LISTING PARTICULARS OFFERING MEMORANDUM U.S.$300,000,000

El Puerto de , S.A.B. de C.V. 3.950% Senior Notes due 2024 Guaranteed by Distribuidora Liverpool, S.A. de C.V.

We are offering U.S.$300,000,000 aggregate principal amount of our 3.950% senior notes due 2024, or the notes. Interest on the notes will accrue at a rate of 3.950% per year. We will pay interest on the notes semi-annually in arrears on April 2 and October 2 of each year, commencing on April 2, 2015. The notes will mature on October 2, 2024. The notes will be our senior unsecured general obligations and will be guaranteed by our wholly owned subsidiary Distribuidora Liverpool, S.A. de C.V. The notes will rank at least pari passu in right of payment with all of our unsecured and unsubordinated debt, and the guarantee will rank at least pari passu in right of payment with all unsecured and unsubordinated debt of the subsidiary guarantor (in each case, subject to certain obligations given preferential treatment pursuant to applicable law). The notes and the subsidiary guarantee will be structurally subordinated to all existing and future indebtedness and trade payables of our non-guarantor subsidiaries in respect of assets of and revenue generated by these subsidiaries. See ‘‘Risk Factors—Risk Related to the Notes—The notes are not secured by our assets and the notes and the subsidiary guarantee will be effectively subordinated to our and the subsidiary guarantor’s secured debt’’ and ‘‘—The notes and the subsidiary guarantee will be structurally subordinated to the liabilities of our non-guarantor subsidiaries.’’ We may redeem the notes, in whole or in part, at any time at a redemption price equal to the greater of par and a make-whole amount described herein, plus accrued and unpaid interest, if any. See ‘‘Description of the Notes—Optional Redemption—Optional Redemption.’’ In addition, we may redeem the notes, in whole but not in part, at 100% of their principal amount plus accrued and unpaid interest and additional amounts, if any, upon the occurrence of specified events relating to Mexican tax law, all as described under ‘‘Description of the Notes—Optional Redemption—Redemption for Taxation Reasons.’’ In addition, if we experience a Change of Control (as defined in the indenture governing the notes), we must offer to repurchase the notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any. See ‘‘Description of the Notes—Repurchase at the Option of Holders Upon a Change of Control.’’ Application has been made to the Irish Stock Exchange for the approval of this offering memorandum as Listing Particulars. Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and trading on the Global Exchange Market, which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of Directive 2004/39/EC. This offering memorandum constitutes the listing particulars, or the Listing Particulars, in respect of the admission of the notes to the Official List and to trading on the Global Exchange Market of the Irish Stock Exchange. Investing in the notes involves significant risks. See ‘‘Risk Factors’’ beginning on page 17 for a discussion of certain information that you should consider before investing in the notes.

Price: 98.312% plus accrued interest, if any, from October 2, 2014.

THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE MEXICAN NATIONAL SECURITIES REGISTRY (REGISTRO NACIONAL DE VALORES, OR THE RNV) MAINTAINED BY THE MEXICAN NATIONAL BANKING AND SECURITIES COMMISSION (COMISIÓN NACIONAL BANCARIA Y DE VALORES, OR CNBV), AND MAY NOT BE OFFERED PUBLICLY IN . THE NOTES MAY ONLY BE OFFERED IN MEXICO PURSUANT TO THE EXEMPTIONS TO REGISTRATION PROVIDED IN ARTICLE 8 OF THE MEXICAN SECURITIES MARKET LAW (LEY DEL MERCADO DE VALORES). WE WILL NOTIFY THE CNBV OF THE TERMS AND CONDITIONS OF THIS OFFERING FOR INFORMATIONAL AND STATISTICAL PURPOSES ONLY, AND DELIVERY OR RECEIPT OF SUCH NOTICE DOES NOT CONSTITUTE OR IMPLY A CERTIFICATION AS TO THE INVESTMENT QUALITY OF THE NOTES OR OF OUR OR THE SUBSIDIARY GUARANTOR’S SOLVENCY, LIQUIDITY OR CREDIT QUALITY OR THE ACCURACY OR COMPLETENESS OF THE INFORMATION SET FORTH HEREIN. THIS OFFERING MEMORANDUM IS SOLELY OUR RESPONSIBILITY AND HAS NOT BEEN REVIEWED OR AUTHORIZED BY THE CNBV. IN MAKING AN INVESTMENT DECISION, ALL INVESTORS, INCLUDING ANY MEXICAN INVESTOR, WHO MAY ACQUIRE NOTES FROM TIME TO TIME, MUST RELY ON THEIR OWN EXAMINATION OF EL PUERTO DE LIVERPOOL, S.A.B. DE C.V. AND THE SUBSIDIARY GUARANTOR. We have not registered the notes under the U.S. Securities Act of 1933, as amended, or the Securities Act, or under any state securities laws. Therefore, we may not offer or sell the notes within the to, or for the account or benefit of, any U.S. person unless the offer or sale would qualify for an exemption from registration under the Securities Act and applicable state securities laws. Accordingly, we are only offering the notes (1) to qualified institutional buyers (as defined in Rule 144A under the Securities Act) and (2) to persons outside the United States in compliance with Regulation S under the Securities Act. See ‘‘Transfer Restrictions’’ for additional information about eligible offerees and transfer restrictions. The notes are not being offered to the public within the meaning of Directive 2003/71/EC of the European Union, and this offer is not subject to the obligation to publish a prospectus under that Directive. The notes will be delivered to purchasers in book-entry form through The Depository Trust Company and its direct and indirect participants, including Clearstream Banking, société anonyme and Euroclear S.A./N.V., as operator of the Euroclear System, on or about October 2, 2014.

Joint Bookrunners and Joint Lead Managers BofA Merrill Lynch Citigroup

The date of this offering memorandum is October 2, 2014. TABLE OF CONTENTS

Page Market and Industry Information ...... iv Trademarks, Service Marks and Trade Names ...... v Enforceability of Civil Liabilities ...... vi Cautionary Statement Regarding Forward-Looking Statements ...... vii Presentation of Financial and Other Information ...... ix Summary ...... 1 Risk Factors ...... 17 Use of Proceeds ...... 35 Exchange Rates ...... 36 Capitalization ...... 37 Selected Consolidated Financial and Other Information ...... 38 Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 41 Industry ...... 57 Business ...... 66 Management ...... 91 Shareholders ...... 97 Certain Transactions with Related Parties ...... 98 Description of the Notes ...... 99 Form of Notes, Clearing and Settlement ...... 115 Taxation ...... 118 Plan of Distribution ...... 122 Transfer Restrictions ...... 128 Legal Matters ...... 130 Independent Auditors ...... 131 Available Information ...... 132 Index to Consolidated Financial Statements ...... F-1 All references to ‘‘we,’’ ‘‘us,’’ ‘‘our,’’ ‘‘our company’’ or the ‘‘issuer’’ in this offering memorandum are to El Puerto de Liverpool, S.A.B. de C.V., a publicly traded stock corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico and, unless otherwise indicated or the context requires otherwise, its consolidated subsidiaries. All references to ‘‘subsidiary guarantor’’ are to our wholly owned subsidiary Distribuidora Liverpool, S.A. de C.V., a variable stock corporation (sociedad anónima de capital variable) organized under the laws of Mexico. All references to ‘‘Mexico’’ in this offering memorandum are to the United Mexican States. All references to the ‘‘United States’’ or ‘‘U.S.’’ in this offering memorandum are to the United States of America. You should only rely on the information contained in this offering memorandum. We are responsible for the information contained in this offering memorandum. To the best of our knowledge (having taken all reasonable care to ensure that such is the case), the information contained in this offering memorandum is true and accurate in all material respects, and there are no other facts, the omission of which makes this offering memorandum misleading in any material respect. Neither we nor the initial purchasers have authorized anyone to provide you with different information, and neither we nor the initial purchasers take any responsibility for any other information that others may give to you. Neither we nor the initial purchasers are making an offer of the notes in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this offering memorandum is accurate as of any date other than the date on the cover of this offering memorandum, regardless of time of delivery or any sale of the notes. This offering memorandum is based on information provided by us and by other sources we believe to be reliable. This offering memorandum summarizes certain documents and other information, and we refer you to those sources for a more complete understanding of what we discuss in this offering memorandum. The initial purchasers assume no responsibility for, and make no representation or warranty, express or implied, as to the

i accuracy or completeness of the information contained in this offering memorandum or any other information provided by our company. Nothing contained in this offering memorandum is, or shall be, relied upon as a promise or representation by the initial purchasers, whether as to the past or the future. This offering memorandum does not constitute an offer to sell, or a solicitation of an offer to buy, any notes offered hereby by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. Neither the delivery of this offering memorandum nor any sale made hereunder shall under any circumstances imply that there has been no change in our affairs or the affairs of our subsidiaries or that the information set forth in this offering memorandum is correct as of any date subsequent to the date of this offering memorandum. This offering memorandum has been prepared by us solely for use in connection with the proposed offering of the notes. We reserve the right to reject any offer to purchase, in whole or in part, for any reason, or to sell less than all of the notes offered by this offering memorandum. Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated will act as initial purchasers with respect to the offering of the notes. This offering memorandum is personal to you and does not constitute an offer to any other person or to the public in general to subscribe for or otherwise acquire the notes. The proposed offering of the notes was authorized by our Board of Directors on June 20, 2014. Distribution of this offering memorandum by you to any person other than those persons retained to advise you is unauthorized, and any disclosure of any of the contents of this offering memorandum without our prior written consent is prohibited. You must (i) comply with all applicable laws and regulations in force in any jurisdiction in connection with the possession or distribution of this offering memorandum and the purchase, offer or sale of the notes, and (ii) obtain any required consent, approval or permission for the purchase, offer or sale by you of the notes under the laws and regulations applicable to you in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales, and neither we nor the initial purchasers or their respective agents have any responsibility therefor. See ‘‘Transfer Restrictions’’ for information concerning some of the transfer restrictions applicable to the notes. By accepting this offering memorandum you acknowledge that: • you have been afforded an opportunity to request from us, and to review, all additional information considered by you to be necessary to verify the accuracy of, or to supplement, the information contained in this offering memorandum; • you have not relied on the initial purchasers or their respective agents or any person affiliated with the initial purchasers or their respective agents in connection with your investigation of the accuracy of such information or your investment decision; and • no person has been authorized to give any information or to make any representation concerning us or the notes other than those set forth in this offering memorandum. If given or made, any such other information or representation should not be relied upon as having been authorized by us or the initial purchasers or their respective agents. In making an investment decision, you must rely on your own examination of our business and the terms of this offering, including the merits and risks involved. The notes have not been recommended by the United States Securities and Exchange Commission, or the SEC, or any state securities commission, the CNBV, or any other regulatory authority. Furthermore, these authorities have not confirmed the accuracy or determined the adequacy of this offering memorandum. Any representation to the contrary is a criminal offense. We are relying on an exemption from registration under the Securities Act for offers and sales of securities that do not involve a public offering. The notes may not be transferred or resold except as permitted under the Securities Act and related regulations and applicable state securities laws. In making your purchase, you will be deemed to have made certain acknowledgements, representations and agreements set forth in this offering memorandum under the caption ‘‘Transfer Restrictions.’’ You should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. This offering memorandum may only be used for the purpose for which it has been published.

ii See ‘‘Risk Factors’’ for a description of certain factors relating to an investment in the notes, including information about our business. None of us, the initial purchasers or any of our or their representatives is making any representation to you regarding the legality of an investment by you under applicable legal investment or similar laws. You should not consider any information in this offering memorandum to be legal, business or tax advice. You should consult with your own advisors as to legal, tax, business, financial and related aspects of a purchase of the notes. The notes will be available initially only in book-entry form. We expect that the notes offered and sold to qualified institutional buyers, or QIBs, in reliance upon Rule 144A under the Securities Act will be represented by beneficial interests in one or more permanent global notes in fully registered form without interest coupons, collectively, the Rule 144A notes. We expect that the notes offered and sold outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act will be represented by beneficial interests in one or more permanent global notes in fully registered form without interest coupons, collectively, the Regulation S notes and, together with the Rule 144A notes, the global notes. The global notes will be deposited with The Depository Trust Company. Notes will be issued in minimum denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. See ‘‘Description of the Notes’’ for further discussion of these matters. Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and trading on the Global Exchange Market, which is the exchange regulated market of the Irish Stock Exchange. We expect the total fees and expenses in connection with the admission of the notes to trading on the Global Exchange Market to be approximately €5,000. We accept responsibility for the information contained in these Listing Particulars and confirm that, to the best of our knowledge (having taken all reasonable care to ensure that such is the case), the information contained in these Listing Particulars is in accordance with the facts and does not omit anything likely to affect the import of such information. Arthur Cox Listing Services Limited is acting solely in its capacity as listing agent for us in relation to the notes and is not itself seeking admission of the notes to the Official List of the Irish Stock Exchange or to trading on the Global Exchange Market of the Irish Stock Exchange. This offering memorandum is only being distributed and is only directed (i) to persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000, or the FSMA (Financial Promotion) Order 2005, or the Order, or (iii) to high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as Relevant Persons). The notes are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such notes will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this offering memorandum or any of its contents.

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

MARKET AND INDUSTRY INFORMATION Statements in this offering memorandum with respect to market and other industry data are based on statistics and other information from independent industry publications and reports by research firms or other published independent sources, as well as our own internal studies derived from our review of internal surveys and other independent sources, such as Euromonitor, IBISWorld, the Mexican National Association of Self-service and Department Stores (Asociación Nacional de Tiendas de Autoservicio y Departamentales, A. C., or ANTAD), and Interbrand. As far as we are aware and are able to ascertain from such sources, no facts have been omitted which would render such information inaccurate or misleading. The facts and statistics presented have been accurately reproduced from such sources; however, such facts and statistics have not been independently verified by us, the initial purchasers or our respective advisors and therefore we make no representation as to the accuracy of such facts and statistics, which may not be consistent with other information compiled within or outside the jurisdictions specified. In addition, we have based certain statements contained in this offering memorandum regarding our industry, and our position in the industry, on certain assumptions concerning our customers and competitors. These assumptions are based on our experience in the industry, conversations with our principal vendors and our own investigation of market conditions. We cannot assure you as to the accuracy of any such assumptions, and such assumptions may not be indicative of our positions in our industry.

iv TRADEMARKS, SERVICE MARKS AND TRADE NAMES We own or have rights to the trademarks used in our business, including Liverpool, Fábricas de Francia, Liverpool Duty Free, El Puerto de Liverpool, That’s it, JBE, , Galerías Coapa, Galerías Insurgentes and Galerías . We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

v ENFORCEABILITY OF CIVIL LIABILITIES We and the subsidiary guarantor are companies organized and existing under the laws of Mexico. Most of our directors, officers and controlling persons, and most of the directors and officers of the subsidiary guarantor, reside outside of the United States. A significant portion of our assets and the assets of the subsidiary guarantor are located, and a majority of our revenues and the revenues of the subsidiary guarantor are derived from sources, outside the United States. As a result, it may not be possible for investors to effect service of process upon such persons or entities outside Mexico, as the case may be, or to enforce against such parties any judgment obtained in courts located outside of Mexico predicated on civil liabilities under the laws of jurisdictions other than Mexico, including judgments predicated on the civil liability provisions of the U.S. federal securities laws or other laws of the United States. We have been advised by our Mexican counsel, Ritch, Mueller, Heather y Nicolau, S.C., that no treaty exists between the United States and Mexico for the reciprocal enforcement of judgments issued in the other country. Generally, Mexican courts would enforce final judgments rendered in the United States if certain requirements are met, including the review in Mexico of the U.S. judgment to ascertain compliance with certain basic principles of due process and the non-violation of Mexican law or public policy (orden público), provided that U.S. courts would grant reciprocal treatment to Mexican judgments. Additionally, there is doubt as to the enforceability, in original actions in Mexican courts or in actions for enforcement of judgments obtained in courts of jurisdictions outside Mexico, of liabilities predicated, in whole or in part, on U.S. federal securities laws or similar laws of any jurisdiction outside Mexico and as to the enforceability in Mexican courts of judgments of U.S. courts obtained in actions predicated on the civil liability provisions of U.S. federal securities laws. See ‘‘Risk Factors.’’ In the event that proceedings are brought in Mexico seeking to enforce our or the subsidiary guarantor’s obligations in respect of the notes, we would not be required to discharge such obligations in a currency other than the Mexican peso. Pursuant to Mexican law, an obligation in a currency other than the Mexican peso, which is payable in Mexico, may be satisfied in Mexican currency at the rate of exchange in effect on the date on which payment is made. Such rate of exchange is currently determined by the Mexican Central Bank (Banco de México) each business day in Mexico and published the following banking-business day in the Mexican Federal Official Gazette (Diario Oficial de la Federación). In connection with the issuance of the notes, we have appointed CT Corporation System as our authorized agent upon whom process may be served in connection with any action instituted in any United States federal or state court having subject matter jurisdiction in the Borough of Manhattan in New York arising out of or based upon the indenture governing the notes or the guarantee of the subsidiary guarantor. See ‘‘Description of the Notes.’’

vi CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This offering memorandum contains statements that constitute estimates and forward-looking statements, including but not limited to the sections ‘‘Summary,’’ ‘‘Risk Factors’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations.’’ These statements appear in a number of places in this offering memorandum and include statements regarding our intent, belief or current expectations, and those of our officers, with respect to (among other things) our financial condition. Our estimates and forward-looking statements are based mainly on current expectations and estimates of future events and trends, which affect, or may affect, our business, financial condition and results of operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, these assumptions are subject to several risks and uncertainties and are based on information limited to that information currently available to us. Our estimates and forward-looking statements, as well as our actual results and financial condition, may be influenced by, among others, the following factors: • any decrease in the buying power of our customers and any decrease in the level of consumer spending for apparel and other merchandise we sell; • global macroeconomic conditions and economic, political and social conditions in Mexico; • changes in consumer preferences; • risks related to fluctuations in foreign exchange or interest rates and stock market volatility; • competitive pressures from department and specialty stores, general merchandise stores, manufacturers’ outlets, off-price and discount stores, and all other retail channels, including the internet, mail-order catalogs and television; • the availability of desirable store locations on suitable terms; • adequate and stable sources of merchandise, including changes in relationships with vendors and other product and service providers; • reforms of Mexican tax laws, including reforms related to the Mexican value added tax and income tax, which may increase our overall costs and the overall cost of the products we sell; • any damage to the public’s perception of our brands or the brands we sell; • our ability to implement our business and investment strategy; • industry trends, including changes in buying, inventory and other business practices; • disruption of our supply chain, or the failure of our suppliers to perform in a timely manner; • risks inherent to product liability or intellectual property claims; • our ability to successfully expand into new markets in Mexico; • our ability to successfully engage in property development; • our ability to lease any of our properties; • credit and other risks of lending, such as increases in the number of defaulting customers; • technological innovations; • increases in our operating costs or our inability to meet efficiency or cost reduction objectives; • interruptions or failures in our information technology systems; • loss of key personnel; • the deterioration of labor relations with our workforce or an increase in labor costs; • our ability to integrate and benefit from our recent or future real estate acquisitions and strategic alliances; • the costs, difficulties, uncertainties and regulations related to mergers, acquisitions or joint ventures;

vii • our ability to service our debt; • limitations on our access to sources of financing on competitive terms and compliance with covenants by which we are bound; • compliance with health, environmental and other governmental laws and regulations; • regulatory changes and adverse administrative or judicial rulings relating to us; • trade barriers; • the imposition of price controls on the products we sell; • possible disruptions to commercial activities due to natural and human-induced disasters, including terrorist activities and armed conflicts; and • other factors, some of which are described under ‘‘Risk Factors’’ and elsewhere in this offering memorandum. The words ‘‘believe,’’ ‘‘may,’’ ‘‘may have,’’ ‘‘would,’’ ‘‘estimate,’’ ‘‘continue,’’ ‘‘anticipate,’’ ‘‘intend’’ and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements refer only to the date when they were made, and neither we nor the initial purchasers undertake any obligation to update or review any estimate or forward-looking statement whether as a result of new information, future events or any other factors. Estimates and forward-looking statements involve risks and uncertainties and do not guarantee future performance, as actual results or developments may be substantially different from the expectations described in the estimates and forward-looking statements. In light of the risks and uncertainties described above, the events referred to in the estimates and forward-looking statements included in this offering memorandum may or may not occur, and our business performance, financial condition and results of operations may differ materially from those expressed in our estimates and forward-looking statements, due to factors that include, but are not limited to, those mentioned above. Investors are warned not to place undue reliance on any estimates or forward-looking statements in making decisions regarding an investment in the notes.

viii PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Financial Statements This offering memorandum includes (i) our audited consolidated financial statements as of December 31, 2013, 2012 and for each of the three years ended December 31, 2013, 2012 and 2011, or the audited consolidated financial statements, and (ii) our unaudited condensed consolidated interim financial statements as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013, or the unaudited condensed consolidated interim financial statements, all of which are stated in Mexican pesos. Our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements include consolidated information of our subsidiary guarantor and our non-guarantor subsidiaries. Pursuant to the General Provisions Applicable to Securities Issuers and Other Participants in the Securities Market (Disposiciones de Carácter General Aplicables a las Emisoras de Valores y a Otros Participantes del Mercado de Valores), or the General Provisions, issued by CNBV, beginning with the year ended December 31, 2012, Mexican companies with securities listed on a Mexican securities exchange, including our company, have been required to prepare and present financial information in accordance with International Financial Reporting Standards, or IFRS, as adopted by the International Accounting Standards Board. Accordingly, our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements have been prepared in accordance with IFRS, which differ in certain significant respects from the generally accepted accounting principles in the United States, or U.S. GAAP. Financial information for periods before 2011 was prepared in accordance with Mexican Financial Reporting Standards, or Mexican GAAP, which differ in certain significant respects from IFRS and U.S. GAAP.

