against this reserve. Mexican banks are required to obtain authorization from their boards of directors in order to write-off loans. In addition, Mexican banks are required to inform the CNBV after such write-offs have been recorded.

The determination of the allowance for loan losses reflected in Famsa’s financial statements is made at the consolidated Famsa level, and, pursuant to MFRS, is calculated according to Company policy, which requires management’s judgment, particularly for commercial loans. The loan loss reserve calculation that results from using the estimated and prescribed loss percentages may not be indicative of future losses. Differences between the estimate of the loan loss reserve and the actual loss will be reflected in Banco Famsa’s financial statements at the time of charge-off.

Risk Management Policies and Procedures. Banco Famsa is subject to the provisions applicable to the development and implementation of risk management policies and procedures contained in the General Bank Rules, which in general terms provide for the development of a non-speculative, low-risk profile on the part of Mexican banks. Among other things, under such provisions Mexican banks are required to identify, quantify, manage and report the various types of risks to which they are exposed in connection with the financial transactions entered into thereby. The Board of Directors of Banco Famsa is responsible for approving the objectives, guidelines and policies for risk management.

To such effect, Banco Famsa has established a Risk Management Committee that is responsible for the development and implementation of the policies, procedures and methodology applicable to the identification and administration of its risks, including the establishment of risk limits and any exceptions thereto. In addition, Banco Famsa’s Overall Risk Management Unit is responsible for the development and implementation of mechanisms and procedures for the identification, measurement, management and reporting of the risks to which it is exposed, based upon legal, regulatory, external and other quantitative and qualitative considerations. For additional information concerning Banco Famsa’s risk management policies and procedures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations―Market Risk Disclosures―Risk Management Policies and Procedures.”

Self-imposed Correction Programs. On January 10, 2014, the Mexican Law of Credit Institutions was amended to provide, among other things, the legal framework for self-imposed correction programs for Mexican banks in the event an irregularity or non-compliance with the Mexican Law of Credit Institutions or other applicable regulation is detected by the relevant Mexican bank. Self-imposed correction programs shall be filed for approval with the CNBV, CONDUSEF and IPAB, and shall include, among others, the relevant irregularity or non-compliance and its effect, the corrective measures conducted or proposed to be conducted, and any applicable term to rectify the relevant irregularity or non- compliance. If approved, the CNBV, CONDUSEF and IPAB may not impose any sanction on the relevant Mexican bank during the term the self-imposed correction program is being implemented.

In this regard, the CNBV issued the General Provisions to regulate Self-imposed Correction Programs (Disposiciones de Carácter General que Regulan los Programas de Autocorrección) published in the Federal Official Gazette on November 19, 2014. These provisions set forth the irregularities that will not be subject to self-correction and the general procedure to authorize programs.

Funding Limits. In accordance with the General Rules for Banks, Mexican banks are required to diversify their funding risks. In particular, a Mexican bank is required to notify the CNBV on the business day immediately following the occurrence of the event if it receives funds from a person or a group of persons acting in concert that represent in one or more funding transactions more than 100% of a bank’s Tier 1 capital. None of Banco Famsa’s liabilities to a person or group of persons exceeds the 100% threshold.

Restrictions on Liens and Guarantees. Under the Mexican Law of Credit Institutions, banks are specifically prohibited from (i) pledging their securities as collateral (except if the Mexican Central Bank or the CNBV so authorizes, including as described above with respect to derivative transactions) and (ii) guarantying the obligations of third parties, except, generally, in connection with letters of credit and bankers’ acceptances.

Bank Secrecy Provisions; Credit Bureaus. Pursuant to the Mexican Law of Credit Institutions, a Mexican bank may not provide any information relating to the identity of its customers or specific deposits, services or any other banking transactions (including loans) to any third parties (including any purchaser,

underwriter or broker or holder of any of the bank’s securities), other than (i) the depositor, debtor, accountholder or beneficiary and their legal representatives or attorneys-in-fact, (ii) judicial authorities in trial proceedings in which the accountholder is a party or defendant, (iii) the Mexican federal tax authorities for tax purposes, (iv) the Ministry of Finance and Public Credit for purposes of the implementation of measures and procedures to prevent terrorism and money laundering, (v) the Federal Auditor (Auditoría Superior de la Federación) to exercise its supervisory authority, (vi) the supervisory unit of the Federal Electoral Agency, and (vii) the federal attorney general’s office (Procurador General de la República) for purposes of criminal proceedings, among others. In most cases, the information needs to be requested through the CNBV.

In order to comply with the applicable bank secrecy provisions, we have established different operating systems, which restrict the sharing of information between our retail business and Banco Famsa. The only information of Banco Famsa’s loan portfolio that is provided to our retail business is the information regarding specific loans, which are effectively transferred to Famsa as part of the credit transfer-back process of account receivables that are more than 120 days past due. See “—Banco Famsa—Overview.”

Banks and other financial entities are allowed to provide credit-related information to duly- authorized Mexican credit bureaus.

On January 10, 2014, the Mexican Law of Credit Bureaus (Ley para Regular las Sociedades de Información Crediticia) was amended to, among other things, allow the Mexican Federal Government to incorporate a governmental entity as a credit bureau which would become part of the Mexican financial system.

Money Laundering Regulations. Mexico has in effect rules relating to money laundering (the “Money Laundering Rules”). Under the Money Laundering Rules, Banco Famsa is required to satisfy various requirements, including:

 the establishment and implementation of procedures and policies, including client identification and know-your-customer policies, to prevent and detect actions, omissions or transactions that might favor, assist or cooperate in any manner with terrorism or money laundering activities, as each is defined in the Mexican Federal Criminal Code (Código Penal Federal);

 implementing procedures for detecting relevant, unusual and suspicious transactions, as defined in the Ministry of Finance and Public Credit regulations;

 reporting of relevant, unusual and suspicious transactions to the CNBV and the Ministry of Finance and Public Credit; and

 the establishment of a communication and control committee (which, in turn, must appoint a compliance officer) in charge of, among other matters, supervising compliance with anti-money laundering provisions; and

 the creation of an Electronic Automated System which must have the following functions:

(i) maintaining, updating and consulting of the clients’ information;

(ii) generating, encrypting, coding and transferring of information with respect to any unusual or relevant operations;

(iii) classifying the transactions entered into by the banking institutions in order to screen potential unusual or relevant operations; and

(iv) triggering an alert system with regards to any unusual or relevant operations to be carried out by any politically-exposed person.

Banco Famsa is also required to organize and maintain a file before opening an account or entering into any kind of transaction for the identification of each client (each, an “Identification File”). An individual’s Identification File includes, among other information, a copy of the following documentation or data: (i) full name, (ii) date of birth, (iii) country of birth, (iv) nationality, (v) occupation, profession, main activity or line of business, (vi) complete domicile, (vii) telephone number, (viii) e-mail, if any, (ix) tax identification number and population registry identification, when applicable, and (x) advanced electronic signature series number, when applicable. An entity’s Identification File includes, among other information, a copy of the following documentation or data: (i) corporate name, (ii) corporate purpose and line of business, (iii) nationality, (iv) tax identification number, (v) advanced electronic signature series number, when applicable, (vi) complete domicile, (vii) telephone number, (viii) e-mail, if any, (ix) incorporation date, and (x) complete name of the sole administrator, the members of the board of directors, the general manager or any relevant attorneys-in-fact. Identification Files are maintained for the complete duration of the corresponding agreement entered into with such client, and for a minimum term of 10 years from the date such agreement is terminated.

Under the Money Laundering Rules, Banco Famsa must provide to the Ministry of Finance and Public Credit, through the CNBV, (i) quarterly reports (within 10 business days from the end of each quarter) with respect to transactions equal to, or exceeding, U.S.$10,000, (ii) monthly reports (within 15 business days from the end of the month) with respect to international funds transfers, received or sent by a client, with respect to transactions equal to, or exceeding, U.S.$10,000, (iii) reports of unusual transactions, within 60 calendar days counted from the date an unusual transaction is detected by its systems and (iv) periodic reports of suspicious transactions, within 60 calendar days counted from the date the suspicious transaction is detected.

Rules on Interest Rates. The Mexican Central Bank regulations limit the number of reference rates that may be used by Mexican banks as a basis for determining interest rates on loans. For Peso- denominated loans, banks may choose any of a fixed rate, TIIE (Tasa de Interés Interbancaria de Equilibrio), Cetes (Certificados de la Tesoreria de la Federación), CCP (costo de captación promedio a plazo), the rate determined by the Mexican Central Bank as applied to loans funded by or discounted with NAFIN, the rate agreed to with development banks in loans funded or discounted with them, the weighted bank funding rate (tasa ponderada de fondeo bancario) and the weighted governmental funding rate (tasa ponderada de fondeo gubernamental). For UDI-denominated loans, the reference rate is the UDIBONOS (Bonos de Desarrollo del Gobierno Federal denominados en Unidades de Inversión). For foreign currency-denominated loans, banks may choose either a fixed rate or floating market reference rates that are not unilaterally determined by a financial institution, including LIBOR (as defined in the relevant loan or credit agreement) or the rate agreed upon with international or national development banks or funds for loans funded by or discounted with such banks or funds. For U.S. Dollar-denominated loans, banks may choose any of a fixed rate, any of the rates referred to in the prior sentence or CCP-U.S. Dollars, as calculated and published in the Official Gazette by the Mexican Central Bank.

The rules also provide that only one reference rate can be used for each transaction and that no alternative reference rate can be utilized, unless the selected reference rate is discontinued, in which event a substitute reference rate may be established. A rate or the mechanism to determine a rate may not be modified unilaterally by a bank. Rates must be calculated annually, based upon 360-day periods.

Fees. Under the Mexican Central Bank regulations, Mexican banks, Sofoles and Sofomes may not, in respect of loans, deposits or other forms of funding and services with their respective clients, (i) charge fees that are not included in their respective, publicly disclosed, aggregate annual cost (costo anual total), (ii) charge alternative fees, except if the fee charged is the lower fee, and (iii) charge fees for the cancellation of credit cards issued. In addition, among other things, Mexican banks may not (i) charge simultaneous fees, in respect of demand deposits, for account management and relating to not maintaining minimum amounts, (ii) charge fees for returned checks received for deposit in a deposit account or as payment for loans granted, (iii) charge fees for cancellation of deposit accounts, debit or teller cards or the use of electronic banking services, or (iv) charge different fees depending upon the amount subject of a money transfer. Under the regulations, fees arising from the use of ATMs must be disclosed to users.

Mexican banks, Sofoles and Sofomes permitting customers the use of, or operating, ATMs must choose between two options for charging fees to clients withdrawing cash or requesting balances: (i) specifying a fee for the relevant transactions, in which case, Mexican banks, Sofoles and Sofomes issuing credit or debit cards (“Issuers”) may not charge cardholders any additional fee (Issuers are entitled to charge operators the respective fee), or (ii) permit Issuers to charge a fee to clients, in which case, banks, Sofoles and Sofomes may not charge additional fees to clients.

The Mexican Central Bank, on its own initiative or as per request from the CONDUSEF, banks, Sofoles or Sofomes, may assess whether reasonable competition conditions exist in connection with fees charged by banks, Sofoles or Sofomes in performing financial operations. The Mexican Central Bank must obtain the opinion of the Federal Economic Competition Commission (Comisión Federal de Competencia Económica) in carrying out this assessment. The Mexican Central Bank may take measures to address these issues.

Law for the Protection and Defense of Financial Service Users. A Law for the Protection and Defense of Financial Service Users (Ley de Protección y Defensa al Usuario de Servicios Financieros) is in effect in Mexico. The purpose of this law is to protect and defend the rights and interests of users of financial services. To this end, the law provides for the creation of CONDUSEF, an autonomous entity that protects the interests of users of financial services and that has very wide authority to protect users of financial services (including imposing fines). CONDUSEF acts as arbitrator in disputes submitted to its jurisdiction and seeks to promote better relationships among users of financial institutions and the financial institutions. As a banking institution, Banco Famsa must submit to CONDUSEF’s jurisdiction in all conciliation proceedings (initial steps of a dispute) and may choose to submit to CONDUSEF’s jurisdiction in all arbitration proceedings that may be brought before it. The law requires banks, as Banco Famsa, to maintain an internal unit designated to resolve any and all controversies submitted by clients.

On January 10, 2014, the Law for the Protection and Defense of Financial Service Users was amended to provide, among other things, the creation of the Financial Arbitration System (Sistema Arbitral en Materia Financiera) by means of which financial institutions may offer to the public the alternative to resolve through arbitration any future disputes in connection with transactions and services determined in advance. Such offer to the public will be registered with the Arbitration System Registry of Public Offers (Registro de Ofertas Públicas del Sistema Arbitral).

CONDUSEF maintains a Registry of Financial Service Providers (Registro de Prestadores de Servicios Financieros), in which all financial services providers must be registered, that assists CONDUSEF in the performance of its activities. CONDUSEF is required to publicly disclose the products and services offered by financial service providers, including interest rates. To satisfy this duty, CONDUSEF has wide authority to request any and all necessary information from financial institutions. Furthermore, CONDUSEF may scrutinize banking services provided by using standard accession agreements.

With the January 10, 2014 amendments to the Law for the Protection and Defense of Financial Service Users, the Financial Entities Bureau (Buró de Entidades Financieras) was created, to provide information regarding products offered by financial institutions, including commissions, practices, administrative sanctions, claims and other relevant information for users of financial services regarding the performance of financial institutions. This information is public and CONDUSEF shall issue periodic information relevant for users of financial services in their decision-making regarding financial services.

The January 10, 2014 amendments to the Law for the Protection and Defense of Financial Service Users provide greater powers to CONDUSEF. With this amendment, CONDUSEF has the authority to regulate standard accession agreements of financial institutions and to regulate the events when provisions of such contracts qualify as abusive, provided that such provisions do not refer to interest rates, commissions or any other provisions regarding the amounts received by financial institutions for their services, which are subject to the Mexican Central Bank regulations. CONDUSEF has the power to suppress any such abusive provisions from standard accession agreements, and resolutions issued by CONDUSEF with such effect are made public.

CONDUSEF must determine the existence of abusive provisions and its elimination from the corresponding agreement, pursuant to the General Provisions regarding abusive sections in accession agreements (disposiciones de carácter general en material de cláusulas abusivas contenidas en los contratos de adhesion) published in the Federal Official Gazette on November 19, 2014.

On July 29, 2010, Article 17 of the Mexican Constitution was amended in order to allow class actions to be brought in federal courts in connection with civil actions on matters related, among others, to protection and defense of financial service users. Consequently, on August 30, 2011, the Federal Code of Civil Procedure and the Law for the Protection and Defense of Financial Service Users (Ley de Protección y Defensa al Usuario de Servicios Financieros), among others, were amended to incorporate class actions. Such amendments became effective on March 1, 2012. As of the date of this Information Memorandum, no class action has been initiated in connection with protection and defense of financial service users matters.

Banco Famsa may be required to provide reserves against contingencies that could arise from proceedings pending before CONDUSEF. Banco Famsa may also be subject to recommendations by CONDUSEF regarding its standard agreements or information used to provide its services. It may be subject to coercive measures or sanctions imposed by CONDUSEF. At present, Banco Famsa is not the subject of any material proceedings before CONDUSEF.

Law for the Transparency and Ordering of Financial Services. The Transparency and Ordering of Financial Services Law (Ley para la Transparencia y Ordenamiento de los Servicios Financieros) was published in the Official Gazette of Mexico in June 2007. The purpose of this law is to regulate (i) the fees charged to clients of financial institutions for the use and/or acceptance of means of payment, as with debit cards, credit cards, checks and orders for the transfer of funds, (ii) the fees that financial institutions charge to each other for the use of any payment system, (iii) interest rates that may be charged to clients and (iv) other aspects related to financial services, all in an effort to make financial services more transparent and protect the interests of the users of such services. This law grants the Mexican Central Bank the authority to regulate interest rates and fees and establish general guidelines and requirements relating to payment devices and credit card account statements. See “—Rules on Interest Rates” and “—Fees” above. The Mexican Central Bank has the authority to specify the basis upon which each bank must calculate its aggregate annual cost (costo annual total), which comprises interest rates and fees, on an aggregate basis, charged in respect of loans and other services. The aggregate annual cost must be publicly disclosed by each bank. The law also regulates the terms that banks must include in standard accession agreements and the terms of any publicity and of information provided in account statements.

Banco Famsa must inform the Mexican Central Bank of any changes in fees at least 30 calendar days before they become effective.

Regulations Regarding the Entry of U.S. Dollars into Mexico. On June 16, 2010, the SHCP issued new regulations limiting the ability of banking institutions to accept U.S. Dollars. Among other things, these new regulations restrict banks from receiving from their customers more than U.S.$4,000 in cash from individuals or U.S.$7,000 from companies operating in the northern border region in the same month in transactions such as the purchase of U.S. Dollars, cash deposits, or as payment of credits or other banking services. These new measures seek to reinforce anti-money laundering policy and dissuade other illegal or improper activities. These new regulations do not limit in any way the amount of U.S. Dollars that may be sold to the public by banking institutions and do not restrict transactions with U.S. Dollars performed by any other means other than cash. According to the 103 press release of the SHCP dated June 15, 2010, announcing the issuance of these new regulations, more than 96% of the cash remittance from the United States into Mexico is carried out through electronic money transfers and, therefore, will not be affected by these new regulations. Considering that (i) substantially all of our customers in Mexico pay in Pesos and (ii) all the payment services made in connection with the cash remittance from the United States are made in Pesos, these regulations have not had and we do not expect that they will have a significant impact in our operations. There can be no assurance that regulations related to U.S. Dollar transactions will not be implemented in the future that could have a material effect on our operations.

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Legal Regime Applicable to our U.S. Operations

Our consumer finance operations in the United States are subject to various federal laws and regulations, including the Federal Truth-In-Lending Act, the Federal Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Federal Fair Debt Collection Practices Act, the Federal Trade Commission Act, Regulations B and Z of the Federal Reserve System, and to numerous state and local laws and regulations. Among other things, these laws and regulations:

 subject us to licensing and registration requirements in connection with our sales on credit and installments;

 limit the time length of our consumer lending transactions;

 restrict the amount of the fees and commissions that we may charge our clients;

 require full-disclosure of our lending practices to our customers;

 prescribe procedures for the processing of credit applications, and regulate the entire lending process;

 regulate certain account collection practices and procedures; and

 regulate the repossession of merchandise and its resale.

In addition, our retail operations are subject to the consumer protection, customs, zoning and other laws and regulations applicable to the U.S. retail industry generally. For instance, we are subject to federal and state laws and regulations that require retailers who offer merchandise at discount prices to also offer merchandise at regular prices during certain periods. The violation of any of these laws and regulations may result in the imposition of fines and penalties, and may entitle our customers to challenge the validity of their payment obligations. We believe that we are currently in compliance with all the laws and regulations applicable to our operations in the United States.

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Employees

The following table shows our number of full-time employees by area of activity and geographical segment during the periods indicated.

As of December 31, As of September 30, 2012 2013 2014 By Activity: Sales and operations 8,921 9,317 8,100 Credit and collections 2,858 3,089 3,396 Logistics and distribution 671 757 538 Furniture manufacturing 216 216 203 Management 369 602 597 Executive Officers 114 143 132 Banco Famsa 2,853 2,807 2,726 By Geographical Segment: Famsa Mexico 16,002 16,931 15,692 Famsa USA 739 658 626 Total employees 16,741 17,589 16,318

In addition, from time to time we hire temporary employees, particularly around the Christmas holiday season. As of December 31, 2013 and December 31, 2012, 31.5% and 31.2% of our employees, respectively, were affiliated with labor unions. In addition, as of September 30, 2014, approximately 28.0% of our employees remain affiliated with labor unions. Our Mexican employees are affiliated with five labor associations (centrales obreras) and 10 unions, and we have entered into a collective bargaining agreement with each of them. Pursuant to Mexican law, collective bargaining agreements are subject to renegotiation on an annual basis as with respect to salaries, and otherwise on a bi-annual basis. We believe that our relationships with our labor unions are good. To date, we have never experienced a strike or other labor disruption. Famsa USA’s employees are not unionized.

On November 30, 2012, the Federal Labor Law (Ley Federal del Trabajo) was amended in order to incorporate, among other things, (i) labor principles recognized by the International Labor Organization regarding non-discrimination towards women and the disabled in the labor environment, (ii) three new employment arrangements (the “initial training contract,” the “contract on trial” and the “seasonal discontinuous contract”), and (iii) the new subcontracting regime providing a legal framework for the contracting of employees through third parties. While we do not expect these amendments to have a material impact on us, we cannot predict with certainty the potential effects from the application of this new law.

Property

We lease a substantial majority of the retail space used by our stores. We select the retail space used by our stores based upon various considerations, including our desire to convey a uniform corporate image and the need for total sales and warehouse areas sufficient to accommodate our increasing number of product lines and services and merchandise volumes.

As of December 31, 2013, 87.4% of our stores were located on real property owned by independent third parties, 10.5% were located on property leased from related third parties and 2.1% located on property we own. As of December 31, 2012, 88.3% of our stores were located on real property owned by independent third parties, 10.5% were located on property leased from related third parties and 1.2% located on property we own. As of December 31, 2012 and December 31, 2013, our total rental expense amounted to Ps.763 million and Ps.763 million, respectively.

As of September 30, 2014, 87.5% of our stores were located on real property owned by independent third parties, 10.4% were located on property leased from related third parties and 2.1% located on

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property we own. In addition, as of September 30, 2014 we had more than 389 short- and long-term lease agreements in place. Leased properties are used primarily for our stores and as office space and warehouse facilities.

The following table shows the principal real properties owned by us as of September 30, 2014.

Location Use Area (in square meters) Cienega de Flores Polígono No.5, Monterrey, Nuevo León ..... Vacant 1,082,433.0 Cienega de Flores Polígono No.2, Monterrey, Nuevo León Vacant 69,078.8 ...... Adolfo López Mateos No.1339, Monterrey, Nuevo León ...... Warehouse 7,409.9 Manuel Pérez Treviño No. 284, Saltillo, Coahuila ...... Store 3,520.6 Colón No. 607 Pte., Monterrey, Nuevo León ...... Store 1,922.5 Pino Suárez and Ruperto Martínez, Monterrey, Nuevo León .. Store 1,910.4 Félix U. Gómez No. 850, Monterrey, Nuevo León ...... Parking lot 1,640.0 Zaragoza and Ocampo, Saltillo, Coahuila ...... Store 1,315.2 Cuauhtémoc No.1419 Norte, Monterrey, Nuevo León ...... Warehouse 1,288.0 Humberto Lobo (Opción San Pedro Mall), Nuevo León ...... Leased to unaffiliated third party 1,000.0 Ocampo and Hidalgo, Monclova, Coahuila ...... Store 939.0 Cuauhtémoc No. 1408 Lado Sur, Monterrey, Nuevo León ...... Warehouse 802.7 Benito Juárez and Zaragoza, Sabinas, Coahuila ...... Store 700.0 Zaragoza No.449, Saltillo, Coahuila ...... Store 298.3 Allende No. 424, Saltillo, Coahuila ...... Store 249.0 Zaragoza No. 447, Saltillo, Coahuila ...... Store 143.3

Environmental Matters

In connection with the ownership and/or operation of the real properties where our stores are located, we are subject to various Mexican and U.S. environmental protection laws and regulations, including those concerning the handling and disposal of hazardous residues and materials and the clean-up of polluting agents. We could be forced to incur unanticipated expenses as a result of the violation of such laws or regulations, including clean-up expenses and administrative fines, or of third-party environmental- related claims. We believe that we currently conduct all of our business operations in compliance with such laws and regulations.

On July 29, 2010, Article 17 of the Mexican Constitution was amended in order to allow class actions to be brought in federal courts in connection with civil actions on matters related, among others, to environmental law. Consequently, on August 30, 2011, the Federal Code of Civil Procedure and the Mexican General Law of Ecological Balance and Environmental Protection (Ley General del Equilibrio Ecológico y la Protección al Ambiente) were amended to incorporate class actions. Such amendments became effective on March 1, 2012. As of the date of this information memorandum, no class action has been resolved in connection with environmental matters.

Legal Proceedings

From time to time, we are involved in various types of legal proceedings that are incidental to our business operations. There has been no governmental, legal or arbitration proceeding (including any such proceedings which are pending or threatened of which we are aware), during the immediately preceding twelve months, which may have, or have had during such time, significant effects on us and our financial position or profitability.

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Insurance

Our policy is to purchase and carry all-risk insurance coverage for our property and business operations. We currently maintain insurance policies in respect of all leased and owned real property and all of our inventory, equipment and distribution fleet, with policy specifications and for insured limits that we believe are appropriate in view of our exposure to the risk of loss, the cost of such insurance, the regulatory requirements to which we are subject and the prevailing industry practice. However, we could suffer losses that are not covered by our insurance policies or in amounts that exceed our insured limits.

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RELATED PARTY TRANSACTIONS

We have historically engaged and will continue to engage in a number of transactions with our shareholders or their affiliates. All transactions with these related parties are entered into on an arm’s length basis, on terms and conditions no more favorable than those available in the market through independent third parties.

Real Property Leases

As of September 30, 2014, we had 42 long-term lease agreements in place with our controlling shareholders and various entities controlled thereby, in respect of the retail space used by several of our stores. As of such date, these lease agreements accounted for approximately 9.8% of the aggregate amount of leased space used for our stores. The terms of all such agreements are substantially identical and are consistent with standard industry practices and real estate market prices, except for certain lease agreements entered into with Desarrollos Inmobiliarios Garza Valdez, S.A. de C.V. (“DIGV”), an entity owned by our controlling shareholders, which contain provisions pursuant to which DIGV may terminate the relevant lease in the event of our default with any of our obligations thereunder. In addition, DIGV has pledged the amounts payable as rent by the Company and its subsidiaries under such lease agreements as collateral for certain loan obligations incurred by it. As a result, in the event of default by the Company or its subsidiaries under such lease agreements, DIGV and/or the holder of such debt will be entitled to collect any and all rents through the expiration or termination of the relevant lease.

The terms of our lease agreements with our controlling shareholders and entities controlled by them range from three to fifteen years, and monthly lease payments per lease range from approximately Ps.24,000 to Ps.793,000. With exception of leases with indefinite terms, the average maturity date for these leases as of September 30, 2014 was 12 years. Upon maturity, a majority of these lease agreements are automatically renewable for successive additional one-year terms.

In addition, in respect to DIGV leases, DIGV has pledged the amounts payable as rent by the Company and its subsidiaries under such lease agreements as collateral for certain loan obligations incurred by it. As a result, in the event of default by the Company or its subsidiaries under such lease agreements, DIGV and/or the holder of such debt will be entitled to collect any and all rents through the expiration or termination of the relevant lease.

During the years ended December 31, 2012 and 2013, we made payments in the aggregate amount, stated in millions of Pesos, of Ps.101.1 and Ps.101.1, respectively, under our lease agreements with these related parties. In addition, for the nine-month period ended September 30, 2014, we made payments in the aggregate amount of Ps.78.8 million under our lease agreements with these related parties.

Asset Management

We have entered into various asset management agreements with affiliates and other entities controlled by our principal shareholders, pursuant to which such shareholders perform account collection services and manage and invest the proceeds of such accounts on behalf of such entities, in exchange for a commission payable on an annual basis. In addition, pursuant to these agreements we are required to make available to such entities every year a revolving credit facility that bears interest at the rate of 9.3% per annum, payable in arrears at the end of each such year. For the year ended December 31, 2013, net interest expense related to these credit facilities totaled Ps.14.4 million.

We have entered into this kind of agreement with certain entities that are directly or indirectly controlled by our controlling shareholder, including Inmobiliaria Garza Valdez, S.A. de C.V., Inmobiliaria Garza Valdez de la Laguna, S.A. de C.V., Inmobiliaria Logar de Monterrey, S.A. de C.V., and Desarrollos Inmobiliarios Garza Valdez, S.A. de C.V., among others.