Non-IFRS Financial Measures This offering memorandum contains financial measures that are not in accordance with IFRS, or non-IFRS measures, primarily EBITDA and net debt. EBITDA represents operating income plus depreciation and amortization. Our management uses this measure as an indicator of our operating results and financial condition. However, you should not consider EBITDA in isolation, as an alternative to net income, as an indicator of our operating performance or as a substitute for analysis of our results as reported under IFRS, since, among others: • it does not reflect the depreciation and amortization of our operating assets; • it does not reflect our interest expense; • it does not reflect our share of profits of associates; • it does not reflect any income taxes we may be required to pay; and • it does not reflect our cash expenditures or future requirements for cash expenditures or our working capital needs or charges. Our management believes that, for comparison purposes with other companies, EBITDA can be useful as an objective and comparable measure of operating profitability, because it excludes those elements of earnings that may not consistently provide information about the current and ongoing operations of our existing businesses. Although our calculation of EBITDA may not be comparable to calculations of similarly titled measures used by other companies, our management believes that disclosure of EBITDA can provide useful information to investors in their evaluation of our operating performance. Last twelve months EBITDA, or LTM EBITDA, for a given interim period was calculated by subtracting the previous year’s results for the same interim period, and adding the difference to the results for the fiscal year most recently reported. Net debt represents our long-term debt (including the current portion) minus cash and cash equivalents. Net debt measures may not be comparable to similarly titled measures used by other companies. Net debt is a non-IFRS measure, and we do not intend net debt to represent debt as defined by IFRS. You should not consider net debt to be an alternative to debt or any other items calculated in accordance with IFRS. Debt levels and, therefore, the impact of interest rates on earnings vary in significance between companies. Thus, for comparison purposes, our management believes that net debt can be useful to investors as an objective and comparable measure of our debt obligations and liquidity, because it recognizes the net cash position of our current operations.

ix Currency Unless otherwise specified, references herein to ‘‘U.S. dollars,’’ ‘‘dollars’’ or ‘‘U.S.$’’ are to United States dollars, the legal currency of the United States; and references to ‘‘Mexican peso,’’ ‘‘peso,’’ ‘‘pesos’’ or ‘‘Ps.’’ are to the Mexican peso, the legal currency of Mexico. This offering memorandum contains translations of various peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. You should understand that that these translations are not representations that the peso amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, we have translated Mexican peso amounts for the year ended December 31, 2013 and the six months ended June 30, 2014 in the sections entitled ‘‘Summary Consolidated Financial and Other Information,’’ ‘‘Selected Consolidated Financial and Other Information’’ and ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ in this offering memorandum at the exchange rate of Ps.12.97 to U.S.$1.00, which was the exchange rate published by the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York, expressed in pesos per U.S. dollar on, June 30, 2014.

Rounding Certain figures included in this offering memorandum have been rounded for ease of presentation. Percentage figures included in this offering memorandum have not, in all cases, been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this offering memorandum may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements. Certain numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them due to such rounding.

x SUMMARY This summary highlights selected information described in greater detail elsewhere in this offering memorandum. It does not contain all of the information that may be important to you. This offering memorandum describes the terms of the offering, as well as information regarding our business and detailed financial information. This information includes risks and uncertainties. Our actual results may differ materially from the results discussed in the estimates and forward-looking statements. You should read the entire offering memorandum carefully, including the risk factors and financial statements. The terms ‘‘Liverpool,’’ ‘‘our company,’’ ‘‘we,’’ ‘‘us,’’ and ‘‘our’’ in this offering memorandum refer to El Puerto de Liverpool, S.A.B. de C.V., together with its subsidiaries on a consolidated basis, except as otherwise specified. Overview We are the largest department store chain in Mexico in terms of number of stores and sales. We offer a wide variety of consumer products, including distinctive fashion apparel, shoes, accessories, jewelry, electronics, sporting goods, household articles, furniture, cosmetics and books. We were established in 1847 and currently operate 104 department stores nationwide under the ‘‘Liverpool,’’ ‘‘Fábricas de Francia’’ and ‘‘Liverpool Duty Free’’ names. Our brand ‘‘Liverpool’’ is iconic in Mexico and is ranked among the top five Latin American brands in the retail industry and among the top 20 brands in the retail industry worldwide, according to Interbrand. We also own or have a significant interest in 22 shopping centers in 16 cities in Mexico and, according to information from the Mexican Central Bank and our estimates, as of April 30, 2014 we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million credit card holders. Our stores are primarily located in upscale mixed-use and regional malls catering to middle and high-income families in Mexico. Through our customer-centric and omni-channel strategy we have established a leading market position in the Mexican department store industry according to Euromonitor. Our customer-centric strategy ensures that our customers find an assortment of merchandise, sizes, marketing programs, credit offers and shopping experiences that are custom-tailored to their needs. Our omni-channel strategy allows our customers to shop seamlessly through our different distribution channels while consistently experiencing our brand. Our shares are listed on the (Bolsa Mexicana de Valores S.A.B. de C.V.), or the BMV, under the ticker symbol ‘‘LIVEPOL.’’ As of June 30, 2014, our market capitalization was approximately Ps.206 billion (U.S.$16 billion). As a result of our expansion and the diversification of our business in the last 20 years, we have divided our operations in three different business activities that complement each other and represent independent sources of revenue: commercial, consumer credit and real estate. • Commercial Operations. We operate a total of 104 department stores, of which 75 are under the name ‘‘Liverpool,’’ 24 are under the name ‘‘Fábricas de Francia’’ and five are under the name ‘‘Liverpool Duty Free,’’ we also operate 76 specialized boutiques, including under the names of ‘‘Aéropostale,’’ ‘‘Banana Republic,’’ ‘‘Chico’s,’’ ‘‘Destination Maternity,’’ ‘‘GAP,’’ ‘‘M.A.C. Cosmetics’’ and ‘‘Sfera,’’ among others, which represent, in the aggregate, 1.4 million square meters of retail space, as well as our website www.liverpool.com.mx, through which we are the largest retailer in Mexico in terms of sales according to ANTAD. Our business model is driven by the optimization of fixed retail space based on the assortment of merchandise. As a result, the product offerings vary by size of store and specific customer preferences in each of our locations. We have a nation-wide presence, most of our stores are located at urban or suburban sites, primarily in densely populated areas across Mexico and our department stores and website generally serve the same type of customers and provide virtually the same mix of merchandise. • Consumer Credit Operations. As part of our comprehensive program to support our retail operations, we provide financing to our customers through the ‘‘Liverpool Credit Card’’ and the ‘‘Fábricas de Francia Credit Card,’’ which allows them to purchase goods and services exclusively at our department stores. In addition, we offer the ‘‘Liverpool Premium Card,’’ which allows cardholders to purchase goods and services at our department stores and specialized boutiques, and at any business affiliated with the VISA payment system worldwide. Our consumer credit operations have become an independent source of revenue, as of April 30, 2014, according to information from the Mexican Central Bank and our estimates, we were the leading non-bank credit card issuer in Mexico, with

1 approximately 3.5 million card holders and we had a loan portfolio of Ps.28,181 million (U.S.$2,173 million) as of December 31, 2013. For the year ended December 31, 2013, sales through our credit cards accounted for Ps.33,416 million, or 52.8% of our consolidated sales and our non-performing loans rate was 3.3%. • Real Estate Operations. We are also involved in real estate operations which include developing, leasing and managing shopping centers and retail premises. We own or have a significant interest in 22 shopping centers known as ‘‘Galerías’’ and lease approximately 2,430 retail premises to third parties. Our shopping centers have presence in all of Mexico’s principal cities in terms of population. In the last ten years, we have more than doubled the gross leasable area of our shopping centers and retail premises from 158,637 square meters in 2003 to 394,248 square meters in 2013. For the year ended December 31, 2013, our shopping centers had more than 100 million visitors and our retail premises had an average occupancy rate of 97.0%. Our real estate operations have become an important source of revenue and a strategic complement to our commercial operations by providing high-profile facilities to attract an increasing number of potential customers to our department stores. For the year ended December 31, 2013, we generated consolidated revenue and EBITDA of Ps.74,105 million (U.S.$5,714 million) and Ps.12,536 million (U.S.$967 million), respectively. For this period, our commercial, consumer credit and real estate operations accounted for 88.7%, 7.8% and 3.5% of our consolidated revenue, respectively. From 2009 to 2013, our consolidated revenue and EBITDA grew at a compounded annual growth rate, or CAGR, of 12.1% and 16.2%, respectively. During the same period, same store sales grew at a CAGR of 8.3%, and we opened 17 new department stores, two ‘‘Liverpool Duty Free’’ stores and six shopping centers which represent 32.6% and 36.3% of our aggregate retail space and gross leasable area, respectively.

In millions of Ps. (except percentages) 74,105 66,247 58,657 52,161 47,004

17.9% 17.8% 14.6% 17.1% 16.9%

2009* 2010* 2011 2012 2013

Consolidated Revenue EBITDA Margin

* Information prepared in accordance with Mexican GAAP.

2 For the year ended December 31, 2013, our and the subsidiary guarantor’s aggregate EBITDA and the aggregate EBITDA of our non-guarantor subsidiaries (in each case, without giving effect to intercompany eliminations) was Ps.7,124 million (U.S.$546 million) and Ps.5,412 million (U.S.$415 million), respectively, or 56.8% and 43.2% of our consolidated EBITDA, respectively. As of December 31, 2013, the total assets of our company and the subsidiary guarantor was Ps.53,891 million (U.S.$4,133 million), or 56.8% of our consolidated total assets, and the aggregate total assets of our non-guarantor subsidiaries was Ps.41,045 million (U.S.$3,148 million), or 43.2% of our consolidated total assets. For the six months ended June 30, 2014, we generated consolidated revenue and EBITDA of Ps.34,907 million (U.S.$2,691 million) and Ps.4,752 million (U.S.$366 million), respectively. For this period, our commercial, consumer credit and real estate operations accounted for 84.7%, 11.5% and 3.7% of our consolidated revenue, respectively.

Our Strengths As a result of our unique customer-centric corporate philosophy and deep understanding of the Mexican market and consumer, we have built a reputation for quality, creativity and uniqueness. We believe the following strengths distinguish us from our competitors and will allow us to successfully fulfill our strategy for our continued growth. • Distinctive Philosophy. We recognize that our customers are paramount and we strive to provide them with an outstanding experience that transcends ordinary shopping. We believe that such customer-centric and family-orientated philosophy has allowed us to develop wide consumer recognition in Mexico. Our slogan ‘‘Liverpool Es Parte de Mi Vida’’ (Liverpool Is Part of My Life) confirms our philosophy of being a part of the Mexican lifestyle for more than 165 years. As we look towards the future, we are focused on creating diverse environments by transforming our department stores into multifunctional destinations. We believe that our department stores serve as destinations that promote social gathering while acting as a fashion stage and source of entertainment to provide a complete shopping experience. Our shopping centers have our customers in mind and have been adapted to suit their needs, by providing a diverse range of experiences, entertainment and services, as well as a broad assortment of merchandise in a comfortable, functional and safe environment. Our shopping experience includes quality events such as our biannual Fashion Fest, a festival that covers new fashion trends for the upcoming seasons and gathers supermodels, brand launches, food tastings, runways and holiday celebration events such as tree lightings. In 2011, we launched ‘‘Experiencia Gourmet,’’ our innovative gourmet food hall, to complement our entertainment and services offering within our department stores. Experiencia Gourmet combines eating venues where customers enjoy gourmet food products from different countries. Experiencia Gourmet is currently available in eight of our department stores and we plan to continue expanding this concept. We believe that our Experiencia Gourmet format enables our customers to enjoy a sophisticated yet comfortable eating experience at our department stores while promoting social gathering. • Leading Department Store Chain in Mexico. We started operations in 1847 and have become the leading department store chain in Mexico in terms of sales according to the ANTAD, offering to our customers a wide variety of consumer products, including distinctive fashion apparel, shoes, accessories, jewelry, electronics, sporting goods, household articles, furniture, cosmetics and books, all within a pleasant shopping environment. Our brand ‘‘Liverpool’’ is iconic in Mexico and is ranked among the top five Latin American brands in the retail industry and among the top 20 brands in the retail industry worldwide according to Interbrand. We operate 104 department stores located at urban or suburban sites, primarily located in densely populated areas, covering a larger portion of the Mexican territory than any one of our competitors. We believe that our current geographic diversification and our experience and knowledge of consumer preferences and habits in the regions in which we operate provide us with a significant advantage over our competitors. We believe our brands are generally associated with trust, legacy and status, coupled with a broad product assortment, personalized and high-quality customer service, convenience, good store locations and attractive promotions and sales

3 financing programs, among others. We offer a broad selection of branded and private-label merchandise appealing to the fashion taste of our customers. The quality and breadth of our selection allow us to change the mix of our merchandise based on fashion trends and individual store locations and enable us to satisfy the needs of a broad customer base. • Wholly Owned and Strategic Real Estate Portfolio. Our department stores and shopping centers are strategically acquired to create a wholly owned portfolio of a single asset class of regional and neighborhood real estate properties with attractive location. We have nationwide presence, virtually covering every major region of Mexico. The real estate properties in our portfolio are selected based on growth potential, trade area and overall operating synergies. Currently we own approximately 88.0% of our retail space and approximately 76.0% of the gross leasable area of the shopping centers in which we have interests. Historically, our retail premises have had occupancy rates above 95.0%, low turnover rates and low past-due accounts with an attractive mix of more than 1,500 tenants and no tenant representing more than 10.0% of our consolidated revenue. Also, during the last ten years we have more than doubled the gross leasable area of our shopping centers from 158,637 square meters in 2003 to 394,248 square meters in 2013, which allowed us to host more than 100 million visitors in our stores in the last year. Our department stores and shopping centers are predominantly located within established trade areas across the 30 most populated cities in Mexico. Key areas of geographic concentration include and other urban centers, with 8.9 million inhabitants served by 17 of our department stores and seven of our shopping centers, , , with 1.5 million inhabitants served by eight of our department stores, and , Nuevo León with 1.1 million inhabitants served by four of our department stores and one of our shopping centers. We believe that such geographic concentration allows for economies of scale and provides us with market leverage while representing significant entry barriers for competitors due to the limited geographical opportunities and high costs associated with the construction of new developments. • Effective Control of Our Loan Portfolio and Flexibility To Adapt to Challenging Economic Cycles. As of April 30, 2014, according to information from the Mexican Central Bank and our estimates, we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million card holders and we had a loan portfolio of Ps.28,181 million (U.S.$2,173 million) as of December 31, 2013. Our sound and effective credit portfolio management allows us to rapidly increase and decrease our credit offerings which has a direct impact on the purchase behavior of our customers and, in turn, on our results of operations. For example, during challenging economic times with higher unemployment rates, we restrict our credit offerings, as well as credit limits of existing customers to avoid an excessive growth of our loan portfolio and non-performing loans rate. In addition, during periods of contraction in consumption with stable macroeconomic fundamentals, we usually increase our credit offerings to increase our customer base and purchase frequency. In the past, such adjustments have had an immediate favorable impact on our results of operations. We believe that such ability to adjust our loan portfolio during challenging economic cycles places us in an advantageous position with respect to our competitors. • Integrated Business Model With Strong Synergy Potential. Originally, our consumer credit and real estate operations were introduced as part of our comprehensive program to support our commercial operations and recently have become an independent source of revenue while continuing to serve as a strategic complement to our commercial operations. Since the introduction of our consumer credit and real estate operations, we have strived to share and leverage key resources and capabilities of our company across all of our operations, which has resulted in significant cost savings and enhanced revenues. Our commercial operations remain our core competency that binds together all our operations and our consumer credit and real estate operations have fueled our existing and new business growth. Our consumer credit operations have expanded significantly our customer base and purchase frequency, while our real estate segment has been focused on providing high-profile facilities to increase customer traffic in, and time enjoyed at, our department stores and shopping centers. Such business model has allowed us to capture synergies from a streamlined infrastructure and rationalized operations, while integrating customers, suppliers, processes, products, systems, and associates. As a result, we have built a strategic platform that leverages new capabilities and value propositions without disrupting or hurting

4 business momentum, shareholder value, or financial performance. We believe that our integrated business model places us in a unique position to take advantage of the strong synergy potential of our commercial, consumer credit and real estate operations. • Strategic Distribution Network. We have developed an extensive distribution network. Our network allows us to distribute products from two national distribution centers to four regional distribution centers, 14 local warehouses, 25 storage deposits for remote stores and 104 department stores nationwide, complemented with a fleet of 250 trucks and trailers, 450 home delivery units, and services from independent operators. Our network also allows us to deliver big-ticket items sold in our department stores and products sold through our website to our customer’s homes. For example, in 2013 we completed over two million deliveries to our customers’ homes. We also maintain a highly efficient and sophisticated logistics operation to address distribution requirements, which allows us to manage over 180,000 different stock-keeping units (SKUs). Our distribution network allows us to respond to the diverse and changing needs of our customers and vendors in a cost-effective manner, which we believe contributes to the development of strong customer loyalty. • Presence in Attractive Markets with High Growth Potential. We believe that Mexico will continue to present very attractive growth opportunities for the retail industry. With a nominal Gross Domestic Product, or GDP, of U.S.$1,261 billion in 2013, a population of more than 115 million and a rapidly expanding middle class, Mexico is the second largest economy in Latin America and has experienced sustained growth in recent years. After absorbing the impact of the latest financial crisis, the Mexican economy grew at an average annual rate of 3.0% in the past three years according to information of the World Bank. We believe that a favorable outlook for the Mexican economy, the growth in income per capita, and the country’s positive demographic trends will drive consumer spending in Mexico. In addition, as a result of an expected increase in income per capita and since Mexico has a young and growing population, it is estimated that, by 2025, approximately half of the population will belong to the middle class, up from approximately 30.0% at present. We believe this will create greater demand for the merchandise we sell. In light of these factors, we believe that there is great potential for significant long-term growth in the retail industry in Mexico. Over the past three years, the department store industry has been the fastest growing retail sub-sector in Mexico, with average sales growth of 14.0%, according to information from ANTAD. We believe department stores will continue to grow ahead of the industry, owing to the combination of share gains from informal channels, increasing shopping frequency from rising income trends, footprint expansion, higher credit penetration, and an increased assortment of merchandise. We believe we are uniquely positioned to take advantage of the growth opportunities offered by the Mexican market. Our portfolio of highly recognized store names combined with our deep understanding of our customers and our ability to adapt to various markets through our wide assortment of merchandise targeting different socio-economic levels place us in a unique position to take advantage of the strong synergy potential of our commercial, consumer credit and real estate operations. • High-Quality and Motivated Management Team. Our strong senior management team has proven industry expertise, with over 149 years of service with our company in the aggregate. It has managed our company through Mexico’s economic cycles while maintaining high operating income margins and sales growth. Our management team has developed and consolidated our market leadership by focusing on our retail operations while successfully integrating our credit and real estate operations. For example, since their introduction, our credit cards have been the most frequently used payment method for our customers and for the year ended December 31, 2013, sales through our credit cards accounted for Ps.33,416 million, or 52.8% of our consolidated sales. Our management philosophy emphasizes accountability coupled with efficient control mechanisms, as a result we believe we maintain a strong balance sheet and disciplined financial policies. In addition, we benefit from a healthy financial position with low leverage levels and high capitalization which enables us to respond effectively to the constantly changing consumer demands and competitive environment in the Mexican retail market.