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During the years ended December 31, 2013 and 2012, we generated net financing expense in the aggregate amount of Ps.7.7 million and Ps.7.7 million, respectively, under our asset management agreements with these related parties. For the nine-month period ended September 30, 2014, net interest expense related to these credit facilities totaled Ps.5.1 million.

Banco Famsa

Banco Famsa has set in place a series of policies and procedures with respect to its transactions with our controlling shareholders and their affiliates, including qualitative and quantitative restrictions and oversight and reporting and disclosure obligations in connection therewith. Among other things, such policies and procedures impose restrictions to the granting of loans to our directors, executives and employees other than as part of their employment benefit packages. Banco Famsa is in compliance with these policies and procedures.

Article 73 of the Mexican Law of Credit Institutions regulates transactions by a bank with affiliates and other “related party transactions.” Related party transactions may only be undertaken on market terms. Loans made to related parties require the approval of 75% of the members of our board that are present and the prior approval of our credit committee, and must be notified to the CNBV. As of September 30, 2014, loans granted by Banco Famsa to related parties pursuant to Article 73 of the Mexican Law of Credit Institutions amounted to Ps.549.7 million (4.5% of Banco Famsa’s total loan portfolio as of such date). This amount is comprised of 2 separate loans described in the following sentence. Banco Famsa entered into a) a three-year credit facility with Grupo Famsa on January 29, 2014 for an aggregate principal amount of Ps.405.1 million at a variable interest rate of TIIE plus 2.5 percentage points with maturity on January 29, 2017; and b) a three-year credit facility with Grupo Famsa on September 04, 2013 for an aggregate principal amount of Ps.144.6 million at a variable interest rate of TIIE plus 2.5 percentage points, with maturity on September 04, 2016.

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MANAGEMENT

General

The management of our business affairs and operations is entrusted to our Board of Directors. Our corporate bylaws prescribe that our Board of Directors shall consist of no less than five and no more than 21 members, subject to determination at the general shareholders meeting. At least 25% of the directors must be independent within the meaning assigned to such term by the Mexican Securities Market Law.

The members of our Board of Directors are appointed to one-year terms during our general annual shareholders meeting and may be reelected. At such meeting, any shareholder or group of shareholders representing at least 10% of our outstanding capital stock is entitled to appoint a director and an alternate. All of our current directors and alternate directors were elected or ratified on April 23, 2014.

A quorum at any meeting of the Board of Directors is formed with the attendance of a majority of its members and actions are validly taken by the affirmative vote of a majority of the members present. In the event of an impasse, the Chairman of the Board casts the deciding vote.

Board of Directors

Our board of directors currently consists of eight members, four of whom are considered independent. The business address for each member of the board of directors is the registered address of the Company. The following table sets forth the name, title, age and the year elected to office of each of the current board members.

Director Name Title Age since

Humberto Garza González Chairman of the Board 87 1993 Humberto Garza Valdez Director 52 1993 Hernán Javier Garza Valdez Director 51 1993 Oziel Mario Garza Valdez Director 45 1993 Salvador Kalifa Assad Independent Director 64 1998 Jorge Luis Ramos Santos Independent Director 62 2006 Alejandro Sepúlveda Gutiérrez Independent Director 71 2006 Bernardo Guerra Treviño Independent Director 49 2011

Humberto Garza González is the founder and Chairman of the Board of Grupo Famsa.

Humberto Garza Valdez has been with the Company for the past 28 years and is Don Humberto Garza González’ son. He has been President of Grupo Famsa for the past 17 years, having previously served as Deputy President. He obtained a Bachelor’s degree in Business Administration from the University of Monterrey (UDEM) and a Masters in Executive Business Administration from the Institute of Executive Business Management (IPADE).

Hernán Javier Garza Valdez has been with the Company for the past 27 years and is Humberto Garza González’ son. He currently serves as Project Director. He obtained a Bachelor’s degree in Economics from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM), an M.B.A. from the University of Notre Dame and a Master in Information Systems from ITESM.

Oziel Mario Garza Valdez has been with the Company for the past 20 years and is Don Humberto Garza González’ son. He has been Vice President of Clothing and Verochi for the past 15 years, having previously served as Commercial Director for the Monterrey Region. He obtained a Bachelor’s degree in Business Administration from UDEM and a Master in Executive Business Administration from IPADE.

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Salvador Kalifa Assad has been a member of Grupo Famsa’s Board of Directors since 1997 and Banco Ahorro Famsa’s Board of Directors since 2007. He currently runs his own consulting firm, Consultores Económicos Especializados, S.A. de C.V. and provides economic analysis for several Mexican newspapers. He was Director of Economic Studies at Grupo Alfa for seven years and collaborated with Grupo Financiero GBM-Atlántico. He has also been a member of the Boards of Directors of Grupo IMSA, Verzatec and Banorte. He obtained a Bachelor’s degree in Economics from ITESM, as well as Master’s and Doctoral degrees in Economics from Cornell University.

Jorge Luis Ramos Santos has been a member of Grupo Famsa’s Board of Directors since 2006. He currently represents Heineken Americas in its joint ventures and is a strategic advisor to this company. He has served as Deputy President of Heineken Americas, as CEO of Cervecería Cuauhtémoc Moctezuma, as Human Resources Vice President and as Chief Commercial Officer of Femsa Cerveza. He currently sits on the boards of several companies in Latin America, as well as of several business organizations and universities in Mexico. He obtained a Bachelor’s degrees in Accounting and Business Administration from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) and a Master in Business Administration from the Wharton School of the University of Pennsylvania.

Alejandro Sepúlveda Gutiérrez has been a member of Grupo Famsa’s Board of Directors since 2006 and Banco Ahorro Famsa’s Board of Directors since 2007. He served as Vice President of Financial Information at Alfa for 25 years. He also served for 12 years at Fundidora Monterrey, S.A., been Corporate Controller his last position and participated as member of the Board of Directors of the main subsidiaries of Fundidora Monterrey. He was President of the Committee on Financial Reporting Practices of the Mexican Institute of Finance Executives for two years. He obtained a Bachelor´s degree in accounting from ITESM, a Master in Business Administration from Texas Christian University and has completed a course study on executive business management at IPADE.

Bernardo Guerra Treviño has been a member of Grupo Famsa’s Board of Directors since 2011 and Banco Ahorro Famsa since 2007. He is a founding member and General Director of Morales y Guerra Capital Asesores (MG Capital) and serves as an independent director of Axtel, where he is also the President of the Corporate Practices and Auditing committees. He is also a member of the administrative committee and President of the Corporate Practices and Auditing committees of Promotora Ambiental. He obtained an Industrial Engineering degree from ITESM.

Pursuant to the Mexican Securities Market Law and our corporate bylaws, our Board of Directors must, among other things:

 determine our general business strategy;

 approve (i) policies and guidelines for the use of our assets by related parties, and (ii) any transaction with related parties, subject to certain limited exceptions, in both cases taking into consideration the opinion of the Audit Committee;

 approve unusual or non-recurrent transactions and any transactions that imply the acquisition or sale of assets with a value equal to or in excess of 5% of our consolidated assets, or the provision of collateral or guarantees or the assumption of liabilities equal to or in excess of 5% of our consolidated assets;

 appoint and remove our chief executive officer, and approve the policies for the appointment of our executive officers;

 approve our financial statements, accounting policies and internal control systems;

 approve the appointment of our external auditors; and

 approve the policies for the disclosure of information.

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The Mexican Securities Market Law also permits us to appoint a substitute director for each appointed director. The substitute director of an independent appointed director must also be independent. The Mexican Securities Market Law also imposes duties of care and loyalty on our directors, including our substitute directors.

The duty of care requires that our directors act in good faith and in our best interest, and obtain from our chief executive officer, other executive officers and external auditors sufficient information based upon which to make their decisions. The duty of care is discharged, primarily, by attending the meetings of the Board of Directors and its committees and disclosing material information in the possession of the relevant director. Failure to act with care by any one or more directors subjects the relevant directors to joint liability for damages and losses caused to the Company and its subsidiaries.

The duty of loyalty primarily consists of a duty to maintain the confidentiality of information received in connection with the performance of a director’s duties and to abstain from discussing or voting on matters where the director has a conflict of interest. In addition, the duty of loyalty is breached if a shareholder or group of shareholders is knowingly favored or if, without the express approval of the board of directors, a director takes advantage of a corporate opportunity. The duty of loyalty is also breached if the director (i) fails to report to the Audit Committee and our external auditors any irregularity that may come to his attention, or (ii) discloses false or misleading information or fails to register any transaction on the Company’s records that could affect its financial statements. The violation of the duty of loyalty subjects the offending director to joint liability for damages and losses caused to the Company and its subsidiaries, and may subject the offending director to criminal penalties including a prison term of up to 12 years.

Claims for breach of the duty or care of the duty of loyalty may be brought solely for the benefit of the Company, by the Company or by shareholders representing at least 5% of our outstanding shares. Criminal complaints may only be brought by the SHCP, subject to the opinion of the CNBV.

The liabilities specified above will not be applicable if the director acted in good faith and (i) complied with the requirements set forth in the applicable laws and our bylaws in connection with the matters requiring approval by our Board or Directors or its committees, (ii) relied upon information provided by our executive officers or independent experts, and (iii) selects the more adequate alternative in good faith or in a case where the negative effects of such decision may not have been foreseeable.

Our audited consolidated financial statements for the year ended December 31, 2013 have been approved by our Board of Directors and were approved by our shareholders at the annual ordinary shareholders’ meeting held on April 23, 2014.

With respect to each of our directors, except as otherwise described in this Information Memorandum or previously disclosed by such director to the full board of directors, there are no conflicts of interests between such director’s duties to the Company, which are described above, and his private interests.

Secretary

Since December 31, 2005, the Secretary of the Board of Directors is Luis Gerardo Villarreal Rosales. He is not a member of the Board of Directors.

Audit Committee

Under the Mexican Securities Market Law, all members of our Audit Committee must be independent, and two such members must meet the criteria to be considered as financial experts. The following persons are current members of our Audit Committee: Alejandro Sepúlveda Gutiérrez (Chairman) was ratified on April 23, 2014, Salvador Llarena Arriola (substitute director) was elected on April 27, 2007 and Jorge Luis Ramos Santos was elected on October 26, 2010.

The duties of the Audit Committee include, among others:

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 evaluating our internal control and internal audit systems;

 submitting to the Board and Directors and the shareholders meeting, for approval, an annual report of activities;

 reviewing our financial statements and, if applicable, recommending their approval to the Board of Directors; and

 overseeing the enforcement of the resolutions adopted by our shareholders meeting and Board of Directors.

The chairman of the Audit Committee prepares an annual report to our Board of Directors with respect to its activities and findings.

Corporate Practices Committee

As in the case of our Audit Committee, in accordance with the Mexican Securities Market Law all members of our Corporate Practices Committee must be independent. The current members of our Corporate Practices Committee are Alejandro Sepulveda Gutiérrez (Chairman) and Jorge Luis Ramos Santos.

The Corporate Practices Committee is required to:

 oversee the performance of our executive officers and the compensation awarded to such executive officers;

 provide to the Board of Directors opinions in connection with any material transaction with related parties;

 call shareholders meetings and submit thereto any matter as it may deem appropriate; and

 assist the Board of Directors in the preparation of the information required by law.

The chairman of the Corporate Practices Committee prepares an annual report to our Board of Directors with respect to its activities and findings.

Executive Officers

The following table sets forth the name, title, age and years with the company of our executive officers.

Years with the Name Title Age Company Humberto Garza Valdez Chief Executive Officer 52 29 Oziel Mario Garza Valdez Vice President, Clothing and Real Estate 45 21 Luis Gerardo Villarreal Rosales Chief Operating Officer 64 17 Abelardo García Lozano Chief Financial Officer 53 25 Héctor Padilla Ramos Vice President, Purchases 54 17 Héctor Hugo Hernández Lee Vice President, Human Resources 50 15 Martin Urbina Villarreal General Director, Famsa Mexico 55 12 Ignacio Ortiz Lambretón General Director, Famsa USA 59 15

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Angel Alfonso de Soto Hernández Director of Consumer Banking 47 3 Joaquin Aguirre Carrera Marketing Director 45 7 Manuel Rodríguez González Chief Information Officer 62 17

Luis Gerardo Villarreal Rosales has served as Chief Operating Officer for the past 17 years. Prior to joining the Company, he served as President of the Dairy Division of Sigma Alimentos, and as Director of Finance and Administration of the same company, for a total of nine years. Previously, he worked at Hylsa for eight years as Corporate Controller. He obtained a Bachelor’s degree in Chemical Engineering from ITESM, a Master in Business Administration from the same institution, and a Bachelor’s degree in Accounting and Auditing from Universidad Regiomontana. He has also completed several courses on Executive Business Management at the University of Texas and IPADE.

Abelardo García Lozano has worked with the Company for the past 25 years. He has served as Chief Financial Officer for the past 18 years and, previously, as Regional Manager and Vice President of Financial Information. Before joining the Company, he served as Administrative Director at Plastic Art Angel. He obtained a Bachelor’s degree in Accounting and Auditing from the Universidad de Monterrey and is a Certified Public Accountant. He also holds a degree in Finance from ITESM and a degree in Taxation from the Instituto de Especialización para Ejecutivos (IEE).

Héctor Padilla Ramos has served as Vice President of Merchandise for the past 17 years. Prior to joining the Company, he served as Vice President of Merchandise at Grupo Mazon for nine years. He obtained a Bachelor’s degree in Industrial Psychology from Northwestern University, a Master in Business Administration from the University of Sonora and a Diploma in Marketing and Finance from ITESM.

Héctor Hugo Hernández Lee has served as Vice President of Human Resources for the past 15 years. Prior to joining the Company, he served as National Director of Human Resources at Danone de México for three years and as Vice President of Human Resources at Sigma Alimentos for six years. He obtained a Bachelor’s degree in Industrial Relations and a Diploma in Organizational Development, both from Universidad Iberoamericana.

Martin Urbina Villarreal has been with the Company for 12 years. He currently serves as Vice President of Famsa Mexico and previously as Vice President of Commercial Banking with Banco Famsa and as Vice President of Northern Regional Operations for Famsa. Prior to joining the Company, he was General Director of Precision Tune Mexico for five years and Commercial Vice President for the Central Region for Grupo Gamesa for four years. He obtained a Bachelor’s degree in Business Administration from ITESM and has completed the AD1 program at IPADE.

Ignacio Ortíz Lambretón has served as Vice President of Famsa USA for the past 15 years. Prior to joining the Company, he worked in Grupo Protexa for eight years, where he last held the position of President of the Tourism and Real Estate Division. Previously, he held various positions in Grupo Alfa and also served as General Director of Church’s and Little Caesars Pizza Northeast Division. He obtained a Degree in Systems and Industrial Engineering from ITESM and a Master in Business Administration from the Wharton School of Business of the University of Pennsylvania.

Angel Alfonso de Soto Hernández has been the Vice President of Banco Famsa since April 2012. Prior to joining the Company, he served as Chief Executive Officer of CAM & Credito Inmobiliario- Americas for four years and worked at CAMGE Bank in Spain for three years, where he held the positions of Chief Risk Officer and Chief Compliance Officer. He also worked at GE Capital for ten years, serving as Chief Risk Officer and Chief Compliance Officer. He obtained a Bachelor’s Degree in Mechanical Engineering with a concentration in Industrial Engineering from Universidad Anahuac and a Master in Business Administration from ITAM.

Joaquin Aguirre Carrera has worked with Grupo Famsa for the past 7 years, and has served as Vice President of Marketing since September 2011 and, previously, as Vice President of New Business and Marketing at Banco Famsa. Prior to joining the Company, he served as Marketing Director at Banorte for

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10 years and as Subdirector of Strategic Planning at Bancomer for another 10 years. He obtained a degree in Business Administration and a Master in Business Administration with a specialty in Marketing from the La Salle University.

Manuel Rodríguez González has served as Chief Information Officer for the past 17 years. Prior to joining the company he served as an IT Manager for more than 15 years in several companies, primarily of Grupo Alfa. He obtained a Bachelor’s degree in Industrial Engineering from the Universidad Autónoma de Nuevo León (UANL) and has completed several courses on specialized studies in the Escuela de Graduados en Administración EGAII.

Pursuant to the Mexican Securities Market Law, our executive officers are subject to duty of care and duty of loyalty obligations. See the discussion of these duties under “Management—Board of Directors— Board Practices” above. With respect to each of our executive officers, except as otherwise described in this Information Memorandum or previously disclosed by such officer, there are no conflicts of interests between such officer’s duties to the Company, which are described above, and his private interests.

Compensation of Our Directors and Executive Officers

By resolution of the annual shareholders meeting held April 23, 2014, each member of our Board of Directors is entitled to receive Ps.40,000 as compensation for each board meeting attended by such director.

We pay our executive officers, on an annual basis, in addition to their salaries and other fixed compensation, a performance bonus equal to up to 33% of their fixed compensation, based on each executive’s individual performance and our results of operations for the year. During the year ended December 31, 2013, the aggregate amount of all fixed and variable compensations paid to our executive officers, as a group, was Ps.105.7 million.

Stock Plan

In May 2012, the Technical Committee of Trust No. 80497, which is comprised of Humberto Garza Valdez, Oziel Mario Garza Valdez and Luis Gerardo Villarreal Rosales, approved a modification to our April 2006 stock plan, pursuant to which up to 3,123,546 common, nominative shares with no par value could be awarded to executives, employees and persons who render services either to Famsa or to its subsidiaries. The main objectives of the stock plan are to:

 motivate beneficiaries to achieve an outstanding performance;

 allow beneficiaries to be part of the success of the business;

 bring the interests of the beneficiaries in line with those of Famsa;

 grant an important incentive to the beneficiaries of the stock plan; and

 to retain the services of the beneficiaries of the stock plan.

Awards under the stock plan are determined by the Technical Committee of Trust No. 80497. As of December 31, 2013, a total of 3,113,256 common, nominative shares with no par value had been granted under the stock plan.

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Share Ownership

The following table sets forth the beneficial ownership of our capital stock by our directors and senior management as of November 25, 2014.

Number of Percentage of Name Common Common Shares Owned Shares Outstanding Humberto Garza González 274,979,062 62.57% Humberto Garza Valdéz 4,768,325 1.09% Hernán Javier Garza Valdéz 1,830,757 0.42% Oziel Mario Garza Valdéz 1,973,325 0.45% Total 285,389,794 64.94%

Independent Auditors Our independent auditors are PricewaterhouseCoopers, S.C., who have reviewed and audited our consolidated financial statements as of and for the years ended December 31, 2012 and 2013, included elsewhere in this Information Memorandum, and issued an unqualified opinion as the accuracy and sufficiency of the information contained therein. PricewaterhouseCoopers, S.C. is a member of numerous associations, including the Mexican Institute of Public Accountants (Instituto Mexicano de Contadores Públicos, A. C.) and the National Association of Fiscal Specialists (Asociación Nacional de Especialistas Fiscales, A. C.). The address of PricewaterhouseCoopers, S.C.’s principal offices is Avenida Rufino Tamayo 100, Col. Valle Oriente, San Pedro Garza García, N.L. México, C.P.66269.

Principal Shareholders The table below sets forth information concerning the percentage of our capital stock owned by any person known to us to be the owner of 5% or more of any class of our voting securities and our other shareholders as of November 25, 2014. Our majority shareholders do not have different or preferential voting rights with respect to the shares they own.

Series A, Class II Series A, Class I Shares Shares Shares

Identity of owner Number % Number % Number %

Control Trusts(1) 210,177,060 63.67 64,802,002 61.20 274,979,062 63.07 Other members of the Garza Valdez family(2) 1,173,300 0.36 9,237,432 8.72 10,410,732 2.39 Public Investors 118,747,025 35.97 31,847,121 30.08 150,594,146 34.54

Total 330,097,385 105,886,555 435,983,940 100% ______

(1) Trust No. F/007 and Trust No. F/715 (the “Control Trusts”) were entered into on April 7, 2005 and May 17, 2007, respectively, by Humberto Garza González and Graciela Valdez Sánchez de Garza, with Humberto Garza Valdez, Graciela Valdez Sánchez de Garza and certain immediate family members as beneficiaries. Under the terms of the Control Trusts, voting in respect of the shares subject to the Control Trusts must be exercised by the Trustee as instructed by Humberto Garza González and, upon his death, as instructed by a committee comprised of various members of the Garza Valdez family. The Control Trusts also contain standard provisions relating to, among other things, preemptive rights in the context of future stock issuances and limitations on transfer. The Control Trusts have a duration of 30 years and may be revoked at any time by Humberto Garza González.

(2) Humberto Garza Valdez, Hernán J. Garza Valdez, Graciela L. Garza Valdez and Oziel Mario Garza Valdez.

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At the April 23, 2014 Ordinary General Meeting , the stockholders agreed that the fund created for the purchase and sale of the Company’s own shares will be of up to a maximum amount of Ps 130 million. As of November 25, 2014, the Company had 3,204,354 shares (259,700 shares as of December 31, 2013) held in treasury.

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TAXATION

General

The following summary contains a description of the material Mexican federal tax consequences of the purchase, ownership and disposition of the Notes by certain non-Mexican resident holders. This summary does not purport to be a comprehensive description of all the Mexican federal income tax considerations that may be relevant to a decision to purchase, hold or dispose of the Notes and does not address all of the Mexican federal tax consequences that may be applicable to specific holders of the Notes. The summary does not address any tax consequences under the laws of any state, municipality or locality of Mexico or the laws of any taxing jurisdiction other than the federal laws of Mexico.

This summary is based on the Mexican Federal Income Tax Law (Ley del Impuesto sobre la Renta), the Federal Fiscal Code (Código Fiscal de la Federación) and regulations in effect on the date of this Information Memorandum, all of which are subject to change, possibly with retroactive effect, or to new or different interpretations, which could affect the continued validity of this summary. The current tax regime could be modified by the competent authorities in Mexico during the term of the Notes. We assume no obligation to inform about modifications in the Mexican federal tax provisions applicable throughout the term of the Notes.

Prospective investors, including Mexican resident investors, should consult their own tax advisors as to the Mexican and foreign tax consequences of the purchase, ownership and disposition of the Notes, including, in particular, the effect of any foreign (non-Mexican), state or local tax laws or under any applicable double taxation treaty.

The tax implications described herein may vary depending on the applicability of a treaty for the avoidance of double taxation. Mexico has also entered into or is negotiating several double taxation treaties with various countries that may have an impact on the tax treatment of the purchase, ownership or disposition of the Notes. Prospective purchasers of the Notes should consult their own tax advisors as to the tax consequences, if any, of the application of any such treaties.

Mexican Federal Tax Considerations

General

The following is a general summary of the principal Mexican federal income tax consequences of the acquisition, ownership and disposition of the Notes by holders that are not residents of Mexico, for Mexican federal tax purposes, and that do not hold such Notes through a permanent establishment in Mexico for tax purposes, to which income under the Notes is attributable; for purposes of this summary, each such holder is referred to as a “foreign holder.”

For purposes of Mexican taxation, an individual or corporation that does not satisfy the requirements to be considered a resident of Mexico for tax purposes, as specified below, is deemed a non-resident of Mexico for tax purposes and a foreign holder for purposes of this summary.

An individual is a resident of Mexico for tax purposes, if he/she established his/her home in Mexico. When the individual in question has a home in another country, the individual will be deemed a resident in Mexico if his/her center of vital interests is located in Mexican territory. This will be deemed to occur if, among others, (i) more than 50% of the aggregate income realized by such individual in the calendar year is from a Mexican source or (ii) the principal center of his/her professional activities is located in Mexico. Mexican nationals who filed a change of tax residence to a country or jurisdiction that does not have a comprehensive exchange of information agreement with Mexico and where his/her income is subject to a preferential tax regime as defined by Mexican law, will be considered Mexican residents for tax purposes during the year of the filing of notice of such residence change and during the following three years.

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A legal entity is a resident of Mexico if it maintains the principal administration of its business or the effective location of its management in Mexico. Under applicable regulations, the principal administration of a business or the effective location of management is deemed to exist in Mexico if the individual or individuals having the authority to decide or execute the decisions of control, management, operation or administration are in Mexico.

If a legal entity or an individual is deemed to have a permanent establishment in Mexico for Mexican tax purposes, all income attributable to that permanent establishment will be subject to Mexican income taxes, in accordance with applicable tax laws.

Payments of Interest

Pursuant to the Mexican Income Tax Law, payments of interest on the Notes (including original issue discount, if any, which is deemed to be interest) made by us to foreign holders will be subject to Mexican withholding tax at a rate of 4.9%, if, as expected, the following requirements are met:

 notice of issuance of the Notes (including the principal characteristics of the Notes) is provided to the CNBV pursuant to Article 7 of the Mexican Securities Market Law and the information requirements related to such registration established in the general rules issued by the Tax Administrative Service (Servicio de Administración Tributaria, or “SAT”) are duly complied with;

 the Notes, as expected, are placed outside of Mexico through banks or brokerage houses, in a country with which Mexico has in force a treaty for the avoidance of double taxation (which currently includes Luxembourg);

 we timely file with the SAT, fifteen (15) days after the placement of the Notes, information regarding such placement, and the information requirements specified from time to time by SAT; and

 we timely file with the SAT quarterly filings with respect to interest paid, income tax withheld and certain other related information relative to the immediately preceding quarter during the life of the Notes.

If any of the above mentioned requirements is not met, the Mexican withholding tax will be 10.0% or higher.

In addition, if the effective beneficiaries, whether acting directly or indirectly, severally or jointly, with related parties receiving more than 5% of the aggregate amount of each interest payment under the Notes are (i) shareholders holding 10% or more of our voting stock, directly or indirectly, severally or jointly, with related parties, or (ii) corporations or other entities having more that 20% of their stock owned directly or indirectly, jointly or severally, by persons related to us, the Mexican withholding tax will be applied at a rate of 35%.

Payments of interest on the Notes made by us to non-Mexican pension and retirement funds will be exempt from Mexican withholding tax, provided that:

 such fund is duly-incorporated pursuant to the laws of its country of residence and is the effective beneficiary of the interest payment; and

 such income is exempt from income tax in its country of tax residence.

Holders or beneficial owners of the Notes may be requested to, subject to specified exceptions and limitations, provide certain information or documentation necessary to enable us to apply the appropriate Mexican withholding tax rate on interest payments under the Notes made by us to such holders or beneficial owners. In the event that the specified information or documentation concerning the holder or

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beneficial owner, if requested, is not timely provided, we may withhold Mexican tax from interest payments on the Notes to that holder or beneficial owner at the maximum applicable rate.

Payments of Principal

Under Mexican Income Tax Law, payments of principal on the Notes made by us to a foreign holder will not be subject to Mexican income tax withholding.

Taxation of Capital Gains

Under the Mexican Income Tax Law and regulations thereunder, capital gains resulting from the sale or other disposition of the Notes by a foreign holder to another foreign holder are not taxable in Mexico. Gains resulting from the sale of the Notes by a foreign holder to a Mexican resident for tax purposes or to a foreign holder deemed to have a permanent establishment in Mexico for tax purposes will be subject to the Mexican taxes pursuant to the rules described above with respect to interest payments.

Other Mexican Taxes

Under current Mexican tax laws, generally there are no estate, inheritance, succession or gift taxes applicable to the acquisition, ownership or disposition of the Notes by a foreign holder. Gratuitous transfers of the Notes in certain circumstances may result in the imposition of a Mexican federal tax upon the recipient. There is no Mexican stamp, issuer registration or similar taxes or duties payable by foreign holders of the Notes with respect to the Notes.

The above description is not intended to constitute a complete analysis of all Mexican federal tax consequences relating to the acquisition, ownership and disposition of the Notes. Prospective purchasers of the Notes should consult their own tax advisors concerning the tax consequences of their particular situations.

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SELLING RESTRICTIONS

General

Pursuant to a dealer agreement applicable to the Program (the “Dealer Agreement”), each Dealer has represented, warranted and agreed that it will observe all applicable laws and regulations in any jurisdiction in which it may offer, sell or deliver Notes, and it will not directly or indirectly offer, sell, resell, reoffer or deliver Notes or distribute any Disclosure Documents (as defined in the Dealer Agreement), circular, advertisement or other offering material in any country or jurisdiction, except under circumstances that will result, to the best of its knowledge and belief after due inquiry, in compliance with all applicable laws and regulations.

The United States of America

The Notes have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or territory within the jurisdiction of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Each Dealer has represented that it has offered and sold the Notes, and agrees that it will offer and sell the Notes, only in accordance with Rule 903 of Regulation S under the Securities Act. Accordingly, neither it, its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Notes, and it and they have complied and will comply with the offering restrictions requirement of Regulation S. Each Dealer has agreed that, at or prior to confirmation of sale of the Notes, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it a confirmation or notice to substantially the following effect:

“The Notes covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered or sold within the Unites States or to, or for the account or benefit of, U.S. persons. Terms used above have the meanings given to them by Regulation S under the Securities Act.”

European Economic Area

In relation to each Member State of the EEA that has implemented the Prospectus Directive (each, a “Relevant Member State”), each Dealer has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of the Notes to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Notes that has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of the Notes to the public in that Relevant Member State at any time:

(a) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b) to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive (as defined below), 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Dealer; or

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(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Notes shall require the Issuer or the Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

The United Kingdom

Each Dealer has represented and agreed that (i) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom and (ii) it has only issued or passed on, and will only issue or pass on, in the United Kingdom any document received by it in connection with any issue of the Notes to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements (Exemptions) Order 1996 (as amended)) or who is a person to whom such document may otherwise lawfully be issued or passed on.

Mexico

The Notes have not been and will not be listed in the BMV or registered with the RNV and, therefore, the Notes may not be offered or sold publicly or otherwise be the subject of brokerage activities in Mexico, except pursuant to a private placement exemption set forth under Article 8 of the Mexican Securities Market Law.

Hong Kong

Each Dealer has represented and agreed that (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (a) to persons whose ordinary business is to buy or sell shares or debentures (whether as principal or agent); (b) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (c) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes that are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

Kingdom of Denmark

Each Dealer has represented and agreed that the Notes have not been offered or sold and will not be offered, sold or delivered directly or indirectly in the Kingdom of Denmark by way of a public offering,

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unless in compliance with the Danish Securities Trading Act, Consolidation Act No. 1077 of 4 September 2007, as amended from time to time, and any Orders issued thereunder.

Singapore

The Information Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore (the “MAS”) under the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”). Accordingly, the Notes may not be offered or sold or made the subject of an invitation for subscription or purchase nor may the Information Memorandum or any other document or material in connection with the offer or sale or invitation for subscription or purchase of such Notes be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor pursuant to Section 274 of the Securities and Futures Act, (ii) to a relevant person, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions specified in Section 275 of the Securities and Futures Act, or (iii) pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

Each of the following relevant persons specified in Section 275 of the Securities and Futures Act that has subscribed for or purchased Notes, namely a person who is (i) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, should note that shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for six months after that corporation or that trust has acquired the Notes under Section 275 of the Securities and Futures Act except: (a) to an institutional investor under Section 274 of the Securities and Futures Act or to a relevant person, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions, specified in Section 275 of the Securities and Futures Act; (b) where no consideration is given for the transfer; or (c) by operation of law.

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TRANSFER RESTRICTIONS

The Notes have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes are being offered and sold only outside the United States to persons other than U.S. persons, or foreign purchasers, which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust), in reliance upon Regulation S under the Securities Act.

By its purchase of Notes, each purchaser of Notes will be deemed to:

(1) represent that it is purchasing the Notes for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a foreign purchaser that is outside the United States (or a foreign purchaser that is a dealer or other fiduciary as referred to above);

(2) acknowledge that the Notes have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except as set forth below;

(3) agree that it will deliver to each person to whom it transfers Notes notice of any restriction on transfer of such Notes;

(4) if it is a foreign purchaser outside the United States, (a) understand that the Notes will be represented by the Regulation S global note and that transfers are restricted as described below and (b) represent and agree that it will not sell short or otherwise sell, transfer or dispose of the economic risk of the Notes into the United States or to a U.S. person; and

(5) understand that until registered under the Securities Act, the Notes (other than those issued to foreign purchasers or in substitution or exchange therefor) will bear a legend to the following effect unless otherwise agreed by us and the holder thereof:

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER

(1) REPRESENTS THAT IT IS NOT A U.S. PERSON (WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT) AND

(2) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL INTEREST HEREIN, EXCEPT IN ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ONLY

(A) TO THE COMPANY,

(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT,

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(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH ABOVE, THE ISSUER RESERVES THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY RULE 144 EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; and

(6) acknowledge that we and the Dealers will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements, and agree that if any of the acknowledgements, representations or warranties deemed to have been made by it by its purchase of Notes are no longer accurate, it shall promptly notify us and the Dealers; and if it is acquiring Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account.

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GENERAL INFORMATION

Listing

Application has been made to the Irish Stock Exchange in accordance with its rules to approve this Information Memorandum as a Listing Particulars and for the Notes to be admitted to the Official List of the Irish Stock Exchange for trading on the Global Exchange Market. If the Notes are approved for listing, we will be required to comply with certain undertakings, from time to time, as may be required by the Irish Stock Exchange, and to furnish all such information as the rules of that exchange may require. Physical and electronic copies of our charter documents, our bylaws, the Note Agency Agreement, as each may be amended or supplemented from time to time, form of Notes, our published annual audited consolidated financial statements as of and for each of the years ended December 31, 2012 and 2013, our future published audited consolidated financial statements, and our published quarterly unaudited consolidated financial statements will be available for the life of the Notes free of charge at our principal executive offices, as well as at the offices of the issue and paying agent and transfer agent, as such addresses are set forth in this Information Memorandum. We do not publish unconsolidated financial statements. We believe the auditors’ reports included herein have been accurately reproduced. We will maintain a paying and transfer agent in Ireland for so long as any of the Notes are listed on the Irish Stock Exchange. The expenses related to the admission of the Notes to the Global Exchange Market of the Irish Stock Exchange are expected to be approximately €2,940. The Notes are being issued pursuant to the general authority granted to Grupo Famsa’s executive officers and board of director approval is not required under Article 28 of the Mexican Securities Market Law given the aggregate principal amount of Notes being issued. Our consolidated annual financial statements as of and for the year ended December 31, 2012, as filed previously with the Irish Stock Exchange, are incorporated by reference herein.

Service of Process and Enforcement of Civil Liabilities

Famsa is a publicly-traded variable capital corporation (sociedad anónima bursátil de capital variable) and our subsidiaries (except for Famsa, Inc. and Famsa Financial, Inc., subsidiaries incorporated in the United States) are variable capital corporations (sociedades anónimas de capital variable) and, in the case of Banco Famsa, a corporation (sociedad anónima), authorized to conduct banking activities as an institución de banca múltiple, organized under the laws of Mexico, and headquartered, managed and operated outside the United States (principally in Mexico). Almost all of our directors and officers reside outside the United States. Substantially all of our assets and the assets of our directors and officers are located outside the United States (principally in Mexico). As a result, it may not be possible for investors to effect service of process within the United States or in any other jurisdiction outside of Mexico upon us, our directors or officers or our subsidiaries (except for Famsa, Inc.) or to enforce against such parties in any jurisdiction outside of Mexico judgments predicated upon the laws of any such jurisdiction, including any judgment predicated upon the federal and state securities laws of the United States. The statute of limitations for enforcement of claims under the notes is six years. We have been advised by our Mexican counsel, Mijares, Angoitia, Cortés y Fuentes, S.C., that there is doubt as to the enforceability in original actions in Mexican courts of civil liabilities under the laws of any jurisdiction outside of Mexico, including any judgment predicated solely upon the federal and state securities laws of the United States.

See “Risk Factors—Risks Related to the Notes—You may not be able to effect service of process on us, our subsidiaries or directors or to enforce in Mexican courts judgments obtained against us in the United States.”

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Exhibit A: Unaudited Interim Consolidated Financial Statements

as of September 30, 2013 and 2014

See attached.

Exhibit B: Audited Consolidated Financial Statements

as of December 30, 2012 and 2013

See attached.

Exhibit C: Form of Global Notes

See attached.

Exhibit D: Form of Definitive Notes

See attached.

Issuer Grupo Famsa, S.A.B. de C.V.

Avenida Pino Suárez No. 1202 Norte, Colonia Centro 64000 Monterrey, N.L.

Dealer Banco Espírito Santo de Investimento, S.A., Sucursal en España

Calle Serrano, N. 88 28006 Madrid, Spain

340 Madison Avenue, 12th Floor New York, NY 10173

Issue Agent and HSBC Bank plc. Principal Paying Agent 8 Canada Square London E14 5HQ

Attorneys Jones Day

222 East 41st Street New York, NY 10017-6727

Mijares, Angoitia, Cortés y Fuentes, S.C.

Javier Barros Sierra 540 4to piso Colonia Santa Fe, Delegación Álvaro Obregón CP 01210 Mexico, D.F.

Exhibit A: Unaudited Interim Consolidated Financial Statements

as of September 30, 2013 and 2014

See attached.

I. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statements of financial position As of September 30, 2014, and December 31, 2013 Thousands of Mexican Pesos

2014 2013 Assets

CURRENT ASSETS: Cash and cash equivalents Ps. 1,304,770 3.8% Ps. 1,509,092 4.6% Trade receivables, net 22,338,943 65.3% 21,640,993 65.7% Recoverable taxes 1,016,189 3.0% 1,043,020 3.2% Other accounts receivable 776,141 2.3% 690,376 2.1% Inventories 2,255,299 6.6% 2,174,473 6.6% Total current assets 27,691,342 81.0% 27,057,954 82.1%

NON-CURRENT ASSETS: Restricted cash 388,371 1.1% 159,475 0.5% Trade receivables, net 821,999 2.4% 526,227 1.6% Property, leasehold improvements, and furniture and equipment, net 2,451,032 7.2% 2,568,243 7.8% Goodwill and intangible assets, net 287,066 0.8% 314,683 1.0% Guarantee deposits 103,148 0.3% 140,411 0.4% Other assets 480,023 1.4% 365,345 1.1% Deferred income tax 1,982,930 5.8% 1,810,630 5.5% Total non-current assets 6,514,569 19.0% 5,885,014 17.9% Total assets Ps. 34,205,911 100.0% Ps. 32,942,968 100.0%

Liabilities and Stockholders’ equity

CURRENT LIABILITIES: Demand deposits and time deposits Ps. 9,596,894 28.1% Ps. 8,416,208 25.5% Short-term debt 3,615,665 10.6% 4,309,618 13.1% Suppliers 1,113,085 3.3% 1,600,595 4.9% Accounts payable and accrued expenses 714,227 2.1% 457,015 1.4% Deferred income from guarantee sales 204,781 0.6% 234,038 0.7% Income tax payable 36,439 0.1% 20,512 0.1% Total current liabilities 15,281,091 44.7% 15,037,986 45.6%

NON-CURRENT LIABILITIES: Time-deposits 5,124,064 15.0% 5,513,805 16.7% Long-term debt 4,331,522 12.7% 3,236,795 9.8% Deferred income from guarantee sales 126,135 0.4% 117,652 0.4% Employee benefits 102,053 0.3% 93,043 0.3% Total non-current liabilities 9,683,774 28.3% 8,961,295 27.2% Total liabilites 24,964,865 73.0% 23,999,281 72.9%

Stockholders’ equity: Capital stock 1,455,909 4.3% 1,458,286 4.4% Additional paid-in capital 2,749,708 8.0% 2,778,226 8.4% Retained earnings 4,498,510 13.2% 3,840,868 11.7% Net income 322,030 0.9% 657,642 2.0% Reserve for repurchase of shares 140,194 0.4% 130,000 0.4% Foreign currency translation adjustment 50,125 0.1% 49,689 0.2% Total stockholders’ equity attributable to shareholders 9,216,476 26.9% 8,914,711 27.1% Non-controlling interest 24,570 0.1% 28,976 0.1% Total stockholders’ equity 9,241,046 27.0% 8,943,687 27.1%

Total liabilities and stockholders’ equity Ps. 34,205,911 100.0% Ps. 32,942,968 100.0%

Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statements of income From January 1 to September 30, 2014 and 2013 Thousands of Mexican Pesos

2014 2013

Total revenues Ps. 10,464,183 100.0% Ps. 10,687,700 100.0%

Cost of sales (5,512,541) -52.7% (5,593,199) -52.3%

Gross profit 4,951,642 47.3% 5,094,501 47.7%

Selling and administrative expenses (4,082,502) -39.0% (3,980,214) -37.2% Other income (expenses), net 23,504 0.2% (15,643) -0.1% (4,058,998) -38.8% (3,995,857) -37.4% Operating profit 892,645 8.5% 1,098,644 10.3%

Financial expenses (700,109) -6.7% (676,454) -6.3% Financial income 1,082 0.0% 1,099 0.0%

Financial expenses, net (699,027) -6.7% (675,355) -6.3%

Profit before income tax 193,617 1.9% 423,289 4.0%

Income tax 130,277 1.2% 188,301 1.8%

Consolidated net income Ps. 323,894 3.1% Ps. 611,590 5.7%

Net income attributable to: Controlling interest Ps. 322,030 3.1% Ps. 608,502 5.7% Non-controlling interest 1,864 0.0% 3,088 0.0%

Consolidated net income Ps. 323,894 3.1% Ps. 611,590 5.7%

Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statements of income From July 1 to September 30, 2014 and 2013 Thousands of Mexican Pesos

2014 2013

Total revenues Ps. 3,598,092 100.0% Ps. 3,608,798 100.0%

Cost of sales (1,900,753) -52.8% (1,918,294) -53.2% 00 Gross profit 1,697,339 47.2% 1,690,504 46.8% 00 Selling and administrative expenses (1,394,877) -38.8% (1,345,663) -37.3% Other income (expenses), net 17,409 0.5% (9,778) -0.3% (1,377,468) -38.3% (1,355,441) -37.6% Operating profit 319,872 8.9% 335,063 9.3% 00 Financial expenses (237,305) -6.6% (253,601) -7.0% Financial income (55,573) -1.5% (21,873) -0.6% 00 Financial expenses, net (292,877) -8.1% (275,474) -7.6% 00 Profit before income tax 26,994 0.8% 59,589 1.7% 00 Income tax 69,341 1.9% 77,106 2.1% 00 Consolidated net income Ps. 96,335 2.7% Ps. 136,695 3.8% 00 Net income attributable to: 00 Controlling interest Ps. 95,296 2.6% Ps. 135,747 3.8% Non-controlling interest 1,039 0.0% 948 0.0%

Consolidated net income (loss) Ps. 96,335 2.7% Ps. 136,695 3.8%

Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statements of cash flows From January 1 to September 30, 2014 and 2013 Thousands of Mexican Pesos

2014 2013 Operating activities

Profit before income tax Ps. 193,617 Ps. 423,289 0 0 Depreciation and amortization 284,309 235,092 Allowance for doubtful receivables 855,968 874,352 Gain (Loss) on sale of property, leasehold improvements, furniture and equipment 895 (951) Estimated liabilities for labor benefits 32,484 26,411 Interest income (1,082) (1,099) Interest expenses 1,184,672 1,153,800 Trade receivables (1,849,690) (2,580,224) Inventories (80,826) (258,731) Other accounts receivable (353,577) (383,850) Suppliers (481,758) (185,248) Accounts payable and accrued expenses 134,129 (169,496) Income tax paid (26,097) (66,616) Demand deposits and time deposits 793,824 1,636,428 Interes to bank depositors (524,552) (517,209) Exchange gain and losses, net 67,543 (250)

Net cash flows from operating activities 229,859 185,698

Investing activities

Acquisition of property, leasehold improvements, furniture and equipment (117,984) 00 (159,851) Acquisition of intangible assets (19,104) 00 (14,321) Proceeds from sale of furniture and equipment 6,117 00 7,827 Interest received 1,082 00 1,099

Net cash flow used in investing activities (129,889) 00 (165,246)

Financing activities

Interest paid (570,081) 00 (688,301) Proceeds from current and non-current debt and bank loans 382,159 00 4,344,379 Payments of current and non-current debt and bank loans (91,418) 00 (3,324,023) Increase (decrease) of capital stock and additional paid-in capital (30,895) 00 0 Share repurchase, net 10,194 00 0 Net cash flow from (used in) financing activities (300,041) 00 332,055

(Decrease) increase in net cash and cash equivalents (200,071) 00 352,507 0 0 0 0 Adjustments to cash flow as a result of changes in exchange rates (4,251) 00 (9,921) 0 0 0 0 Cash and cash equivalents at the beginning of the period Ps. 1,509,092 0 Ps. 1,528,727

Cash and cash equivalents at the end of the period Ps. 1,304,770 Ps. 1,871,313

Grupo Famsa, S.A.B. de C.V. and subsidiaries Consolidated statement of changes in stockholders’ equity For the years 2014 and 2013 from January 1 to September 30 Thousands of Mexican Pesos

Additional Cumulative Total Total Capital paid-in Retained translation majority Minority stockholders’ stock capital earnings adjustment interest interest equity

Balance at January 1, 2013 Ps 1,458,286 Ps 2,778,226 Ps 4,381,929 (Ps354,857) Ps 8,263,584 Ps 26,131 Ps 8,289,715

Changes for the nine months ended September 30, 2013: Net income Cumulative translation adjustment (2,912) (2,912) Comprehensive income 608,502 (4,201) 604,301 3,088 607,389 Balance at September 30, 2013 1,458,286 2,778,226 4,990,431 (359,058) 8,867,885 26,307 8,894,192

Balance at January 1, 2014 Ps 1,458,286 Ps 2,778,226 Ps 5,039,571 (Ps361,372) Ps 8,914,711 Ps 28,976 Ps 8,943,687

Changes for the nine months ended September 30, 2014: Net income

Cumulative translation adjustment (2,377) (18,324) (20,701) (6,270) (26,971) Comprehensive income 322,030 436 322,466 1,864 324,330

Balance at September 30, 2014 Ps 1,455,909 Ps 2,759,902 Ps 5,361,601 (Ps 360,936) Ps9,216,476 Ps 24,570 Ps 9,241,046

II. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements as of September 30, 2014, December 31, 2013 and September 30, 2013

Thousands of Mexican Pesos (except where otherwise indicated)

Note 1 - General information:

Grupo Famsa, S. A. B de C. V. and subsidiaries (hereinafter, “Famsa”, “the Company” or “Grupo Famsa”) is a leading Mexican company in the retail sector, satisfying families’ different purchasing, financing and savings needs. The Company is controlled by a trust whose beneficiaries are the Garza Valdéz family. The address of the Company and its corporate office is Ave. Pino Suárez No. 1202 Nte., Zona Centro, Monterrey, Nuevo León, Mexico. Grupo Famsa began operations in 1970.

Grupo Famsa has developed a solid portfolio of complementary businesses based on consumer credit and savings, which supports a large part of the financing needs of its operations. As of September 30, 2014, Grupo Famsa operates a network of 363 stores with 352 bank branches, 139 pawn store branches, as well as 25 stores in two of the states with the largest Hispanic population in the United States of America (“USA”), focused on selling all types of electronic appliances, furniture, clothing, household appliances, mobile phones, motorcycles and other durable consumer goods. The sales operations are carried out in cash and by credit, wholesale and directly to the general public.

The Company is listed on the Mexican Stock Exchange, and in order to perform its financial activities in Mexico it has obtained the authorization of the Ministry of Finance and Public Credit to operate Banco Ahorro Famsa, S. A. Institución de Banca Múltiple as established by the Mexican Law of Credit Institutions, under the supervision and surveillance of the National Banking and Securities Commission (“the Commission”) and Banco de México (“Banxico” or the “Central Bank”).

Note 2 - Significant events:

1. Refinancing of debt:

As part of a debt-refinancing program, Grupo Famsa undertook the following actions:

i. On January 28, 2014, the Company issued notes for US$60 million at a rate of 6.125%, under a euro commercial paper program established in 2009 for a total of US$110 million. The net proceeds were used by the Company to refinance the existing debt and for working capital.

ii. In 2011, the Company entered into a debt certificate program for up to Ps 2,000 million of a revolving nature for a five-year term. On March 13, 2014, under the same program, the Company issued $1,000 million in unsecured debt instruments (“GFAMSA14”) at a spread of 300 basis points over the TIIE interbank rate, maturing on March 10, 2016. The net proceeds obtained from the offering of local bonds were used to settle the GFAMSA 11 debt instrument maturing on March 21, 2014.

Note 3 - Summary of significant accounting policies:

The most significant accounting policies applied in the preparation of these consolidated financial statements are described as follows. These policies have been consistently applied in the reporting years, unless otherwise indicated.

3.1 Basis of preparation

The consolidated financial statements of Grupo Famsa, S. A. B. de C. V. and subsidiaries have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). The IFRS include all effective International Accounting Standards (“IAS”), and the related interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”), including those issued previously by the Standing Interpretations Committee (“SIC”).

In accordance with the amendments to the Rules for Public Companies and Other Participants in the Mexican Stock Exchange, issued by the Mexican National Banking and Securities Commission on January 27, 2009, the Company is required to prepare its financial statements under IFRS starting in 2012.

The consolidated financial statements have been prepared on the historical cost basis of accounting, except for cash equivalents recorded at fair value.

Preparation of the consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. Additionally, it requires the Company’s management to use judgment in the process of applying the Company’s accounting policies. The areas involving a high degree of judgment or complexity, and areas where judgments and estimates are significant to the consolidated financial statements are disclosed in Note 5.

3.2 Basis for consolidation a. Subsidiaries

The subsidiaries are all those entities over which the Company has the power to govern, in terms of their financial and operating policies. The Company controls an entity when it is exposed, or has the right to variable returns from its interest in the entity and it is capable of affecting the returns through its power over the entity. When the Company's interest in subsidiaries is less than 100%, the share attributed to outside shareholders is presented as non-controlling interest.

Subsidiaries are consolidated in full from the date on which control is transferred to the Company and up to the date it loses such control.

The Company applies the acquisition method in accounting for business combinations, except in a jointly controlled entity. The Company defines a business combination as a transaction in which it obtains control over the business, which is defined as a set of activities and assets which are conducted and managed in order to provide benefits in the form of dividends, less costs or other economic benefits, directly to investors.

The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Company. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable acquired assets and liabilities and contingent liabilities assumed in a business combination are initially measured at their fair values at the acquisition date. The Company recognizes any non-controlling interest in the acquiree based on the share of the non-controlling interest in the net identifiable assets of the acquired entity.

Acquisition-related costs are recognized as expenses as they are incurred.

Goodwill is initially measured as an excess of the sum of the consideration transferred and the fair value of the non-controlling interest over the net identifiable assets acquired. If the consideration transferred is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the consolidated statement of income.

When a jointly controlled entity is acquired, the Company accounts for business combinations using the predecessor method. The predecessor method involves the incorporation of the carrying amounts of the acquired entity, which includes the goodwill recognized at the consolidated level with respect to the acquiree. Any difference between the consideration transferred and the carrying amount of the net assets acquired at the level of the subsidiary is recognized in stockholders’ equity.

Inter-company transactions and balances and unrealized gains between Famsa companies are eliminated in the preparation of the consolidated financial statements. Unrealized losses are eliminated unless the transaction provides evidence of impairment in the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.

As of September30, 2014 and December 31, 2013, shareholding percentages are as follows:

Shareholding% 2014 2013 Retail sales Famsa México, S. A. de C. V. (1) 99.99 99.99 Impulsora Promobien, S. A. de C. V. 99.04 99.04 Famsa, Inc., a subsidiary headquartered in U.S.A. (“Famsa USA”) 100.00 100.00

Administrative services Corporación de Servicios Ejecutivos Famsa, S. A. de C. V. 100.00 100.00 Corporación de Servicios Ejecutivos, S. A. de C. V. 99.21 99.21 Promotora Sultana, S. A. de C. V. 99.99 99.99 Suministro Especial de Personal, S. A. de C. V. 99.99 99.99

Manufacturing and other Auto Gran Crédito Famsa, S. A. de C. V. 99.99 99.99 Expormuebles, S. A. de C. V. 99.90 99.90 Mayoramsa, S. A. de C. V. 99.89 99.89 Verochi, S. A. de C. V. 99.92 99.92 Geografía Patrimonial, S. A. de C. V. 100.00 100.00 Corporación de Servicios para la Administración de Valores, S. A. de C. V. (2) 99.80 99.80

Financial sector Banco Ahorro Famsa, S. A., Institución de Banca Múltiple (“BAF”) 99.82 99.82

(1) Company established on December 21, 2012. (2) Company established on April 29, 2013.

b. Absorption (dilution) of control in subsidiaries

The effect of absorption (dilution) of control in subsidiaries, i.e., an increase or decrease in the percentage of control, is recorded in stockholders' equity, directly in retained earnings, in the period in which the transactions that cause such effects occur. The effect of absorption (dilution) of control is determined by comparing the book value of the investment according to the shareholding percentage before the dilution or absorption event, against the book value with the new shareholding percentage after the relevant event. In the event of loss of control, the dilution effect is applied to income.

c. Disposal of subsidiaries

When the Company ceases to have control, any retained interest in the entity is measured at its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purpose of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss. d. Associates

Associates are all entities over which the Company has significant influence but not control. Generally, an investor must hold between 20% and 50% of the voting rights in an investee for it to be an associate. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Company's investment in associates includes goodwill identified at acquisition, net of any accumulated impairment loss.

If the equity in an associate is reduced but significant influence is maintained, only a portion of the amounts recognized in the comprehensive income is reclassified to income for the year, where appropriate.

The Company's share in the profits or losses of associates, post-acquisition, is recognized in the income statement and its share in other comprehensive income of associates is recognized as other comprehensive income. The cumulative movements postacquisition are adjusted against the carrying amount of the investment. When the Company's share of losses in an associate equals or exceeds its equity in the associate, including unsecured receivables, the Company does not recognize further losses unless it has incurred obligations or has made payments on behalf of the associate.

The Company assesses, at each reporting date, whether or not there is objective evidence that the investment in the associate is impaired. If so, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying amount and recognizes it in "share of profit/loss of associates” in the income statement.

Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s equity in such gains. Unrealized losses are also eliminated unless the transaction provides evidence that the asset transferred is impaired. In order to ensure consistency with the policies adopted by the Company, the accounting policies of associates have been modified. When the Company ceases to have significant influence over an associate, any difference between the fair value of any retained interest plus any proceeds from disposal of part of the interest in the associate, less the carrying amount of the investment at the date the equity method was discontinued is recognized in the income statement.

3.3 Business segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The officer responsible for allocating resources and assessing performance of the operating segments has been identified as the Chief Executive Officer.

With respect to the periods presented, September 30, 2014 and 2013, the Company has operated on the basis of business segments. These segments have been determined considering the geographical areas. See Note 18.

The statement of comprehensive income shows the financial information in the way that management analyzes, conducts and controls the business.

3.4 Foreign currency translation a. Functional and presentation currency

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).

The consolidated financial statements are presented in Mexican pesos, which is the functional currency of the Company’s subsidiaries, except for Famsa, Inc., whose functional currency is the United States dollar. b. Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or of valuation when the amounts are revalued. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of comprehensive income. c. Translation of entities with a functional currency different from the presentation currency

The results and financial position of Famsa, Inc., which operates in the USA, are translated into the presentation currency as follows:

- Assets and liabilities for each statement of financial position are translated at the closing rate at the date of such statement of financial position.

- Income and expenses recognized in the statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case, income and expenses are translated at the rates prevailing on the transaction dates), and;

- Capital stock recognized in the statement of financial position is translated at historical exchange rates. All resulting exchange differences are recognized in other comprehensive income.

3.5 Cash and cash equivalents

Cash and cash equivalents include cash balances, bank deposits and other highly liquid investments with original maturities of less than three months with minor risk of changes in value. Cash is presented at nominal value and cash equivalents are measured at fair value; changes in value are recognized in profit or loss for the period. Cash equivalents consist primarily of investments in government securities.