5 Our Strategy We seek to enhance our position as the leading Mexican retailer and leading non-bank credit card issuer, and increase our presence in the real estate market for stores and shopping centers in Mexico while continuing to provide our customers an experience that transcends ordinary shopping. To achieve these objectives, we plan on executing the following key strategies. • Customer-Centric Omni-Channel Strategy. Localization and omni-channel integration are key components of our strategy to achieve continued growth as we redefine customer’s shopping experience and build customer trust. Technology and social media have transformed the retail landscape. To meet new customer demands we plan to continue tracking customers across all channels simultaneously, while offering innovative sale programs to increase volumes and purchase frequency, such as our night sales (Ventas Nocturnas) and our end-of-season clearances. We believe that incorporating selling and promotion across all channels will leverage each channel’s strengths and will allow us to present ourselves seamlessly to our customers as one cohesive brand. We seek to enable our consumers to experience our brand consistently across all retail channels, while offering targeted and innovative purchase options tailored to their needs and preferences. As part of this strategy, since 2007 we have been working with SAS, the leader in business analytics software and services, to develop customer profiles which we believe will allow us to better understand our customers and engage them in targeted promotions and credit offers. We believe that a deep understanding of our customers’ preferences allows us to continue to develop integrated marketing plans with offers that address specific customers determined by purchase patterns, social network affinities, website visits, loyalty programs, and other data-mining techniques. We are aware that satisfying customers today transcends place or time, and growth is dependent on continually creating best shopping experiences. In this context, our brick-and-mortar stores have become an extension of the supply chain in which purchases are made at the store, but researched through other channels of communication. We believe that our omni-channel strategy will allow us to continue to enhance customer loyalty while increasing our sales and profitability. • Continue Expanding Our Retail Space and Developing Shopping Centers on Prime Locations. Our business expansion strategy for our commercial and real estate operations focuses on acquiring or building new stores and shopping centers on prime locations and increasing same-store sales by store remodeling and improved store layouts. We believe that we are in a favorable position to capitalize on attractive growth opportunities through the constant expansion of our selling area and geographic footprint in regions that we believe offer strong growth potential. Generalized nationwide growth in recent years and a major rise of infrastructure and commercial real estate projects have resulted in increased availability of retail space that will allow us to capitalize on the positive trend of retail consumption through the expansion of our commercial and real estate operations. Currently, there are more than 250 cities in Mexico with a population of over 50,000 inhabitants without access to important retail chains, presenting an important opportunity for the expansion of our operations. Each investment decision involves a deep analysis of the geographic landscape and markets with characteristics that we believe present attractive opportunities to achieve strong profitability over a reasonable time period. Our disciplined approach to acquisitions is centered on securing premium real estate locations, expanding our geographic footprint, diversifying our retail portfolio, achieving economies of scale, realizing important revenue and cost synergies, and enhancing the return on investment of our portfolio. From 2009 to 2013 we opened 23 new department stores, two ‘‘Liverpool Duty Free’’ and nine shopping centers which represent 25.0% and 35.0% of our aggregate retail space and gross leasable area, respectively. We expect to continue implementing our expansion strategy throughout 2014 and over the next years, particularly in cities with population ranging between 200,000 and 800,000 inhabitants which we believe are underserved. We are building department stores and shopping centers in the fast growing cities of and . In addition, we expect that two Fábricas de Francia stores and 42 specialized boutiques in different cities of Mexico will start operations in 2014, which we expect will represent a 6.8% increase in our aggregate sales area.

6 • Enhance Consumer Credit Offerings. We intend to continue enhancing our consumer credit offerings through our private label credit cards and seek to consolidate our position as the number one non-bank credit card issuer in Mexico. We believe that our credit offerings increase our customer base for our retail operations, enhance our ability to sell additional products and build lasting trust and loyalty with our customers. Besides acting as a catalyst for further growth of our commercial and real estate operations, we believe that our consumer credit offerings will increasingly become a source of independent income through the expansion of our credit card portfolio and enhancement of our offerings of financial products and services. In 2013 our consumer credit operations reached more than 3.5 million cardholders for a loan book that totaled Ps.28,181 million (U.S.$2,173 million) and grew 17.7%. We expect our consumer credit operations to continue their growing trend over the next years. As more of our customers use our private label credit cards, we expect our same-store sales to increase. In addition, our efficient consumer credit portfolio management has resulted in historically low non-performing loan rates. For the year ended December 31, 2013, our non-performing loans rate was 3.3%. We intend to continue to build upon our experience and knowledge of providing consumer financing to further expand and enhance our consumer credit offerings, while deepening the loyalty of our customers already using those cards. • Increase Customer Traffic and Sales. We believe we have a significant opportunity to increase our market share by opening new stores and shopping centers and remodeling existing ones with attractive layouts in line with our customer-centric and family-orientated philosophy, further developing our credit card portfolio by introducing new products and categories and continue our omni-channel efforts towards enhancing customer loyalty. For the year ended December 31, 2013, our shopping centers had more than 100 million visitors and our retail premises had an average occupancy rate of 97.0%. While we seek to continue developing our real estate operations as an independent source of revenue, we expect that such operations will continue to be an important complement to our commercial operations by providing high-profile facilities to attract an increasing number of potential customers for our department stores. In addition, we believe that our customer-centric focus favors the alignment of our commercial offerings by providing particularized merchandise in the right stores at the right price at the right time. In line with this strategy, in recent years we have optimized the retail space in our department stores by tailoring the merchandise catalogue and targeting the preferences and needs of the customer according to each location and channel, which resulted in an increase in customer traffic and sales in stores. We believe our solid service infrastructure, supply chain and accessible IT services combined with functional, state-of-the art and conveniently located facilities are core elements of our competitive advantages and key components for our steady growth, which will allow us to continue as the preferred choice amongst our customers in each of our formats. We expect to continue to cater to our customers in ways that are aimed at efficiently and effectively increasing customer traffic in, and time enjoyed at, our department stores and shopping centers. • Improved and Efficient Operations, Technology and Customer Service. We continuously invest to improve, especially through the use of technology, our supply and distribution chains as well as the management of our customer information to enhance the effectiveness of our omni-channel retailing and marketing efforts. For example, in 2013 we invested Ps.878 million in our technology platforms, as well as in our supply chain, with the objective of fostering the further development and growth of our current businesses. Our rapid growth has required us to continuously optimize our warehousing processes and inventory management through automated warehousing and sorting systems, areas where we believe the use of technology would derive in increased efficiencies. For example, we have introduced radio frequency identification, or RFID, and electronic product code, or EPC, tags in most of our department stores and in our Tultitlan, Estado de México, national distribution center to improve inventory management. Additionally, in compliance with the requirements of our supply chain, our merchandise handling operation was migrated to a flow and in-line processing system in all our locations.

7 Online shopping has become increasingly important in our customers’ preferences. To capitalize on that trend, in 2013 we re-launched our e-commerce platform to offer a greater merchandise catalog and strengthened the search engine of our e-commerce website. As a result of our work with SAS, in line with our efforts to keep up with cutting edge technology and offer immediate and efficient customer service, in 2013 we introduced the golden customer record function which allows us to unify our databases to simplify our processes and personalize our service offerings. • Sales Force Productivity and Social Responsibility. As of July 31, 2014, we had approximately 45,000 associates, and we believe that a key element to our continued growth is to promote their personal and professional growth. We believe that a well-trained and informed workforce will reduce labor costs and drive efficiencies. As a result, we plan to continue improving our sales force productivity through more effective training programs and attractive compensation schemes. We are convinced that training plays a crucial role in omni-channel success. Our store colleagues are part of our brand-delivery experience and a crucial element to maintain our brand-customer relationship, which provides us with a competitive advantage and distinguishes us from our competitors. Data and technology help us train our associates on omni-channel strategies and customer behavior so we can create a unified approach for the shopping experience we offer. We are committed to customer service and customer satisfaction by providing a combination of high-quality personalized services. We believe that such commitment is reflected in the low turnover rates of our associates. In 2014 we were ranked third among the best places to work in Mexico by the Great Place to Work Institute. In addition, as part of our commitment to the growth of our associates, in 2000 we launched the Liverpool Training Institute (Instituto de Formación Liverpool), the first virtual corporate university in Mexico, to provide our associates and their families with personal development options ranging from senior high-school programs to graduate studies. The Liverpool Education Institute offers a bachelor degree in retail management, master degrees in leadership and business administration and other programs associated with our business. As of December 31, 2013, more than 1,500 associates have obtained a degree from the Liverpool Education Institute. Through our Liverpool Education Institute we seek to guarantee the continuity of our principles, identity and business philosophy, while encouraging the growth of our associates. We expect to continue offering career plans that enable us to adapt the development of our associates to our corporate growth needs.

8 Corporate Structure Set forth below is our simplified corporate structure:

EL PUERTO DE LIVERPOOL, S.A.B. DE C.V.

Operadora Liverpool, S.A. de C.V.

Servicios Liverpool, S.A. Operadora de Nuevos Distribuidora Liverpool, S.A. Impeco, S.A. de C.V. Grandes Almacenes de C.V. Formatos, S.A. de C.V. de C.V.* Liverpool, S.A. de C.V.

Bodegas Liverpool, S.A. de Operadora Comercial Tiendas Departamentales Operadora Liverpool Constructora e Inmobiliaria C.V. Liverpool, S.A. de C.V. Liverpool, S.A. de C.V. México, S.A. de C.V. Perinorte, S.A. de C.V.

Almacenadora Liverpool, Service Trading, S.A. de Inmobiliaria Floreal, S.A. Pluvioso, S.A. de C.V. S.A. de C.V. C.V. de C.V.

Instituto de Formación Promoción Inmobiliaria Importadora Globastic, Termidor, S.A. de C.V. Liverpool, A.C. Grua, S.A. de C.V. S.A. de C.V.

Galerías , S.A. Importaciones Factum, de C.V. S.A. de C.V.

Edificio Polanco, S.A. de C.V.

* Subsidiary guarantor.

Company Information Our headquarters are located at Mario Pani 200, Colonia Santa Fe, Delegación , 05384, Mexico City, Mexico, and our telephone number is +52(55) 5268-3000. We were incorporated under the laws of Mexico on February 28, 1912. Our commercial registry number (folio mercantil) with the Public Registry of Commerce of Mexico City (Registro Público de Comercio del Distrito Federal), or the Mexican Registry, is 11934, and our taxpayer identification number is PLI 830517 184. The subsidiary guarantor was incorporated under the laws of Mexico on December 1, 1993. The subsidiary guarantor’s commercial registry number (folio mercantil) with the Mexican Registry is 177327, and its taxpayer identification number is DLI 931201 MI9. The subsidiary guarantor’s main business activity is the operation of department stores in Mexico. Our website is www.liverpool.com.mx. The information included on our website or which may be accessed through our website is not part of this offering memorandum, is not incorporated by reference herein or otherwise and should not be relied upon in determining whether to make an investment in the notes.

9 The Offering Issuer ...... El Puerto de Liverpool, S.A.B. de C.V. Subsidiary Guarantor...... Distribuidora Liverpool, S.A. de C.V. Notes Offered ...... U.S.$300,000,000 aggregate principal amount of 3.950% Senior Notes due 2024. Offering Price ...... 98.312%, plus accrued interest, if any, from October 2, 2014. Maturity Date ...... October 2, 2024. Interest ...... The notes will bear interest from and including October 2, 2014 at the rate of 3.950% per annum, payable semi-annually in arrears. Interest Payment Dates ...... April 2 and October 2 of each year, commencing on April 2, 2015. Ranking ...... The notes and the subsidiary guarantee will be unsecured obligations and will, other than with respect to certain obligations given preferential treatment pursuant to the laws of Mexico, rank pari passu in right of payment with all of our and the subsidiary guarantor’s unsecured and unsubordinated indebtedness. The notes and the subsidiary guarantee will not have the benefit of any collateral securing any of our or the subsidiary guarantor’s existing and future secured indebtedness, and will be effectively junior to such secured indebtedness to the extent of the value of the assets securing such indebtedness. The notes and the subsidiary guarantee will be structurally subordinated to all existing and future indebtedness and trade payables of our non-guarantor subsidiaries in respect of assets of and revenue generated by these subsidiaries. See ‘‘Risk Factors—Risk Related to the Notes—The notes are not secured by our assets and the notes and the subsidiary guarantee will be effectively subordinated to our and the subsidiary guarantor’s secured debt’’ and ‘‘—The notes and the subsidiary guarantee will be structurally subordinated to the liabilities of our non-guarantor subsidiaries.’’ As of June 30, 2014, our total consolidated indebtedness was Ps.13,521 million (U.S.$1,042 million), all of which constituted unsecured indebtedness. As of such date, our non-guarantor subsidiaries had no indebtedness (other than intercompany indebtedness). After giving pro-forma effect to the offer and sale of the notes and the application of the net proceeds from this offering as described under ‘‘Use of Proceeds’’ we and the subsidiary guarantor would have had Ps.17,412 million (U.S.$1,342 million) of total consolidated indebtedness, all of which would have constituted unsecured indebtedness. Use of Proceeds ...... We intend to use the net proceeds of this offering for general corporate purposes, including to repay existing indebtedness and finance capital expenditures. See ‘‘Use of Proceeds.’’ Certain Covenants ...... The indenture governing the notes contains certain covenants, including limitations on liens, limitations on sale and leaseback transactions and limitations on consolidations, mergers, sales or conveyances. All of these limitations and restrictions are subject to a number of significant qualifications and exceptions. See ‘‘Description of the Notes.’’

10 Change of Control ...... If we experience a Change of Control (as defined in the indenture governing the notes), we must offer to repurchase the notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any. See ‘‘Description of the Notes—Repurchase at the Option of Holders Upon a Change of Control.’’ Additional Amounts ...... We are required by Mexican law to deduct and pay to the Mexican tax authorities, Mexican withholding taxes from payments of interest (and amounts deemed interest, such as any discount on the principal amount of the notes) made to holders who are not residents of Mexico for tax purposes, at a rate of 4.9% if certain requirements under Mexican law are met. See ‘‘Taxation—Certain Mexican Federal Income Tax Considerations.’’ We will pay additional amounts in respect of those payments of interest so that the amounts holders receive after such withholding will equal the amounts that they would have received if no such withholding tax had been applicable, subject to the limitations and exceptions described under ‘‘Description of the Notes—Payment of Additional Amounts.’’ Redemption for Taxation Reasons . . We may redeem all, but not less than all, of the notes at any time at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date and any additional amounts due thereon, if, as a result of certain changes in tax laws, there is an increase in the additional amounts we are obligated to pay under the notes. See ‘‘Description of the Notes—Optional Redemption—Redemption for Taxation Reasons.’’ Optional Redemption ...... We may, at our option, at any time and from time to time, redeem the notes, in whole or in part, at the greater of (i) 100% of their principal amount, and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the notes, discounted to the date of redemption on a semi-annual basis at the applicable treasury rate plus 25 basis points, plus accrued and unpaid interest, if any, on the principal amount of the notes being redeemed to the redemption date. See ‘‘Description of the Notes—Optional Redemption—Optional Redemption.’’ Transfer Restrictions ...... We have not and will not register the notes under the Securities Act, the Mexican Securities Market Law or the securities laws of any other jurisdiction. The notes are subject to restrictions on transfer and may only be offered in transactions exempt from or not subject to the registration requirements of the Securities Act. The notes have not been and will not be registered with the RNV maintained by the CNBV and may not be offered publicly in Mexico. The notes may only be offered in Mexico pursuant to the exemptions to registration provided in article 8 of the Mexican Securities Market Law. See ‘‘Transfer Restrictions.’’ Further Issuances ...... Subject to the covenants in the indenture governing the notes, we may from time to time, without the consent of the holders of the notes, issue further securities having the same terms and conditions as the notes in all respects. Any further issue may be consolidated with, and form a single series with, the notes sold in this offering.

11 Form and Denomination ...... The notes will be issued in the form of global notes in fully registered form. The global notes will be exchangeable or transferable, as the case may be, for definitive certificated notes in fully registered form without interest coupons only in limited circumstances. The notes will be issued in registered form in denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. See ‘‘Description of the Notes’’ and ‘‘Form of Notes, Clearing and Settlement.’’ Settlement ...... The notes will be delivered in book-entry form through the facilities of The Depository Trust Company, or DTC, for the accounts of its participants, including Euroclear S.A./N.V., as operator of the Euroclear System, or Euroclear, and Clearstream Banking, société anonyme, or Clearstream, and will trade in DTC’s Same-Day Funds Settlement System. See ‘‘Form of Notes, Clearing and Settlement.’’ Governing Law ...... The indenture, the notes and the subsidiary guarantee will be governed by, and construed in accordance with, the laws of the State of New York. Trustee, Registrar, Paying Agent and Transfer Agent ...... Citibank, N.A. Listing ...... Application has been made to list the notes on the Global Exchange Market of the Irish Stock Exchange. However, we cannot assure you that the listing application will be approved. Irish Listing Agent ...... Arthur Cox Listing Services Limited. Risk Factors ...... Investing in the notes involves significant risks. See ‘‘Risk Factors’’ beginning on page 17 for a discussion of certain risk factors you should carefully consider in evaluating an investment in the notes. Securities Codes ...... The notes will be assigned the following securities codes:

Rule 144A: CUSIP: 283837 AA0 ISIN: US283837AA09

Regulation S: CUSIP: P3691N BE9 ISIN: USP3691NBE96

12 Summary Consolidated Financial and Other Information The following tables present our summary consolidated financial and operating information, as of the dates and for each of the periods indicated. This information should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements, including the notes thereto, contained elsewhere in this offering memorandum and the ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ section of this offering memorandum. The consolidated financial information as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 has been derived from our audited consolidated financial statements contained elsewhere in this offering memorandum. The consolidated financial information as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013 has been derived from our unaudited condensed consolidated interim financial statements contained elsewhere in this offering memorandum. The results of operations for the six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other period. Our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements have been prepared in accordance with IFRS and our audited consolidated financial statements have been audited in accordance with International Auditing Standards. We are not providing any reconciliation to U.S. GAAP of our consolidated financial statements or other financial information in this offering memorandum. We cannot assure you that a reconciliation would not identify material quantitative differences between our consolidated financial statements and other financial information as prepared on the basis of IFRS if such information were to be prepared on the basis of U.S. GAAP. Our consolidated financial statements are stated in Mexican pesos. Certain financial information concerning us as of and for the year ended December 31, 2013 and the six months ended June 30, 2014 included in this offering memorandum is presented in U.S. dollars for the convenience of the investors. See ‘‘Presentation of Financial and Other Information—Currency.’’ For additional information regarding financial information presented in this offering memorandum, see ‘‘Presentation of Financial and Other Information.’’

13 Six Months Ended June 30, Year Ended December 31, 2014 2013 Unaudited 2013 2012 2011 SUMMARY CONSOLIDATED (in thousands (in thousands STATEMENTS OF of U.S. of U.S. COMPREHENSIVE INCOME dollars)(1)(2) (in thousands of Ps.)(2) dollars)(1)(2) (in thousands of Ps.)(2) Operating revenue: Net sales of merchandise . . 2,277,380 29,537,614 27,415,598 4,898,102 63,528,386 57,017,252 50,881,125 Interest income from customers ...... 310,709 4,029,899 3,619,019 447,940 5,809,777 5,352,964 4,577,386 Leasing of investment property ...... 100,776 1,307,067 1,117,287 198,896 2,579,680 2,115,854 1,731,041 Services ...... 2,392 31,029 42,226 168,666 2,187,601 1,760,434 1,467,257 Total revenue ...... 2,691,257 34,905,609 32,194,130 5,713,604 74,105,444 66,246,504 58,656,809

Costs and expenses: Cost of sales ...... 1,605,685 20,825,736 19,279,245 3,402,804 44,134,370 39,526,608 34,932,775 Administrative expenses . . 802,775 10,411,987 9,133,220 1,495,588 19,397,781 16,756,502 14,700,673 Total costs and expenses ... 2,408,460 31,237,723 28,412,465 4,898,392 63,532,151 56,283,110 49,633,448

Other income - net ...... 11,692 151,639 119,652 20,261 262,789 342,682 204,454

Operating income ...... 294,489 3,819,525 3,901,317 835,473 10,836,082 10,306,076 9,227,815

Finance costs ...... (39,125) (507,451) (506,137) (83,955) (1,088,892) (985,129) (847,293) Finance income ...... 3,875 50,263 77,363 14,031 181,983 200,660 227,312 Foreign exchange (loss) gain - net ...... 513 6,648 (3,884) (2,948) (38,236) 12,776 (7,669) Share of profits of associates . 20,672 268,119 278,350 39,322 510,011 414,941 304,727

Profit before income tax . . . . 280,424 3,637,104 3,747,009 801,923 10,400,948 9,949,324 8,904,892 Income taxes ...... 72,987 946,645 931,120 208,027 2,698,115 2,750,744 2,360,947

Consolidated net income ... 207,437 2,690,459 2,815,889 593,896 7,702,833 7,198,580 6,543,945

Other items comprising comprehensive income: Cash flow hedges ...... 3,149 40,848 31,000 5,120 66,404 95,026 (20,145) Other movements in equity ...... 35 457 — 3,977 51,576 — — Actuarial loss on post-employment benefit obligations ...... — — — 5,185 67,247 (123,614) (112,280)

Consolidated comprehensive income ...... 210,621 2,731,764 2,846,889 608,178 7,888,060 7,169,992 6,411,520

Net income attributable to: Owners of the parent . . . . 207,337 2,689,167 2,815,397 593,827 7,701,930 7,197,700 6,543,365 Non-controlling interests . . 100 1,292 492 70 903 880 580 Basic and diluted earnings per share ...... U.S.$0.15 Ps.2.00 Ps.2.10 U.S.$0.44 Ps.5.73 Ps.5.36 Ps.4.88 Weighted average number of shares outstanding ...... 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100

(1) Translated to U.S. dollars for convenience only at the rate of Ps.12.97 per U.S.$1.00, the exchange rate reported on June 30, 2014 by the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York. See ‘‘Exchange Rates.’’ (2) Except basic and diluted earnings per share and weighted average number of shares outstanding.

14 As of June 30, As of December 31, 2014 Unaudited 2013 2012 2011 SUMMARY CONSOLIDATED (in thousands (in thousands STATEMENTS OF of U.S. (in thousands of U.S. FINANCIAL POSITION dollars)(1)(2) of Ps.)(2) dollars)(1)(2) (in thousands of Ps.)(2) Assets Current assets: Cash and cash equivalents ...... 42,672 553,458 124,754 1,618,060 2,910,124 2,565,515 Loan portfolio - net ...... 1,449,010 18,793,664 1,652,792 21,436,709 17,561,620 15,990,126 Other accounts receivable - net ...... 41,852 542,815 46,034 597,059 920,354 850,984 Inventories ...... 981,567 12,730,921 880,645 11,421,969 10,558,247 10,109,023 Prepaid expenses ...... 87,951 1,140,721 47,601 617,387 520,160 502,599 Other current assets ...... 146,378 1,898,520 143,826 1,865,427 1,397,581 919,275 Total current assets ...... 2,749,430 35,660,099 2,895,652 37,556,611 33,868,086 30,937,522 Non-current assets: Long - term loan portfolio - net ...... 559,929 7,262,284 520,012 6,744,558 6,389,578 4,768,474 Investments in associates ...... 377,454 4,895,581 355,964 4,616,854 4,007,211 3,568,978 Intangible assets - net ...... 137,548 1,783,993 138,312 1,793,911 1,503,847 927,142 Investment properties - net ...... 1,162,505 15,077,688 1,097,439 14,233,786 12,360,087 10,102,793 Property, furniture and equipment - net . . 2,281,391 29,589,636 2,240,113 29,054,263 26,490,563 22,319,405 Other non-current assets ...... 73,082 947,872 72,238 936,921 490,481 398,476 Total non-current assets ...... 4,591,909 59,557,054 4,424,078 57,380,293 51,241,767 42,085,538

Total assets ...... 7,341,339 95,217,153 7,319,730 94,936,904 85,109,853 73,023,060

Liabilities and stockholders’ equity ..... Current liabilities: Suppliers ...... 795,282 10,314,813 883,143 11,454,374 10,288,069 9,583,759 Creditors ...... 380,494 4,935,013 400,102 5,189,318 4,446,520 4,145,308 Bank borrowings ...... 46,261 600,000 155,060 2,011,128 — — Senior notes (certificados bursátiles) . . . 308,404 4,000,000 308,404 4,000,000 — — Other current liabilities ...... 227,788 2,954,422 229,118 2,971,651 2,981,857 2,869,125 Total current liabilities ...... 1,758,229 22,804,248 1,975,827 25,626,471 17,716,446 16,598,192 Non-current liabilities: 457,392 5,932,353 428,808 5,561,645 4,942,241 4,244,423 Long - term bank borrowings ...... 71,045 921,456 71,045 921,456 921,456 921,456 Long - term senior notes (certificados bursátiles) ...... 616,808 8,000,000 616,808 8,000,000 12,000,000 8,000,000 Other non-current liabilities ...... Total non-current liabilities ...... 1,145,245 14,853,809 1,116,661 14,483,101 17,863,697 13,165,879

Total liabilities ...... 2,903,474 37,658,057 3,092,488 40,109,572 35,580,143 29,764,071

Stockholders’ equity: Capital stock ...... 260,161 3,374,282 260,161 3,374,282 3,374,282 3,374,282 Retained earnings: Prior years’ ...... 3,881,900 50,348,239 3,288,038 42,645,852 37,919,186 32,398,436 For the period ...... 207,337 2,689,167 593,826 7,701,930 7,197,700 6,543,365 Capital reserves ...... 88,186 1,143,767 85,036 1,102,919 1,036,515 941,489 Stockholders’ equity attributable to parent company ...... 4,437,584 57,555,455 4,227,061 54,824,983 49,527,683 43,257,572 Non-controlling interest ...... 281 3,641 181 2,349 2,027 1,417

Total stockholders’ equity ...... 4,437,865 57,559,096 4,227,242 54,827,332 49,529,710 43,258,989

Total liabilities and stockholders’ equity .. 7,341,339 95,217,153 7,319,730 94,936,904 85,109,853 73,023,060

OTHER FINANCIAL DATA EBITDA(3) ...... 366,471 4,753,136 966,564 12,536,327 11,768,983 10,510,561 Total debt/LTM EBITDA(3) ...... 1.1 1.1 1.0 1.0 1.1 0.8 Net debt(4)/LTM EBITDA(3) ...... 1.03 1.03 0.9 0.9 0.9 0.6 LTM EBITDA(3)/LTM Finance costs ...... 11.5 11.5 11.5 11.5 11.9 12.4

15 (1) Translated to U.S. dollars for convenience only at the rate of Ps.12.97 per U.S.$1.00, the exchange rate reported on June 30, 2014 by the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York. See ‘‘Exchange Rates.’’ (2) Except ratios. (3) We define EBITDA as operating income plus depreciation and amortization. Our management uses this measure as an indicator of our operating results and financial condition. However, you should not consider EBITDA in isolation, as an alternative to net income, as an indicator of our operating performance or as a substitute for analysis of our results as reported under IFRS, since, among others: • it does not reflect the depreciation and amortization of our operating assets; • it does not reflect our interest expense; • it does not reflect our share of profits of associates; • it does not reflect any income taxes we may be required to pay; and • it does not reflect our cash expenditures or future requirements for cash expenditures or our working capital needs or charges. Because of the above, our EBITDA measure should not be considered a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. EBITDA is not a recognized financial measure under IFRS and it may not be comparable to similar titled measures presented by other companies in our industry because not all companies use the same definition. As a result, you should rely primarily on our IFRS results and use our EBITDA measurement only as a supplement. The following is a reconciliation of our EBITDA for the periods presented: Twelve Months Ended Six Months Ended June 30, June 30, Year Ended December 31, 2014 2013 2014 Unaudited 2013 2012 2011 (in (in (in thousands thousands (in thousands of U.S. of U.S. thousands of U.S. dollars) (in thousands of Ps.) dollars) of Ps.) dollars) (in thousands of Ps.) EBITDA ...... 366,471 4,753,136 4,730,351 968,320 12,559,112 966,564 12,536,327 11,768,983 10,510,561 Deduct: Depreciation and amortization ...... 71,982 933,611 829,034 139,154 1,804,822 131,091 1,700,245 1,462,907 1,282,746 Operating income ...... 294,489 3,819,525 3,901,317 829,167 10,754,290 835,473 10,836,082 10,306,076 9,227,815 (4) Net debt represents our long-term debt (including the current portion) minus cash and cash equivalents. Net debt measures may not be comparable to similarly titled measures used by other companies. Net debt is a non-IFRS measure, and we do not intend net debt to represent debt as defined by IFRS. You should not consider net debt to be an alternative to debt or any other items calculated in accordance with IFRS. Debt levels and, therefore, the impact of interest rates on earnings vary in significance between companies. Thus, for comparison purposes, our management believes that net debt can be useful to investors as an objective and comparable measure of our debt obligations and liquidity, because it recognizes the net cash position of our current operations. The following is the reconciliation as of the dates indicated: As of June 30, As of December 31, 2014 Unaudited 2013 2012 2011 (in (in thousands (in thousands of U.S. thousands of U.S. dollars) of Ps.) dollars) (in thousands of Ps.) Current portion of long-term debt ...... 354,665 4,600,000 463,464 6,011,128 — — Long-term debt ...... 687,853 8,921,456 687,853 8,921,456 12,921,456 8,921,456 Deduct: Cash and cash equivalents ...... 42,672 553,458 124,754 1,618,060 2,910,124 2,565,515 Net debt ...... 999,846 12,967,998 1,026,563 13,314,524 10,011,332 6,355,941

16 RISK FACTORS An investment in the notes involves a high degree of risk. You should consider carefully the following risk factors, as well as the other information presented in this offering memorandum, before buying the notes. The risks and uncertainties described below are not the only ones that we face. Additional risks and uncertainties that we do not know about or that we currently think are immaterial or we do not view as risks may also affect us. Any of the following risks, if they actually occur, could materially and adversely affect our business, results of operations, financial condition and our ability to service our debt. In that event, the market price and liquidity of the notes could be materially adversely affected, and you could lose all or part of your investment in the notes.

Risks Related to our Business and Industry—Commercial Operations Our sales and operating results depend on consumer spending. Our sales are significantly affected by the discretionary spending of consumers. Consumer spending may be affected by many factors outside of our control, including general economic conditions, consumer disposable income levels, consumer confidence levels, the availability of goods that match consumer needs and preferences, cost and level of consumer debt, consumer behavior with respect to consumer credit, the costs of basic necessities and other goods, and the effects of the weather or natural disasters. Any decline in the discretionary spending of consumers could negatively affect our business and results of operations.

Our business is intensely competitive and increased or new competition could have a material adverse effect on us. The retail industry is intensely competitive. Although we are one of Mexico’s largest retailers, we have numerous and varied competitors at the Mexican national and local levels, including omni-channel retailers, traditional department stores, vendor owned boutiques, specialty retailers, individual specialty apparel stores, designer boutiques, outlet stores, e-commerce and mail order retailers, and ‘‘flash sale’’ businesses, which sell, among other products, products similar to those that we sell. In addition, we face significant competition from informal retailers in Mexico. We compete for customers on the basis of fashion and trends; the selection, presentation, quality, and pricing of our merchandise; the customer experience, both in-store and online; our marketing initiatives; and the visual appeal and overall ambiance of our stores. We also compete in particular markets with a substantial number of retailers that specialize in one or more types of products that we sell. Competition may intensify as our competitors enter into business combinations or alliances. A number of different competitive factors could have a material adverse effect on our business, results of operations and financial condition, including: • increased operational efficiencies of competitors; • competitive pricing strategies, including deep discount pricing by a broad range of retailers during periods of low consumption or economic instability; • assortment of products offered by our competitors and any expansion of such product offerings; • entry by new competitors into markets in which we currently operate; • credit availability for customers; and • adoption by existing competitors of innovative retail sales methods. We may not be able to continue to compete successfully with our existing or any new competitors, and prolonged periods of deep discount pricing by our competitors may have a material adverse effect on our business. Our failure to compete effectively could negatively affect our business and results of operations.

Our sales and operating results depend on consumer preferences, demand, and fashion trends. The fashion and retail industries are subject to sudden shifts in consumer preferences, demand, and fashion trends. Our sales and operating results depend in part on our ability to predict or respond to changes in fashion trends and consumer preferences in a timely manner. We develop new retail concepts and continuously adjust our industry position in certain major and private-label brands and product categories in an effort to satisfy our customers. Early order commitments often are made far in advance of consumer acceptance. If we fail to anticipate preferences accurately and respond to consumer preferences and demand or if we fail to maintain

17 adequate inventories that satisfy our customers’ needs and preferences, we could experience lower sales, excess inventories, and lower profit margins. In addition, demand for products can change significantly between the time inventory or components are ordered and the date of sale. The acquisition of certain types of inventory or components may require significant lead-time and prepayment and they may not be returnable. We carry a broad selection and significant inventory levels of certain products, such as consumer electronics, and we may be unable to sell products in sufficient quantities or during the relevant selling seasons. Any sustained failure to anticipate, identify and respond to emerging trends in lifestyle and consumer preferences could negatively affect our business and results of operations. In addition, prediction of consumer preferences requires significant research and development as well as marketing initiatives. If we fail to anticipate consumers’ preferences, then the return on that investment will be less than anticipated and our strategy to grow net sales and profits may not be successful, materially and adversely affecting us.

Our business depends, in part, on the success of our strategies. Our success is dependent on our ability to identify, develop and execute our strategies. Our continued growth and success depends, in part, on our ability to successfully open and operate new stores, enhance and remodel existing stores on a timely and profitable basis, and optimize store performance by closing under-performing stores. The success of any future store openings will depend upon numerous factors, many of which are beyond our control, including the following: • our ability to attract appropriate vendors; • the competition for suitable store sites; • our ability to negotiate favorable lease terms with landlords; • the availability of associates to staff new stores and our ability to hire, train, motivate, and retain store personnel; and • our ability to attract customers and generate sales sufficient to operate new stores profitably. In the future, we may enter into additional markets. These markets may have different competitive conditions, consumer trends, and discretionary spending patterns than our existing markets, which may cause new stores in these markets to be less successful than stores in our existing markets. Our continued growth and success also depends, in part, on our ability to implement our omni-channel strategy. Omni-channel retailing is rapidly evolving, and we must keep pace with changing customer expectations and new developments by our competitors. If we do not acquire, improve, and develop relevant technology in a timely manner and in a manner that appeals to our customers, our ability to compete and our results of operations could be adversely affected. In addition, if there are performance issues with our customer-facing technology systems, we may experience a loss of customer confidence and sales, which could adversely affect our reputation and results of operations. We continue to implement customer-oriented strategic programs designed to differentiate and strengthen our core merchandise content and service levels and expand and enhance our merchandise offerings. We also seek to improve the effectiveness of our marketing and advertising programs. If we fail to implement successfully some or all of these initiatives, we may be unable to retain or attract customers, which could adversely affect our financial results.

Our revenues and cash requirements are affected by the seasonal nature of our business. Our retail operations are seasonal, with a high proportion of revenues and operating cash flows generated during the fourth fiscal quarter, which includes the fall and holiday selling seasons. In addition, sales volumes in our department stores are higher during the months of May, June, November and December due to Mother’s Day, Father’s Day, the ‘‘Buen Fin’’ (a weekend in late November of each year during which various commercial businesses, including our company, offer sales and discounts to encourage consumer spending in Mexico) and year-end holidays. As a result, our revenues and cash requirements are affected by the seasonal nature of our business and any economic slowdown, interruption to our business or to the business of our suppliers, or the occurrence of any other circumstance that may impact our business during the last quarter of any calendar year may therefore adversely affect our financial condition and results of operations.

18 The termination of certain license agreements may affect our business. We have entered into various license agreements and hold both exclusive and non-exclusive licenses to use certain brands and market certain products, as well as franchise agreements for corner stores inside our department stores. These licenses and agreements represent an important benefit to our business; however, we cannot guarantee that they will continue to do so. The term of our license agreements varies. The term of such agreements ranges from five to ten years and some of them are automatically renewable for one or two additional periods of the same tenor. The termination of such agreements or failure to perform by any of the parties to such agreements and licenses may have an adverse effect on our sales, financial condition and results of operations. We cannot provide any assurance that any agreement or license will not expire in accordance with its terms or that we will be able to form strategic alliances with current or potential partners and/or obtain other licenses that may enable us to improve the performance of our business.

We depend upon designers, vendors and other sources of merchandise, goods and services. Our business could be affected by disruptions in, or other legal, regulatory, political or economic issues associated with, our supply network. Our relationships with established and emerging designers have been a significant contributor to our past success, and a substantial portion of our revenues are attributable to our sales of designer merchandise. Many of our key vendors limit the number of retailers they use to sell their merchandise, and competition among retailers to obtain and sell these goods is intense. Although we have supply arrangements with some of our merchandising sources, there can be no assurance that such sources will continue to meet our quality, style, and volume requirements. Moreover, nearly all of the established designer brands sold by us are also sold by competing retailers, and many of these designer brands also have their own dedicated retail stores and/or their own e-commerce sites. If one or more of these designers were to cease providing us with adequate supplies of merchandise or, conversely, were to increase sales of merchandise through their own stores or to the stores of other competitors, our business could be adversely affected. In addition, any decline in the popularity or quality of any of these designer brands could adversely affect our business. Our ability to find qualified vendors and access products in a timely and efficient manner is particularly challenging with respect to goods sourced outside Mexico. Our procurement of goods and services from outside Mexico is subject to risks associated with political or financial instability, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade, including costs and uncertainties associated with potential sell-through difficulties and reputational damage that may be associated with our inability to determine the products we sell are manufactured in accordance with environmental, health, and safety laws for the benefit of workers. In addition, our procurement of all our goods and services is subject to the effects of price increases which we may or may not be able to pass through to our customers. All of these factors may affect our ability to access suitable merchandise on acceptable terms, are beyond our control and could negatively affect our business and results of operations.

We depend upon the success of our advertising and marketing programs. Our business depends in part on effective marketing and high customer traffic. Our advertising and promotional costs, net of cooperative advertising allowances, amounted to Ps.82 million for the year ended December 31, 2013. We have many initiatives in this area, and often change our advertising and marketing programs. There can be no assurance as to our continued ability to effectively execute our advertising and marketing programs, and any failure to do so could negatively affect our business and results of operations.

Parties with whom we do business may be subject to insolvency risks or may otherwise become unable or unwilling to perform their obligations to us. We are a party to contracts, transactions and business relationships with various third parties, including vendors, suppliers, service providers, lenders and participants in joint ventures, strategic alliances and other joint commercial relationships, pursuant to which such third parties have performance, payment and other obligations to us. In some cases, we depend upon such third parties to provide essential leaseholds, products, services or other benefits, including with respect to store and distribution center locations, merchandise, advertising, software development and support, logistics, other agreements for goods and services in order to operate our business in

19 the ordinary course, extensions of credit, credit card accounts and related receivables, and other vital matters. Current economic, industry and market conditions could result in increased risks to us associated with the potential financial distress or insolvency of such third parties. If any of these third parties were to become subject to bankruptcy, receivership or similar proceedings, our rights and benefits in relation to its contracts, transactions and business relationships with such third parties could be terminated, modified in a manner adverse to us, or otherwise impaired. We cannot make any assurances that we would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable as our existing contracts, transactions or business relationships, if at all. Any inability on our part to do so could negatively affect our cash flows, financial condition and results of operations.

Our business is capital-intensive and we may not be able to generate sufficient cash flows from operations or obtain the funding required to make capital expenditures and/or implement our investment strategy. We make and expect to continue to make capital expenditures to finance our land acquisition, construction, development and renovation of department stores and shopping centers. For the years ended December 31, 2013, 2012 and 2011, we made capital expenditures of Ps.5,948 million, Ps.7,732 million Ps.5,134 million, respectively. For the six months ended June 30, 2014 we made capital expenditures of Ps.2,156 million. We plan to continue making capital expenditures to implement our expansion plan, which includes the increase in our gross leasable area through the construction of shopping centers, and department stores, major renovation of certain of our department stores, and the acquisition of additional land in different locations across Mexico. Failure to implement our expansion plan and the planned renovations might result in a reduction of our capacity to attract customers to our stores or to retain current tenants or attract new tenants to our shopping centers, causing a decline in our results of operation. We expect to fund our capital expenditures program with a combination of cash flows from operations and additional financing, including a portion from the proceeds of this offering. We cannot assure you that we will generate sufficient cash flow from operations, or that we will have access to external financing sources, to adequately fund such or any future capital expenditures. Our access to external sources of financing will depend on many factors, including factors beyond our control, such as conditions in the global capital markets and how investing in Mexico and emerging markets is generally perceived by investors. If our access to external financing is limited, we may not be able to make committed and/or planned capital expenditures or otherwise execute our investment strategy, which could adversely affect our business, financial condition or results of operation. In addition, the amount, timing and costs of our capital expenditures depend in part on market conditions. We may not be able to accurately predict the timing or amount of capital investments or the costs of the expenditures we will require. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital Expenditures.’’

We Could Be Harmed by Data Loss or Other Security Breaches As a result of part of our services being web-based and the fact that we process, store and transmit large amounts of data, including personal information, for our customers, failure to prevent or mitigate data loss or other security breaches, including breaches of our vendors’ technology and systems, could expose us or our customers to a risk of loss or misuse of such information, adversely affect our operating results, result in litigation or potential liability for us and otherwise harm our business. We use third party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back office support and other functions. We have experienced security breaches in the past, and, although they did not have a material adverse effect on our operating results, there can be no assurance of a similar result in the future. Although we have implemented systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third party vendor, such measures cannot provide absolute security.

Risks Related to our Business and Industry—Consumer Credit Operations Our inability to effectively control the level of non-performing loans in the future and an insufficient allowance for loan losses could have a material adverse effect on us. The Liverpool credit cards have historically been the most frequently used payment method for our customers in our stores. As of December 31, 2013, purchases by our customers using the Liverpool credit cards

20 accounted for 52.8% of our total sales. If we fail to successfully assess the creditworthiness of our customers during our credit approval process, the proportion and number of impaired loans in our total loan portfolio may increase. Furthermore, risks arising from changes in the recoverability of loans and amounts due from our customers are inherent in our businesses, and non-performing loans can have an adverse effect on us. Although historically we have been able to maintain low levels of non-performing loans, we cannot assure you that in the future we will be able to effectively control the proportion and number of impaired loans in our total loan portfolio. In particular, the amount of our reported non-performing loans may increase in the future as a result of growth in our total loan portfolio, the adverse effect of changes in the credit quality of our customers or a general deterioration in Mexican or global economic conditions, the impact of political events, events affecting certain industries or events affecting financial markets and global economies. Our current allowance for loan losses 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 our total loan portfolio. Our allowance for loan losses is based on our current assessment of and expectations concerning various factors affecting us, including the quality of our loan portfolio. In addition, we have a risk management system for our loan portfolio which allows us to reduce the impact of non-performing loans. However, as the recent global financial crisis has demonstrated, many of the factors affecting our loan portfolio are beyond our control. As a result, there is no precise method for predicting loan and credit losses, and we cannot assure you that our allowance for loan losses will be sufficient in the future to cover actual loan and credit losses. If our assessments and expectations concerning the performance of our loan portfolio differ from actual developments, if the quality of our total loan portfolio deteriorates for any reason or if future actual losses exceed our estimates of incurred losses, we may be required to increase our provisions and allowance for loan losses, which may adversely affect us. If we are unable to control or reduce the level of our non-performing or poor credit quality loans, this could have a material adverse effect on us.