3.6 Restricted cash

Restricted cash represents limited cash in BAF and comprises: a) deposits required by monetary regulations of Banco de México, which earn a bank funding rate, b) inter-bank short-term loans whose term does not exceed three working days, and c) purchased foreign currency, whose settlement date is agreed subsequently to the transaction date.

3.7 Financial instruments

3.7.1 Financial assets

The Company classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at the date of initial recognition.

months after the end of the reporting period; the latter are classified as non-current assets. The Company’s financial assets comprise trade receivables, other accounts receivable, cash and cash equivalents, and restricted cash, in the statement of financial position.

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, less any impairment allowance.

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to retain control of the transferred asset, the Company recognizes its interest in the asset and the associated liability for the amounts it would pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a liability for the amounts received.

3.7.2 Accounts payables

Financial liabilities are initially recognized at fair value and are subsequently measured at their amortized cost using the effective interest method. Liabilities in this category are classified as current liabilities if they are expected to be settled within the next 12 months; otherwise, they are classified as non-current.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

3.7.3 Impairment of financial assets

The Company assesses, at the end of each reporting period, whether or not there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and if that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

For loans and receivables, if impairment exists, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated income statement in the line administrative expenses.

If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the reversal of the previously recognized impairment loss is recognized in the statement of comprehensive income.

3.8 Other accounts receivable

The Company classifies as ‘other receivables’ all credits or advances to employees and other individuals or entities other than the general public. If the receivables are expected to be collected within 12 months of the end of the financial year, they are classified as current; otherwise, they are classified as non-current. See Note 3.7.1.

3.9 Advance payments

The Company classifies as ‘advance payments’ payments for advertising in mass media, mainly television and press. These amounts are recognized at the value of the related agreements and are charged to income as they accrue. In no case do the contracted amounts exceed one year.

3.10 Inventories

Inventories are stated at the lower of cost and net realizable value. The cost comprises the cost of goods plus import costs, freight, handling, shipping, and warehousing in customs and distribution centers, decreased by the value of respective returns. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The cost is determined using the average cost method.

3.11 Property, leasehold improvements, and furniture and equipment, and depreciation

Property, leasehold improvements, and furniture and equipment are recognized at cost less accumulated depreciation and any accumulated impairment losses. The cost includes expenses directly attributable to the acquisition of the asset and all the costs associated with the placement of the asset in its location and in the necessary conditions so that it can operate in the manner intended by the management. See Note 3.19

Costs for extension, remodeling or improvements representing an increase in the capacity and therefore an extension of the useful life of the assets are also capitalized. The expenses for maintenance and repairs are charged to the statement of comprehensive income in the period they are incurred. The carrying amount of the replaced assets is derecognized when replaced, with all effects transferred to the statement of comprehensive income.

Improvements in process represent stores under construction and include investments and all costs directly attributable to placing them in operating conditions. Reclassification of these investments takes place when the store opens and deprecation of the assets commences.

Depreciation on the assets is calculated by the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Buildings and construction 33 years Furniture and equipment 11 years Transportation equipment 5 years Data-processing equipment 4 years Leasehold improvements Over the effective period of the leasing agreement

Residual values, useful lives and depreciation of assets are reviewed and adjusted, if necessary, at the date of each statement of financial position.

The book value of an asset is written off to its recoverable amount if the asset’s carrying amount is higher than its estimated recoverable amount. See Note 3.13.

Gains and losses on the sale of assets result from the difference between the proceeds from the transaction and the carrying value of the assets. These are included in the statement of comprehensive income within other income (expenses), net.

3.12 Goodwill and intangible assets a. Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the interest in the fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units, or groups of cash generating units, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the greater of the value in use and the fair value less selling costs. Impairment, if any, is recognized immediately as an expense and is not subsequently reversed. b. Systems development and computer software

Intangible assets associated with systems development and computer software programs involve the plan or design and the development of a new or substantially improved software or computer systems. Development costs are capitalized only when the following criteria are met:

- It is technically feasible to complete the software product so that it will be available for use;

- Management intends to complete the software product and use or sell it;

- There is an ability to use or sell the software product;

- It can be demonstrated how the software product will generate probable future economic benefits;

- Adequate technical, financial and other resources to complete the development, and to use or sell the software product are available; and

- The expenditure attributable to the software product during its development can be reliably measured.

Acquired licenses for the use of programs, software and other systems are capitalized at the value of costs incurred for the acquisition and preparation for use. Other development costs that do not meet these criteria and research expenses, as well as maintenance, are recognized in the statement of income within administrative expenses as incurred. Development costs previously recognized as an expense are not recognized as an asset in subsequent periods.

These assets are amortized based on their estimated useful life, which is 6 years.

3.13 Impairment of non-financial assets

Assets that have an indefinite useful life, including goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less selling costs and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

3.14 Demand deposits and time-deposits

The Company’s funding liabilities include interest-bearing demand deposits (savings deposits and checking accounts) as well as time-deposits (certificates of deposits and promissory notes). These liabilities are recorded at the contracted transaction value plus accrued interest, determined by the days elapsed at the end of each month, which is charged to income on an accrual basis.

3.15 Provisions

Provisions represent present obligations from past events where an outflow of economic resources is probable. These provisions have been recognized under Management’s best estimate.

3.16 Income taxes

The deferred income taxes are determined in each subsidiary by the asset and liability method, applying the tax rate enacted or substantially enacted at the statement of financial position date. The tax rates are applied to the total of the temporary differences resulting from comparing the accounting and tax bases of assets and liabilities, according to the years in which the deferred asset tax is realized or the deferred liability tax is expected to be settled, considering, when applicable, any tax loss carry forwards expected to be recovered. The effect of a change in tax rates is applied to income forthe period in which the rate change is enacted.

Management periodically evaluates the positions taken in tax returns with respect to the situations in which the applicable law is subject to interpretation. Provisions are recognized when appropriate, based on the amounts expected to be paid to tax authorities.

Deferred tax assets are recognized only when it is probable that future taxable profits will exist against which the deductions for temporary differences can be taken.

The deferred income tax on temporary differences arising from investments in subsidiaries and associates is recognized, unless the period of reversal of temporary differences is controlled by the Company and it is probable that the temporary differences will not be reversed in the near future.

Deferred tax assets and liabilities are offset when legal enforceable rights exist, and when the taxes are levied by the same tax authority.

3.17 Employee benefits a. Short-term benefits

The Company provides benefits to employees in the short term, which may include wages, salaries, annual compensation and bonuses payable within 12 months. b. Pensions and seniority premium

The Company has defined benefit plans. A defined benefit pension plan is a plan that defines the amount of pension benefits to be received by an employee at retirement, usually depending on one or more factors, such as the employee’s age, years of service and compensation.

The liability recognized in the consolidated balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the date of the consolidated balance sheet, together with adjustments for unrecognized actuarial gains and losses and past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension obligation.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

The Company has no plan assets.

c. Employee profit sharing

The Company recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the taxable income after certain adjustments. The Company recognizes a provision where contractually obligated or where there is a past practice that has created a constructive obligation. d. Termination benefits for indemnities established in labor laws

Termination benefits are payable and recognized in the statement of comprehensive income of the period when employment is terminated by the Company before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. e. Other employee benefits

The Company grants benefits to its employees who terminate their employment after more than 15 years of service. According to IAS 19 (revised) this practice constitutes an assumed obligation by the Company with its employees which is recognized based on calculations prepared by independent actuaries.

3.18 Stockholders’ equity

Common shares are classified as equity.

The amounts of the capital stock, legal reserve, additional paid-in capital and retained earnings are presented at historical value, modified by the effects of inflation on the financial information recognized as of December 31, 1997. In accordance with the requirements of IAS 29 “Financial reporting under hyperinflationary economies”, the Mexican economy is currently in a non-hyperinflationary environment, maintaining an accumulated inflation for the last three years under 100% (threshold for considering an economy as hyperinflationary), therefore from January 1, 1998 onwards, the Company does not recognize the effects of inflation on the financial information.

Legal reserve and reinvestment reserve

The net income for the year is subject to the legal provision requiring the allocation of 5% of the income for each period to increase the legal reserve until it reaches an amount equivalent to 20% of the capital stock. The reinvestment reserve is intended to be reinvested in the Company under shareholders agreements; 10% of the profit for the year is allocated to this reserve.

Reserve for repurchase of shares

The maximum limit for the acquisition of the Company’s own shares is determined based on stockholders’ resolutions. Shares acquired are held in treasury and their acquisition cost is charged to stockholders’ equity at their purchase price as follows: a portion is charged to capital stock at its modified historical cost and the excess to the reserve for repurchase of shares (which is included under retained earnings). These amounts are stated at historical cost.

3.19 Borrowing costs

The Company capitalizes borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets, as part of the cost of such assets. It recognizes other borrowing costs as an expense in the period in which they are incurred.

As of September 30, 2014 and December 31, 2012, there were no financial costs capitalized because during these periods there were no qualifying assets in accordance with the Company’s policies. Leasehold improvements require construction periods of less than one year.

3.20 Revenue recognition

Revenue represents the fair value of the cash collected or receivable resulting from the sale of goods or services in the normal operating cycle of the Company. Revenues are stated net of discounts and returns granted to customers.

The Company obtains revenues from retail operations primarily through the sale of products such as household appliances, furniture, clothing, electronics and mobile phones, and other financial services offered through BAF, such as the granting of personal loans.

The Company recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Company’s activities, as described below.

Revenue from sales of goods is recognized when the customer takes possession of the goods at the stores or when the merchandise is delivered to their domiciles. Approximately 81% of sales are settled by customers with cards operated by the Company, and the rest is settled in cash or through bank credit and debit cards.

In accordance with IAS 18 “Revenue recognition”; in merchandise sales in installments, the cash receivable is deferred over the time and therefore, its fair value may be less than the nominal amount of the sale. In these cases, the Company determines the fair value of cash to be received, discounting all future cash flows using an implied interest rate determined as per the prevailing market rate for a similar instrument.

The difference between the nominal value of the sale payable in installments and the discounted value, according to the above paragraph, is recognized as interest income.

The Company’s policy is to sell certain products with the right of return. Customer returns are normally due to some fault or imperfection in the product. However, in those cases where it is clear that the customers wish to return the product, the Company offers its customers the option to credit their account if the purchase was made with a card operated by the Company or to credit their bank card if the purchase was made in cash or with external cards. Experience shows that returns on sales are not significant in relation to total sales, and, therefore, the Company does not set up an allowance for returns.

Other revenues exist for commissions on the sale of life insurance policies which are recognized as income when the policies are sold. Revenues from guarantees granted are recognized by the straight-line method over the period in which this service is offered.

Interest income resulting from sale of products and personal loans is recognized as accrued, using the effective interest rate method.

3.21 Leases

Leases are classified as financial leases when the terms of the lease transfer to the lessee substantially all the risks and rewards of ownership. All other leases are classified as operating leases. Leasing expenses are recorded in the statement of income based on the straight-line method during the term of the lease agreement. See Note 17.

3.22 Earnings per share

Basic earnings per share are calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share are calculated by adjusting the attributable profit and the weighted average number of ordinary

shares outstanding to assume conversion of all potentially dilutive ordinary shares. Basic earnings per share are the same as diluted earnings per share because there are no transactions that may potentially dilute the net income.

Note 4 - Risk Management

An integral risk management process refers to the set of objectives, policies, procedures and actions that are implemented to identify, measure, monitor, limit, control, report and disclose the different types of risk to which the Company is exposed.

Those responsible for risk management and their functions are:

 The Board of Directors, whose responsibility is to approve the objectives, guidelines and policies for risk management.

 Internal Audit, which is responsible for carrying out all the activities necessary in order to comply with the policies defined by the Board of Directors.

The Company has adopted, as its main premise, carrying out its operations in a conservative framework or profile, so as to optimize its resources through the implementation of balanced operations between risk and performance.

The current strategy pursued by the Company is primarily focused on the granting of consumer loans, which will be supported by the funding of resources that will be obtained through deposits, aimed at correct placement and profitability, all of this under the operation of BAF.

The criteria, policies and procedures adopted by the Company in terms of risk management are based on internal policies and applicable standards.

The Company is exposed to several market and financial risks.

a) Market Risk

Market risk is defined as the potential loss due to changes in the risk factors that affect the valuation or the expected results from lending/borrowing operations, such as interest rates and exchange rates, among others.

I. Interest rate risk

The interest rate risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Loans and debt certificates with maturities in the short and long term are subject to both fixed and variable interest rates and expose the Company to the risk of variability in interest rates and therefore its cash flows.

Changes in interest rates on long-term debt at fixed rates only affect the results if such debt is recognized at fair value. The Company initially recognizes loans from financial institutions and debt certificates at fair value and subsequently records them at amortized cost, whereby the Company is subject to interest rate risk related to changes in fair value.

II. Exchange rate risk

The Company's exposure to exchange rate risk refers to risks associated with movements in the exchange rate of the Mexican peso against the U.S. dollar, with the Mexican peso being the functional currency of the Company. In the past, the value of the Mexican peso has been subject to significant exchange fluctuations against the U.S. dollar.

The Company operates internationally and is exposed to foreign exchange risk, primarily related to the Mexican peso and the US dollar. The Company is exposed to foreign exchange risk arising from future commercial transactions in assets and liabilities in foreign currencies and investments abroad.

The Company has monetary assets denominated in U.S. Dollars which are part of the operating unit in the USA. There is no exchange rate risk because the operations are performed only in the local currency. b) Liquidity Risk

Liquidity risk is defined as the inability of the Company to have sufficient funds available to meet its obligations. The Company´s Treasury Department is responsible for ensuring liquidity and managing the working capital in order to guarantee payment to suppliers, service debt and fund the costs and expenses of the operation. Furthermore, the Company has the alternative to obtain liquidity through loans drawn down from credit lines, debt and equity issuances, and funds from the sale of assets. c) Credit Risk

Credit risk refers to the potential loss from the inability of customers to make all required payments. The Company’s accounts receivable represent amounts owed by customers and are generated by sales of goods or services in the regular course of its operations. Since the Company's sales are made mostly to the general public, there is no risk of concentration in a customer or group of customers.

The Company has a risk management system for the loan portfolio, whose main elements include: 1) the risk of default and loss, which includes the processes of granting credit, authorization of purchase transactions and collections management; 2) operational risk, including security of the information and technologic infrastructure and 3) the risk of fraud, comprising the steps of prevention, analysis, detection, containment, recovery and solution.

The initial credit limits are calculated on an individual basis by the Company's systems and are regularly monitored by the credit area to adjust them based on customer history. The Company has processes in place to review credit quality of its customers for early identification of potential changes in the ability to pay, taking timely corrective actions and the determination of current and potential losses.

The Company continuously monitors its portfolio recovery considering several factors including historical trends in the aging of the portfolio, history of cancellations and future performance expectations, including trends in the unemployment rates. In addition to this analysis, the Company requires that loans be secured primarily with the goods sold or by a guarantor. To quantify the credit risk of the Mexican commercial portfolio, the Company uses CREDITRISK+, which considers both the creditworthiness of counterparties and the exposure of each of the customers. CREDITRISK+ models the defaults themselves and is not intended to model or identify any causes underlying the defaults.

For quantification of the credit risk of the consumer portfolio, both for Mexico and the U.S. collective evaluation models are used that consider the level of risk of borrowers, taking into account the likelihood of their defaulting and the severity of the associated loss.

The input data primarily considered are the probabilities of default, according to the credit quality of borrowers. d) Capital Risk

The Company's objective is to safeguard its ability to continue as a going concern, maintaining a financial structure that maximizes the return to shareholders. The capital structure of the Company comprises debt, which includes financing contracted via bank loans and issuance of debt certificates,

cash and cash equivalents and stockholders´ equity. The Company does not have an established policy to declare dividends.

The Company’s management annually reviews its capital structure when presenting the budget to the Board of Directors, which reviews the planned level of debt and ensures that it does not exceed the established limit.

Note 5 - Critical accounting estimates and judgments:

In the application of the Company’s accounting policies, which are described in Note 3, the Company’s management needs to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities. Estimates and assumptions are based on historical experience and other factors considered as relevant. Actual results may differ from those estimates.

Estimates and underlying assumptions are continually reviewed. Adjustments to the accounting estimates are recognized in the period evaluated and in future periods if the evaluation affects the current period and subsequent periods.

5.1 Critical accounting judgments

Below are the key judgments, apart from those involving estimates, made by management in the application of the Company’s accounting policies and that have a significant effect on the amounts recognized in the consolidated financial statements.

5.1.1 Revenue recognition, installment sales

Note 3.20 describes the Company’s policy for the recognition of installment sales. This implies that the Company’s management applies its judgment to identify the applicable discount rate to determine the present value of installment sales. To determine the discounted cash flows, the Company uses an imputed interest rate, considering the rate that can better be determined better from: i) the prevailing rate in the market for a similar instrument available for the Company’s customers with a similar credit rating or ii) the interest rate that equals the nominal value of the sale, properly discounted to the cash price of the goods sold.

5.2 Key sources of uncertainty in estimates

Following are the key sources of uncertainty in the estimates made at the date of the consolidated statement of financial position, and that have a significant risk of resulting in an adjustment to the carrying amounts of assets and liabilities during the next financial period:

5.2.1 Impairment provisions for loan and receivable portfolios

The methodology applied by the Company to determine the amount of this estimate is described in Note 3.7, see also Note 8.

5.2.2 Estimates of useful lives and residual values of property, leasehold improvements, and furniture and equipment

As described in Note 3.11, the Company reviews the estimated useful lives and residual values of property, leasehold improvements and furniture and equipment at the end of each annual period. During the period, it was determined that lives and residual values do not need to be modified since, in the assessment of management, the existing useful lives and residual values adequately reflect the economic conditions of the Company’s operating environment.

Note 6 - Cash and cash equivalents:

Cash and cash equivalents comprised the following: September 30, December 31, 2014 2013

Cash in bank Ps. 436,080 Ps. 414,779 Investments 868,690 1,094,313 Total Ps. 1,304,770 Ps. 1,509,092

Note 7 - Restricted cash:

Restricted cash represents limited cash in BAF of Ps. 388,371 and Ps. 159,475 as of September 30, 2014 and December 31, 2013, respectively. The restricted cash balance is classified as a non-current asset in the statement of financial position of the Company based on the expiration date of the restriction.

Note 8 - Trade receivables: September 30, December 31, 2014 2013 Trade receivables: Mexican consumer Ps. 19,435,018 Ps. 18,606,822 Mexico commercial 2,781,627 2,751,868 USA consumer 2,126,493 2,105,334 24,343,138 23,464,024 Less - allowance for doubtful accounts (1,182,196) (1, 296,804) Total, net Ps.23,160,942 Ps. 22,167,220

Current trade receivables Ps. 22,338,943 Ps. 21,640,993

Non-current trade receivables Ps. 821,999 Ps. 526,227

8.1 Movements of the allowance for impairment of doubtful accounts:

September 30, December 31, 2014 2013

Opening balance (Ps 1,296,804) (Ps 1,035,154) Increases (855,968) (1,284,315) Recoveries 970,576 1,022,665 Ending balance (Ps 1,182,196) (Ps 1,296,804)

Note 9 - Inventories: 2014 2013

Products (*) Ps 1,901,384 Ps 1,915,827 Clothing, footwear and jewelry 315,631 237,799 Merchandise in transit 38,284 20,847 Total Ps 2,255,299 Ps 2,174,473

(*) Comprises all types of electronic appliances, furniture, household appliances, mobile phones, motorcycles and other consumer goods.

Note 10 - Property, leasehold improvements and furniture and equipment, net:

Buildings Furniture Trans- Data Improve- and and Leasehold portation processing ments in Land construction equipment improvements equipment equipment process Total

As of December 31, 2013 Cost Ps 328,454 Ps 392,889 Ps 1,066,656 Ps 2,482,181 Ps 215,356 Ps 532,202 Ps 207,016 Ps 5,224,754 Accumulated depreciation - (121,966) (489,405) (1,420,647) (162,153) (462,340) - (2,656,511) Net book amount Ps 328,454 Ps 270,923 Ps 577,251 Ps 1,061,534 Ps 53,203 Ps 69,862 Ps 207,016 Ps 2,568,243

As of September30, 2014 Opening net book amount 328,454 270,923 577,251 1,061,534 53,203 69,862 207,016 2,568,243 Exchange differences on cost - 3,560 3,403 3,602 1,428 699 - 12,692 Additions - - 20,346 46,521 36,775 13,745 7,015 124,402 Disposals - - (3,595) (21) (14,885) (8,092) - (26,593) Cancelation of accumulated depreciation on the sale of fixed assets - - 4,411 525 8,340 8,076 - 21,352 Capitalization of fixed assets - 96,129 9,054 99,488 - 558 (206,465) (1,236) Exchange differences on accumulated depreciation - 262 (3,343) (3,604) (1,784) (676) - (9,145) Depreciation charge - (7,099) (39,821) (128,166) (21,818) (41,779) - (238,683) Closing net book amount 328,454 363,775 567,706 1,079,879 61,259 42,393 7,566 2,451,032

As of September 30, 2014 Cost 328,454 492,578 1,095,864 2,631,771 238,674 539,112 7,566 5,334,019 Accumulated depreciation - (128,803) (528,158) (1,551,892) (177,415) (496,719) - (2,882,987) Net book amount Ps 328,454 Ps 363,775 Ps 567,706 Ps 1,079,879 Ps 61,259 Ps 42,393 Ps 7,566 Ps 2,451,032

The depreciation expense is recognized in the income statement under administrative and selling expenses. At September 30, 2014 and December 31, 2013, there were no signs of impairment.

Note 11 - Goodwill and intangible assets: Licenses and Goodwill software Total As of December 31, 2013 Cost Ps 241,096 Ps 336,035 Ps577,131 Accumulated amortization - (262,448) (262,448) Net book amount Ps 241,096 Ps 73,587 Ps 314,683

At September 30, 2014 Additions - 18,009 18,009 Disposals - - - Amortization - (45,626) (45,626) Ending balance 241,096 45,970 287,066

As of September 30, 2014 Cost 241,096 354,044 595,140 Accumulated amortization - (308,074) (308,074) Net book amount Ps 241,096 Ps 45,970 Ps 287,066

Goodwill is not subject to amortization and is tested annually for impairment.

Note 12 - Demand deposits and time-deposits:

As of September 30, 2014 and December 31, 2013, the Company’s deposits with third parties were as follows:

2014 2013 Demand deposits: Savings deposits (interest bearing) Ps 3,194,895 Ps 2,640,232 Checking accounts (non-interest bearing) 411,019 371,360

Time-deposits: From the general public 11,115,044 10,918,421 Total demand deposits and time-deposits Ps 14,720,958 Ps 13,930,013

In accordance with the terms negotiated, the Company’s deposits as of September 30, 2014 and December 31, 2013 are presented as follows: 2014 2013

Short-term demand deposits and time-deposits Ps 9,596,894 Ps 8,416,208 Long-term demand deposits and time-deposits 5,124,064 5,513,805 Total demand deposits and time-deposits Ps 14,720,958 Ps 13,930,013

Note 13 - Short-term and long-term debt:

The total consolidated debt was as follows: September 30, December31, Interest 2014 2013 rate (*) GrupoFamsa: Mexican pesos: Financial factoring: Financiera Bajío, S. A. SOFOM, ER Ps 149,906 Ps 76,100 6.17% (b) Banco Nacional de México, S. A. - 99,094 6.53% (b) BBVA Bancomer, S. A. 64,267 24,434 6.29% (b) Arrendadora y Factor Banorte, S. A. de C. V. SOFOM, ER 346,855 373,996 5.79% (b) Banco Monex, S. A. 199,511 183,886 5.92% (b) 760,539 757,510 Amounts drawn down on short-term Revolving credit lines: Banco del Bajío, S. A. 100,000 100,000 6.55% (b) Banorte, S. A. 249,795 199,795 6.17% (a) BBVA Bancomer, S. A. 200,000 150,000 6.18% (a) CI Banco, S. A. 100,000 100,000 6.04% (b) Banamex, S. A. 100,000 100,000 6.44% (b) Banco Actinver, S. A. 100,000 35,000 6.79% (b) Banco Monex, S. A. 50,000 - 5.90% (b) Issuance of debt certificates: Short-term 978,752 1,989,170 6.21% (b) Long-term (1) 1,000,000 - 6.28% (b) 2,878,547 2,673,965 Grupo Famsa:

U.S. Dollars: Issuance of foreign debt: Senior notes 2020 (2) 3,271,064 3,176,924 7.25% (a) Euro–commercial paper(3) 805,980 654,215 6.125% (a) 4,077,044 3,831,139

Banco Ahorro Famsa, S. A., Institución de Banca Múltiple: Mexican pesos: Banco del Bajío, S. A. - 80,000 3.45% (b) - 80,000

Famsa USA: U.S: Dollars: Business property lending, Inc. 60,458 59,871 6.07% (a) Capital One, National Association 63,135 39,254 5.00% (b) Deutsche Bank AG (4) 107,464 104,674 2.175% (a) 231,057 203,799 Total debt 7,947,187 7,546,413 Short-term debt (3,615,665) (4,309,618) Long-term debt Ps 4,331,522 Ps 3,236,795 (*) Nominal rates as of September 30, 2013. Interest is accrued on a monthly basis.

(1) In 2011, the Company entered into a revolving debt instrument program for up to Ps 2,000 million for a five-year term. On March 13, 2014, under that program, the Company issued $1,000 million in unsecured debt instruments (GFAMSA14) at a spread of 300 basis points over the TIIE interbank rate maturing in March 10, 2016. The net proceeds obtained from the offering of local bonds were used to settle GFAMSA 11 bonds maturing on March 21, 2014.

(2) On May 31, 2013, the Company issued senior notes of US$ 250 million, under Rule 144A/Reg. S, in the foreign market, at a rate of 7.25%, maturing in May 31, 2020. The senior notes are guaranteed by the retail, manufacturing and other subsidiaries. The notes were assigned “B” and “B+” ratings by Standard & Poor’s and Fitch Ratings, respectively. The notes may not be offered or sold within the United States.

(3) On January 28, 2014, the Company issued notes for US$60 million at a rate of 6.125%, under a euro commercial paper program established in 2009 for a total of US$110 million. The net proceeds were used by the Company to refinance the existing debt and for working capital, maturing on January 28, 2015.

(4) On October 16, 2012, the Company renewed its credit line for a maximum amount of EUR 6.6 million or its equivalent in US dollars. As of December 31, 2012, the Company had drawn a total of US$8 million; this credit bears interest at an annual rate of 2.39% and matures on October 16, 2013.

Note 14 - Stockholders’ equity:

At the April 23, 2014 Ordinary General Meeting , the stockholders agreed that the fund created for the purchase and sale of the Company’s own shares will be of up to a maximum amount of Ps 130 million. As ofSeptember 30, 2014, the Company had 1,447,968 shares (259,700 shares in 2013) held in treasury and the market value per share at that date was Ps13.30 (Ps 23.61 at December 31, 2013).

As of September 30, 2014 and December 31, 2013, the capital stock comprised the following:

Number Description of shares Amount Fixed capital (minimum): Series “A”, Class “I”, common, nominative shares, without par value 330,097,385 Ps 660,195

Variable capital: Series “A”, Class “II”, common, nominative shares, without par value 107,902,641 215,805

Accumulated inflation increase as of December 31, 1997 579,909 Capital stock 438,000,026 Ps1,455,909

As of September 30, 2014, retained earnings included Ps 335,661 and Ps 671,324, applicable to the legal reserve and to the reinvestment reserve, respectively.