Our exposure to loans to individuals could lead to higher levels of non-performing loans, allowances for loan losses and write-offs. As of June 30, 2014, all of our loan portfolio consisted of consumer credits to our customers. As part of our business strategy, we are seeking to increase volume in our consumer credit portfolio. Our customers are more likely to be adversely affected by downturns in the Mexican economy than large corporations and high-income individuals who have greater resources. Consequently, in the future we may experience higher levels of non-performing loans, which could result in increases in our provisions for loan losses, which in turn will adversely affect us. For the year ended December 31, 2013, non-performing loans totaled Ps.876 million and write-offs against our allowance for loan losses totaled Ps.1,182 million. For the six months ended June 30, 2014, non-performing loans totaled Ps.1,234 million and write-offs against our allowance for loan losses totaled Ps.775. There can be no assurance that the levels of non-performing loans and subsequent write-offs will not be materially higher in the future and that this activity will not have an adverse effect on us.

Our consumer credit loans are unsecured and an inefficient recovery process may adversely affect our business, financial condition and results of operations. We offer a wide variety of credit plans to our customers, primarily through the issuance of our branded credit cards. The loans we provide to our customers are unsecured. Any payment default by our customers could lead us to pursue judicial collection procedures. Judicial recovery through Mexican courts is a complex, uncertain and time consuming endeavor. We cannot anticipate any outcome resulting from the exercise of our collection rights and remedies or otherwise assure that any payments we may obtain would be sufficient to pay in full the amounts due by our customers. Our inability to successfully recover the principal of an interest on the loans from our customers could materially and adversely affect our business, financial condition and results of operations.

We may fail to detect money laundering or fraudulent activities of our customers, which may adversely impact our reputation, business and financial condition. We are exposed to the risk of money laundering and fraudulent activities by our customers, particularly with respect to our consumer credit offerings. We have implemented internal control systems that monitor unusual transaction volumes or unusual transaction patterns and screen the personal details of our customers, but these systems may not always succeed in protecting us and our customers from money laundering and fraud. To the extent we are not successful in protecting ourselves or our customers from money laundering or fraud, or if we

21 fail to comply with the applicable regulations, we and our directors could be subject to criminal sanctions or administrative and civil fines and could directly suffer loss, or lose the confidence of our customer base, which could have a material adverse effect on our reputation, business, results of operations and financial condition.

Risks Related to Our Business and Industry—Real Estate Operations Our expansion depends in part on our ability to successfully acquire or build new stores and shopping centers and remodel and/or expand existing stores and shopping centers. One of our business expansion strategies focuses on acquiring or building new stores and shopping centers and remodeling and/or expanding existing stores and shopping centers. We evaluate each investment decision to determine if it meets our financial projections and expected returns. Our success in achieving future growth through opening new stores and shopping centers, or expanding existing stores and shopping centers, will depend on our ability to identify, finance, obtain, construct and operate such stores and shopping centers. Acquisitions depend on our ability to identify, negotiate and finance acquisitions on acceptable terms and integrate acquired stores and shopping centers into our operations. Our failure to implement this business expansion strategy could have a material adverse effect on our business and operations. The performance of our real estate operations is subject to risks associated with the real estate industry generally. Real estate investments are subject to various risks and fluctuations and cycles in value and demand, many of which are beyond our control. Certain events may decrease our results of operations and the value of our properties. These events include, but are not limited to: • adverse changes in local, national or international demographic and economic conditions, such as the global economic downturn of 2008; • vacancies or our inability to rent space on favorable terms; • adverse changes in the financial condition of tenants and buyers of properties; • our inability to collect rent from tenants; • adverse changes in laws, regulations and governmental policies, including, without limitation, tax, zoning, environmental and safety laws, governmental fiscal policies, and changes in enforcement thereof; • competition from other real estate investors with significant capital, including real estate investment companies, real estate investment trusts and institutional investment funds; • reductions in the level of demand for retail space, and changes in the relative popularity of properties; • increases in the supply of commercial space; • fluctuations in interest rates, which could adversely affect our ability, or the ability of buyers and tenants of properties, to obtain financing on favorable terms, or at all; • increases in expenses including, but not limited to, insurance costs, labor costs, energy prices, real estate assessments and other taxes and costs of compliance with laws, regulations and governmental policies, and restrictions on our ability to pass increased expenses on to our tenants; • tenants rotation larger than expectation; • failure to provide adequate maintenance to the properties; • increases in the criminal activity in the areas where our properties are located; • excess in the construction or oversupply in the real estate market; • failure to attract or maintain anchor stores other than ‘‘Liverpool’’; and • competition from other shopping malls, other types of retail premises, or other kinds of shopping experiences such as virtual commerce. In addition, periods of economic slowdown or recession, such as the recent global economic downturn, rising interest rates or declining demand for real estate, or the public perception that any of these events may

22 occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. If we cannot operate our properties to meet our financial expectations, our business, financial condition and results of operations could be materially and adversely affected.

Changes in the market value of land may adversely affect our business. We continuously purchase land in order to develop future projects and investment activities; however, the value of such land could drop significantly from the date of purchase to the actual development of the project, as a result of economic or market conditions, reducing the profit margins from our leases or the expected return rate from our store projects, which in turn will adversely affect our results of operations. We believe that there is increasing competition for acquisition of land in suitable locations and, even though our continued growth depends on our ability to continue to acquire land at reasonable prices, we cannot guarantee that we will have continued success in this task. The entry of or an increase in the activities of other Mexican or foreign real estate developers could significantly increase real estate prices, leading to a shortage of suitable property. As a consequence, an increase in the cost of real estate could result in an increase in our cost of sales and a decrease in profits, thus adversely affecting our business and results of operations.

We are dependent on our tenants for a portion of our revenue, and our business would be adversely affected if a significant number of our tenants, or any of our major tenants, were unable to meet their lease obligations. The performance of our real estate operations depends, in part, on our ability to collect rents, past-due amounts and future rent payments from our tenants and our tenants’ ability to make rental payments. Our results of operations would be negatively affected if a significant number of our tenants, or any of our major tenants, were to delay commencement of leases, decline to extend or renew leases upon expiration, fail to make rental payments when due or close their businesses or declare bankruptcy. Any of these actions could result in the termination of the tenants’ lease, losses to our investments and the loss of rental income attributable to the terminated lease. In addition, if a tenant defaults on its lease obligations, we may experience delays in enforcing our rights as landlord and may incur substantial costs, including litigation and related expenses, in protecting our investment and re-leasing our property. As of June 30, 2014, our ten largest tenants occupied approximately 22.6% of the gross leasable area of our portfolio and represented approximately 23.0% of the base rents attributable to our portfolio, with no single tenant accounting for more than 6.7% of the gross leasable area of our portfolio or more than 10.0% of the base rents attributable to our portfolio. To the extent that a significant number of our tenants experience a downturn in their businesses, their financial condition could be weakened and could result in their failure to make timely rental payments or their default under their leases, which could harm our performance.

If we are unable to renew our leases or lease our vacant space, or we are unable to lease our properties at or above existing rental rates, our rental revenue may be adversely affected. If we are unable to renew our leases or lease our vacant space, or we are unable to lease our properties at or above existing rental rates, our rental revenue may be adversely affected. Approximately 95.7% of the properties in our real estate portfolio were occupied as of June 30, 2014, in terms of gross leasable area. As of such date, leases representing approximately 43.0% of the occupied gross leasable area of our properties are scheduled to expire in 2015. We cannot assure you that our leases will be renewed or that our properties will be re-leased at rental rates equal to or above our existing rental rates or that substantial rent abatements, tenant improvements, early termination rights or tenant-favorable renewal options will not be offered to attract new tenants or retain existing tenants. There can be no assurance that we will be able to lease any unoccupied spaces or spaces in different stages of development on favorable terms, or at all. In addition, we intend to continue to acquire additional development properties and may acquire undeveloped land in the future as part of our growth strategy. To the extent that our properties, or portions of our properties, remain vacant for extended periods of time, or in case that our rents decrease for any reason, we may receive reduced or no revenue from such properties. Moreover, the resale value of a property could be diminished because the market value of a particular property depends principally upon the value of the leases of such property. If we were to incur uninsured or uninsurable losses, or losses in excess of our insurance coverage, we would be required to pay for such losses, which could adversely affect our financial condition and our cash flow.

23 We carry comprehensive insurance, including property, casualty and business interruption insurance. Certain types of losses may be either uninsurable or not economically insurable, such as losses due to riots, terrorism or acts of war. Should an uninsured loss occur, we could lose both our investment in and anticipated profits and cash flow from a property. If any such loss is insured, we may be required to pay a significant deductible on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. In addition, future lenders may require such insurance, and our failure to obtain such insurance could constitute a default under our loan agreements. In addition, we may reduce or discontinue terrorism, earthquake, flood or other insurance on some or all of our properties in the future if the cost of premiums for any of these policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss. In addition, if any one of our insurance carriers were to become insolvent, we would be forced to replace the existing insurance coverage with another suitable carrier at potentially unfavorable rates, and any outstanding claims would be at risk for collection. If we were to incur uninsured or uninsurable losses, or losses in excess of our current coverage, our business, financial condition, results of operations, cash flow, trading price of the notes and our ability to make distributions to holders of the notes may be materially and adversely affected.

We are subject to risks relating to investments in real property. We are subject to risks that generally relate to investments in real property because of the properties we own and lease. Real property may not generate the expected investment returns due to a variety of reasons, including the amount of income earned, capital appreciation generated and expenses incurred. In addition, regulations and interest rates can make it more expensive and/or time-consuming to develop real property or expand, modify or renovate shopping centers and department stores. Under expropriation and similar laws, governments can take or expropriate real property in exchange for some measure of ‘‘reasonable’’ compensation. Sometimes the compensation paid in an expropriation is less than the owner believes the property is worth. Under the Federal Law of Eminent Domain (Ley Federal de Extinción de Dominio), Mexican federal authorities also have the authority to order the seizure of any property, without compensation and prior to judgment, if such property was used for the commission of drug trafficking crimes. In addition, certain of our shopping centers and department stores are in condominiums and are subject to the rules and regulations of the condominium’s association, as well as common area charges. Any of these factors could have a material adverse impact on our results of operations or financial condition. Real estate investments are not as liquid as other types of investments, and this lack of liquidity may limit our ability to react promptly to changes in economic, market or other conditions. Our ability to dispose of real estate assets on advantageous terms depends on factors beyond our control, including competition from other sellers, demand from potential buyers and the availability of attractive financing for potential buyers. We cannot predict the various market conditions affecting real estate investments that will exist at any particular time in the future. Due to the uncertainty of market conditions that may affect the future disposition of our real estate assets, we cannot assure you that we will be able to sell our real estate assets at a profit in the future.

The assets we acquire may be subject to unknown liabilities that could affect the value and profitability of these properties. In connection with our acquisitions of real estate properties and buildings, we assume existing liabilities associated with such real estate properties or buildings, some of which may be unknown or unquantifiable at the time of the global offering. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims of tenants, vendors or other persons dealing with the entities prior to the acquisition by us of such properties, tax liabilities, employment-related issues, and accrued but unpaid liabilities, whether incurred in the ordinary course of business or otherwise. If the magnitude of such unknown liabilities is high, either singly or in the aggregate, such liabilities could adversely affect our business, financial condition, results of operations and cash flow and the trading price of our shares.

We might be unable to evict a tenant in a timely manner at the end of the term of their lease. In Mexico, in general terms, the applicable regulation regarding leases tends to be favorable to the tenant. It may be the case that, even though the lease agreement has expired, a tenant keeps the possession of the real estate property, and we would have to initiate a legal proceeding before the courts of the state where the property

24 is located in order to evict the tenant. A legal proceeding in Mexico, as well as obtaining a definite judgment for the termination of a lease, the eviction of the tenant and the collection of any due amount may be a long and expensive process. Our incapacity to evict the tenants in a timely manner and substitute them with new tenants may negatively affect our financial condition.

Risks Related to Our Business and Industry—General Our business is subject to unfavorable economic and political conditions and other developments and risks. Unfavorable global, domestic or regional economic or political conditions and other developments and risks could negatively affect our business and results of operations. For example, unfavorable changes related to interest rates, rates of economic growth, fiscal and monetary policies of governments, inflation, deflation, consumer credit availability, consumer debt levels, consumer debt payment behaviors, tax rates and policy, unemployment trends, energy prices, and other matters that influence the availability and cost of merchandise, consumer confidence, spending and tourism could negatively affect our business and results of operations. In addition, unstable political conditions, criminal activities, civil unrest, terrorist activities and armed conflicts may disrupt commerce and could negatively affect our business and results of operations.

Our business could be affected by extreme weather conditions, regional or global health pandemics or natural disasters. Extreme weather conditions in the areas in which our stores are located could negatively affect our business and results of operations. For example, frequent or unusually heavy rainstorms or other extreme weather conditions over a prolonged period could make it difficult for our customers to travel to our stores and thereby reduce our sales and profitability. Our business is also susceptible to unseasonable weather conditions. For example, extended periods of unseasonably warm temperatures during the winter season or cool weather during the summer season could reduce demand for a portion of our inventory and thereby reduce our sales and profitability. In addition, extreme weather conditions could result in disruption or delay of production and delivery of materials and products in our supply chain and cause staffing shortages in our stores. Our business and results of operations could also be negatively affected if a regional or global health pandemic were to occur, depending upon its location, duration and severity. To halt or delay the spread of disease, local, regional or national governments might limit or ban public gatherings or customers might avoid public places, such as our stores and shopping centers. A regional or global health pandemic might also result in disruption or delay of production and delivery of materials and products in our supply chain and cause staffing shortages in our stores. In addition, natural disasters such as hurricanes and earthquakes, or a combination of these or other factors, could damage or destroy our facilities or make it difficult for customers to travel to our stores, thereby negatively affecting our business and results of operations.

Currency fluctuations may adversely affect us. Substantially all of our revenues are, and will continue to be, denominated in pesos. We incur operating expenses and indebtedness denominated in U.S. dollars and euros, particularly with respect to imports of merchandise from and Asia. For the year ended December 31, 2013, purchases of merchandise in a currency other than Mexico peso represented approximately 18.0% of our total purchases. As of December 31, 2013 and 2012, we had exposure to exchange rate risks of U.S.$181 million and €6 million and U.S.$3 million and €2 million, respectively. This situation exposes us to potential losses and reductions in our margins resulting from currency fluctuations, which may materially and adversely affect us. A portion of our operating costs, primarily costs resulting from imports, are denominated in U.S. dollars. However, other significant portions of our operating costs, taxes and income are denominated in Mexican pesos. As a result, the appreciation or depreciation of the Mexican peso against the U.S. dollar affects our results of operations and financial condition. Significant fluctuation of the Mexican peso relative to the U.S. dollar has occurred in the past, negatively affecting our results. According to the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York, relative to the U.S. dollar, the Mexican peso depreciated by 12.2% in 2011, appreciated by 5.5% in 2012 and depreciated by 2.6% in 2013, all in nominal terms. See ‘‘Exchange Rates.’’

25 Fluctuations in currency exchange rates may adversely affect our ability to acquire assets denominated in other currencies and may also adversely affect the performance of our investments in such assets. Since assets may be purchased with and income may be payable in pesos, the value of these assets measured in U.S. dollars may be affected favorably or unfavorably by changes in currency rates, costs of conversion and exchange control regulations. We selectively hedge our exposure to the U.S. dollar with respect to the Mexican peso and other currencies, our U.S. dollar-denominated debt obligations and the purchase of certain U.S. dollar-denominated raw materials. A severe depreciation of the Mexican peso may result in a disruption of the international foreign exchange markets and may limit our ability to transfer or to convert Mexican pesos into U.S. dollars or other currencies for the purpose of making timely payments of interest and principal on our U.S. dollar-denominated indebtedness or obligations in other currencies. While the Mexican government does not currently restrict, and since 1982 has not restricted, the right or ability of Mexican or foreign persons or entities to convert Mexican pesos into U.S. dollars or to transfer other currencies out of Mexico, the Mexican government could institute restrictive exchange rate policies in the future. Currency fluctuations may have an adverse effect on us in future periods.

Failure to maintain our relationships with labor unions may have an adverse effect on us. The majority of our workforce is represented by labor unions. While we have enjoyed satisfactory relationships with all of the labor organizations that represent our associates and we believe our relationships with labor organizations will continue to be satisfactory, labor-related disputes may still arise. Labor disputes that result in strikes or other disruptions could also cause increases in operating costs, which could damage our relationships with our customers and adversely affect us. In addition, we may be materially and adversely impacted as a result of increases in labor costs. A shortage in the labor pool or other general inflationary pressures or changes in applicable laws and regulations could increase labor costs, which could have a material adverse effect on us. Our labor costs include the cost of providing benefits for associates. We sponsor a number of defined benefit plans for our associates in most of the regions where we operate, including active health care, pension, retiree health and welfare, severance and other post-employment benefits. The annual cost of benefits can vary significantly from year to year and is materially affected by such factors as changes in the assumed or actual rate of return on major plan assets, a change in the weighted-average discount rate used to measure obligations, the rate or trend of health care cost inflation, and the outcome of collectively-bargained wage and benefit agreements.

We depend on the expertise of our senior management and skilled associates, and our business may be disrupted if we lose their services. Our senior management team possesses extensive operating experience and industry knowledge. We depend on our senior management to set our strategic direction and manage our business and we believe that their involvement is crucial to our success. Furthermore, our continued success depends upon our ability to attract and retain experienced professionals. Many of our associates are in entry level or part-time positions with historically high rates of turnover. Our ability to meet our labor needs while controlling the costs associated with hiring and training new associates is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics. The loss of the services of our senior management or our inability to recruit, train or retain a sufficient number of experienced associates could have an adverse effect on us, including our ability to successfully expand our operations. We do not maintain any key person insurance on any of our senior management or associates for these purposes. Our ability to retain senior management as well as experienced associates will in part depend on our having in place appropriate staff remuneration and incentive schemes. The remuneration and incentive schemes we have in place may not be sufficient for retaining the services of our experienced associates.

Compliance with environmental and other governmental laws and regulations could result in added expenditures or liabilities. Our operations are subject to federal, state and municipal laws, regulations and official standards, relating to the protection of the environment and natural resources.

26 In Mexico, we are subject to various Mexican federal, state and municipal environmental laws and regulations that govern physical discharges into the environment, as well as the handling and disposal of hazardous substances and wastes. Environmental laws impose liability and clean-up responsibility for releases of hazardous substances into the environment. We are subject to strict regulation in Mexico by, among other agencies, the Environmental and National Resources Ministry (Secretaría de Medio Ambiente y Recursos Naturales), the Labor and Social Security Ministry (Secretaría del Trabajo y Previsión Social), the Federal Environmental Protection Bureau (Procuraduría Federal de Protección al Ambiente) and the National Water Commission (Comisión Nacional del Agua). These agencies may initiate administrative proceedings for violations of environmental and safety ordinances and impose economic penalties on violators. Modifications of existing environmental laws and regulations or the adoption of more stringent environmental laws and regulations may result in the need for investments that are not currently provided for in our capital expenditures program and may otherwise result in a material adverse effect on us.

Recently approved amendments to Mexican tax laws may have an adverse effect on our financial condition and results of operations. On January 1, 2014, fundamental changes to Mexican tax laws that seek to support Mexican federal tax revenue became effective. We cannot predict the effects that these changes or other changes to tax regulations in Mexico will have on our company. These amendments maintained the current corporate tax rate, which had previously been scheduled for reduction, imposed withholding tax on dividends paid to Mexican and foreign shareholders, eliminated deductions that were previously allowed for related-party payments to certain foreign entities, limited tax deductions on salaries paid to employees, uniform the value-added tax rate throughout Mexico, required new monthly tax reports to be provided to governmental tax authorities and required the use of electronic invoices among others. It is expected that such reforms will adversely affect consumer disposable income levels and, therefore, consumer spending. Any decline in consumer spending could negatively affect our business and results of operations.

Financing to meet our future capital needs may not be available or sufficient on terms acceptable to us and/or at all. Our growth strategy may require financing by public or commercial banks, loans from other public or private financial institutions and offerings of securities in the debt capital markets. We may need additional financing to build new facilities, expand existing ones, undertake mergers and acquisitions, refinance our debt or for other purposes. Some of the financing agreements entered into by us and by our subsidiaries contain financial ratios and other customary covenants for transactions of this type which may limit our ability to incur additional debt. Global market and economic conditions are unpredictable and may continue to be so in the future. Debt capital markets have in the past been affected by significant losses in the international financial services industry and economic events in certain countries, among other factors. Changes in the credit and capital markets, including market disruptions, limited liquidity and interest rate fluctuations, may increase the cost of financing or restrict our access to potential sources of future liquidity. In addition, a decrease in the ratings that rating agencies assign to our short and long-term debt may negatively impact our access to the debt capital markets and increase our cost of borrowing. If our results of operations or operating ratios deteriorate to a point where we are not in compliance with our debt covenants, and we are unable to obtain a waiver, much of our debt would be in default and could become due and payable immediately. Our assets may not be sufficient to repay in full this indebtedness, resulting in a need for an alternate source of funding. We cannot make any assurances that we would be able to obtain funding on satisfactory terms, if at all. If we are not able to access the debt capital markets or if there are no funds available from public or private banks, or if such funds are provided on less favorable terms, we may not be able to meet our capital needs, or these needs may be limited or hampered, and we may not be able to (i) take advantage of certain business opportunities, (ii) respond to competitive pressures, (iii) fund needed capital expenditures, or (iv) fund required margin calls or margin deposits in connection with hedging transactions, any of which may adversely affect us.