Note 15 - Costs and expenses classified by their nature:

Cost of sales and administrative and selling expenses are analyzed as follows:

September 30,

2014 2013

Cost of goods sold Ps 4,101,107 Ps 4,168,293 Salaries and employee benefits 1,880,741 1,887,639 Impairment allowance 855,968 874,352 Leasing 612,424 577,236 Interest expense on bank deposits 521,673 517,209 Depreciation and amortization 284,309 235,092 Energy, water and telephone services 218,356 233,192 Advertising 168,659 221,536 Maintenance 113,434 120,085 Freight 33,793 33,345 Other (1) 804,579 705,434 Ps 9,595,043 Ps 9,573,413

(1) Includes mainly insurance expenses, travel expenses and training.

Note 16 - Contingencies:

In the normal course of operations, the Company is involved in disputes and lawsuits. The Company believes there are no legal proceedings or threatened claims against or affecting the Company which, in the event of an adverse resolution, could significantly affect, either individually or taken as a whole, the Company’s results of operations or financial position.

Note 17 - Commitments:

The majority of the subsidiary companies have entered into long-term lease agreements (some with related parties) covering properties occupied by their stores. Following is a description of the main agreements entered into with related parties:

As of September 30, 2014, the Company had 42 long-term lease agreements in place with the controlling shareholders and various entities controlled by them, with regard to the retail space used by a number of stores. The terms of such agreements are similar and consistent with standard industry practices and have been established at market prices.

The Company has entered into various asset management agreements with affiliates and other entities controlled by the principal shareholders, covering account collection services and the management and investment of the proceeds of such collections, in exchange for a commission payable on an annual basis.

During 2014 and 2013, total rental and administrative services expense was as follows:

2014 2013 Other, different from related parties Ps 533,569 Ps 501,527 Related parties 78,855 75,709 Total Ps 612,424 Ps 577,236

Note 18 - Information by business segments:

18.1 Segment reporting

The Company manages and evaluates its continuing operations through three business segments: Mexico (national retail stores and financial sector), the US, (foreign retail stores) and other businesses in Mexico (wholesale, manufacturing of furniture and footwear, catalog business). The Company controls and evaluates its continuing operations on a consolidated basis. Its activities are carried out through its subsidiary companies.

The Company’s management uses operating income before depreciation and amortization as the measurement of segment performance as well as to evaluate development, make general operating decisions and assign resources. The information by business segment is as follows:

September 30, 2014 Mexico USA Other Subtotal Intersegment Consolidated Net sales (1) Ps 6,380,944 Ps 883,918 Ps 382,406 Ps 7,647,268 (Ps 336,129) Ps 7,311,139 Interest earned from customers 2,751,883 381,203 164,919 3,298,005 (144,961) 3,153,044 Total revenues Ps 9,132,827 Ps 1,265,121 Ps 547,325 Ps 10,945,273 (Ps 481,090) Ps 10,464,183 Cost of sales (4,829,429) (701,002) (461,575) (5,992,006) 479,465 (5,512,541) Gross profit 4,303,398 564,119 85,750 4,953,267 (1,625) 4,951,642 Operating expenses (2) (3,276,804) (477,585) (88,344) (3,842,733) 44,540 (3,798,193) Other income, net 71,086 7,302 (11,901) 66,487 (42,983) 23,504 Operating profit before depreciation and amortization 1,097,680 93,836 (14,495) 1,177,021 (68) 1,176,953 Depreciation and amortization (276,569) (3,955) (3,785) (284,309) - (284,309) Operating profit (loss) Ps 821,111 Ps 89,881 (Ps 18,280) Ps 892,712 (Ps 68) Ps 892,644

Additional disclosures: Capital expenditure Ps 119,207 Ps 3,994 Ps 1,201 Ps 124,402 Ps - Ps 124,402 Adjusted EBITDA Ps 1,619,353 Ps 93,836 (Ps 14,495) Ps 1,698,694 (Ps 68) Ps 1,698,626

September 30, 2013 Mexico USA Other Subtotal Intersegment Consolidated Net sales (1) Ps 6,456,134 Ps 817,597 Ps 440,191 Ps 7,713,922 (Ps 389,985) Ps 7,323,937 Interest earned from customers 2,965,195 375,509 202,172 3,542,876 (179,113) 3,363,763 Total revenues Ps 9,421,329 Ps 1,193,106 Ps 642,363 Ps 11,256,798 (Ps 569,098) Ps 10,687,700 Cost of sales (4,951,010) (665,368) (543,584) (6,159,962) 566,763 (5,593,199) Gross profit 4,470,319 527,738 98,779 5,096,836 (2,335) 5,094,501 Operating expenses (2) (3,238,095) (457,744) (95,293) (3,791,132) 46,010 (3,745,122) Other income(expenses), net 37,871 (2,623) (7,129) 28,119 (43,762) (15,643) Operating profit before depreciation and amortization 1,270,095 67,371 (3,643) 1,333,823 (87) 1,333,736 Depreciation and amortization (228,784) (2,644) (3,664) (235,092) - (235,092) Operating profit (loss) Ps 1,041,311 Ps 64,727 (Ps 7,307) Ps 1,098,731 (Ps 87) Ps 1,098,644

Additional disclosures: Capital expenditure Ps 157,558 Ps 5,234 Ps 450 Ps 163,242 Ps - Ps 163,242 Adjusted EBITDA Ps 1,787,304 Ps 67,371 (Ps 3,643) Ps 1,851,032 (Ps 87) Ps 1,850,945

(1) Net sales realized in the respective countries shown above.

(2) Excluding depreciation and amortization.

18.2 Assessment of operating performance

The Company evaluates operating performance based on a measure denominated “adjusted EBITDA”, which consists of adding to the operating profit, interest expense on bank deposits, and depreciation and amortization. The adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered as an alternative to net income as a measure of operating performance or cash flow as a measure of liquidity.

The reconciliation between Adjusted EBITDA and operating profit for the periods ended September 3o is as follows:

2014 2013 Operating profit Ps 892,644 Ps 1,098,644 Interest expense on bank deposits 521,673 517,209 Depreciation and amortization 284,309 235,092 Adjusted EBITDA Ps 1,698,626 Ps 1,850,945

18.3 Sales by product

Net sales by product for the periods ended September 30 were as follows:

2014 2013

Interest earned from customers Ps 3,153,044 Ps 3,363,763 Furniture 1,383,371 1,578,808 Appliances 1,193,974 1,142,134 Electronics 1,162,978 1,145,184 Mobile phones 969,390 853,759 Motorcycles 585,256 571,146 Computer equipment 454,330 549,494 Clothing and footwear 317,365 328,735 Seasonal articles (air conditioners, heaters, etc.) 269,563 302,336 Income from commercial banking 143,447 140,217 Small appliances 108,818 100,841 Sports articles 70,740 76,780 Children’s articles and accessories 17,020 19,535 Other (1) 634,887 514,968 Ps 10,464,183 Ps 10,687,700

(1) Includes primarily revenues from guarantees granted and sales through the commercial program denominated “Famsa to Famsa”.

Exhibit B: Audited Consolidated Financial Statements

as of December 30, 2012 and 2013

See attached.

Grupo Famsa, S. A. B. de C. V. and subsidiaries Consolidated Financial Statements December 31, 2013 and 2012

Grupo Famsa, S. A. B. de C. V. and subsidiaries Consolidated Financial Statements Contents As of December 31, 2013 and 2012

Contents: Page

Independent auditor’s report ...... 1 and 2

Consolidated financial statements:

Consolidated statements of financial position ...... 3

Consolidated statements of income ...... 4

Consolidated statements of comprehensive income ...... 5

Consolidated statements of changes in stockholders’ equity ...... 6

Consolidated statements of cash flows ...... 7

Notes to the consolidated financial statements ...... 8 to 56

Grupo Famsa, S. A. B. de C. V. and subsidiaries Consolidated statements of financial position As of December 31, 2013 and 2012

(Thousands of Mexican pesos)

December 31, Assets Note 2013 2012 Current assets: Cash and cash equivalents 6 Ps. 1,509,092 Ps. 1,528,727 Trade receivables, net 8 21,640,993 18,546,393 Recoverable taxes 1,043,020 1,135,713 Other accounts receivable 9 690,376 525,964 Inventories 10 2,174,473 1,950,663 Total current assets 27,057,954 23,687,460 Non-current assets: Restricted cash 7 159,475 254,905 Trade receivables, net 8 526,227 669,065 Property, leasehold improvements, and furniture and equipment, net 11 2,568,243 2,370,018 Goodwill and intangible assets, net 12 314,683 299,572 Guarantee deposits 140,411 53,910 Other assets 13 365,345 186,963 Deferred income tax 23 1,810,630 1,548,033 Total non-current assets 5,885,014 5,382,466 Total assets Ps. 32,942,968 Ps. 29,069,926

Liabilities and Stockholders’ equity Demand deposits and time deposits 14 Ps. 8,416,208 Ps. 8,382,497 Short-term debt 15 4,309,618 2,583,831 Suppliers 1,600,595 1,562,613 Accounts payable and accrued expenses 16 457,015 603,464 Deferred income from guarantee sales 234,038 239,245 Income tax payable 20,512 26,556 Total current liabilities 15,037,986 13,398,206

Non-current liabilities: Time-deposits 14 5,513,805 3,616,767 Long-term debt 15 3,236,795 3,563,611 Deferred income from guarantee sales 117,652 116,387 Employee benefits 18 93,043 85,240 Total non-current liabilities 8,961,295 7,382,005

Total liabilities 23,999,281 20,780,211

Stockholders’ equity: Capital stock 19 1,458,286 1,458,286 Additional paid-in capital 2,778,226 2,778,226 Retained earnings 4,498,510 3,836,677 Reserve for repurchase of shares 130,000 130,000 Foreign currency translation adjustment 49,689 60,395

Total stockholders’ equity attributable to shareholders 8,914,711 8,263,584 Non-controlling interest 28,976 26,131

Total stockholders’ equity 8,943,687 8,289,715

Subsequent events (Notes 17 and 27)

Total liabilities and stockholders’ equity Ps. 32,942,968 Ps. 29,069,926

The accompanying notes are an integral part of these consolidated financial statements.

Humberto Garza Valdéz Abelardo García Lozano Chief Executive Officer Chief Financial Officer

Page 3 Grupo Famsa, S. A. B. de C. V. and subsidiaries Consolidated statements of income For the years ended December 31, 2013 and 2012

(Thousands of Mexican pesos)

December 31 Note 2013 2012

Net sales 26 Ps. 10,642,973 Ps. 10,446,466 Interest earned from customers 26 4,404,901 3,677,062 Total revenues 15,047,874 14,123,528 Cost of sales 20 (8,143,382) (7,536,148) Gross profit 6,904,492 6,587,380

Selling expenses 20 (3,589,431) (3,226,968) Administrative expenses 20 (1,903,912) (1,956,292) Other income, net 21 8,420 70,980 (5,484,923) (5,112,280) Operating profit 1,419,569 1,475,100

Financial expenses 22 (986,923) (722,345) Financial income 22 1,515 63,970 Financial expenses, net (985,408) (658,375) Profit before income tax 434,161 816,725

Income tax 23 226,326 107,332 Profit before discontinued operations 660,487 924,057

Discontinued operations - (598,458) Consolidated net income Ps. 660,487 Ps. 325,599

Net income attributable to: Controlling interest Ps. 657,642 Ps. 322,850 Non-controlling interest 2,845 2,749 Consolidated net income Ps. 660,487 Ps. 325,599

Basic and diluted earnings per share attributable to controlling interest, in Mexican pesos:

Continuing operations Ps. 1.50 Ps. 2.10

Discontinued operations Ps. - Ps. (1.36)

Net income Ps. 1.50 Ps. 0.74

Number of outstanding shares 19 439,188,294 439,188,294

The accompanying notes are an integral part of these consolidated financial statements.

Humberto Garza Valdéz Abelardo García Lozano Chief Executive Officer Chief Financial Officer

Page 4 Grupo Famsa, S. A. B. de C. V. and subsidiaries Consolidated statements of comprehensive income For the years ended December 31, 2013 and 2012

(Thousands of Mexican pesos)

December 31

Note 2013 2012

Consolidated net income Ps. 660,487 Ps. 325,599 Other comprehensive income (loss), net of taxes:

Items that will not be reclassified to profit or loss: Actuarial gains and (losses) 18 4,191 (2,185)

Items that may be reclassified to profit or loss: Foreign currency translation adjustment (10,706) (48,215) Consolidated comprehensive income Ps. 653,972 Ps. 275,199

Consolidated comprehensive income attributable to: Controlling interest Ps. 651,127 Ps. 272,450 Non-controlling interest 2,845 2,749 Ps. 653,972 Ps. 275,199

The accompanying notes are an integral part of these consolidated financial statements.

Humberto Garza Valdéz Abelardo García Lozano Chief Executive Officer Chief Financial Officer

Page 5 Grupo Famsa, S. A. B. de C. V. and subsidiaries Consolidated statements of changes in equity As of December 31, 2013 and 2012

(Thousands of Mexican pesos)

Effects Total Additional Reserve for of foreign stockholders’ Total Total Capital paid-in Retained repurchase currency equity attributable non-controlling stockholders’ Note stock capital earnings of shares translation to shareholders interest equity

Balances as of January 1, 2012 Ps. 1,458,286 Ps. 2,778,226 Ps. 3,536,012 Ps 110,000 Ps. 108,610 Ps. 7,991,134 Ps. 23,382 Ps. 8,014,516

Transactions with owners of the Company: Increase in the reserve for repurchase of shares 19 - - (20,000) 20,000 - - - -

Net income - - 322,850 - - 322,850 2,749 325,599 Other comprehensive income - - (2,185) - (48,215) (50,400) - (50,400)

Total comprehensive income - - 320,665 - (48,215) 272,450 2,749 275,199 Balances as of December 31, 2012 19 1,458,286 2,778,226 3,836,677 130,000 60,395 8,263,584 26,131 8,289,715

Net income - - 657,642 - - 657,642 2,845 660,487 Other comprehensive income - - 4,191 - (10,706) (6,515) - (6,515) Total comprehensive income - - 661,833 - (10,706) 651,127 2,845 653,972 Balances as of December 31, 2013 19 Ps. 1,458,286 Ps. 2,778,226 Ps. 4,498,510 Ps. 130,000 Ps. 49,689 Ps. 8,914,711 Ps. 28,976 Ps. 8,943,687

The accompanying notes are an integral part of these consolidated financial statements.

Humberto Garza Valdéz Abelardo García Lozano Chief Executive Officer Chief Financial Officer

Page 6 Grupo Famsa, S. A. B. de C. V. and subsidiaries Consolidated statements of cash flows For the years ended December 31, 2013 and 2012

(Thousands of Mexican pesos)

December 31 Operating activities: Note 2013 2012

Profit before income tax Ps. 434,161 Ps. 816,725 Depreciation and amortization 11,12,20 286,771 314,397 Allowance for doubtful receivables 20 1,284,315 1,173,362 Gain on sale of property, leasehold improvements, furniture and equipment (1,639) (1,279) Estimated liabilities for labor benefits 18 38,434 15,731 Interest income (1,515) (1,757) Interest expenses 1,630,185 1,312,145 Trade receivables (4,236,077) (2,476,844) Inventories (223,810) (308,934) Other accounts receivable (248,875) (109,161) Suppliers 27,656 87,437 Accounts payable and accrued expenses (49,020) (647,281) Interests to bank depositors (690,523) (589,799) Income tax paid (26,846) (39,619) Demand deposits and time deposits 1,922,981 1,563,190 Exchange gain and losses, net 19,381 (112,969) Net cash flows from operating activities 165,579 995,344

Investing activities:

Acquisition of property, leasehold improvements, furniture and equipment (525,899) (201,597) Acquisition of intangible assets (34,987) (19,777) Proceeds from sale of furniture and equipment 62,746 9,829 Interest received 1,515 1,757 Net cash flow used in investing activities (496,625) (209,788)

Financing activities:

Interest paid (1,048,565) (718,948) Proceeds from current and non-current debt and bank loans 4,586,356 300,040 Payments of current and non-current debt and bank loans (3,216,773) (103,585) Net cash flow from (used in) financing activities 321,018 (522,493)

(Decrease) increase in net cash and cash equivalents (10,028) 263,063

Adjustments to cash flow as a result of changes in exchange rates (9,607) 4,210

Cash and cash equivalents at the beginning of the period 6 1,528,727 1,261,454 Cash and cash equivalents at the end of the period 6 Ps.1,509,092 Ps.1,528,727

The accompanying notes are an integral part of these consolidated financial statements.

Humberto Garza Valdéz Abelardo García Lozano Chief Executive officer Chief financial officer

Page 7 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

(Thousands of Mexican pesos, except where otherwise indicated)

Note 1 - General information:

Grupo Famsa, S. A. B de C. V. and subsidiaries (hereinafter, “Famsa”, “Company” or “Grupo Famsa”) is a Mexican company and a leader in the retail sector, satisfying families’ different purchasing, financing and savings needs. The Company is controlled by a trust whose beneficiaries are the Garza Valdéz family. The address of the Company and its corporate office is Ave. Pino Suárez No. 1202 Nte., Zona Centro, Monterrey, Nuevo León, Mexico. Grupo Famsa started operations in 1970.

Grupo Famsa has developed a solid portfolio of complementary businesses based on consumer credit and savings, which supports a large part of the financing needs of its operations. As of December 31, 2013, Grupo Famsa operates a network of 362 stores with 317 bank branches, 173 pawn store branches, as well as 25 stores in two of the states with the largest Hispanic population in the United States of America (USA), focused on selling all types of electronic appliances, furniture, clothing, household appliances, mobile phones, motorcycles and other consumer durable goods. The sales operations are carried out in cash and by credit, wholesale and directly to the general public.

The consolidated financial statements were authorized for issuance on April 22, 2014, by the Company’s officers who have signed the consolidated financial statements and the accompanying notes. They are subject to the approval of the ordinary shareholders’ meeting, which is legally empowered to make such changes as it considers necessary.

Note 2 - Significant events:

1. Discontinued operation:

The Company’s management redesigned its business strategy for Famsa, Inc. due to the ongoing economic problems in the Western USA region affecting specially the Hispanic community. During 2012 the organized closing of the stores in the states of California, Arizona and Nevada was concluded and simultaneously the US operations were concentrated in the stores located in the states of Texas and Illinois (“Eastern USA” region).

Page 8 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The analysis of the results of the discontinued operation for the years ended December 31, 2012, is as follows: 2013 2012 Net sales Ps. - Ps. 392,105

Operating expenses - (421,781) Allowance for doubtful receivables - (368,704) Cost of goods sold - (189,753) Financing expenses - (7,417) Freights - (2,828) Other expenses, net - (80) - (990,563) Loss before tax from discontinued operations - (598,458) Tax on discontinued operations - - Loss after tax from discontinued operations Ps. - (Ps. 598,458)

The net cash flow from discontinued operations is attributable to operating activities.

2. Refinancing of debt:

As part of a debt-refinancing program, Grupo Famsa undertook the following actions:

i. On February 4, 2013, the Company issued notes for US$50 million at a rate of 7.00%, under a euro commercial paper program established in 2009 for a total of US$100 million. The net proceeds were used by the Company to refinance the existing debt which matured on February 4, 2014. The debt was paid off at the aforementioned date with the net proceeds obtained from the issuance of euro commercial paper in the amount of US$60 million under the same program and maturing on January 28, 2015 at a rate of 6.125%.

ii. On May 15, 2013 the company announced an acquisition offer in cash to acquire each and every one of its senior notes 11.00% payable in 2015, amounting to US$200 million. At the cut-off date of the early offer established at May 29, 2013, 80.07% or US$160.13 million of the total outstanding bonds were amortized. At the date of maturity of the acquisition offer, established at June 12, 2013, 0.16% or US$322 thousands of the total outstanding bonds were redeemed. The remaining amount, equal to US$39.55 million, was amortized by the company on July 22, 2013. Additionally, on May 31, 2013 Grupo Famsa issued senior notes amounting to US$250 million, under rule 144A/Reg. S, in the foreign market, at a 7.25% rate maturing on May 31, 2020. The bonds are guaranteed by retailers, transformation companies and others. The bonds received a “B” rating by Standard & Poors and a “B+” rating by Fitch Ratings so that they cannot be offered or sold in the United States of America.

Page 9 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

3. Business acquisition

In order to continue strengthening the network expansion plan of banking branches in order to increase penetration in the country’s states and offer its clients different credit alternatives, BAF conducted negotiations with the company Monte de México, S. A. de C. V. (Montemex) in October 2013, in order to acquire a group of identifiable assets associated to the pledge activity of this company, mainly credit portfolio, furniture and equipment and intangible assets (referring to Montemex brands, licenses and certain know-how, among others.) This acquisition qualifies as a business combination in accordance with IFRS 3.

At December 31, 2013, BAF is in the process of concluding the acquisition of assets linked to the pawn store business, to determine the final acquisition price and distribute it at the fair values of the acquired assets and consequently, determine goodwill. The negotiation process is estimated to be concluded within a term of approximately twelve months as from the acquisition date.

Goodwill has been determined in a preliminary way based on the information available as from the purchase date and up to the date of issuance of this report. The total consideration paid by the Company at the date of issuance of this report was $396,997 in cash. The following table shows recorded assets and assumed liabilities determined provisionally at the acquisition date. We estimate the valuation will be concluded within the period of 12 months following the acquisition date.

Clients $ 135,148 Property, leasehold improvements and Furniture and equipment, net 212,637 Intangible assets (1) 47,134 Goodwill (2) 2,078 $ 396,997

(1) The information, classification and percentage of amortization are part of the assets descried in Note 12.

(2) Provided that the acquisition process has not been concluded and due to its relative importance in the context of the consolidated financial statements, goodwill was not recorded at December 31, 2013.

The value of acquired accounts receivable approximate their fair value due to their short term maturity. Acquired accounts receivable are estimated to be recovered in the short term.

No contingent liability has arisen from this acquisition, which requires recording. Neither are there any contingent consideration agreements.

Costs related to the acquisition amount to $3,376 and were recorded in the statement of income within administrative expenses.

Contributed income due to the acquisition of Montemex included in the consolidated statement of income as from the acquisition date and up to December 31, 2013 amount to $44,188.

Page 10 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

At the date of issuance of these financial statements, the Company was not able to obtain the audited financial information before the acquisition date in accordance with accounting standards followed by the Company for purposes of determining the amount of income and annual net profit as if the acquisition had taken place on January 1, 2013.

4. Merger from incorporation agreed by some subsidiaries

Considering the dynamics of Grupo Famsa, and in order to facilitate the operations and supervision of the trading companies through a single entity, represented by Famsa México, S. A. de C. V., the four trading companies should be merged with Grupo Famsa. Among some of the benefits of performing this corporate restructuring, are improving the monitoring of retail operations in Mexico and facilitating transactions performed with Banco Ahorro Famsa.

In a General Extraordinary Meeting held on October 31, 2013, the stockholders approved the merger by incorporation of its subsidiaries Fabricantes Muebleros, S. A. de C. V., Famsa del Centro, S. A. de C. V., Famsa del Pacífico, S. A. de C. V. and Famsa Metropolitano, S. A. de C. V., the companies merged into Grupo Famsa, S. A. B. de C. V., as the merging and surviving company.

The merger became effective between the parties as of October 31, 2013, in accordance with the approval of stockholders present or represented in such General Extraordinary Meeting on October 31, 2013. Therefore, as of that date, the Company acquired the total assets and assumed the total liabilities and stockholders’ equity of the merged companies, with the latter ceasing to exist as legal entities. In order to account for this transaction, the predecessor method was used, as mentioned in Note 3.2. It is established that the balance sheets used as a basis for the merger declared were those corresponding to October 31, 2013, approved by the General Extraordinary Stockholders’ Meeting.

The balances of merged assets, liabilities and capital are as follows:

Fabricantes Famsa del Famsa del Famsa Concept Muebleros Centro Pacífico Metropolitano Total

Current assets Ps. 149,969 Ps. 85,663 Ps. 122,882 Ps. 716,566 Ps. 1,075,080 Non-current assets 684,339 313,931 506,885 648,782 2,153,937 Ps. 834,308 Ps. 399,594 Ps. 629,767 Ps. 1,365,348 Ps. 3,229,017

Short-term liabilities Ps. 42,789 Ps. 156,284 Ps. 50,970 Ps. 158,290 Ps. 408,333 Stockholders’ equity 791,519 243,310 578,797 1,207,058 2,820,684 Ps. 834,308 Ps. 399,594 Ps.629,767 Ps. 1,365,348 Ps. 3,229,017

At December 31, 2013, balances detailed above had already been incorporated in the consolidated financial statements before the merger; therefore, no additional effects were present in the consolidated financial statement as a result of the merger.

Page 11 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 3 - Summary of significant accounting policies:

The most significant accounting policies applied in the preparation of these consolidated financial statements are summarized as follows. These policies have been consistently applied in the reporting years, unless otherwise indicated.

3.1 Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for cash equivalents recorded at fair value.

The preparation of the consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. Additionally, it requires the Company’s management to use judgment in the process of applying the accounting policies of the Company. The areas involving a high degree of judgment or complexity and areas where judgments and estimates are significant to the consolidated financial statements are disclosed in Note 5.

3.2 Basis for consolidation a. Subsidiaries

The subsidiaries are all the entities over which the Company has the power to govern the financial and operating policies of the entity. The Company controls an entity when it is exposed, or has the right to variable returns from its interest in the entity and it is capable of affecting the returns through its power over the entity. Where the Company's interest in subsidiaries is less than 100%, the share attributed to outside shareholders is presented as non-controlling interest.

Subsidiaries are consolidated in full from the date on which control is transferred to the Company and up to the date it loses that control.

Page 12 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The acquisition-related costs are recognized as expenses when they are incurred.

Goodwill is initially measured as excess of the sum of the consideration transferred and the fair value of the non-controlling interest over the net identifiable assets acquired. If the consideration transferred is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the consolidated statement of income.

As of December 31, 2013 and 2012, the shareholding ownership percentages are as follows:

% of ownership

As of As of December 31, December31, 2013 2012 Retail sales Fabricantes Muebleros, S. A. de C. V. (1) - 99.93 Famsa del Centro, S. A. de C. V. (1) - 100.00 Famsa del Pacífico, S. A. de C. V. (1) - 100.00 Famsa Metropolitano, S. A. de C. V. (1) - 99.94 Famsa México, S. A. de C. V. (2) and (4) 99.99 99.38 Impulsora Promobien, S. A. de C. V. 99.04 99.04 Famsa, Inc., headquartered in U.S.A. (Famsa USA) 100.00 100.00

Page 13 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

% of ownership As of As of December 31, December31, 2013 2012 Manufacturing and other Auto Gran Crédito Famsa, S. A. de C. V. 99.99 99.99 Expormuebles, S. A. de C. V. 99.90 99.90 Mayoramsa, S. A. de C. V. 99.89 99.89 Verochi, S. A. de C. V. 99.92 99.92 Geografía Patrimonial, S. A. de C. V. 100.00 53.75 Corporación de Servicios para la Administración de Valores, S. A. de C. V. (3) 99.80 -

Financial sector Banco Ahorro Famsa, S. A., Institución de Banca Múltiple (BAF) (4) 99.82 99.79

(1) Company merged with Grupo Famsa, S. A. B. de C. V. on October 31, 2013. (2) Company established on December 21, 2012. (3) Company established on April 29, 201|3. (4) At December 31, 2013 no changes in the total (direct and indirect) equity percentages in subsidiaries were observed since the difference shown in the table above with respect to December 31, 2013 corresponds to the indirect share ownership held through the subsidiaries that were merged. b. Absorption (dilution) of control in subsidiaries

The effect of absorption (dilution) of control in subsidiaries, i.e., an increase or decrease in the percentage of control, is recorded in stockholders' equity, directly in retained earnings, in the period in which the transactions that cause such effects occur. The effect of absorption (dilution) of control is determined by comparing the book value of the investment according to percentage of ownership before the event of dilution or absorption against the book value with the new percentage of ownership after the relevant event. In the case of loss of control, the dilution effect is recognized in income. c. Disposal of subsidiaries

When the Company ceases to have control any retained interest in the entity is remeasured at its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss. d. Associates

Associates are all entities over which the Company has significant influence but not control. Generally an investor must hold between 20% and 50% of the voting rights in an investee for it to be an associate. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Company's investment in associates includes goodwill identified at acquisition, net of any accumulated impairment loss.