27 We may incur additional indebtedness in the future that could adversely affect our financial health and our ability to satisfy our total outstanding debt obligations from our cash flow. After the offering of the notes, we may incur additional indebtedness that may have the following direct or indirect effects: • limit our ability to satisfy our obligations under the instruments governing our debt, including the notes; • limit our ability to pay dividends; • increase our vulnerability to adverse general economic and industry conditions; • require us to dedicate a portion of our cash flow from operations to servicing and repaying our indebtedness, which may place us at a competitive disadvantage with respect to our competitors with less debt; • limit our flexibility in planning for or reacting to changes in our business and the industry in which we operate; • limit, along with the financial and other restrictive covenants of our indebtedness, among other things, our ability to borrow additional funds; and • increase the cost of additional financing. Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations depends on our operating performance, which is, in turn, affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking equity capital. These strategies may not be instituted on satisfactory terms, if at all. In addition, certain of our financing arrangements and other instruments governing our debt obligations impose operating and financial restrictions on our business. These provisions may negatively affect our ability to react to changes in market conditions, take advantage of business opportunities we believe to be desirable, obtain future financing, fund needed capital expenditures, or overcome downturns in our business. In the future, we may from time to time incur substantial additional indebtedness. If we or our subsidiaries incur additional debt, the risks that we face as a result of our existing indebtedness could further intensify.

A material disruption in our computer systems could adversely affect our business or results of operations. We rely extensively on our computer systems and infrastructure to process transactions, summarize results and manage our business. Our computer systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, cyber-attack or other security breaches, catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism, and usage errors by our employees. In addition, a portion of our information technology systems and infrastructure are maintained by third-party service providers, over which we have no control. If our computer systems or the portion of our information technology systems and infrastructure maintained by third-party service providers are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our operations. Any material interruption in our computer systems could negatively affect our business and results of operations.

A privacy breach or failure to comply with consumer protection laws and regulations could result in negative publicity and adversely affect our business or results of operations. The protection of customer, employee, and company data is critical to us. The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements across business units. In addition, customers have a high expectation that we will adequately protect their personal information from cyber-attack or other security breaches. A significant breach of confidentiality obligations with respect to customer, employee, or company data could attract a substantial amount of media attention, damage our customer relationships and our reputation, and result in lost sales, fines, or lawsuits.

28 In addition, we are subject to laws and regulations related to consumer protection, particularly with respect to our marketing and promotional programs. We may be subject to penalties from the Mexican Consumer Protection Agency (Procuraduría Federal del Consumidor) if we use marketing materials with inaccurate or misleading information, which, in turn may have an adverse effect in our reputation, business, financial condition and results of operation.

Disruption of our supply chain and distribution network could adversely affect our operations. Our operations depend on the continuous operation of our supply chain and distribution network. Damage or disruption to our distribution capabilities due to weather, natural disaster, fire, electricity shortages, terrorism, pandemics, strikes, disputes with, or the financial and/or operational instability of, key suppliers, distributors, warehousing and transportation providers, or for other reasons could impair our ability to conduct our business. To the extent that we are unable, or it is not financially feasible, to mitigate interruptions in our supply chain, whether through insurance arrangements or otherwise, or their potential consequences, there could be an adverse effect on us, and additional resources could be required to restore our supply chain.

Risks Related to Mexico Our business and the results of our operations depend on economic, political and social conditions in Mexico. We are incorporated in Mexico, most of our assets are located in Mexico and most of our operations take place in Mexico. As a result, we are subject to political, economic, legal, tax and regulatory risks specific to Mexico, including the general condition of the Mexican economy, the devaluation of the peso as compared to other currencies, including the U.S. dollar, inflation in Mexico, interest rates, regulation, including antitrust regulation, taxation, expropriation, social instability, increasing crime rates and other political, social and economic developments in Mexico. Sales volumes and frequency of consumption of the products sold by us in Mexico depend on the development of Mexico’s gross domestic product, or GDP, the pace of government spending, the level of disposable income of consumers, and related macroeconomic factors affecting Mexico. Changes in Mexican macroeconomic conditions have a significant influence on the demand for the products we sell. Decreases in the growth rate of the Mexican economy, periods of negative growth, reduced government spending and its effect on disposable income and/or increases in inflation or interest rates may result in lower demand for the products we sell, lower real pricing of our services and products or a shift to lower margin products. As a result, our business, financial position and results of operations may be affected by the general condition of the Mexican economy, price instability, inflation, interest rates, regulations, taxation, social instability and other political, social and economic developments in Mexico, over which we have no control. Many countries in Latin America, including Mexico, have suffered significant economic, political and social crises in the past, and these events may occur again in the future. Instability in the region has been caused by many different factors, including: (i) significant governmental influence over local economies, (ii) substantial fluctuations in economic growth, (iii) high levels of inflation, (iv) changes in currency values, (v) exchange controls or restrictions on expatriation of earnings, (vi) high domestic interest rates, (vii) wage and price controls, (viii) changes in governmental economic or tax policies and regulations, (ix) imposition of trade barriers, (x) unexpected changes in regulation, and (xi) overall political, social and economic instability. In the past, Mexico has experienced prolonged periods of poor economic conditions. We cannot assure you that such conditions will not return or that such conditions will not have a material and adverse effect on our business, results of operations or financial condition.

Political events in Mexico could adversely affect our operations. Mexican political events may significantly affect our operations. On July 1, 2012, Mexico elected a new president from a political party previously in opposition, Enrique Peña Nieto of the Partido Revolucionario Institucional. 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 such proposed bills, including structural reforms related to energy, political elections, labor telecommunications, financial services and taxes. There is no certainty about the impact of such changes on Mexico’s economy or our business. Any such changes may have an adverse effect on us.

29 Mexico’s political, economic and social conditions could change as a result of a variety of reasons and we cannot predict the impact that any such change could have on the Mexican economy. Furthermore, we cannot provide any assurances that political, economic or social developments in Mexico, over which we have no control, will not have an adverse effect on our business, financial condition, results of operations and prospects.

Economic, political and social conditions in other countries may adversely affect our business, the market value of our securities and our results of operations. The Mexican economy and the market value of Mexican companies may be, to varying degrees, affected by economic and market conditions in other emerging market countries and in the United States. Furthermore, economic conditions in Mexico are highly correlated with economic conditions in the United States as a result of the North American Free Trade Agreement, or NAFTA, and increased economic activity between the two countries. Adverse economic conditions in the United States, the termination or re-negotiation of NAFTA in North America or other related events could have an adverse effect on the Mexican economy. Although economic conditions in other emerging market countries and in the United States may differ significantly from economic conditions in Mexico, investors’ reactions to developments in other countries may have an adverse effect on the market value of securities of Mexican issuers or of Mexican assets. There can be no assurance that future developments in other emerging market countries and in the United States, over which we have no control, will not have a material adverse effect on our business, results of operations, financial condition or prospects.

Inflation in Mexico, along with government measures to curb inflation, may have an adverse effect on our investments. Mexico historically has experienced levels of inflation that are higher than the annual inflation rates of its main trading partners. The annual rate of inflation, as measured by changes in the Mexican national consumer price index calculated and published by the Mexican Central Bank was 3.8% for 2011, 3.6% for 2012 and 4.0% for 2013. High inflation rates could adversely affect our business and results of operations by reducing consumer purchasing power, thereby adversely affecting consumer demand for the products we sell, increasing our costs beyond levels that we could pass on to our customers and by decreasing the benefit to us of revenues earned to the extent that inflation exceeds growth in our pricing levels.

Mexico has experienced a period of increasing criminal activity, and such activities could affect our business, results of operations and financial condition. Recently, Mexico has experienced a period of increasing criminal activity, primarily due to organized crime. These activities, their possible escalation and the violence associated with them may have a negative impact on the business environment in certain locations in which we operate, and therefore on our business, results of operations and financial condition.

High interest rates in Mexico could increase our financing costs. The year-average interest rates on 28-day Mexican government peso-denominated treasury bills (Certificados de la Tesorería de la Federación), were 4.2%, 4.2% and 3.8%, for 2011, 2012 and 2013, respectively. The year-average 28-day Interbank Equilibrium Interest Rate (Tasa de Interés Interbancaria de Equilibrio, or TIIE), was 4.8%, 4.8%, and 4.3% for 2011, 2012 and 2013, respectively. As a result of the weakening of economic activity in Mexico during 2013 and the inflation of 4.0%, the Central Bank of Mexico decreased its reference interest rate to 3.5% in October 2013, in an effort to encourage lending and stimulate the economy. In the medium-term, it is possible that the Mexican Central Bank will increase its benchmark interest rate. Accordingly, if we incur peso-denominated debt in the future, it could be at higher interest rates.

The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy. Changes in Mexican governmental policies could adversely affect our business, results of operations and financial condition. The Mexican federal government has exercised, and continues to exercise, significant influence over the Mexican economy. Accordingly, the actions and policies of the Mexican federal governmental concerning the economy, state owned enterprises and state controlled, funded or influenced financial institutions could have a

30 significant impact on private sector entities in general and on us in particular, and on market conditions, prices and returns on Mexican securities. See ‘‘Business—Governmental and Environmental Regulation.’’ The Mexican government has in the past intervened in the local economy and occasionally made significant changes in policies and regulations, which it could continue to do in the future. Such actions to control inflation and other regulations and policies have involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, limits on imports and other actions. Our business, financial condition, results of operations and our ability to comply with our obligations under the notes may be adversely affected by changes in governmental policies or regulations involving or affecting our management, our operations and our tax regime. In the past, the Mexican economy has experienced balance of payment 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 denominated obligations and could also have a material adverse effect on our business, financial condition and results of operations. Tax legislation, in particular, in Mexico is constantly subject to change, such as the increases in tax rates resulting from the enactment of the Mexican tax legislation in effect as of January 2014, and the Mexican government may continue to make changes to it or any of its existing political, social, economic or other policies, which changes may have a material adverse effect on our business, results of operations, financial condition or prospects or may adversely affect our ability to comply with the obligations under the notes.

Risks Related to the Notes There is no existing market for the trading of the notes, and we cannot assure you that you will be able to sell your notes in the future. The notes will constitute a new issue of securities. Prior to the offering of the notes there has been no public market and the notes may not be widely distributed. Accordingly, an active trading market for the notes may not develop. If a market for the notes offered hereby does develop, the price of such notes may fluctuate and liquidity may be limited. If a market for the notes offered hereby does not develop, purchasers may not be able to resell such notes for an extended period of time, if at all. Although we have applied to the Irish Stock Exchange for the notes to be admitted to the Official List and trading on the Global Exchange Market, which is the exchange regulated market of the Irish Stock Exchange, we cannot provide you with any assurances regarding the future development of a market for the notes, the ability of holders of the notes to sell their notes, or the price at which such holders may be able to sell their notes. If such a market were to develop, the notes could trade at prices that may be higher or lower than the initial offering price depending on many factors, including prevailing interest rates, our results of operations and financial condition, political and economic developments in and affecting Mexico and the markets for similar securities. The initial purchasers have advised us that they currently intend to make a market in the notes but they are not under any obligation to do so, and any market-making with respect to the notes may be discontinued at any time without notice at the sole discretion of the initial purchasers. In addition, trading or resale of the notes (or beneficial interests therein) may be negatively affected by other factors described in this offering memorandum, either arising from this transaction or from the market for securities of Mexican issuers generally. As a result, we cannot assure you of the level of liquidity of any trading market for the notes and, as a result, you may be required to bear the financial risk of your investment in the notes indefinitely.

The notes are subject to transfer restrictions, which could limit your ability to resell your notes. The notes have not been registered under the Securities Act or any U.S. state securities laws or the Mexican Securities Market Law 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 and applicable U.S. state securities laws. These exemptions include those for

31 offers and sales that occur outside the United States in compliance with Regulation S under the Securities Act and in accordance with any applicable securities laws of any other jurisdiction and for sales to qualified institutional buyers, as defined under Rule 144A of the Securities Act. For a discussion of certain restrictions on resale and transfer, see ‘‘Transfer Restrictions.’’

We are a holding company. We don’t generate revenue ourselves, and depend on dividends and other financial resources from our subsidiaries to fund our operations and pay dividends, should we determine to do so. We are a holding company and conduct all of our operations through our subsidiaries. We have no material assets other than the shares of our subsidiaries. Consequently, our ability to fund our operations, pay our debt and, to the extent that we decide to do so, pay dividends, primarily depends on our subsidiaries’ ability to generate revenue and pay dividends and make other distributions to us. Our subsidiaries are separate and distinct legal entities. Any dividend payment, distribution, credit or advance from our subsidiaries is limited by the general provisions of Mexican legislation regarding the distribution of corporate earnings and may be limited pursuant to contractual restrictions. The payment of dividends by our subsidiaries also depends on their earnings and business considerations. In addition, our right to receive any assets from any subsidiary upon its reorganization or liquidation, in our capacity as a shareholder of such subsidiary, will be effectively subordinated to the rights of such subsidiary’s creditors, including trade creditors.

We may not be able to fulfill our repurchase obligations with respect to the notes upon a change of control. If we experience certain change of control events, we are required by the indenture governing the notes to offer to repurchase all outstanding notes at a repurchase price equal to 101% of the principal amount of notes repurchased, plus accrued and unpaid interest, if any, to the applicable repurchase date. If a change of control event were to occur, we may not have sufficient funds to repay any notes tendered for purchase or that would become immediately due and payable as a result of such change of control event. We may require additional financing from third parties to fund any such repurchases, and we may not be able to obtain additional financing on satisfactory terms or at all. Our failure to repay holders who tender notes for repurchase following a change of control event could result in an event of default under the indenture governing the notes and under the instruments governing our other financings.

Payments of judgments against us on the notes would be in pesos. In the event that proceedings are brought against us or the subsidiary guarantor in Mexico, either to enforce a judgment or as a result of an original action brought in Mexico, we and the subsidiary guarantor would not be required to discharge those obligations in a currency other than Mexican currency. Under the Monetary Law of the United Mexican States (Ley Monetaria de los Estados Unidos Mexicanos), an obligation, whether resulting from a judgment or by agreement, denominated in a currency other than Mexican pesos, which is payable in Mexico, may be satisfied in Mexican pesos at the rate of exchange in effect at the time and place of payment or judgment. Such rate is currently determined by the Mexican Central Bank and published every banking-business day in the Mexican Federal Official Gazette. As a result, you may suffer a United States dollar shortfall if you obtain a judgment or a distribution in bankruptcy in Mexico and we elect to make payments due under the notes in Mexican pesos.

It may be difficult to enforce civil liabilities against us or our directors, executive officers and controlling persons. Our company and the subsidiary guarantor are organized under the laws of Mexico. Most of our directors, executive officers and controlling persons, and most of the directors and officers of the subsidiary guarantor, reside outside of the United States. A significant portion of our assets and the assets of the subsidiary guarantor are located, and a majority of our revenues and the revenues of the subsidiary guarantor are derived from sources, outside the United States. Certain of the experts named in this offering memorandum also reside outside the United States. As a result, it may not be possible for you to effect service of process upon such persons or entities outside Mexico, as the case may be. In addition, we have been advised by our Mexican counsel, Ritch, Mueller, Heather y Nicolau, S.C., that there is doubt as to the enforceability, in original actions in Mexican courts or in actions for enforcement of judgments obtained in courts of jurisdictions outside Mexico, of liabilities predicated solely on U.S. federal securities laws or the securities laws of any jurisdiction outside Mexico and as

32 to the enforceability in Mexican courts of judgments of U.S. courts obtained in actions predicated upon the civil liability provisions of U.S. federal securities laws. No treaty is currently in effect between the United States and Mexico that covers the reciprocal enforcement of foreign judgments. As a result, creditors of indebtedness incurred under instruments governed by Mexican law may be in a better position to enforce their rights against us in connection with judgments obtained from Mexican courts predicated on civil liabilities under Mexican laws. The notes are not secured by our assets and the notes and the subsidiary guarantee will be effectively subordinated to our and the subsidiary guarantor’s secured debt. The notes will be our senior unsecured debt and the subsidiary guarantee will be the unsecured obligation of the subsidiary guarantor, and will rank equally in right of payment with all of our and the subsidiary guarantor’s other existing and future unsubordinated debt, respectively. The notes and the subsidiary guarantee will be effectively junior to any existing secured debt or secured debt we may incur in the future and to the future secured debt of the subsidiary guarantor. As of June 30, 2014, our total consolidated indebtedness was Ps.13,521 million (U.S.$1,042 million), all of which constituted unsecured indebtedness. Because the notes are our unsecured obligations, if an event of default occurs under any future secured debt, or in the event that we or the subsidiary guarantor becomes subject to a dissolution, bankruptcy (quiebra), liquidation or insolvency proceeding (concurso mercantil), any secured debt holders would be paid before you receive any amounts due under the notes to the extent of the value of the assets securing their debt and creditors of our non-guarantor subsidiaries may also be paid before you receive any amounts due under the notes or the subsidiary guarantee. In that event, you may not be able to recover any principal or interest you are due under the notes or the subsidiary guarantee. Further, if any assets did remain after payment of these secured creditors, 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 of the same class as the notes, and potentially all other general creditors who would participate ratably with holders of the notes. Furthermore, the notes will be subordinated to obligations given preference by mandatory provisions of Mexican law (including certain claims relating to taxes and labor). The notes and the subsidiary guarantee will be structurally subordinated to the liabilities of our non-guarantor subsidiaries. The notes will only be guaranteed by the subsidiary guarantor. Therefore, the notes and the subsidiary guarantee will be the unconditional and unsecured obligation of the subsidiary guarantor only and are structurally subordinated to all existing and future liabilities of our other non-guarantor subsidiaries in respect of the assets and revenues of such non-guarantor subsidiaries. As of June 30, 2014, our total consolidated indebtedness was Ps.13,521 million (U.S.$1,042 million), all of which constituted unsecured indebtedness. As of such date, our non-guarantor subsidiaries had no indebtedness (other than intercompany indebtedness). The non-guarantor subsidiaries are separate legal entities and have no obligation, contingent or otherwise, to pay any amounts due under any the notes or to make any funds available to us for such purpose. The payment of dividends and other distributions by such non-guarantor subsidiaries will be subject to legal and, in certain instances, contractual restrictions and will depend upon the earnings and cash flow of each non-guarantor subsidiary, which are speculative. In the event of a bankruptcy, liquidation or dissolution of one or more of our subsidiaries, following payment by such subsidiaries of their liabilities, they may not have sufficient assets to make payments to us. We and the subsidiary guarantor hold a limited portion of our total consolidated assets and account for a limited portion of our consolidated EBITDA. For the year ended December 31, 2013, our and the subsidiary guarantor’s aggregate EBITDA and the aggregate EBITDA of our non-guarantor subsidiaries (in each case, without giving effect to intercompany eliminations) was Ps.7,124 million (U.S.$546 million) and Ps.5,412 million (U.S.$415 million), respectively, or 56.8% and 43.2% of our consolidated EBITDA, respectively. As of December 31, 2013, the total assets of our company and the subsidiary guarantor was Ps.53,891 million (U.S.$4,133 million), or 56.8% of our consolidated total assets, and the aggregate total assets of our non-guarantor subsidiaries was Ps.41,045 million (U.S.$3,148 million), or 43.2% of our consolidated total assets. Further, our consolidated financial information included in this offering memorandum may be of limited use in assessing the financial position of the subsidiary guarantor.

33 The subsidiary guarantee may not be enforceable against the subsidiary guarantor. The notes will be fully and unconditionally guaranteed by the subsidiary guarantor; however, it is possible that the subsidiary guarantee may not be enforceable under Mexican law. While Mexican law does not prohibit the giving of guarantees and, as a result, does not prevent the guarantee of the notes from being valid, binding and enforceable against the subsidiary guarantor, in the event that the subsidiary guarantor becomes subject to an insolvency proceeding (concurso mercantil) or to bankruptcy (quiebra), the creditors of the subsidiary guarantor may challenge the validity of the subsidiary guarantee on the grounds that the subsidiary guarantor did not receive fair consideration in exchange for such guarantee.

If we or the subsidiary guarantor were to be declared insolvent or bankrupt, holders of notes may find it difficult to collect payment on the notes. Under the Mexican Business Reorganizations Law (Ley de Concursos Mercantiles), if we are or the subsidiary guarantor is declared bankrupt (en quiebra) or subject to insolvency proceedings (concurso mercantil), our obligations under the notes and the obligations of such subsidiary guarantor under the subsidiary guarantee, respectively, (i) would be converted to pesos and then from pesos into unidades de inversión, or UDIs, which is a Mexican synthetic unit adjusted by inflation, and would not be adjusted to take into account any devaluation of the peso relative to the U.S. dollar occurring after such conversion, (ii) would cease to accrue interest from the date the insolvency proceeding (concurso mercantil) is declared, (iii) would be subject to the outcome of, and priorities recognized in, the relevant proceedings (including statutory preferences for tax, social security and labor claims) and (iv) would be satisfied at the time claims of all our unsecured creditors are satisfied.

The collection of interest on interest may not be enforceable in Mexico. Mexican law does not permit the collection of interest on interest and, as a result, the accrual of default interest on past-due ordinary interest accrued in respect of the notes may be unenforceable in Mexico.

34 USE OF PROCEEDS We estimate that the net proceeds from this offering, after deducting the underwriting discount and other estimated expenses payable in connection with this offering, will be approximately U.S.$293 million. We intend to use the net proceeds of this offering for general corporate purposes, including to repay existing indebtedness and finance capital expenditures.

35 EXCHANGE RATES Mexico has had a free market for foreign exchange since the end of 1994 and Mexican Central Bank allows the peso to float freely against the U.S. dollar and other foreign currencies. As a result, policy has evolved toward an inflation targeting regime and Mexican Central Bank intervenes directly in the foreign exchange market only to reduce excessive short-term volatility. Mexican Central Bank, as an autonomous authority, recognizes price stability as its fundamental goal and implements monetary policy using a target for the overnight interest rate charged in the interbank market. An interest rate regime became effective on January 21, 2008, and substituted the regime based on daily balances known as the ‘‘corto.’’ As part of the interest rate target regime, open market operations (liquidity auctions) aim to provide the incentives for commercial banks to keep their accounts at the Mexican Central Bank with a balance of zero at the daily market closing, in an environment where the overnight rate equals the target rate. The Mexican Central Bank provides or withdraws liquidity as needed to meet its target rate through these operations. Positive balances in the accounts kept by commercial banks at the Mexican Central Bank are not paid interest, while overdrafts or negative balances are charged twice the overnight interest rate target. An increase in interest rates can make domestic financial assets more attractive to investors than foreign financial assets, which could trigger an appreciation of the nominal exchange rate and vice versa. There can be no assurance that the Mexican government will maintain its current policies with respect to the peso or that the peso will not depreciate significantly in the future. The Mexican economy has suffered balance of payment deficits and shortages in foreign exchange reserves in the past. While the Mexican government, for more than 15 years, has not restricted the ability of Mexican and foreign individuals or entities to convert pesos to U.S. dollars, we cannot assure you that the Mexican government will not institute restrictive exchange control policies in the future. To the extent that any such restrictive exchange control policies were to be instituted in the future in the event of shortages of foreign currency, our ability to transfer or convert pesos into U.S. dollars and other currencies to service our foreign currency obligations would be adversely affected and foreign currency may not be available without substantial additional cost. The following table sets forth, for the periods indicated, the period-end, average, high and low exchange rate between the Mexican peso and U.S. dollar, based on buying rates published by the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York. The annual rates presented in the following table were calculated by using the average of the exchange rates on the last day of each month during the relevant period and the monthly rates were calculated by using the daily average of the exchange rates on each day during the relevant period. All amounts are stated in pesos, and we have not restated the rates in constant currency units. We make no representation that the peso amounts referred to in this offering memorandum actually represent U.S. dollar amounts or that we earn revenue in U.S. dollars, or that such peso amount could have been or could be converted into U.S. dollars at any particular rate or at all. See ‘‘Risk Factors—Risks Factors Related to our Business and Industry—Our business and financial performance may be adversely affected by risks inherent in international operations’’ and ‘‘—Currency fluctuations may adversely affect us.’’ On September 12, 2014, the exchange rate between the peso and U.S. dollar was Ps.13.25 to U.S.$1.00. The exchange rates in this table are provided solely for reference of the investors. Exchange Rate Low High Period Average Period End Year: 2009 ...... 12.63 15.41 13.58 13.06 2010 ...... 12.16 13.19 12.64 12.38 2011 ...... 11.51 14.25 12.46 13.95 2012 ...... 12.63 14.37 13.14 12.96 2013 ...... 11.98 13.43 12.86 13.10 Month ended: January 31, 2014 ...... 13.00 13.46 13.22 13.36 February 28, 2014 ...... 13.20 13.51 13.29 13.23 March 31, 2014 ...... 13.06 13.33 13.19 13.06 April 30, 2014 ...... 12.95 13.14 13.07 13.08 May 30, 2014...... 12.85 13.05 12.93 12.86 June 30, 2014...... 12.88 13.09 12.99 12.97 July 31, 2014 ...... 12.93 13.24 12.99 13.24 August 29, 2014 ...... 13.05 13.28 13.14 13.07

36 CAPITALIZATION The following table sets forth our capitalization and indebtedness under IFRS as of June 30, 2014 on (i) an actual basis and (ii) as adjusted to give effect to the issuance of the notes offered hereby and the use of the proceeds thereby. This table should be read in conjunction with, and is qualified in its entirety by reference to, ‘‘Use of Proceeds,’’ ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations,’’ ‘‘Selected Financial and Other Information’’ and our unaudited condensed consolidated interim financial statements included elsewhere in this offering memorandum.

As of June 30, 2014 As of June 30, 2014 Unaudited Actual As adjusted Actual As adjusted (in millions of U.S.$)(1)(2) (in millions of Ps.)(2) Debt: Denominated in U.S. dollars: 3.24% Loan Facility(3) ...... 46 46 600 600 3.950% Senior Notes due 2024 ...... — 300 — 3,891 Total...... 46 346 600 4,491 Denominated in Mexican pesos: 9.36% Notes (certificados bursátiles) due 2018 ...... 77 77 1,000 1,000 7.64% Notes (certificados bursátiles) due 2022 ...... 146 146 1,900 1,900 4.22% Notes (certificados bursátiles) due 2020(4) ...... 58 58 750 750 8.53% Notes (certificados bursátiles) due 2020 ...... 173 173 2,250 2,250 TIIE + 0.35% Notes (certificados bursátiles) due 2017 ...... 162 162 2,100 2,100 TIIE + 0.04% Notes (certificados bursátiles) due 2014 ...... 309 309 4,000 4,000 CS Credit Facility ...... 71 71 921 921 Total...... 996 996 12,921 12,921 Total Debt ...... 1,042 1,342 13,521 17,412

Less current portion of long-term debt ...... 355 355 4,600 4,600 Less estimated debt issuance costs...... — 7 — 91 Long-term debt ...... 687 980 8,921 12,721

Total stockholders’ equity ...... 4,438 4,438 57,559 57,559 Total capitalization ...... 5,480 5,780 71,080 74,971 Total debt as a percentage of total capitalization ...... 19.0% 23.2% 19.0% 23.2%

(1) The U.S. dollar amount for debt denominated in U.S. dollars represents the outstanding balance in Mexican peso of such debt as of the relevant date registered in the audited consolidated financial statements or in the unaudited condensed consolidated interim financial statements, respectively, translated to U.S. dollars using the convenience translation exchange rate used throughout this offering memorandum. (2) Except percentages. (3) All amounts outstanding under this credit facility were repaid in full on July 1, 2014. (4) Translated to Mexican pesos for convenience only at the rate of Ps.5.13 per 1.00 UDI, the rate reported as of June 30, 2014 by the Mexican Central Bank.

37 SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION The following tables present our selected consolidated financial and operating information, as of the dates and for each of the periods indicated. This information should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements, including the notes thereto, contained elsewhere in this offering memorandum and the ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ section of this offering memorandum. The consolidated financial information as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 has been derived from our audited consolidated financial statements contained elsewhere in this offering memorandum. The consolidated financial information as of June 30, 2014 and for the three and six months ended June 30, 2014 and 2013 has been derived from our unaudited condensed consolidated interim financial statements contained elsewhere in this offering memorandum. The results of operations for the six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other period. Our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements have been prepared in accordance with IFRS and our audited consolidated financial statements have been audited in accordance with International Auditing Standards. We are not providing any reconciliation to U.S. GAAP of our consolidated financial statements or other financial information in this offering memorandum. We cannot assure you that a reconciliation would not identify material quantitative differences between our consolidated financial statements and other financial information as prepared on the basis of IFRS if such information were to be prepared on the basis of U.S. GAAP. Our consolidated financial statements are stated in Mexican pesos. Certain financial information concerning us as of and for the year ended December 31, 2013 and the six months ended June 30, 2014 included in this offering memorandum is presented in U.S. dollars for the convenience of the investors. See ‘‘Presentation of Financial and Other Information—Currency.’’ For additional information regarding financial information presented in this offering memorandum, see ‘‘Presentation of Financial and Other Information.’’

38 Six Months Ended June 30, Year Ended December 31, 2014 2013 Unaudited 2013 2012 2011 (in thousands (in thousands CONSOLIDATED STATEMENTS of U.S. of U.S. OF COMPREHENSIVE INCOME dollars)(1)(2) (in thousands of Ps.)(2) dollars)(1)(2) (in thousands of Ps.)(2) Operating revenue: Net sales of merchandise ...... 2,277,380 29,537,614 27,415,598 4,898,102 63,528,386 57,017,252 50,881,125 Interest income from customers ...... 310,709 4,029,899 3,619,019 447,940 5,809,777 5,352,964 4,577,386 Leasing of investment property ...... 100,776 1,307,067 1,117,287 198,896 2,579,680 2,115,854 1,731,041 Services ...... 2,392 31,029 42,226 168,666 2,187,601 1,760,434 1,467,257 Total revenue ...... 2,691,257 34,905,609 32,194,130 5,713,604 74,105,444 66,246,504 58,656,809

Costs and expenses: Cost of sales ...... 1,605,685 20,825,736 19,279,245 3,402,804 44,134,370 39,526,608 34,932,775 Administrative expenses ...... 802,775 10,411,987 9,133,220 1,495,588 19,397,781 16,756,502 14,700,673 Total costs and expenses ...... 2,408,460 31,237,723 28,412,465 4,898,392 63,532,151 56,283,110 49,633,448

Other income - net ...... 11,692 151,639 119,652 20,261 262,789 342,682 204,454

Operating income ...... 294,489 3,819,525 3,901,317 835,473 10,836,082 10,306,076 9,227,815

Finance costs ...... (39,125) (507,451) (506,137) (83,955) (1,088,892) (985,129) (847,293) Finance income...... 3,875 50,263 77,363 14,031 181,983 200,660 227,312 Foreign exchange (loss) gain - net ...... 513 6,648 (3,884) (2,948) (38,236) 12,776 (7,669) Share of profits of associates ...... 20,672 268,119 278,350 39,322 510,011 414,941 304,727 Profit before income tax ...... 280,424 3,637,104 3,747,009 801,923 10,400,948 9,949,324 8,904,892 Income taxes ...... 72,987 946,645 931,120 208,027 2,698,115 2,750,744 2,360,947

Consolidated net income ...... 207,437 2,690,459 2,815,889 593,896 7,702,833 7,198,580 6,543,945

Other items comprising comprehensive income: Cash flow hedges ...... 3,149 40,848 31,000 5,120 66,404 95,026 (20,145) Other movements in equity ...... 35 457 — 3,977 51,576 — — Actuarial loss on post-employment benefit obligations ...... — — — 5,185 67,247 (123,614) (112,280)

Consolidated comprehensive income .... 210,621 2,731,764 2,846,889 608,178 7,888,060 7,169,992 6,411,520

Net income attributable to: Owners of the parent ...... 207,337 2,689,167 2,815,397 593,826 7,701,930 7,197,700 6,543,365 Non-controlling interests ...... 100 1,292 492 70 903 880 580 Total...... 207,437 2,690,459 2,815,889 593,897 7,702,833 7,198,580 6,543,945 Basic and diluted earnings per share . . . . . U.S.$0.15 Ps.2.00 Ps.2.10 U.S.$0.44 Ps.5.73 Ps.5.36 Ps.4.88

Comprehensive income attributable to: Owners of the parent ...... 2,730,472 2,846,397 7,887,738 7,169,382 6,410,689 Non-controlling interests ...... 1,292 492 322 610 831 Total...... 210,622 2,731,764 2,846,889 608,177 7,888,060 7,169,992 6,411,520 Basic and diluted earnings per share . . . . . U.S.$0.16 Ps.2.03 Ps.2.12 U.S.$0.45 Ps.5.87 Ps.5.34 Ps.4.78

Weighted average number of shares outstanding ...... 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100 1,342,196,100

(1) Translated to U.S. dollars for convenience only at the rate of Ps.12.97 per U.S.$1.00, the exchange rate reported on June 30, 2014 by the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York. See ‘‘Exchange Rates.’’ (2) Except basic and diluted earnings per share and weighted average number of shares outstanding.

39 As of June 30, As of December 31, 2014 Unaudited 2013 2012 2011 (in thousands (in thousands of U.S. (in thousands of U.S. dollars)(1) of Ps.) dollars)(1) (in thousands of Ps.) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Assets Current assets: Cash and cash equivalents ...... 42,672 553,458 124,754 1,618,060 2,910,124 2,565,515 Loan portfolio - net...... 1,449,010 18,793,664 1,652,792 21,436,709 17,561,620 15,990,126 Value added tax recoverable - net ...... 84,177 1,091,775 80,421 1,043,057 994,584 919,275 Income tax recoverable - net...... 62,201 806,745 62,807 814,611 402,997 — Other accounts receivable - net ...... 41,852 542,815 46,034 597,059 920,354 850,984 Inventories ...... 981,567 12,730,921 880,645 11,421,969 10,558,247 10,109,023 Derivative financial instruments...... — — 598 7,759 — — Prepaid expenses ...... 87,951 1,140,721 47,601 617,387 520,160 502,599 Total current assets ...... 2,749,430 35,660,099 2,895,652 37,556,611 33,868,086 30,937,522 Non-current assets: Long - term loan portfolio - net...... 559,929 7,262,284 520,012 6,744,558 6,389,578 4,768,474 Other accounts receivable - net ...... 12,359 160,295 10,881 141,132 172,117 158,646 Derivative financial instruments...... 23,775 308,361 24,064 312,114 318,364 240,100 Investments in associates ...... 377,454 4,895,581 355,964 4,616,854 4,007,211 3,568,978 Intangible assets - net ...... 137,548 1,783,993 138,312 1,793,911 1,503,847 927,142 Investment properties - net ...... 1,162,505 15,077,688 1,097,439 14,233,786 12,360,087 10,102,793 Property, furniture and equipment - net ...... 2,281,391 29,589,636 2,240,113 29,054,263 26,490,563 22,319,405 Employee benefits-net ...... 36,948 479,216 37,293 483,675 — — Total non-current assets ...... 4,591,909 59,557,054 4,424,078 57,380,293 51,241,767 42,085,538

Total assets...... 7,341,339 95,217,153 7,319,730 94,936,904 85,109,853 73,023,060

Liabilities and stockholders’ equity Current liabilities: Suppliers ...... 795,282 10,314,813 883,143 11,454,374 10,288,069 9,583,759 Provisions ...... 108,792 1,411,037 98,893 1,282,636 1,501,543 1,392,432 Deferred income...... 112,792 1,462,914 118,815 1,541,032 1,480,314 1,338,544 Creditors...... 380,494 4,935,013 400,102 5,189,318 4,446,520 4,145,308 Income tax payable...... — — — — 138 Bank borrowings ...... 46,261 600,000 155,060 2,011,128 — — Senior notes (certificados bursátiles) ...... 308,404 4,000,000 308,404 4,000,000 — — Derivative financial instruments...... 6,204 80,471 11,410 147,983 — — Total current liabilities...... 1,758,229 22,804,248 1,975,827 25,626,471 17,716,446 16,598,192 Non-current liabilities: Long - term bank borrowings ...... 71,045 921,456 71,045 921,456 921,456 921,456 Long - term senior notes (certificados bursátiles) . . . . 616,808 8,000,000 616,808 8,000,000 12,000,000 8,000,000 Derivative financial instruments...... 11,066 143,511 9,298 120,599 341,237 357,999 Employee benefits - net ...... 30,292 392,882 27,406 355,459 398,645 265,004 Deferred income tax ...... 416,034 5,395,960 392,104 5,085,587 4,202,359 3,621,420 Total non-current liabilities ...... 1,145,245 14,853,809 1,116,661 14,483,101 17,863,697 13,165,879

Total liabilities ...... 2,903,474 37,658,057 3,092,488 40,109,572 35,580,143 29,764,071

Stockholders’ equity: Capital stock ...... 260,161 3,374,282 260,161 3,374,282 3,374,282 3,374,282 Retained earnings: ...... Prior years’ ...... 3,881,900 50,348,239 3,288,038 42,645,852 37,919,186 32,398,436 For the period ...... 207,337 2,689,167 593,826 7,701,930 7,197,700 6,543,365 Capital reserves ...... 88,186 1,143,767 85,036 1,102,919 1,036,515 941,489 Stockholders’ equity attributable to parent company. . . . . 4,437,584 57,555,455 4,227,061 54,824,983 49,527,683 43,257,572 Non-controlling interest ...... 281 3,641 181 2,349 2,027 1,417

Total stockholders’ equity...... 4,437,865 57,559,096 4,227,242 54,827,332 49,529,710 43,258,989

Total liabilities and stockholders’ equity ...... 7,341,339 95,217,153 7,319,730 94,936,904 85,109,853 73,023,060

(1) Translated to U.S. dollars for convenience only at the rate of Ps.12.97 per U.S.$1.00, the exchange rate reported on June 30, 2014 by the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York. See ‘‘Exchange Rates.’’

40 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read together with our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements, including the notes thereto, contained elsewhere in this offering memorandum. Our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements contained elsewhere in this offering memorandum have been prepared in accordance with IFRS, which differs in certain significant respects with U.S. GAAP. See ‘‘Presentation of Financial and Other Information—Financial Statements.’’ Our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements are stated in Mexican pesos. Certain financial information concerning us as of and for the year ended December 31, 2013 and the six months ended June 30, 2014 included in this offering memorandum is presented in U.S. dollars solely for the convenience of the reader.

Overview We are the largest department store chain in Mexico in terms of number of stores and sales. We offer a wide variety of consumer products, including distinctive fashion apparel, shoes, accessories, jewelry, electronics, sporting goods, household articles, furniture, cosmetics and books. We were established in 1847 and currently operate 104 department stores nationwide under the ‘‘Liverpool,’’ ‘‘Fábricas de Francia’’ and ‘‘Liverpool Duty Free’’ names. Our brand ‘‘Liverpool’’ is iconic in Mexico and is ranked among the top five Latin American brands in the retail industry and among the top 20 brands in the retail industry worldwide, according to Interbrand. We also own or have a significant interest in 22 shopping centers in 16 cities in Mexico and, according to information from the Mexican Central Bank and our estimates, as of April 30, 2014 we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million credit card holders. Our stores are primarily located in upscale mixed-use and regional malls catering to middle and high-income families in Mexico. Through our customer-centric and omni-channel strategy we have established a leading market position in the Mexican department store industry according to Euromonitor. Our customer-centric strategy ensures that our customers find an assortment of merchandise, sizes, marketing programs, credit offers and shopping experiences that are custom-tailored to their needs. Our omni-channel strategy allows our customers to shop seamlessly through our different distribution channels while consistently experiencing our brand.

Factors Affecting our Results of Operations Our consolidated revenues derive from our commercial, consumer credit and real estate operations, and are impacted by general economic conditions, industry conditions, competition with other retail participants, and other factors, including promotions, seasonality, new stores in operations, store size, product mix, and the effectiveness of our advertising campaigns. The primary factors that impact our results of operations are: • Commercial Operations. Seasonality—Our sales are seasonal, with a high proportion of revenues and operating cash flows generated during the fourth fiscal quarter, which includes the fall and holiday selling seasons. In addition, sales volumes in our department stores are higher during the months of May, June, November and December due to Mother’s Day, Father’s Day, the ‘‘Buen Fin’’ (a weekend in late November of each year during which various commercial businesses, including our company, offer sales and discounts to encourage consumer spending in Mexico) and year-end holidays. Promotions—We offer a wide range of promotions, most of which are shared and supported by our suppliers. As part of said promotions we receive rebates from suppliers as reimbursement of discounts granted to customers. Other promotions involve benefits granted to our customers through e-wallets, the value of which is referred to as a percentage of the price of the merchandise sold. E-wallets can be used by customers to pay for future purchases at our department stores. We deduct the amount of money granted to our customers in e-wallets from our revenue.

41 Merchandise Mix—Our margins vary among the category of products and brands we sell. As a result, our merchandise mix impacts our results of operations from one period to another, depending on the merchandise mix and the increase in the demand for specific products during different times of the year or in different regions. • Consumer Credit Operations. We believe that our credit offerings increase our customer base for our retail operations, enhance our ability to sell additional products and build lasting trust and loyalty with our customers. Besides acting as a catalyst for further growth of our commercial and real estate operations, we believe that our consumer credit offerings will increasingly become a source of independent income through the expansion of our credit card portfolio and enhancement of our offerings of financial products and services. For the last three fiscal years, approximately 50.0% of merchandise sales were paid for by our customers with the Liverpool and Fábricas de Francia credit cards and the other 50.0% were settled in cash or through other bank debit or credit cards. We frequently monitor recovery of our loan portfolio using a broad range of statistical tools which take into account different factors, including historical trends of portfolio aging, record of cancellations and factors correlative to future credit performance, such as trends in unemployment rates in Mexico. During challenging economic times with high unemployment rates, we restrict our credit offerings, as well as credit limits of existing customers to avoid the excessive growth of our loan portfolio and non-performing loans rate. We apply consistent policies and procedures to create and increase the provision for impairment of our loan portfolio, as well as to write off unrecoverable loans. • Real Estate Operations. We have diversified base premises that are leased to third parties in our malls and stores. Historically, our retail premises have had occupancy rates above 95.0% and the rent-related uncollectible rate has historically remained below 2.0%. While we seek to continue developing our real estate operations as an independent source of revenue, we expect that such operations will continue to be an important complement to our commercial operations by providing high-profile facilities to attract an increasing number of potential customers for our department stores. The main factors that affect our operating and other costs and expenses include: Cost of Sales. Our most significant costs of sales include cost of merchandise, cost of distribution and logistics, services contracted, costs related to our workforce and maintenance and repairs. General Expenses. Our most significant general expenses include personnel compensation and benefits, depreciation and amortization, advertising and promotion, leases, electrical power and utilities, provision for impairment of loan portfolio and other selling, general and administrative expenses. Foreign exchange rates. Our consolidated financial statements are stated in Mexican pesos. We generate revenue primarily in Mexican pesos; however, a portion of our operating expenses and indebtedness denominated in U.S. dollars and euros, particularly with respect to imports of merchandise from Europe and Asia. As a result, differences in the currency exchange rate can impact our financial statements. We estimate that approximately 18.0% of our purchases in 2013 were denominated in, or linked to, the U.S. dollar.