Page 14 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The Company's share of profits or losses of associates, post-acquisition, is recognized in the income statement and its share in the other comprehensive income of associates is recognized as other comprehensive income. The cumulative movements after acquisition are adjusted against the carrying amount of the investment. When the Company's share of losses in an associate equals or exceeds its equity in the associate, including unsecured receivables, the Company does not recognize further losses unless it has incurred obligations or made payments on behalf of the associate.

The Company assesses at each reporting date whether there is objective evidence that the investment in the associate is impaired. If so, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying amount and recognizes it in "share of profit/loss of associates” in the income statement.

Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company’s equity in such gains. Unrealized losses are also eliminated unless the transaction provides evidence that the asset transferred is impaired. In order to ensure consistency with the policies adopted by the Company, the accounting policies of associates have been modified. When the Company ceases to have significant influence over an associate, any difference between the fair value of any retained interest plus any proceeds from disposing part of the interest in the associate less the carrying amount of the investment at the date the equity method was discontinued is recognized in the income statement.

3.3 Business segment information

With respect to the years presented, December 31, 2013 and 2012, the Company has operated on the basis of business segments. These segments have been determined considering the geographical areas. See Note 26.

The statement of comprehensive income shows the financial information in the way that management analyzes, conducts and controls the business.

3.4 Foreign currency translation a. Functional and presentation currency

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency).

Page 15 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The results and financial position of Famsa, Inc., which operates in the USA, are translated into the presentation currency as follows:

- Assets and liabilities for each statement of financial position are translated at the closing rate at the date of such statement of financial position;

- Income and expenses recognized in the statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates on the dates of the transaction), and;

- The capital stock recognized in the statement of financial position is translated at historical exchange rates. All resulting exchange differences are recognized in other comprehensive income.

3.5 Cash and cash equivalents

Cash and cash equivalents include cash balances, bank deposits and other highly liquid investments with original maturities of less than three months with minor risk of changes in value. Cash is presented at nominal value and cash equivalents are measured at fair value; the changes in value are recognized in profit or loss of the period. Cash equivalents consist primarily of investments in government securities.

3.6 Restricted cash

Restricted cash represents limited cash in BAF and it comprises: a) deposits required by monetary regulations with Banco de México, which earn a bank funding rate, b) inter-bank short-term loans whose term does not exceed three working days, and c) purchased foreign currency, whose settlement date is agreed subsequently to the transaction date.

3.7 Financial instruments

3.7.1 Financial assets

Page 16 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Company’s financial assets comprise trade receivables, other accounts receivable, cash and cash equivalents, and restricted cash, in the statement of financial position.

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, less any impairment allowance. Acquisition costs are initially recorded at fair value plus origination charges and subsequently at their amortization cost. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to retain control of the transferred asset, the Company recognizes its interest in the asset and the associated liability for the amounts it would pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a liability for the amounts received.

3.7.2 Accounts payables

Trade payables are obligations to pay for goods or services that have been acquired or received in the ordinary course of business from suppliers. Loans are initially recognized at fair value, net of transaction costs incurred. Loans are subsequently recognized at amortized cost, any difference between the amounts received (net of transaction costs) and the settlement value being recognized in the statement of comprehensive income over the term of the loan using the effective interest method. Financial liabilities are initially recognized at fair value and are subsequently measured at amortized cost using the effective interest method. Liabilities in this category are classified as current liabilities if they are expected to be settled within the next 12 months, otherwise they are classified as non-current.

3.7.3. Impairment of financial assets

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and if that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Page 17 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

3.8 Other accounts receivable

The Company classifies as other receivables all credits or advances to employees and other persons or companies other than the general public. If the receivables are expected to be collected within 12 months of the end of the financial year, they are classified as current, if not they are classified as non-current. See Note 3.7.1.

3.9 Advance payments

The Company classifies as advance payments the payments for advertising in mass media, mainly television and press. These amounts are recognized at the value of the related agreements and are charged to income as they are accrued. In no case do the contracted amounts exceed one year.

3.10 Inventories

Inventories are stated at the lower of cost and net realizable value. The cost comprises the cost of goods plus import costs, freight, handling, shipping and warehousing in customs and distribution centers, decreased by the value of respective returns. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The cost is determined using the average cost method.

3.11 Property, leasehold improvements, and furniture and equipment

Costs for extension, remodeling or improvements representing an increase in the capacity and therefore an extension of the useful life of the assets are also capitalized. The expenses for maintenance and repairs are charged to the statement of comprehensive income in the period they are incurred. The carrying amount of the replaced assets is derecognized when replaced, with all effects being taken to the statement of comprehensive income.

Improvements in process represent stores under construction and include investments and all costs directly attributable to achieve operating conditions. The reclassification of these investments is made when the store opens and deprecation of the assets commences.

Page 18 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Depreciation on the assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Residual values, useful lives and depreciation of assets are reviewed and adjusted, if necessary, at the date of each statement of financial position.

The book value of an asset is written down to its recoverable amount if the asset’s carrying amount is higher than its estimated recoverable amount. See Note 3.13.

3.12 Goodwill and intangible assets a. Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the interest in the fair value of the net identifiable assets, liabilities and contingent liabilities of the acquire and the fair value of the non-controlling interest in the acquire.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of the value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed. b. Systems development and computer software

- It is technically feasible to complete the software product so that it will be available for use;

- Management intends to complete the software product and use or sell it;

Page 19 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

- There is an ability to use the software product;

- It can be demonstrated how the software product will generate probable future economic benefits;

- Adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

- The expenditure attributable to the software product during its development can be reliably measured.

These assets are amortized based on their estimated useful life, which is 6 years.

3.13 Impairment of non-financial assets

Assets that have an indefinite useful life, including goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

3.14 Demand deposits and time-deposits

3.15 Provisions

Provisions represent present obligations from past events where an outflow of economic resources is probable. These provisions have been recognized under the best estimate made by Management.

Page 20 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

3.16 Income tax

The deferred income taxes are determined in each subsidiary by the asset and liability method, applying the tax rate enacted or substantially enacted at the statement of financial position date. The tax rates are applied to the total of the temporary differences resulting from comparing the accounting and tax bases of assets and liabilities in accordance with the years in which the deferred asset tax is realized or the deferred liability tax is expected to be settled, considering, when applicable, any tax loss carry forwards expected to be recovered. The effect of a change in tax rates is recognized in the income of the period in which the rate change is enacted.

Deferred tax assets are recognized only when it is probable that future taxable profits will exist against which the deductions for temporary differences can be taken.

Deferred tax assets and liabilities are offset when legal enforceable rights exist, and when the taxes are levied by the same tax authority.

3.17 Employee benefits a. Short-term benefits

The Company provides benefits to employees in the short term, which may include wages, salaries, annual compensation and bonuses payable within 12 months. b. Pensions and seniority premium

The Company has defined benefit plans. A defined benefit pension plan is a plan that defines the amount of pension benefits to be received by an employee in his or her retirement, usually depending on one or more factors, such as the employee’s age, years of service and compensation.

The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period, together with adjustments for unrecognized actuarial gains and losses and past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension obligation.

Page 21 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. See Note 3.24.

The Company has no plan assets. c. Employee profit sharing and bonuses

3.18 Stockholders’ equity

Common shares are classified as equity.

The amounts of the capital stock, legal reserve, additional paid-in capital and retained earnings are presented at historical value, modified by the effects of inflation on the financial information recognized as of December 31, 1997. In accordance with the requirements of IAS 29 “Financial reporting under hyperinflationary economies”, the Mexican economy is currently in a non-hyperinflationary environment, maintaining an accumulated inflation for the last three years under 100% (threshold for considering an economy as hyperinflationary), therefore from January 1, 1998 onwards the Company does not recognize the effects of inflation on the financial information.

Legal reserve and reinvestment reserve

The net income of the year is subject to the legal provision requiring the allocation of 5% of the income for each period to increase the legal reserve until it reaches an amount equivalent to 20% of the capital stock. The reinvestment reserve is intended to be reinvested in the Company under shareholders agreements; 10% of the profit for the year is allocated to this reserve.

Page 22 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Reserve for repurchase of shares

3.19 Borrowing costs

As of December 31, 2013 and 2012, there were no financial costs capitalized because during these periods there were no qualifying assets in accordance with the Company’s policies. Leasehold improvements require construction periods of less than one year.

3.20 Revenue recognition

Revenue from sales of goods is recognized when the customer takes possession of the goods in the stores or when the merchandise is delivered to their domiciles. Approximately 81% of the sales are settled by customers with cards operated by the Company, and the rest is settled in cash or through bank credit and debit cards.

In accordance with IAS 18 “Revenue recognition”; in merchandise sales in installments, the cash receivable is deferred over the time and therefore its fair value may be less than the nominal amount of the sale. In these cases the Company determines the fair value of cash to be received, discounting all future cash flows using an implied interest rate determined by reference to the prevailing market rate for a similar instrument.

The difference between the nominal value of the sale payable in installments and the discounted value according to the previous paragraph is recognized as interest income.

The Company’s policy is to sell certain products with the right of return. Customer returns are normally because of some fault or imperfection in the product. However, in cases where it is clear that the customers wish to return the product, the Company offers its customers the option to credit their account if the purchase was made with a card operated by the Company or to credit their bank card if the purchase was made in cash or with external cards.

Page 23 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Experience shows that returns on sales are not significant in relation to total sales, and therefore the Company does not create an allowance for returns.

Interest income resulting from sale of products and personal loans is recognized as accrued, using the effective interest rate method.

3.21 Leases

Leases are classified as finance leases when the terms of the lease transfer to the lessee substantially all the risks and rewards of ownership. All other leases are classified as operating leases. Leasing expenses are recorded in the statement of income based on the straight-line method during the term of the lease agreement. See Note 25.

3.22 Earnings per share

Basic earnings per share are calculated dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by adjusting the attributable profit and the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. Basic earnings per share is the same as diluted earnings per share because there are no transactions that may potentially dilute the net income.

3.23 Discontinued operations

The Company considers as discontinued operations the operations and cash flows that can be clearly distinguished from the rest of the entity, that either have been disposed of or are classified as held for sale, and:

- Represent a line of business or geographical area of operations. - Are part of a single coordinated plan to dispose of a line of business or geographical area of operations, or - Is a subsidiary acquired exclusively with a view to resale.

3.24 New accounting standards

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of new standards effective at January 1, 2013. The nature and impact of each new standard or modification are described as follows:

 IAS 1 (amended) - "Presentation of Financial Statements" The amendment requires entities to separate the items presented in other comprehensive income in two groups based on whether they can be recycled to the income statement in the future or not. Items that cannot be recycled are presented separately from the items that may be recycled in the future. Entities that decide to present items of other comprehensive income before taxes should show the taxes related to the two groups separately. For the Company, this amendment became effective on January 1, 2013. The amendment affected the presentation only and had no effect on the Company’s financial position or performance.

Page 24 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

 IAS 19 (Revised) - "Employee benefits" There are a number of amendments that have been applied retrospectively; these eliminate the option to defer the recognition of actuarial gains and losses in the defined benefit post-employment plans, known as the "corridor method". The Company has not previously applied this option and has recognized the gains and losses in other comprehensive income. Therefore, this change in the standard has no impact on the Company's consolidated financial statements. The expected returns on plan assets are no longer recognized in the statement of income for the year, instead, there is a requirement to recognize net interest on the net defined benefit liability (asset) in the statement of income, calculated using the discount rate used to measure the defined benefit obligation. This change had no significant impact on the consolidated financial statements of the Company.

Past-service costs are recognized in the statement of income in the period of a plan amendment, instead of deferring the portion related to the unvested benefits. IAS 19 (revised) was adopted in advance; therefore, the balances at December 31, 2012 already include the effects of this standard.

 IFRS 10, "Consolidated financial statements" –IFRS 10 was issued in May 2011 and replaces all the guidance on control and consolidation in IAS 27, "Consolidated and separate financial statements', and SIC 12, "Consolidation - Special purpose entities'. Under IFRS 10, subsidiaries are all entities (including the structured entities) over which the Company has control. The Company controls an entity when it has power over an entity, is exposed to, or has rights to variable returns from its interest in the entity and has the ability to affect these returns through its power over the entity. Subsidiaries are fully consolidated from the date when the control is transferred to the Company. They are deconsolidated from the date control ceases. The Company has applied IFRS 10 retrospectively in conformity with transition provisions described in this standard. The aforementioned had no impact on the consolidation of investments held by the Company.

 IFRS 11 "Joint arrangements" The standard focuses on the rights and obligations of the parties to determine whether there is a joint arrangement, over other factors such as the legal form. There are two types of joint arrangements: Joint operations and joint ventures. Joint operations occur when investors have rights to the assets and obligations for liabilities of an arrangement, a joint operator accounts for his portion of assets, liabilities, revenues and expenses. A joint venture occurs when investors have rights over the net assets of the arrangement; joint ventures are accounted using the equity method. Proportional consolidation is not allowed under this standard. This change had no effect on the consolidated financial statements of the Company.

 IFRS 12, "Disclosure of Interests in Other Entities" requires an entity to disclose information that enables users of financial information to evaluate the nature and risks associated with its interests in other entities, including joint arrangements, associates, special purpose entities and other off balance sheet entities; in addition to the effects of these interests in its financial position and performance, and its cash flows. This change had no effect on the consolidated financial statements of the Company.

Page 25 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

 IFRS 13, "Fair Value Measurements". The objective of IFRS 13 is to provide a precise definition of fair value and be a single source for the measurement and disclosure requirements for fair value when it is required or permitted by other IFRS, except for transactions within the scope of IFRS 2 "Share-based payments", IAS 17 "Leases", measurements that have similarities to fair value but not considered as such, and the net realizable value under the scope of the IAS 2 "Inventories" or the value in use in IAS 36 "Impairment of long-lived assets". The application of IFRS 13 has not significantly impacted the fair value measurements made by the Company.

 2011 annual improvements include an improvement to IAS 16 "Property, plant and equipment" - clarifying that main spare parts and maintenance equipment that comply with the definition of Property, plant and equipment, are not part of the inventory, and the improvement to IAS 32 "Financial instruments presentation" clarifies that income taxes derived from distributions to shareholders are accounted for in accordance with IAS 12 "Taxes on gains". These improvements had no effect on the Company.

3.25 New accounting pronouncements not early adopted by the company

Following are the new pronouncements and amendments issued and effective for years subsequent to 2013 that have not been early adopted by the Company.

 IFRS 9, "Financial Instruments"– IFRS 9 was issued in November 2009 and included requirements for classification and measurement of financial assets. IFRS 9 maintains and simplifies the two types of measurement models and establishes two main categories of financial assets: at amortized cost and fair value. The classification basis depends on the business model of the Company and the characteristics of contractual cash flows of financial assets. Requirements for financial liabilities were included as part of the IFRS 9 in October 2010. Most of the requirements for financial liabilities were taken from the IAS 39 without any changes. However, some amendments were realized on the fair value option for financial liabilities to include the credit risk. On December 2011, the IASB made amendments to IFRS 9 to require their application for annual periods starting in or subsequent to January 1, 2015; however, in November 2013, amendments were issued that eliminate the effective application date of January 1, 2015. The new effective application date will be determined once the classification and measurement phases and impairment of IFRS 9 are finished.

 IAS 32, "Financial instruments: presentation" - In December 2011, the IASB amended IAS 32. These amendments are in the application guide and clarify some of the requirements for offsetting financial assets and financial liabilities in the statement of financial position. For the Company, this amendment is obligatory as from January 1, 2014.

 IAS 36, "Impairment of Assets"| - In May 2013, the IASB modified IAS 36. This amendment indicates the disclosure of information over the recoverable value of impaired assets if the amount is calculated based on the fair value method less the cost of sale. For the Company, this amendment is obligatory as from Wednesday, January 1, 2014.

Page 26 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

 IAS 39, “Financial Instruments”: Recognition and Measurement" - In June 2013, the IASB modified IAS 39 to clarify that there is no need to suspend hedge accounting when novation of a hedging instrument to a central counter party meets certain requirements. For the Company, this amendment is applicable to annual periods starting on or subsequent to January 1, 2014.

At the date of the financial statements, the Company's management is in the process of quantifying the effects of adoption of the new standards and amendments mentioned above.

There are no additional standards, amendments or interpretations issued but not effective that could have a significant effect on the company.

Note 4 - Risk Management:

Those responsible for risk management and their functions are:

 The Board of Directors, whose responsibility is to approve the objectives, guidelines and policies for risk management.

 Internal Audit, which is responsible for carrying out all the activities necessary in order to comply with the policies defined by the Board of Directors.

The Company has adopted as its main premise carrying out its operations in a conservative framework or profile so as to optimize its resources through the implementation of balanced operations between risk and performance.

The current strategy pursued by the Company is primarily focused on the granting of consumer loans, which will be supported by the funding of resources that will be obtained through deposits, orienting them towards correct placement and profitability, all of this under the operation of BAF.

The criteria, policies and procedures adopted by the Company in terms of risk management are based on internal policies and applicable standards.

The Company is exposed to several market and financial risks. a) Market Risk

Page 27 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

I. Interest rate risk

The interest rate risk is defined as the risk that the fair value or future cash flows of a financial instrument fluctuate due to changes in market interest rates. Loans and debt certificates with maturities in the short and long term are subject to both fixed and variable interest rates and expose the Company to the risk of variability in interest rates and therefore its cash flows.

The Company’s exposure to changes in interest rates relates primarily to loans and debt certificates in the short and long-term with a variable interest rate. As of December 31, 2013 and 2012, the Company was subject to the volatility of the variable interest rates, such that, an increase in these rates would result in a higher financial cost of the liability.

Based on the Company’s policies, it has not engaged in hedging activities through derivative instruments to hedge the interest rate risk for the years ended December 31, 2013 and 2012.

As of December 31, 2013 and 2012, 14.4% and 14.9%, respectively, of the Company’s debt with financial cost (including deposits) was denominated at variable rates. If hypothetically interest rates on those dates had been increased / decreased 100 basis points and all other variables remained constant, the financial expense of the Company at the end of 2013 and 2012 would have increased / decreased by Ps. 22.6 million and Ps. 22 million, respectively.

II. Exchange rate risk

The Company also has exposure to exchange rate risk for its debt denominated in U.S. dollars. As of December 31, 2013 and 2012, 53.1% and 56.7% respectively, of the Company’s debt with financial cost was denominated in U.S. dollars. Based on the Company policies it did not engage in hedging activities through derivative instruments to hedge the exchange rate risk for the years ended December 31, 2013 and 2012.

Page 28 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

As of December 31, 2013 and 2012, a variation of the Mexican peso against the US dollar of 50 cents, with all other variables remaining constant, would impact the Company's financial expense by Ps. 19.3 million and Ps. 13.4 million, respectively. It is important to mention that the impact of the financial expense from exchange gain (loss) of the Mexican peso in relation to the US dollar is greater for fiscal year 2013, since the Company incurred in a non-recurring financial expense related to the redemption of the price paid corresponding to the offer for acquisition and amortization of senior bonds maturing in 2015, during May 2013 and the premium paid corresponding to the remaining capital of such offer during July 2013.

The Company has non-monetary assets denominated in U.S. Dollars which are part of the operating unit in the USA. There is no exchange rate risk because the operations are performed only in the local currency. b) Liquidity Risk

The following table details the contractual maturities of the Company’s debt with financial cost and its principal current liabilities without financial cost. The table has been drawn up based on undiscounted cash flows from the first date on which the Company may be required to pay. The table includes interest and principal cash flows.

Between 6 Between 1 Between 2 Less than months and year and years and 6 months 1 year 2 years 3 years Total

December 31, 2013 Demand deposits and time deposits Ps. 5,997,671 Ps.2,683,551 Ps.6,160,241 Ps. - Ps.14,841,463 Short and long-term debt 3,921,488 708,293 253,074 4,382,621 9,265,476 Suppliers and accounts payable and accrued expenses 2,209,663 - - - 2,209,663 Total Ps.12,128,822 Ps.3,391,844 Ps.6,413,315 Ps.4,382,621 Ps.26,316,602

December 31, 2012 Demand deposits and time deposits Ps. 5,344,167 Ps.3,325,209 Ps.4,032,623 Ps. - Ps.12,701,999 Short and long-term debt 2,288,298 739,322 1,321,842 2,710,010 7,059,472 Suppliers and accounts payable and accrued expenses 2,166,077 - - - 2,166,077 Total Ps. 9,798,542 Ps.4,064,531 Ps.5,354,465 Ps.2,710,010 Ps.21,927,548

c) Credit Risk

Credit risk refers to the potential loss from the inability of customers to make all required payments. The accounts receivable of the Company represent amounts owed by customers and are generated by sales of goods or services in the normal course of its operations. Since the Company's sales are made mostly to the general public, there is no risk of concentration in a customer or group of customers.

Page 29 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The initial credit limits are calculated on an individual basis by the Company systems and are regularly monitored by the credit area to adjust them based on customer history. The Company has processes for reviewing credit quality of its customers for the early identification of potential changes in the ability to pay, taking timely corrective actions and the determination of current and potential losses.

To quantify the credit risk of the Mexico commercial portfolio, the Company uses CREDITRISK+, which considers both the creditworthiness of counterparties and the exposure of each of the customers. CREDITRISK+ models the defaults themselves and is not intended to model or identify any causes underlying the defaults.

To quantify the credit risk of the consumer portfolio, for Mexico as well as for the United States of America, the Company uses collective assessment models that consider the risk level of debtors, considering their possibility of default and the severity of the associated losses.

The input data primarily considered are the probabilities of default, according to the credit quality of borrowers. See Note 8.3. d) Capital Risk

The leverage ratio monitored by the Company is calculated by dividing debt with financial cost (excluding demand deposits and time deposits) by the net income (excluding interest, exchange gains and losses, depreciation, amortization and taxes). The maximum leverage ratio established in the debt certificate contract is 3.50 and for the issuance of debt certificates in US dollar is 3.25, and the actual ratio as of December 31, 2013 and 2012, was 3.15 and 2.58, respectively.

Page 30 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

BAF capitalization index

The capitalization rules for financial institutions establish requirements for specific levels of net equity, as a percentage of assets subject to both market and credit risk. The capitalization index required for BAF is a minimum of 8%. As of the 2013 year end, BAF determined a capitalization index of 13.6% (13.08% as of December 31, 2012), which results from dividing net equity by the assets at risk including credit, market and operational risk.

Note 5 - Critical accounting estimates and judgments:

5.1. Critical accounting judgments

5.1.1. Revenue recognition, installment sales

Note 3.20 describe the Company’s policy for the recognition of installment sales. This implies that the Company’s management applies its judgment to identify the applicable discount rate to determine the present value of installment sales. To determine the discounted cash flows, the Company uses an imputed interest rate, considering the rate that can be determined better from: i) the prevailing rate in the market for a similar instrument available for the Company’s customers with a similar credit rating or ii) the interest rate that equals the nominal value of the sale, properly discounted to the cash price of the goods sold.

When making its judgment, management considers the interest rates used by the principal financial institutions in Mexico to fund programs of installment sales. In the event the discount rate had a variation of 10% from that estimated by management, the effect on the present value of installment sales would be Ps. 3,883, Ps. 8,573 as of December 31, 2013 and 2012, respectively.

5.2. Key sources of uncertainty in estimates

5.2.1. Impairment provisions for loan and receivable portfolios

The methodology applied by the Company to determine the amount of this estimate is described in Note 3.7, see also Note 8.

Page 31 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

In the event that the probability and the severity of noncompliance varies by 1% as compared to that estimated by management, the effect of the impairment provision for the credit portfolio will vary by $111,698 and $104,841 at December 31, 2013 and 2012, respectively.

5.2.2. Estimates of useful lives and residual values of property, leasehold improvements, and furniture and equipment

As described in Note 3.11, the Company reviews the estimated useful lives and residual values of property, leasehold improvements and furniture and equipment at the end of each annual period. At December 31, 2013 and 2012, it was determined that lives and residual values need not be modified since, in the assessment of management, the existing useful lives and residual values adequately reflect the economic conditions in the Company’s operating environment.

5.2.3. Employee Benefits

The cost of employee benefits that qualify as defined benefit plans in accordance with IAS 19 (revised) “Employee Benefits” is determined using actuarial valuations. The valuations involve actuarial assumptions about discount rates, future salary increases, employee turnover rates and mortality rates, among other things. Any changes in these assumptions will impact the carrying value of the pension obligations. Due to the long-term nature of these plans, such estimates are subject to a significant amount of uncertainty.

Note 6 - Cash and cash equivalents:

Cash and cash equivalents comprised the following:

December 31

2013 2012

Cash at bank and in hand Ps. 414,779 Ps. 461,359 Investments 1,094,313 1,067,368 Total Ps.1,509,092 Ps. 1,528,727

Note 7 - Restricted cash:

Restricted cash represents limited cash in BAF of Ps. 159,475, Ps. 254,905 as of December 31, 2013 and 2012, respectively. The restricted cash balance is classified as a non-current asset in the statement of financial position of the Company based on the expiration date of the restriction.

Page 32 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 8 - Trade receivables: December 31,

2013 2012 Trade receivables: Mexican consumer Ps. 18,606,822 Ps. 15,612,927 Mexico commercial 2,751,868 2,392,702 USA consumer 2,105,334 2,244,983 23,464,024 20,250,612 Less - allowance for doubtful accounts (1,296,804) (1,035,154) Total, net Ps. 22,167,220 Ps. 19,215,458

Current trade receivables Ps. 21,640,993 Ps. 18,546,393

Non-current trade receivables Ps. 526,227 Ps. 669,065

8.1. Movements of the impairment allowance for doubtful accounts

December 31

2013 2012 Opening balance (Ps. 1,035,154) (Ps. 966,391) Increases (1,284,315) (1,542,066) Recoveries 1,022,665 1,473,303 Ending balance (Ps. 1,296,804) (Ps.1,035,154)

8.2. Past due receivables

Trade receivables at the end of the year include past due receivables of Ps. 2,206,326 and Ps. 2,086,294 as of December 31, 2013 and 2012, respectively, whose maturity was as follows:

December 31

2013 2012 1 - 30 days Ps. 286,130 Ps. 210,096 31 - 60 days 113,642 144,501 61 - 90 days 113,471 137,158 91 - 120 days 102,419 132,408 120 days or more 1,590,664 1,462,131 Total past due receivable Ps. 2,206,326 Ps. 2,086,294

Page 33 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

8.3 Credit quality of trade receivables

The credit quality of trade receivables is assessed based on the historical default rates of the counterparties and is analyzed as follows: December 31

Group 2013 2012

A Ps. 17,724,590 Ps.14,223,591 B 3,388,782 3,621,844 C 2,350,652 2,405,177 Ps. 23,464,024 Ps.20,250,612

Group A - very low risk customers who have regularly met their payment commitments. Group B - low risk customers who have made their payments on dates after the payment deadline. Group C - medium-high risk customers who made their payments inconsistently.

8.4 Fair value of trade receivables

As of December 31, 2013 and 2012, the fair values of the Company’s trade receivable approximated their carrying value.

Note 9 - Other accounts receivable: December 31 2013 2012 Bonuses from suppliers (1) Ps. 312,731 Ps. 265,254 Employee debtors (2) 30,108 27,510 Other debtors (3) 347,537 233,200 Total Ps. 690,376 Ps. 525,964

(1) Bonuses negotiated with suppliers based on volume of sales in the normal course of operations, and promotions receivable.

(2) Consists primarily of accounts receivable for expenses pending to be checked.

(3) Includes primarily commissions receivable, other accounts receivable for money transfers and payments in advance to suppliers.

Page 34 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 10 - Inventories: December 31 2013 2012

Products (*) Ps.1,915,827 Ps.1,718,694 Clothing, footwear and jewelry 237,799 201,571 Merchandise in transit 20,847 30,398 Total Ps 2,174,473 Ps.1,950,663

(*) Comprises all types of electronic products, household appliances, furniture, mobile phones, motorcycles and other consumer products.

Note 11 - Property, leasehold improvements and furniture and equipment, net:

Buildings Furniture Trans- Data Improve- and and Leasehold portation processing ments in Land construction equipment improvements equipment equipment process Total

At December 31, 2012 Opening net book amount Ps. 326,252 Ps. 297,504 Ps. 446,932 Ps.1,254,345 Ps. 17,866 Ps. 73,414 Ps. 69,973 Ps. 2,486,286 Exchange differences on cost - (10,710) (18,196) (11,259) (4,803) (4,828) - (49,796) Additions 26,192 25,933 18,063 25,362 24,837 20,788 65,906 207,081 Disposals - - (122,243) (220,949) (26,451) (45,637) - (415,280) Cancelation of accumulated depreciation on the sale of fixed assets - - 114,301 221,895 20,297 43,538 - 400,031 Reclassifications 1,277 (1,277) ------Exchange differences on accumulated depreciation - 937 17,555 11,257 4,727 4,667 - 39,143 Depreciation charge - (7,414) (72,979) (179,488) (10,073) (27,493) - (297,447) Closing net book amount 353,721 304,973 383,433 1,101,163 26,400 64,449 135,879 2,370,018

As of December 31, 2012 Cost 353,721 440,341 1,084,084 2,364,347 255,783 502,075 135,879 5,136,230 Accumulated depreciation - (135,368) (700,651) (1,263,184) (229,383) (437,626) - (2,766,212) Net book amount 353,721 304,973 383,433 1,101,163 26,400 64,449 135,879 2,370,018

At December 31, 2013 Opening net book amount 353,721 304,973 383,433 1,101,163 26,400 64,449 135,879 2,370,018 Exchange differences on cost - 1,293 1,148 1,201 539 234 - 4,415 Additions 2,850 64,706 246,990 120,242 47,525 40,879 71,137 594,329 Disposals (28,117) (113,451) (265,566) (3,609) (88,491) (10,986) - (510,220) Cancelation of accumulated depreciation on the sale of fixed assets - 21,426 263,126 306 85,280 11,047 - 381,185 Exchange differences on accumulated depreciation - (121) (1,136) (1,701) (537) (224) - (3,719) Depreciation charge - (7,903) (50,744) (156,068) (17,513) (35,537) - (267,765) Closing net book amount 328,454 270,923 577,251 1,061,534 53,203 69,862 207,016 2,568,423

As of December 31, 2013 Cost 328,454 392,889 1,066,656 2,482,181 215,356 532,202 207,016 5,224,754 Accumulated depreciation - (121,966) (489,405) (1,420,647) (162,153) (462,340) - (2,656,511) Net book amount Ps. 328,454 Ps. 270,923 Ps. 577,251 Ps.1,061,534 Ps. 53,203 Ps. 69,862 Ps. 207,016 Ps. 2,568,243

The depreciation expense is recognized in the income statement within administrative and selling expenses. At December 31, 2013 and 2012 there were no signs of impairment.

Page 35 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 12 - Goodwill and intangible assets:

Licenses and Goodwill software Total At December 31, 2012 Net book amount Ps. 241,096 Ps. 57,016 Ps. 298,112

Additions - 18,410 18,410 Disposals - - - Amortization - (16,950) (16,950) Ending balance 241,096 58,476 299,572

At December 31, 2012 Cost 241,096 302,361 543,457 Accumulated amortization - (243,885) (243,885) Net book amount 241,096 58,476 299,572

At December 31, 2013 Additions - 33,674 33,674 Disposals - - - Amortization - (18,563) (18,563) Ending balance 241,096 73,587 314,683

At December 31, 2013 Cost 241,096 336,035 577,131 Accumulated amortization - (262,448) (262,448) Net book amount Ps. 241,096 Ps. 73,587 Ps. 314,683

Goodwill is not subject to amortization and is tested annually for impairment.

The goodwill arising in business combinations was allocated at the date of acquisition in its entirety to the cash generating unit (CGU) of the Mexico segment. This segment benefited from the synergies of the business combinations.

The recoverable amount of the operating segment has been determined based on value in use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a five-year period.

The key assumptions used for value in use calculations as of December 31, 2013 and 2012, were as follows:

December 31 2013 2012 Estimated gross margin 46.96% 46.97% Growth rate 8.03% 2.26% Discount rate 11.68% 11.68%

Page 36 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

In connection with the determination of the value in use of the operating segments, the Company considers that a reasonably possible change in the key assumptions used would not cause the carrying value of the operating segment to exceed its value in use.

Nota 13 - Other assets: December 31,

2013 2012

Prepaid expenses (1) Ps. 202,799 Ps.186,963 Other 162,546 - Total Ps. 365,345 Ps.186,963

(1) Included mainly, prepaid advertising insurance and leasing.

Note 14 - Demand deposits and time-deposits:

As of December 31, 2013 and 2012, the Company’s deposits with third parties were as follows:

December 31,

2013 2012 Demand deposits: Savings deposits (interest bearing) Ps. 2,640,232 Ps. 2,191,438 Checking accounts (non-interest bearing) 371,360 314,092 Time-deposits: From the general public 10,918,421 9,493,734 Total demand deposits and time-deposits Ps. 13,930,013 Ps. 11,999,264

In accordance with the terms negotiated, the Company’s deposits as of December 31, 2013 and 2012, are presented as follows:

December 31,

2013 2012

Short-term demand deposits and time-deposits Ps. 8,416,208 Ps. 8,382,497 Long-term demand deposits and time-deposits 5,513,805 3,616,767 Total demand deposits and time-deposits Ps. 13,930,013 Ps. 11,999,264

As of December 31, 2013 and 2012, the maturities of time-deposits from the general public were as follows:

December 31, 2013 2012

From 1 to 179 days Ps. 2,870,256 Ps. 2,731,489 From 6 to 12 months 2,534,360 3,145,478 From 1 to 2 years 5,513,805 3,616,767 Total Ps.10,918,421 Ps. 9,493,734

Page 37 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Depending on the type of instrument and average balance in the investments, these liabilities bear interest at the variable average rates indicated below:

December 31, 2013 2012

Demand deposits 2.64% 2.90% Time-deposits 5.86% 5.73%

At December 31, 2013 and 2012, the fair value of demand and term deposits approximate their accounting value.

Note 15 - Short-term and long-term debt:

The total consolidated debt was as follows: December 31 Interest 2013 2012 rate (*) Grupo Famsa: Mexican pesos: Financial factoring: (1) Financiera Bajío, S. A. SOFOM, ER Ps. 76,100 Ps. 30,629 7.06% (b) Banco Nacional de México, S. A. 99,094 - 6.53% (b) BBVA Bancomer, S. A. 24,434 - 6.79% (b) Arrendadora y Factor Banorte, S. A. de C. V. SOFOM, ER 373,996 392,704 8.34% (b) Banco Monex, S. A. 183,886 124,845 7.86% (b) 757,510 548,178 Amounts drawn down from short-term revolving credit lines: Banco del Bajío, S. A. 100,000 - 7.04% (b) Banorte, S. A. 199,795 199,795 7.37% (a) BBVA Bancomer, S. A. 150,000 63,500 6.53% (a) CI Banco, S. A. 100,000 50,000 6.54% (b) Banamex, S.A. 100,000 - 6.44% (b) Banco Actinver, S. A. 35,000 - 7.29% (b) Banco Santander Serfin, S. A. - 100,000 8.86% (b) Issuance of debt certificates: Short-term 1,989,170 1,000,000 7.10% (b) Long-term (2) - 1,000,000 7.65% (b) 2,673,965 2,413,295

Page 38 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

December 31 Interest 2013 2012 rate (*) Grupo Famsa: U.S. Dollars: Issuance of foreign debt: Senior notes 2020 (3) 3,176,924 - 7.25% (a) Senior notes Rule 144A/Reg.S (4) - 2,554,036 11.00% (a) Euro–commercial paper (5) 654,215 518,632 7.00% (a) 3,831,139 3,072,668 Banco Ahorro Famsa, S. A., Institución de Banca Múltiple: Mexican pesos: Banco del Bajío, S. A. 80,000 - 3.45% (b) Nacional Financiera, S.N.C. (NAFIN) (6) - 9,575 8.93% (b) 80,000 9,575 Famsa USA: U.S. Dollars: Business Property Lending, Inc. 59,871 - 6.07% (a) Capital One, National Association 39,254 - 5.00% (b) Deutsche Bank AG (7) 104,674 103,726 2.175% (a) 203,799 103,726 Total debt 7,546,413 6,147,442 Short-term debt (4,309,618) (2,583,831) Long-term debt Ps.3,236,795 Ps.3,563,611

At December 31, 2013 and 2012, the fair value of short-term debt approximates their accounting value. The fair value of long-term debt is disclosed in the following paragraphs.

(*) Nominal rates (a) fixed and (b) variable, as of December 31, 2013. Interest is accrued monthly.

(1) The Company entered into factoring credit line contracts with suppliers. Interest is calculated applying to the discounted amount the rates that financial institutions apply for this type of operations, according to the discount period. These liabilities are settled in an average period of 110 days. The relevant characteristics of each factoring credit line are presented below:

Renewal date of the Interest Financial institution credit line Credit limit rate Financiera Bajío, S. A. SOFOM, ER September, 2012 Ps.100,000 TIIE+4.0 Banco Nacional de México, S. A. August, 2013 Ps.100,000 TIIE+2.8 BBVA Bancomer, S. A. March, 2013 Ps. 50,000 TIIE+3.0 Arrendadora y Factor Banorte, S. A. de C. V. SOFOM, ER March, 2010 Ps.400,000 TIIE+3.5 Banco Monex, S. A. October, 2012 Ps.125,000 TIIE+3.0

Page 39 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

(2) In 2011, the Company entered into a debt certificate program for up to Ps. 2,000 million of a revolving nature for a five-year term. On March 25, 2011, the Company issued certificates for an aggregate principal amount of Ps. 1,000 million pursuant to such unsecured commercial paper program at a spread of 280 basis points over the TIIE interbank rate and maturing in 2014. The net proceeds of this issue were used to refinance debt maturing in 2011. This commercial paper is guaranteed by the retail, manufacturing and other subsidiaries. At December 31, 2013 this debt is included in the short- term and due on 2014.

The effective interest rate of this issuance as of December 31, 2012 was 8.28%.

As of December 31, 2013 and 2012, the fair value of the debt certificates was Ps.1,986,533 and Ps.1,997,570, respectively. The valuation method is classified in Level 2, as the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of observable market data when available and rely as little as possible on estimates specific to the Company. If all significant inputs required to measure an instrument at fair value are observable, the instrument is classified at Level 2.

(3) On May 31, 2013, the Company issued senior notes for an amount of US$ 250 million, under Rule 144A/Reg. S, in the foreign market, at a rate of 7.25%, maturing in May 31, 2020. The senior notes are guaranteed by the retail, manufacturing and other subsidiaries. The notes were assigned “B” and “B+” ratings by Standard & Poor’s and Fitch Ratings, respectively. The notes may not be offered or sold within the United States.

As of December 31, 2013, the fair value of the senior notes was Ps. 3,289,426. The valuation method is classified in Level 1, as the fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is considered active if quoted prices are clearly and regularly available from a stock exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regular market transactions at arm’s - length conditions. The trading price used for financial assets held by the Company is the current bid price.

(4) On July 2010, the Company issued senior notes for an amount of US$ 200 million, under Rule 144A/Reg. S, in the foreign market, at a rate of 11%, maturing in July 2015. The senior notes are guaranteed by the retail, manufacturing and other subsidiaries. The notes were assigned “B” and “B+” ratings by Standard & Poor’s and Fitch Ratings, respectively. The notes may not be offered or sold within the United States. At the cut-off date for the early offering, established at May 29, 2013, 80.07% of the notes was amortized or US$160.13 million of the total amount of outstanding bonds. Upon maturity of the acquisition offer, established at June 12, 2013, 0.16% of notes was redeemed or US$322 thousands of the total amount of outstanding bonds. The remaining amount, equal to US$39.55 million, was amortized by the company on July 22, 2013.

As of December 31, 2012, the fair value of the senior notes was Ps. 2,894,800. The effective interest rate of this issuance as of December 31, 2012 was 12.28%.

Page 40 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

(5) On February 4, 2013, the Company issued notes for US$50 million at a rate of 7.00%, from a commercial euro paper program established in 2009 for a total of US$100 million. The net proceeds were used by the Company to refinance the existing debt and for working capital. This program became due on February 4, 2014. The debt was paid at that date with the net proceeds obtained from the issuance of notes for US$60 million from a commercial euro paper program maturing on January 28, 2015 at a rate of 6.125%.

(6) Loans contracted by BAF with NAFIN for a total amount of Ps. 9.6 million, with an interest rate of 8.93% and maximum maturities on September 2014 and December 2015. These loans were paid during 2013.

(7) On October 16, 2013, the Company renewed its credit line for a maximum amount of EUROS $6.6 million or its equivalent in US dollars. As of December 31, 2013, the Company had drawn down a total of US$8 million; this borrowing bears interest at an annual rate of 2.17% maturing on October 16, 2014.

At December 31, 2013 and 2012, the Company complied satisfactorily with all covenants and restrictions of the loans mentioned previously.

Note 16 - Accounts payable and accrued expenses:

Accounts payable and accrued expenses comprised the following:

December 31, 2013 2012

Interest payable (1) Ps. 54,240 Ps. 171,568 Accounts payable to affiliated companies (2) - 213,907 Taxes 112,682 56,721 Accrued operating expenses (3) 85,145 46,283 Short-term employee benefits (4) 34,884 50,209 Taxes related to employee payroll (5) 124,757 53,778 Other creditors (6) 45,307 10,998 Total accounts payable and accrued expenses Ps. 457,015 Ps. 603,464

(1) Liability for accrued interest on debt.

(2) Liability from operations with related parties. See Note 17.

(3) Liability for expenses for water service, electricity, telephone, fuel, maintenance and other.

(4) Includes liabilities for accrued salaries payable, commission to sales personnel, vacations, vacation premium, savings fund, medical expenses and other.

(5) Includes liabilities for accrued expenses for labor taxes and other.

(6) Includes self-financing contributions from customers, vehicle insurance and other.

Page 41 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 17 - Related parties:

As of December 31, 2013 the Company has accounts payable to affiliates of Ps. 44,944 (Ps. 213,907 as of December 31, 2012), related primarily to the following expenses:

December 31, 2013 2012 Rent and administrative expenses (Note 25) Ps. 101,068 Ps. 101,161

Related party transactions were carried out at market value.

For the year ended December 31, 2013, salaries and benefits received by the principal executive officers of the Company amounted to Ps. 103,235 (Ps. 105,710 in 2012), consisting of base salary amounts and legal benefits, complemented by a variable compensation program that is basically driven by the Company’s results.

On December 31, 2013 the Company entered into an agreement to transfer part of its portfolio with a nominal value of $200,000, without reserves, resources, or any limitation over each and every one of the credits transferred to Desarrollos Inmobiliarios Garza Valdéz, S. A. de C. V., related party. The Company has no rights or obligations with respect to the transferred portfolio; this transaction was settled offsetting an account payable for the same amount, effective at that date, in favor of such related party.

Subsequent event

On April 10, 2014, the Company entered into a portfolio transfer agreement for $200,000 with conditions similar to those mentioned in the paragraph above with the same related party. At the date of issuance of the audited financial statements, this transaction had not been settled.

The Company and its subsidiaries declare they have no significant transactions with related parties or conflicts of interest to disclose.

Note 18 - Employee benefits:

The amount of employee benefit obligations as of December 31, 2013 and 2012 was Ps. 93,043 and Ps. 85,240 respectively, and is analyzed as follows:

December 31, 2013 2012

Pension plans Ps. 6,593 Ps. 6,185 Seniority premium 51,838 48,125 Other employee benefits 34,612 30,930 Ps. 93,043 Ps. 85,240

Page 42 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The analysis of the net period cost for the years ended December 31, 2013 and 2012, is as follows:

2013 2012

Pension plans Ps. 699 Ps. 744 Seniority premium 11,215 10,376 Other employee benefits 6,715 4,611 Ps. 18,629 Ps. 15,731 Pension plans

The amounts recognized in the consolidated statements of financial position were determined as follows:

December 31 2013 2012

Defined benefit obligations Ps. 6,593 Ps. 6,185 Fair value of plan assets - - Liability in the statement of financial position Ps. 6,593 Ps. 6,185

The movement in the defined benefit obligation is as follows:

2013 2012 Opening balance at January 1 Ps. 6,185 Ps. 5,983

Labor cost 332 337 Finance cost, net 367 407 Actuarial gains (losses) (291) (542) Ending balance at December 31 Ps. 6,593 Ps. 6,185

The principal actuarial assumptions used, in nominal and real terms, were as follows:

December 31, 2013 2012

Discount rate 7.25% 6.25% Salary increase rate 4.00% 4.00%

The net period cost is analyzed as follows: 2013 2012 Service costs of the year Ps. 332 Ps. 337 Finance cost, net 367 407 Net period cost Ps. 699 Ps. 744

Page 43 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

In the event of a hypothetical increase or decrease in the discount rate of 0.25% from that estimated by Management, the carrying amount of labor obligations would increase by Ps. 176 and decrease by Ps. 189, respectively.

In the event of a hypothetical increase or decrease in the salary increase rate of 0.25% from that estimated by Management, the carrying amount of labor obligations would decrease by Ps. 186 and increase by Ps. 200, respectively.

Seniority premium

The amounts recognized in the consolidated statements of financial position were determined as follows:

December 31, 2013 2012

Defined benefit obligations Ps.51,838 Ps.48,125 Fair value of plan assets - - Liability in the statement of financial position Ps.51,838 Ps.48,125

The movement in the defined benefit obligation was as follows:

2013 2012 Opening balance at January 1 Ps. 48,125 Ps.41,539 Labor cost 8,480 7,651 Finance cost, net 2,735 2,725 Actuarial gains (losses) (1,281) 2,024 Benefits paid from the reserve (6,221) (5,814) Ending Balance at December 31 Ps. 51,838 Ps.48,125

The principal actuarial assumptions used, in nominal and real terms, were as follows:

December 31 2013 2012

Discount rate 7.25% 6.25% Salary increase rate 4.00% 4.00%

The net period cost is analyzed as follows: 2013 2012 Service costs of the year Ps. 8,480 Ps. 7,651 Finance cost, net 2,735 2,725 Net period cost Ps. 11,215 Ps. 10,376

Page 44 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Other employee benefits

The amounts recognized in the consolidated statements of financial position were determined as follows:

December 31 2013 2012

Defined benefit obligations Ps. 34,612 Ps.30,930 Fair value of plan assets - - Liability in the statement of financial position Ps. 34,612 Ps.30,930

The movement in the defined benefit obligation was as follows: 2013 2012 At January 1 Ps. 30,930 Ps. 27,167 Labor cost 3,750 2,545 Finance cost, net 2,965 2,066 Actuarial gains (losses) (2,616) 703 Benefits paid from the reserve (417) (1,551) At December 31 Ps. 34,612 Ps. 30,930

The principal actuarial assumptions used, in nominal and real terms, were as follows:

December 31 2013 2012

Discount rate 7.25% 6.25% Salary increase rate 4.00% 4.00%

The net period cost is analyzed as follows: 2013 2012 Service costs of the year Ps. 3,750 Ps. 2,545 Finance cost, net 2,965 2,066 Net period cost Ps. 6,715 Ps. 4,611

Page 45 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 19 - Stockholders’ equity:

In the Ordinary General Meeting held on April 19, 2013, the stockholders agreed that the fund created for the purchase and sale of the Company’s own shares will be up to a maximum amount of Ps. 130 million. As of December 31, 2013, the Company had 259,700 shares (259,700 shares in 2012) held in treasury and the market value per share at that date was Ps. 23.61 (Ps. 16.10 in 2012).

As of December 31, 2013 and 2012 the capital stock comprised the following:

Number Description of shares Amount Fixed capital (minimum): Series “A”, Class “I”, common, nominative shares, without par value 330,097,385 Ps. 660,195 Variable capital: Series “A”, Class “II”, common, nominative shares, without par value 109,090,909 218,182 Accumulated inflation increase as of December 31, 1997 579,909 Capital stock 439,188,294 Ps. 1,458,286

As of December 31, 2013 the retained earnings included Ps. 302,431 and Ps. 604,683, applicable to the legal reserve and to the reinvestment reserve, respectively. The movements of the reserves were as follows:

Legal Reinvestment reserve reserve

As of January 1, 2012 Ps. 295,564 Ps. 591,129

Changes in 2012: Increases 5,275 10,550 Utilization - - As of December 31, 2012 300,839 601,679

Changes in 2013: Increases 1,592 3,184 Utilization - - As of December 31, 2013 Ps. 302,431 Ps. 604,863

Page 46 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Dividends paid are not subject to income tax if they are paid from after-tax earnings. Dividends paid in excess of after-tax earnings are subject to a tax equivalent to 42.86% if paid in 2013. The tax is payable by the Company and may be credited against the normal income tax payable by the Company in the year in which the dividends are paid or in the following two years or, if appropriate, against the flat tax of the year. Dividends which are paid from retained earnings previously taxed are not subject to any tax withholding or additional payment. In the event of a capital reduction, any excess of stockholders’ equity over capital contributed, the latter restated in accordance with the provisions of the Income Tax Law, is accorded the same tax treatment as dividends. At December 31, 2013 and 2012, the inflation-adjusted contributed capital amounted to Ps. 7,080,307 and Ps. 6,808,573, respectively.

Note 20 - Costs and expenses classified by their nature:

Cost of sales and administrative and selling expenses are analyzed as follows: December 31 2013 2012 Cost of goods sold Ps. 6,110,698 Ps. 5,727,672 Salaries and employee benefits 2,557,050 2,340,493 Impairment allowance 1,284,315 1,173,362 Leasing 776,659 763,195 Interest expense on bank deposits 698,291 589,799 Advertising 341,733 334,125 Depreciation and amortization 310,042 314,397 Energy, water and telephone services 286,771 298,788 Maintenance 174,139 158,318 Freights 50,078 45,315 Other (1) 1,046,949 973,944 Ps. 13,636,725 Ps.12,719,408

(1) Includes mainly insurance expenses, travel expenses and training.

The salaries and employee benefits are analyzed as follows: December 31 2013 2012 Salaries and bonuses Ps. 1,814,734 Ps. 1,814,309 Commissions to sales personnel 129,660 87,910 Employee benefits 38,434 15,731 Other remuneration 574,222 422,543 Ps. 2,557,050 Ps. 2,340,493

Page 47 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 21 - Other income (expenses): December 31 Other income: 2013 2012

Recovery of taxes paid in excess Ps. 16,461 Ps. 109,818 Gain on sale of fixed assets 1,639 1,279 Administrative services 7,423 7,551 Trade receivables recovered 28,175 - Other 1,910 5,249 Total other income 55,608 123,897

Other expenses:

Utilization of tax provisions (41,861) (48,290) Other (5,327) (4,627) Total other expenses (47,188) (52,917)

Other income, net Ps. 8,420 Ps. 70,980

Note 22 - Financial income (expenses):

Financial income and expenses are analyzed as follows: December 31 2013 2012 Financial expenses:

Interest expense on bank borrowings (Ps.145,428) (Ps. 106,318) Interest expense on debt certificates (540,270) (553,578) Premium (Senior notes Rule 144A prepayment) (176,784) - Factoring (46,946) (46,800) Other financing expenses (22,466) (15,649) Foreign exchange loss, net (55,029) - (Ps.986,923) (Ps. 722,345)

Financial income:

Financial income Ps. 1,515 Ps. 1,757 Foreign exchange gain, net - 62,213 Ps. 1,515 Ps. 63,970

Page 48 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 23 - Income tax expense:

New Income Tax Law

On December 11, 2013 the decree for the new Income Tax Law was published (new LISR) becoming effective on January 1, 2014, repealing the LISR published as of January 1, 2002 (former LISR). The new LISR maintains the essence of the former LISR; however, it makes significant amendments among which the most important are: i. Limiting deductions in contributions to pension and exempt salary funds, automobile leases, restaurant consumption and social security fees; it also eliminates the immediate deduction in fixed assets. ii. Amending the mechanics to accumulate revenues derived from the term alienation and generalizing the procedure to determine the gain in alienation of shares. iii. Amending the procedure to determine the taxable basis for the Employees' Profit Sharing (PTU), establishing the mechanics to determine the initial balance of the capital contribution account (CUCA) and the CUFIN and establishing new mechanics for the recovery of Asset Tax (IA). iv. Establishing an ISR rate applicable for 2014 and the following years of 30%. In contrast to the LISR above that established a 30%, 29% and 28% rate for 2013, 2014 and 2015, respectively.

The Company has reviewed and adjusted the deferred tax balance at December 31, 2013, considering in the determination of temporary differences, the application of these new provisions, the impacts of which are detailed in the reconciliation of the effective rate as follows. However, the effects in deduction limitations and others indicated previously will be applied as from 2014 and will mainly affect the tax incurred as of such year.

Grupo Famsa determines its taxable income (loss) and employees’ profit sharing on an individual standalone company basis. The tax result differs from the accounting result due to the temporary differences arising from comparing the book value and the tax value of each asset and liability account in the balance sheet, as well as items affecting only the net income or the taxable income of the year.

Income taxes are analyzed as follows: December 31 2013 2012

Current income taxes (Ps. 13,195) (Ps. 19,045) Current flat rate business tax (12,136) (35,591) Deferred income taxes 251,657 161,968 Ps. 226,326 Ps. 107,332

Page 49 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The deferred income tax is analyzed as follows:

December 31 Deferred tax assets: 2013 2012 Tax loss carryforwards Ps. 821,777 Ps. 212,788 Prepaid expenses and other provisions, net 338,454 553,859 Allowance for doubtful receivables 471,063 279,200 Installment sales receivable 109,919 226,424 Property, leasehold improvements and furniture and equipment 134,594 108,253 Tax effect of installment sales 30,104 32,306 Provision for labor obligations 32,328 25,127 Employee profit sharing payable 1,613 1,140 1,939,852 1,439,097

Deferred tax liabilities: Prepaid expenses and other accrued expenses (1) 108,846 - Inventories 11,600 5,033 Effect on decrease in income tax rate 8,776 7,535

129,222 12,568 Deferred income tax before asset tax recoverable 1,810,630 1,426,529 Asset tax recoverable - 121,504 Total deferred tax asset Ps. 1,810,630 Ps. 1,548,033

(1) This balance corresponds to the liability recorded due to the 2014 fiscal reform, specifically due to the elimination of the tax incentive applicable to Real Estate Property Companies.

The Company has tax projections that support the earning of future taxable profit against which current tax losses will be applied and also those which would arise resulting from the reversal of deductible temporary differences.

The analysis of deferred tax assets and deferred tax liabilities is as follows: December 31 Deferred tax assets: 2013 2012 Deferred tax asset to be paid within 12 months Ps. 1,805,258 Ps. 1,225,996 Deferred tax assets to be paid after more than 12 months 134,594 213,101 1,939,852 1,439,097

Page 50 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

December 31 Deferred tax liabilities: 2013 2012 Deferred tax liability to be paid within 12 months - (1,462) Deferred tax liability to be paid after more than 12 months (120,446) (3,571) (120,446) (5,033) Asset tax recoverable after more than 12 months - 121,504 Effect of decrease in income tax rate (8,776) (7,535) Deferred tax asset (net) Ps. 1,810,630 Ps. 1,548,033

The movement in deferred income tax assets and liabilities during the year, excluding asset tax recoverable was as follows: Property Allowance leasehold for improvements, Provision Tax effect of Tax loss doubtful furniture and for labor installment carryforwards receivables equipment obligations sales Inventories Other Total

As of January 1, 2012 Ps. 788,964 Ps. 254,200 Ps. 81,934 Ps. 22,407 Ps. 37,674 (Ps. 97,040) Ps. 177,562 Ps. 1,265,701 Amount charged (credited) to the statement of income (576,176) 25,000 26,319 2,720 (5,368) 92,007 597,466 161,968 Other comprehensive income ------(1,140) (1,140) As of December 31, 2012 212,788 279,200 108,253 25,127 32,306 (5,033) 773,888 1,426,529 Amount charged (credited) to the statement of income 695,553 191,863 26,341 7,201 (2,202) (6,567) (660,532) 251,657 Asset tax recoverable cancelled 134,240 134,240 Other comprehensive income ------(1,796) (1,796) As of December 31, 2013 Ps. 908,341 Ps. 471,063 Ps. 134,594 Ps. 32,328 Ps. 30,104 (Ps. 11,600) Ps. 245,800 Ps. 1,810,630

As of December 31, 2013, the Company had tax loss carryforwards, which will be inflation-indexed through the year in which they are applied, as follows:

Tax loss Year of expiration carryforwards

2017 Ps. 426 2018 14,211 2019 59,473 2020 147,625 2021 76,684 2022 13,002 2023 2,427,836 Ps. 2,739,257

To determine the deferred income tax at December 31, 2013 and 2012, the Company applied to the temporary differences the applicable tax rates in accordance with their estimated reversal date.

Page 51 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

The reconciliation between the statutory and effective income tax rates is as follows:

December 31 2013 2012 Statutory tax rate 30% 30% Add/ (deduct) income tax effect of: Non-deductible permanent items (mainly non-deductible expenses) 13% 8% Inflation 7% Decrease in income tax rate 1% Other permanent differences (tax effect of cost of sales and other) 2% (26%) Effective income tax rate 52% 13%

In 2013 and 2012 certain subsidiaries of Famsa determined a flat rate business tax of Ps. 12,136 and Ps. 35,591 respectively, which exceeded their income tax liability and was therefore paid instead of income tax.

The tax charged related to the components of other comprehensive income for the years ended December 31, was as follows:

2013 2012 Before Tax After Before Tax After tax charged tax tax charged tax Foreign currency translation effects (Ps. 10,706) Ps. - (Ps. 10,706) (Ps. 48,215) Ps. - (Ps. 48,215) Actuarial gains (losses) 5,987 (1,796) 4,191 (3,121) 936 (2,185) Other comprehensive income items (Ps. 4,719) (Ps.1,796) (Ps. 6,515) (Ps. 51,336) Ps. 936 (Ps. 50,400) Deferred tax (Ps.1,796) Ps. 936

Note 24 - Contingencies:

In the normal course of operations the Company is involved in disputes and lawsuits. The Company believes there are no legal proceedings or threatened claims against or affecting the Company which, in the event of an adverse resolution, could significantly affect, individually or taken together, the Company’s results of operations or financial position.

Note 25 - Commitments:

As of December 31, 2013, the Company had 42 long-term lease agreements in place with the controlling shareholders and various entities controlled by them, with regard to the retail space used by several stores. The terms of all such agreements are substantially identical and are consistent with standard industry practices and real estate market prices.

Page 52 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Rentals payable under lease agreements are as follows:

Related parties Other Total 2014 Ps. 709,371 Ps. 106,122 Ps. 815,493 2015 to 2019 3,546,854 530,609 4,077,463 2020 onwards 6,384,336 955,095 7,339,431 Ps.10,640,561 Ps. 1,591,826 Ps. 12,232,387

In 2013 and 2012 total rental and administrative services expense is as follows:

2013 2012 Related parties Ps. 101,068 Ps.101,161 Other 675,591 662,034 Total Ps. 776,659 Ps.763,195

Note 26 - Information by business segments:

26.1 Segment reporting

The Company manages and evaluates its continuing operations through three business segments: Mexico (national retail stores and financial sector), USA, (foreign retail stores) and other businesses in Mexico (wholesale, manufacturing of furniture and footwear, catalog business). The Company controls and evaluates its continuing operations on a consolidated basis. Its activities are carried out through its subsidiary companies.

Page 53 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

2013 Mexico USA Other Subtotal Intersegment Consolidated Net sales (1) Ps. 9,405,118 Ps. 1,164,510 Ps. 608,396 Ps. 11,178,024 (Ps. 535,051) Ps. 10,642,973 Interest earned from customers 3,895,531 478,991 251,993 4,626,515 (221,614) 4,404,901 Total revenues Ps. 13,300,649 Ps. 1,643,501 Ps. 860,389 Ps. 15,804,539 (Ps. 756,665) Ps. 15,047,874 Cost of sales (7,255,758) (962,670) (735,399) (8,953,827) 810,445 (8,143,382) Gross profit 6,044,891 680,831 124,990 6,850,712 53,780 6,904,492 Operating expenses (2) (4,515,852) (622,648) (133,707) (5,272,207) 65,635 (5,206,572) Other income, net 91,550 (2,686) 39,092 127,956 (119,536) 8,420 Operating profit before depreciation and amortization 1,620,589 55,497 30,375 1,706,461 (121) 1,706,340 Depreciation and amortization (278,742) (3,210) (4,819) (286,771) - (286,771) Operating profit (loss) Ps. 1,341,847 Ps. 52,287 Ps. 25,556 Ps. 1,419,690 (Ps. 121) Ps. 1,419,569

Additional disclosures: Total assets Ps. 32,799,488 Ps. 2,380,962 Ps. 497,348 Ps. 35,678,098 (Ps. 2,735,130) Ps. 32,942,968 Total liabilities Ps. 23,707,029 Ps. 2,884,969 Ps. 142,413 Ps. 26,734,411 (Ps. 2,735,130) Ps. 23,999,281 Capital expenditure Ps. 521,012 Ps. 72,420 Ps. 897 Ps. 594,329 Ps. - Ps. 594,329 Adjusted EBITDA Ps. 2,318,880 Ps. 55,497 Ps. 30,375 Ps. 2,404,752 (Ps. 121) Ps. 2,404,631

2012 Mexico USA Other Subtotal Intersegment Consolidated Net sales (1) Ps. 9,137,127 Ps. 1,268,662 Ps. 701,908 Ps. 11,107,697 (Ps. 661,231) Ps. 10,446,466 Interest earned from customers 3,216,187 446,558 247,064 3,909,809 (232,747) 3,677,062 Total revenues Ps. 12,353,314 Ps. 1,715,220 Ps. 948,972 Ps. 15,017,506 (Ps. 893,978) Ps. 14,123,528 Cost of sales (6,657,226) (955,504) (847,549) (8,460,279) 924,131 (7,536,148) Gross profit 5,696,088 759,716 101,423 6,557,227 30,153 6,587,380 Operating expenses (2) (4,163,573) (641,173) (124,884) (4,929,630) 60,767 (4,868,863) Other income, net 135,489 3,146 32,130 170,765 (99,785) 70,980 Operating profit before depreciation and amortization 1,668,004 121,689 8,669 1,798,362 (8,865) 1,789,497 Depreciation and amortization (306,171) (3,103) (5,123) (314,397) - (314,397) Operating profit (loss) Ps. 1,361,833 Ps. 118,586 Ps. 3,546 Ps. 1,483,965 (Ps. 8,865) Ps. 1,475,100

Additional disclosures: Total assets Ps. 28,762,550 Ps. 2,558,349 Ps. 412,056 Ps. 31,732,955 (Ps. 2,663,029) Ps. 29,069,926 Total liabilities Ps. 20,366,785 Ps. 2,927,370 Ps. 149,085 Ps. 23,443,240 (Ps. 2,663,029) Ps. 20,780,211 Capital expenditure Ps. 202,519 Ps. 2,677 Ps. 1,885 Ps. 207,081 Ps. - Ps. 207,081 Adjusted EBITDA Ps. 2,257,803 Ps. 121,689 Ps. 8,669 Ps. 2,388,161 (Ps. 8,865) Ps. 2,379,296

(1) Net sales realized in the respective countries shown above. (2) Excluding depreciation and amortization.

Page 54 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

26.2 Evaluation of operating performance

The Company evaluates operating performance based on a measure denominated “adjusted EBITDA”, which consists of adding to the operating profit interest expense on bank deposits, depreciation and amortization. The adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered as an alternative to net income as a measure of operating performance or cash flows as a measure of liquidity.

The reconciliation between Adjusted EBITDA and operating profit for the years ended December 31 is as follows:

2013 2012 Operating profit Ps. 1,419,569 Ps. 1,475,100

Interest expense on bank deposits 698,291 589,799 Depreciation and amortization 286,771 314,397 Adjusted EBITDA Ps. 2,404,631 Ps. 2,379,296

26.3 Sales by product

Net sales by product for the year ended December 31 were as follows: 2013 2012

Interest earned from customers Ps. 4,404,901 Ps. 3,677,062 Furniture 2,301,511 2,393,908 Electronics 1,765,494 1,690,187 Appliances 1,641,750 1,394,124 Mobile phones 1,249,643 955,514 Computer equipment 843,927 831,890 Motorcycles 768,551 575,611 Clothing and footwear 521,232 540,764 Seasonal articles (air conditioners, heaters, etc.) 345,289 389,451 Income from commercial banking 191,060 175,357 Small appliances 145,361 146,588 Sport articles 134,968 177,849 Children’s articles and accessories 47,634 63,915 Other (1) 686,553 1,111,308 Ps.15,047,874 Ps. 14,123,528

(1) Includes primarily revenues from guarantees granted and sales through the commercial program denominated “Famsa to Famsa”.

Page 55 Grupo Famsa, S. A. B. de C. V. and subsidiaries Notes to the consolidated financial statements As of December 31, 2013 and 2012

Note 27 - Subsequent events:

As at March 13, 2014, Grupo Famsa issued local bonds (GFAMSA14) for a principal amount of $1,000 million maturing as at March 10, 2016, with an interest rate of 3.00% plus the 28-day Interbank Equilibrium Interest Rate (TIIE) under a bond program of $2,000 million. The net proceeds obtained from the offering of local bonds were used to fully pay GFAMSA 11 bonds maturing as at March 21, 2014.

Humberto Garza Valdéz Abelardo García Lozano Chief Executive Officer Chief Financial Officer

Page 56

Exhibit C: Form of Global Note

See attached.

Form of Global Note (Interest Bearing)

The Securities evidenced hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons. Terms used above have the meanings given to them by Regulation S under the Securities Act.

GRUPO FAMSA, S.A.B. DE C.V.

Series No.: Maturity Date:

Issued on: Principal Amount:

Fixed Interest Rate: Margin:

1. For value received, GRUPO FAMSA, S.A.B.de C.V. (the "Issuer") hereby promises to pay to the bearer of this Global Note on the above-mentioned Maturity Date the above Principal Amount together with accrued and unpaid interest on the unpaid principal balance of this Note at the fixed rate of ___% per annum (the "Base Interest") and payable on the dates as set forth below. All such payments shall be made in accordance with a Note Agency Agreement dated as of December 18, 2009 (the "Agency Agreement") among the Issuer and HSBC Bank plc, as issue agent and principal paying agent (in such capacity, the "Agent"). All such payments shall be made upon presentation and surrender of this Global Note at the office of the Agent at HSBC Bank plc, 8 Canada Square, London E14 5HQ, England, by transfer to an account denominated in U.S. Dollars and maintained by the bearer outside the United States. Terms used and not defined herein shall have the meanings given them in, or by reference in, the Agency Agreement.

2. This Global Note is issued in representation of a Series of Notes in the aggregate Principal Amount specified above.

3. The Base Interest will be payable by the Issuer on the unpaid principal balance of this Note from the most recent Payment Date (as defined below) to which interest has been paid on this Note, or if no interest has been paid on this Note, from the date of issuance set forth above, until payment in full of the principal sum hereof has been made, semi-annually in arrears (to the holders of record of the Notes at the close of business on ______and ______(each a "Payment Date")). Interest on past due amounts under this Note shall accrue interest at the Base Interest rate and will be payable by the Issuer on demand of the bearer. Interest on this Note will be calculated on the basis of a 360-day year consisting of twelve (12) 30-day months.

4. All Base Interest payments due on each Payment Date, or other applicable Base Interest payment date hereunder or under the Agreement, will be made in cash by wire transfer of immediately available funds to the bearer's account (the "Bank Account") at such bank outside the United States as may be specified in writing by the bearer to the Issuer in accordance with the notice provisions of the Agency Agreement, in such denomination of U.S. currency as at the time of payment shall be legal tender for the

payment of public and private debts. Payments in respect of the Notes represented by a Book Entry-Note (including principal amount and interest accrued and unpaid) will be made by wire transfer of immediately available funds to the accounts specified by Euroclear or Clearstream Luxembourg.

5. All payments in respect of this Global Note shall be made without setoff, counterclaim, fees, liabilities or similar deductions, and free and clear of, and without deduction or withholding for, taxes, levies, duties, assessments or charges of any nature now or hereafter imposed, levied, collected, withheld or assessed by or for the account of Mexico or any political subdivision or taxing authority thereof or therein ("Taxes"). If the Issuer or any agent thereof is required by law or regulation to make any deduction or withholding for or on account of Taxes, the Issuer shall, to the extent permitted by applicable law or regulation, pay such additional amounts as shall be necessary in order that the net amounts received by the bearer of this Global Note or the holder or beneficial owner of any interest herein or rights in respect hereof after such deduction or withholding shall equal the amount which would have been receivable hereunder in the absence of such deduction or withholding, except that no such additional amounts shall be payable:

(a) to the bearer of this Global Note or the holder or beneficial owner of any interest herein or rights in respect hereof where such deduction or withholding is required by reason of the bearer, holder or owner having some connection with Mexico other than the mere holding of and payment in respect of this Global Note; or

(b) in respect of any deduction or withholding which would not have been required but for the presentation by the bearer of this Global Note for payment on a date more than 15 days after the Maturity Date or the date on which payment hereof is duly provided for, whichever occurs later; or

(d) any taxes imposed on, or withheld or deducted from, payments made to a holder or beneficial owner of this note at a rate in excess of the 4.9% rate of tax in effect on the date hereof and uniformly applicable in respect of payments made by Issuer to all holders or beneficial owners eligible for the benefits of a treaty for the avoidance of double taxation to which Mexico is a party without regard to the particular circumstances of such holders or beneficial owners (provided that, upon any subsequent increase in the rate of tax that would be applicable to payments to all such holders or beneficial owners without regard to their particular circumstances, such increased rate shall be substituted for the 4.9% rate for purpose of this clause (d), but only to the extent that (x) such holder or beneficial owner has failed to provide on a timely basis, at the reasonable request of Issuer (subject to the conditions set forth below), information, documentation or other evidence concerning whether such holder or beneficial owner is eligible for benefits under a treaty for the avoidance of double taxation of which Mexico is a party if necessary to determine the appropriate rate of deduction or withholding of taxes under such treaty or under any statute, regulation, rule, ruling or administrative practice, and (y) at least 60 days prior to the payment date with respect to which Issuer shall make such reasonable request, Issuer shall have notified the holders of this note, in writing, that such holders or beneficial owners of this note will be required to provide such information, documentation or other evidence; or

(e) any taxes that are imposed on, or withheld or deducted from, payments made to the holder or beneficial owner of this note to the extent such taxes would not have been so imposed, deducted or withheld but for the failure by such holder or beneficial owner of this note to comply with any certification, identification, information, documentation or other reporting requirement concerning the nationality, residence, identity or connection with Mexico (or any political subdivision or territory or possession thereof or area subject to its jurisdiction) of the holder or beneficial owner of this note if (x) such compliance is required or imposed by a statute, treaty, regulation, rule, ruling or administrative practice in order to make any claim for exemption from, or reduction in the rate of, the imposition, withholding or deduction of any taxes, and (y) at least 60 days prior to the first payment date with respect to which Issuer shall apply this clause (e), Issuer shall have notified all the holders of this note, in writing, that such holders or beneficial owners of this note will be required to provide such information or documentation.

6. The payment obligation of the Issuer represented by this Global Note constitutes and at all times shall constitute a direct, unsecured and unsubordinated obligation of the Issuer ranking pari passu without any preference with all present and future unsecured and unsubordinated indebtedness of the Issuer, except any such obligations as are preferred by law.

7. If the Maturity Date is not a Payment Business Day (as defined herein), payment in respect hereof will not be made and credit or transfer instructions shall not be given until the next following Payment Business Day and the bearer of this Global Note or the holder or beneficial owner of any interest herein or rights in respect hereof shall not be entitled to any interest or other sums in respect of such postponed payment. "Payment Business Day", as used herein, shall mean any day other than a Saturday or Sunday, which is a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London, New York City and Mexico City.

8. This Global Note is negotiable and, accordingly, title hereto shall pass by delivery and the bearer shall be treated as being absolutely entitled to receive payment upon due presentation hereof (notwithstanding any notation of ownership or other writing thereon or notice of any previous loss or theft thereof).

9. If (i) Euroclear or Clearstream Luxembourg is closed for a continuous period of 14 days (other than by reason of public holidays) or (ii) default is made in the payment referred to above and such default is not remedied within seven days after the due date for payment, the Issuer hereby undertakes that, upon presentation and surrender of this Global Note during normal business hours on or after the Maturity Date to the Issuer at the above office of the Agent, it will issue to the bearer duly executed and authenticated bearer Notes in the form of Schedule 2 to the Agency Agreement ("Definitive Notes") in an aggregate principal amount equal to the Principal Amount of this Global Note.

10. If, upon the occurrence of an event described in paragraph 9 and following such surrender, Definitive Notes are not issued in full exchange for this Global Note before 5:00 p.m. (London time) on the thirtieth day after surrender, this Global Note (including the obligation hereunder to issue Definitive Notes) will become void and the bearer will have no further rights under this Global Note (but without prejudice to the rights which any person may have pursuant to paragraph 11 below).

11. Interests in this Global Note will be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream Luxembourg. Each person who is shown in the records of Euroclear or Clearstream Luxembourg as entitled to a particular number of Definitive Notes by way of an interest in this Global Note will be treated by the Issuer and the Agent as the holder of such number of Definitive Notes, and the expression "Noteholder" shall be construed accordingly. For purposes of this Global Note, the securities account records of Euroclear or Clearstream Luxembourg shall, in the absence of manifest error, be conclusive evidence of the identity of the Noteholders and of the principal amount of the Notes represented by this Global Note credited to the securities accounts of such Noteholders. Any statement issued by Euroclear or Clearstream Luxembourg to any Noteholder relating to a specified Note or Notes credited to the securities account of such Noteholder and stating the principal amount of such Note or Notes and certified by Euroclear or Clearstream Luxembourg to be a true record of such securities account shall, in the absence of manifest error, be conclusive evidence of the records of Euroclear or Clearstream Luxembourg for the purposes of the next preceding sentence (but without prejudice to any other means of producing such records in evidence). Notwithstanding any provisions to the contrary contained in this Global Note, the Issuer irrevocably agrees, for the benefit of such Noteholders and their successors and assigns, that each Noteholder or its successors or assigns may, without the consent and to the exclusion of the bearer hereof, file any claim, take any action or institute any proceeding to enforce, directly against the Issuer, the obligation of the Issuer hereunder to pay any amount due or to become due in respect of each Note represented by this Global Note which is credited to such Noteholder's securities account with Euroclear or Clearstream Luxembourg without the production of this Global Note; provided that the bearer hereof shall not theretofore have filed a claim, taken action or instituted proceedings to enforce the same in respect of such Notes.

12. This Global Note shall be governed by and construed in accordance with the laws of the State of New York. The Issuer irrevocably agrees that any suit, action or proceeding arising out of or relating to this Global Note ("Proceedings") may be instituted in the courts of the State of New York, or the federal courts, sitting in the Borough of Manhattan, City of New York, State of New York. The Issuer irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any Proceedings and any claim that such Proceedings have been brought in any inconvenient or inappropriate forum, and irrevocably submits generally and unconditionally to the jurisdiction of any such court in any Proceedings. The Issuer further irrevocably agrees that a judgment in any Proceedings brought in such courts may be enforced in the courts of any other jurisdiction to the extent permitted by applicable law. Nothing herein contained shall limit the right of any party hereto to initiate Proceedings in any other court of competent jurisdiction, nor shall the initiation of Proceedings in any one or more jurisdictions preclude taking Proceedings in any other jurisdiction. The Issuer hereby appoints C T Corporation System, 111 Eighth Avenue, New York, New York 10011, as its agent to receive service of process in any Proceedings in New York City in connection herewith.

13. This Global Note shall not be validly issued unless manually authenticated by HSBC Bank plc, as Agent.

AUTHENTICATED by Signed in facsimile on behalf of

HSBC BANK plc GRUPO FAMSA, S.A.B. DE C.V. without recourse, warranty or liability and for authentication purposes only By: ______By: ______(Authorized Signatory) (Authorized Signatory)

Exhibit D: Form of Definitive Note

See attached.

Form of Definitive Note (Interest Bearing)

GRUPO FAMSA, S.A.B. DE C.V.

Series No.: Maturity Date:

Issued on: Principal Amount:

Fixed Interest Rate: Margin:

1. For value received, GRUPO FAMSA, S.A.B.de C.V. (the "Issuer") hereby promises to pay to the bearer of this Note on the above-mentioned Maturity Date the above Principal Amount together with accrued and unpaid interest on the unpaid principal balance of this Note at the fixed rate of ___% per annum (the "Base Interest") and payable on the dates as set forth below. All such payments shall be made in accordance with a Note Agency Agreement dated as of December 18, 2009 (the "Agency Agreement") among the Issuer and HSBC Bank plc, as issue agent and principal paying agent (in such capacity, the "Agent"). All such payments shall be made upon presentation and surrender of this Note at the office of the Agent at HSBC Bank plc, 8 Canada Square, London E14 5HQ, England, by transfer to an account denominated in U.S. Dollars and maintained by the bearer outside the United States. Terms used and not defined herein shall have the meanings given them in the Agency Agreement.

2. The Base Interest will be payable by the Issuer on the unpaid principal balance of this Note from the most recent Payment Date (as defined below) to which interest has been paid on this Note, or if no interest has been paid on this Note, from the date of issuance set forth above, until payment in full of the principal sum hereof has been made, semi-annually in arrears (to the holders of record of the Notes at the close of business on ______and ______(each a "Payment Date")). Interest on past due amounts under this Note shall accrue interest at the Base Interest rate and will be payable by the Issuer on demand of the bearer. Interest on this Note will be calculated on the basis of a 360-day year consisting of twelve (12) 30-day months.

3. All Base Interest payments due on each Payment Date, or other applicable Base Interest payment date hereunder or under the Agreement, will be made in cash by wire transfer of immediately available funds to the bearer's account (the "Bank Account") at such bank outside the United States as may be specified in writing by the bearer to the Issuer in accordance with the notice provisions of the Agency Agreement, in such denomination of U.S. currency as at the time of payment shall be legal tender for the payment of public and private debts. Payments in respect of the Notes represented by a Book Entry-Note (including principal amount and interest accrued and unpaid) will be made by wire transfer of immediately available funds to the accounts specified by Euroclear or Clearstream Luxembourg.

4. All payments in respect of this Note shall be made without setoff, counterclaim, fees, liabilities or

similar deductions, and free and clear of, and without deduction or withholding for, taxes, levies, duties, assessments or charges of any nature now or hereafter imposed, levied, collected, withheld or assessed by or for the account of Mexico or any political subdivision or taxing authority thereof or therein ("Taxes"). If the Issuer or any agent thereof is required by law or regulation to make any deduction or withholding for or on account of Taxes, the Issuer shall, to the extent permitted by applicable law or regulation, pay such additional amounts as shall be necessary in order that the net amounts received by the bearer of this Note or the holder or beneficial owner of any interest herein or rights in respect hereof after such deduction or withholding shall equal the amount which would have been receivable hereunder in the absence of such deduction or withholding, except that no such additional amounts shall be payable:

(a) to the bearer of this Note or the holder or beneficial owner of any interest herein or rights in respect hereof where such deduction or withholding is required by reason of the bearer, holder or owner having some connection with Mexico other than the mere holding of and payment in respect of this Note; or

(b) in respect of any deduction or withholding which would not have been required but for the presentation by the bearer of this Note for payment on a date more than 15 days after the Maturity Date or the date on which payment hereof is duly provided for, whichever occurs later; or

reporting requirement concerning the nationality, residence, identity or connection with Mexico (or any political subdivision or territory or possession thereof or area subject to its jurisdiction) of the holder or beneficial owner of this note if (x) such compliance is required or imposed by a statute, treaty, regulation, rule, ruling or administrative practice in order to make any claim for exemption from, or reduction in the rate of, the imposition, withholding or deduction of any taxes, and (y) at least 60 days prior to the first payment date with respect to which Issuer shall apply this clause (e), Issuer shall have notified all the holders of this note, in writing, that such holders or beneficial owners of this note will be required to provide such information or documentation.

5. The payment obligation of the Issuer represented by this Note constitutes and at all times shall constitute a direct, unsecured and unsubordinated obligation of the Issuer ranking pari passu without any preference with all present and future unsecured and unsubordinated indebtedness of the Issuer, except any such obligations as are preferred by law.

6. If the Maturity Date is not a Payment Business Day (as defined herein), payment in respect hereof will not be made and credit or transfer instructions shall not be given until the next following Payment Business Day and the bearer of this Note shall not be entitled to any interest or other sums in respect of such postponed payment. "Payment Business Day", as used herein, shall mean any day other than a Saturday or Sunday, which is a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London, New York City and Mexico City.

7. This Note is negotiable and, accordingly, title hereto shall pass by delivery and the bearer shall be treated as being absolutely entitled to receive payment upon due presentation hereof (notwithstanding any notation of ownership or other writing thereon or notice of any previous loss or theft thereof).

8. This Note shall be governed by and construed in accordance with the laws of the State of New York. The Issuer irrevocably agrees that any suit, action or proceeding arising out of or relating to this Note ("Proceedings") may be instituted in the courts of the State of New York, or the federal courts, sitting in the Borough of Manhattan, City of New York, State of New York. The Issuer irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any Proceedings and any claim that such Proceedings have been brought in any inconvenient or inappropriate forum, and irrevocably submits generally and unconditionally to the jurisdiction of any such court in any Proceedings. The Issuer further irrevocably agrees that a judgment in any Proceedings brought in such courts may be enforced in the courts of any other jurisdiction to the extent permitted by applicable law. Nothing herein contained shall limit the right of any party hereto to initiate Proceedings in any other court of competent jurisdiction, nor shall the initiation of Proceedings in any one or more jurisdictions preclude taking Proceedings in any other jurisdiction. The Issuer hereby appoints C T Corporation System, 111 Eighth Avenue, New York, New York 10011, as its agent to receive service of process in any Proceedings in New York City in connection herewith.

9. This Note shall not be validly issued unless manually authenticated by HSBC Bank plc, as Agent.

AUTHENTICATED by Signed in facsimile on behalf of

HSBC BANK plc GRUPO FAMSA, S.A.B. DE C.V. without recourse, warranty or liability and for authentication purposes only By: ______By: ______(Authorized Signatory) (Authorized Signatory)

Issuer Grupo Famsa, S.A.B. de C.V.

Avenida Pino Suárez No. 1202 Norte, Colonia Centro 64000 Monterrey, N.L.

Dealer Banco Espírito Santo de Investimento, S.A., Sucursal en España

Calle Serrano, N. 88 28006 Madrid, Spain

340 Madison Avenue, 12th Floor New York, NY 10173

Issue Agent and HSBC Bank plc. Principal Paying Agent 8 Canada Square London E14 5HQ

Attorneys Jones Day

222 East 41st Street New York, NY 10017-6727

Mijares, Angoitia, Cortés y Fuentes, S.C.

Javier Barros Sierra 540 4to piso Colonia Santa Fe, Delegación Álvaro Obregón CP 01210 Mexico, D.F.

U.S.$33,000,000

Grupo Famsa, S.A.B. de C.V.

U.S.$120,000,000 Commercial Paper Program 7.00% Notes due 2016

______

INFORMATION MEMORANDUM ______

Dealer

Financial Advisor

February 3, 2015