Critical Accounting Policies The preparation of financial statements in conformity with IFRS requires that management make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results could differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The critical accounting policies used in the preparation of our consolidated financial statements included elsewhere in this offering memorandum are those that are important both to the presentation of financial condition and results of operations, as well as those that require significant judgments with regard to estimates used in arriving at recognition of amounts in the financial statements.

42 We disclose our significant accounting policies in the notes accompanying our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements included elsewhere in this offering memorandum. The following policies affect the more significant estimates and judgments used in the preparation of our financial statements and changes in these judgments and estimates may impact our future results of operations and financial condition.

Critical accounting judgments The following is a summary of the most essential judgments, aside from those that involve estimates (see note 4.2 to our audited consolidated financial statements) made by our management in applying our accounting policies and that have a significant effect on the amounts recognized in our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements.

Revenue recognition - sales at months without interest Notes 2.22a and 2.22c to our audited consolidated financial statements describe our policies for recording sales at months without interest. The above implies that our management used its judgment to identify the interest rate applicable to calculate the present value of sales at months with no interest. To determine our discounted cash flows, we use an imputed interest rate, taking into account the rate that can best be determined between (i) the rate prevailing in the market for a similar instrument available to our customers with a similar credit rating, or (ii) the interest rate that equals the nominal value of the sale, duly discounted, at the cash price of the merchandise sold. In making its judgment, our management considered the interest rates used by the main banking institutions in Mexico when financing programs of sales at months without interest.

Consolidation of structure entities We evaluate the control indicators established by IFRS 10 ‘‘Consolidated financial statements,’’ for consolidation of the trust in which we have no shareholding; however, the activities, decision making and economic aspects indicate that we exercise control there over. That trust is described in Note 13 to our audited consolidated financial statements.

Key sources of uncertainty in estimates The following discussion includes the key sources of uncertainty in the estimates made at the date of the statement of financial position, and represent a significant risk. This may lead to an adjustment of the book values of our assets and liabilities during the following financial period.

Provision for impairment of loan portfolio The methodology applied by us in determining the balance of this provision is described in Note 2.6.1. to our audited consolidated financial statements. Also, see Note 8 to our audited consolidated financial statements.

Determination of tax on profits For the purpose of determining deferred taxes, we must make tax projections to determine whether or not we are to incur flat tax or income tax, and thus consider the tax incurred as the base for determining deferred taxes.

Estimate of useful lives and residual values of property, furniture and equipment As described in Note 2.14 to our audited consolidated financial statements, we review the estimated useful life and residual values of property, furniture and equipment at the end of every annual period. During the most recent period reviewed, it was not determined that the life and residual values must be modified, as according to our management’s assessment, the useful lives and residual values reflect the economic conditions of our operating environment.

43 Fair value of derivative financial instruments As mentioned in Note 2.7 to our audited consolidated financial statements, we determine the value of our derivative financial instruments using valuation techniques usually used by the counterparties with which it maintains current operations, and which require judgments to develop and interpret fair value estimates in using assumptions based on the existing market conditions at each of the dates of the consolidated statement of financial position. Consequently, the estimated amounts presented are not necessarily indicative of the amounts that we could use in a real market exchange. The use of estimation methods could result in amounts different from those shown at maturity.

Employee benefits The cost of employee benefits that qualify as defined benefit plans as per IAS 19 (modified) ‘‘Employee Benefits’’ is determined using actuarial valuations. An actuarial valuation involves assumptions with respect to discount rates, future salary increases, personnel turnover rates and mortality rates, among others. Due to the long-term nature of these plans, such estimations are subject to a significant amount of uncertainty.

Results of Operations The following discussion comparing our financial results of operations for the years ended December 31, 2013, 2012 and 2011 and for the six months ended June 30, 2014 and 2013 is based on our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements included elsewhere in this offering memorandum.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013 Operating Revenue Operating revenue for the six months ended June 30, 2014 increased by Ps.2,712 million, or 8.4%, to Ps.34,906 million from Ps.32,194 million for the six months ended June 30, 2013. This increase in operating revenue reflects a positive performance in each of our operating revenue sources resulting from the trends discussed below. • Commercial Operations. Net sales of merchandise from our commercial operations for the six months ended June 30, 2014 increased by Ps.2,111 million, or 7.7%, to Ps.29,569 million from Ps.27,458 million for the six months ended June 30, 2013. Same store sales rose 4.8% during the six month period ended June 30, 2014, partially offset by a weaker performance of the Mexican economy, which negatively impacted discretionary spending. For the six month period ended June 30, 2014, the shoes and apparel categories grew slightly ahead of durable goods, resulting from increased sales of durable goods during the last quarter of 2013. For this period sales through our credit cards accounted for Ps.13,930 million, or 47.2% of our consolidated sales and sales in cash or through other bank debit or credit cards accounted for Ps.15,608 million, or 52.8%. • Credit Operations. Interest earned from customers of our credit operations for the six months ended June 30, 2014 increased by Ps.411 million, or 11.4%, to Ps.4,030 million from Ps.3,619 million for the six months ended June 30, 2013, primarily as a result of an increase of 6.8% in our loan portfolio combined with enhanced marketing and promotional efforts in our consumer credit offerings. • Real Estate Operations. Leasing of investment property from our real estate operations for the six months ended June 30, 2014 increased by Ps.190 million, or 17.0%, to Ps.1,307 million from Ps.1,117 million for the six months ended June 30, 2013, primarily as a result of three new shopping centers opened during the last quarter of 2013.

44 Operating Revenue

Six Months Ended June 30, 2014 2013 Source (in millions of Ps.) % Change Commercial Operations(1) ...... 29,569 27,458 7.7 Consumer Credit Operations ...... 4,030 3,619 11.4 Real Estate Operations ...... 1,307 1,117 17.0 Consolidated(2) ...... 34,906 32,194 8.4

(1) Includes income from other service offered at our department stores such as beauty salon, travel agency, optician and interior design services, among others, which were not material. (2) Consolidated figures include the effect of intercompany eliminations. Cost of Sale and Gross Margin Cost of sale for the six months ended June 30, 2014 increased by Ps.1,547 million, or 8.0%, to Ps.20,826 million from Ps.19,279 million for the six months ended June 30, 2013. Gross margin for the six months ended June 30, 2014 increased by 20 basis points, to 40.3% from 40.1% for the six months ended June 30, 2013. This increase in gross margin was primarily a result of a positive performance in operating revenue during the first quarter of 2014, which was partially offset by increased costs resulting from our intense marketing and promotional strategy implemented to hold back pressure from challenging industry dynamics. General Expenses General expenses for the six months ended June 30, 2014 increased by Ps.1,279 million, or 14.0%, to Ps.10,412 million from Ps.9,133 million for the six months ended June 30, 2013. This increase in general expenses was primarily a result of higher provisions for non-performing loans resulting from an increase in our loan portfolio and a slightly higher delinquency rate, combined with expenses relating to the implementation of state-of-the-art IT systems and store openings. Operating Income Operating income for the six months ended June 30, 2014 decreased by Ps.82 million, or 2.1%, to Ps.3,819 million from Ps.3,901 million for the six months ended June 30, 2013. Operating margin for the year ended December 31, 2013 decreased by 120 basis points, to 10.9% from 12.1% for the year ended December 31, 2012. This reflects the increase in operating revenue which more than offset the effects of cost of sale and general expenses. Net Financing Cost and Share of Profits of Associates Net financing cost for the six months ended June 30, 2014 increased by Ps.28 million, or 18.1%, to Ps.182 million from Ps.154 million for the six months ended June 30, 2013. This increase in net financing cost was primarily a result of an exchange gain of Ps.7 million in the six months ended June 30, 2014, compared to an exchange loss of Ps.4 million during the same period of the previous year, combined with a decrease of Ps.27 million in interest gain and an increase of Ps.3 million in paid interest. Income Taxes Income tax expense for the six months ended June 30, 2014 increased by Ps.16 million, or 1.7%, to Ps.947 million from Ps.931 million for the six months ended June 30, 2013. Our effective tax rate increased to 24.8%, compared to 23.9% in 2013, primarily as a result of an increase in deferred income tax. In addition, for the six months ended June 30, 2014, our income tax reflected the impact of tax reforms regarding the deductibility of certain fringe benefits, which is now limited to 53.0% compared to the previous periods in which such benefits were 100.0% deductible. Consolidated Comprehensive Net Income Attributable to Owners of the Parent For the reasons described above, consolidated net income attributable to owners of the parent for the six months ended June 30, 2014 decreased by Ps.125 million, or 4.4%, to Ps.2,690 million from Ps.2,815 million for the six months ended June 30, 2013. Net margin for the six months ended June 30, 2014 decreased by 100 basis points, to 7.7% from 8.7% for the six month period ended June 30, 2013.

45 Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 Operating Revenue Operating revenue for the year ended December 31, 2013 increased by Ps.7,859 million, or 11.9%, to Ps.74,105 million from Ps.66,246 million for the year ended December 31, 2012. This increase in operating revenue reflects a positive performance in each of our operating revenue sources resulting from the trends discussed below. • Commercial Operations. Net sales of merchandise from our commercial operations for the year ended December 31, 2013 increased by Ps.6,938 million, or 11.8%, to Ps.65,715 million from Ps.58,777 million for the year ended December 31, 2012, primarily as a result of an improvement in volumes reflecting the effect of our intense marketing and promotional efforts in the fourth quarter of 2013, combined with an increase in income from other services in the amount of Ps.427 million, or 24.3%, for the year ended December 31, 2013 compared to the previous year. For this period sales through our credit cards accounted for Ps.33,416 million, or 52.8% of our consolidated sales and sales in cash or through other bank debit or credit cards accounted for Ps.30,112, or 47.4%. • Credit Operations. Interest earned from customers of our credit operations for the year ended December 31, 2013 increased by Ps.457 million, or 8.5%, to Ps.5,810 million from Ps.5,353 million for the year ended December 31, 2012, primarily as a result of an increase in the customer base for our credit cards by approximately 365,000 new customers during 2013, combined with an increase in the sales completed using our credit cards, which for the year ended December 31, 2013 represented 52.8% of our consolidated sales, compared to 47.4% for the year ended December 31, 2012. • Real Estate Operations. Leasing of investment property from our real estate operations for the year ended December 31, 2013 increased by Ps.464 million, or 21.9%, to Ps.2,580 million from Ps.2,116 million for the year ended December 31, 2012, primarily as a result of the opening of three new shopping centers during 2013, which represented additional income for our real estate operations, combined with the maintenance of our occupancy rates for our retail premises during 2013.

Operating Revenue

Year Ended December 31, 2013 2012 Source (in millions of Ps.) % Change Commercial Operations(1) ...... 65,715 58,777 11.8 Consumer Credit Operations ...... 5,810 5,353 8.5 Real Estate Operations ...... 2,580 2,116 21.9 Consolidated(2) ...... 74,105 66,246 11.9

(1) Includes income from other service offered at our department stores such as beauty salon, travel agency, optician and interior design services, among others, which were not material. (2) Consolidated figures include the effect of intercompany eliminations.

Cost of Sale and Gross Margin Cost of sale for the year ended December 31, 2013 increased by Ps.4,607 million, or 11.7%, to Ps.44,134 million from Ps.39,527 million for the year ended December 31, 2012. Gross margin for the year ended December 31, 2013 increased by 10 basis points, to 40.4% from 40.3% for the year ended December 31, 2012. This increase in gross margin was primarily a result of improved inventory management.

General Expenses General expenses for the year ended December 31, 2013 increased by Ps.2,641 million, or 15.8%, to Ps.19,398 million from Ps.16,757 million for the year ended December 31, 2012. This increase in general expenses was primarily a result of the costs related to the nine department stores and three shopping centers opened in 2012 and the opening of four department stores and three shopping centers which started operating in

46 2013. Other factors that contributed to a lesser extent for this increase in general expenses were an increase in the provisions for non-performing loans resulting from an increase in our loan portfolio and an increase in corporate expenses resulting from the implementation of new information systems in 2013.

Operating Income Operating income for the year ended December 31, 2013 increased by Ps.530 million, or 5.1%, to Ps.10,836 million from Ps.10,306 million for the year ended December 31, 2012; however, operating margin for the year ended December 31, 2013 decreased by 100 basis points, to 14.6% from 15.6% for the year ended December 31, 2012. This reflects the increase in operating revenue, which was more than offset by the effects of general expenses.

Net Financing Cost and Share of Profits of Associates Net financing cost for the year ended December 31, 2013 increased by Ps.79 million, or 22.1%, to Ps.436 million from Ps.357 million for the year ended December 31, 2012. This increase in net financing cost was primarily a result of an increase in our consolidated indebtedness incurred for the financing of our expansion program, combined with an exchange loss of Ps.38 million resulting from the depreciation of the Mexican peso with respect to the U.S. dollar in 2013 compared to an exchange gain of Ps.13 million in 2012, and a decrease of Ps.19 million in interest income for the year ended December 31, 2013, compared to the previous year.

Income Taxes Income tax expense for the year ended December 31, 2013 decreased by Ps.53 million, or 1.9%, to Ps.2,698 million from Ps.2,751 million for the year ended December 31, 2012. Our effective tax rate decreased to 24.9%, compared to 26.7% in 2013, primarily as a result of an increase in deferred income tax combined with a decrease in actual taxes.

Consolidated Comprehensive Net Income Attributable to Owners of the Parent For the reasons described above, net income attributable to owners of the parent for the year ended December 31, 2013 increased by Ps.504 million, or 7.0%, to Ps.7,702 million from Ps.7,198 million for the year ended December 31, 2012. Net margin for the year ended December 31, 2013 decreased by 50 basis points, to 10.4% from 10.9% for the year ended December 31, 2012. In the last quarter of 2013 we registered an extraordinary expense of Ps.142 million as deferred taxes to give effect to the restatement of such taxes at a rate of 30.0%. Without this effect, the increase in consolidated net income for the year ended December 31,2013 would have been Ps.362, or 5.0%, compared to the year ended December 31, 2012.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011 Operating Revenue Operating revenue for the year ended December 31, 2012 increased by Ps.7,589 million, or 12.9%, to Ps.66,246 million from Ps.58,657 million for the year ended December 31, 2011. This increase in operating revenue reflects a positive performance in each of our operating revenue sources resulting from the trends discussed below. • Commercial Operations. Net sales of merchandise from our commercial operations for the year ended December 31, 2012 increased by Ps.6,428 million, or 12.3%, to Ps.58,777 million from Ps.52,349 million for the year ended December 31, 2011, primarily as a result of an improvement in volumes reflecting the effect of the opening of nine new department stores and the effect of our intense marketing and promotional efforts, combined with an increase in income from other services in the amount of Ps.293 million, or 20.0%, for the year ended December 31, 2012 compared to the previous year. For this period, sales through our credit cards accounted for Ps.29,672, or 52.0% of our consolidated sales and sales in cash or through other bank debit or credit cards accounted for Ps.27,345, or 48.0%.

47 • Credit Operations. Interest earned from customers of our credit operations for the year ended December 31, 2012 increased by Ps.776 million, or 16.9%, to Ps.5,353 million from Ps.4,577 million for the year ended December 31, 2011, primarily as a result of an increase in the customer base for our credit cards by approximately 215,000 new customers during 2012, reflecting our enhanced promotional efforts related to our credit cards, combined with an increase in the sales completed using our credit cards, which for the year ended December 31, 2012 represented 47.4% of our consolidated sales, compared to 49.2% for the year ended December 31, 2011 and, to a lesser extent, the reduction of our non-performing loan portfolio by 30 basis points compared to the previous year. • Real Estate Operations. Leasing of investment property from our real estate operations for the year ended December 31, 2012 increased by Ps.385 million, or 22.2%, to Ps.2,116 million from Ps.1,731 million for the year ended December 31, 2011, primarily as a result of the opening of three new shopping centers in 2012.

Operating Revenue

Year Ended December 31, 2012 2011 % Change Source (in millions of Ps.) Commercial Operations(1) ...... 58,777 52,349 12.3 Consumer Credit Operations ...... 5,353 4,577 16.9 Real Estate Operations ...... 2,116 1,731 22.2 Consolidated(2) ...... 66,246 58,657 12.9

(1) Includes income from other service offered at our department stores such as beauty salon, travel agency, optician and interior design services, among others, which were not material. (2) Consolidated figures include the effect of intercompany eliminations.

Cost of Sale and Gross Margin Cost of sale for the year ended December 31, 2012 increased by Ps.4,594 million, or 13.2%, to Ps.39,527 million from Ps.34,933 million for the year ended December 31, 2011, and gross margin for the year ended December 31, 2012 decreased by 10 basis points, to 40.3% from 40.4% for the year ended December 31, 2011. This decrease in gross margin was primarily a result of our enhanced marketing and promotional efforts.

General Expenses General expenses for the year ended December 31, 2012 increased by Ps.2,056 million, or 14.0%, to Ps.16,757 million from Ps.14,701 million for the year ended December 31, 2011. This increase in general expenses was primarily a result of pre-operational expenses related to the opening of nine department stores and two shopping malls in 2012.

Operating Income Operating income for the year ended December 31, 2012 increased by Ps.1,078 million, or 11.7%, to Ps.10,306 million from Ps.9,228 million for the year ended December 31, 2011; however, operating margin for the year ended December 31, 2012 decreased by 10 basis points, to 15.6% from 15.7% for the year ended December 31, 2011. This reflects the increase in operating revenue partially offset by the effects of general expenses.

Net Financing Cost and Share of Profits of Associates Net financing cost for the year ended December 31, 2012 increased by Ps.34 million, or 10.5%, to Ps.357 million from Ps.323 million for the year ended December 31, 2011. This increase in net financing cost was primarily a result of an increase in our consolidated indebtedness reflecting an offering of senior notes (certificados bursátiles) in the amount of Ps.4,000 million, which was partially offset by an exchange gain of

48 Ps.13 million resulting from the appreciation of the Mexican peso with respect to the U.S. dollar in 2012 compared to an exchange loss of Ps.8 million in 2011, and an increase of Ps.110 million in equity in the share of profits of associates for the year ended December 31, 2012, compared to the previous year.

Income Taxes Income tax expense for the year ended December 31, 2012 increased by Ps.390 million, or 16.5%, to Ps.2,751 million from Ps.2,361 million for the year ended December 31, 2011. Our effective tax rate increased to 26.7%, compared to 25.6% in 2011, as a result of an increase in deferred taxes associated with an increase in our loan portfolio.

Consolidated Comprehensive Net Income Attributable to Owners of the Parent For the reasons described above, consolidated net income attributable to owners of the parent for the year ended December 31, 2012 increased by Ps.654 million, or 10.0%, to Ps.7,198 million from Ps.6,544 million for the year ended December 31, 2011. Net margin for the year ended December 31, 2012 decreased by 30 basis points, to 10.9% from 11.2% for the year ended December 31, 2011.

EBITDA EBITDA represents operating income plus depreciation and amortization. Our management uses this measure as an indicator of our operating results and financial condition. However, you should not consider EBITDA in isolation, as an alternative to net income, as an indicator of our operating performance or as a substitute for analysis of our results as reported under IFRS, since, among others: • it does not reflect the depreciation and amortization of our operating assets; • it does not reflect our interest expense; • it does not reflect our share of profits of associates; • it does not reflect any income taxes we may be required to pay; and • it does not reflect our cash expenditures or future requirements for cash expenditures or our working capital needs or charges. For a reconciliation of EBITDA to our operating income, please see ‘‘Summary Consolidated Financial Information.’’

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013 EBITDA for the six months ended June 30, 2014 increased by Ps.22 million, or 0.5%, to Ps.4,752 million from Ps.4.730 million for the six months ended June 30, 2013. This increase in EBITDA reflects operating income performance plus depreciation and amortization. EBITDA margin for the six month period ended June 30, 2014 decreased by 110 basis points, to 13.6% from 14.7% for the six months ended June 30, 2013, primarily as a result of higher general expenses.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 EBITDA for the year ended December 31, 2013 increased by Ps.767 million, or 6.5%, to Ps.12,536 million from Ps.11.768 million for the year ended December 31, 2012. This increase in EBITDA reflects operating income performance plus depreciation amortization. EBITDA margin for the year ended December 31, 2013 decreased by 90 basis points, to 16.9% from 17.8% for the year ended December 31, 2012, primarily as a result of higher general expenses.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011 EBITDA for the year ended December 31, 2012 increased by Ps.1,259 million, or 12.0%, to Ps.11,768 million from Ps.10,509 million for the year ended December 31, 2011. This increase in EBITDA reflects operating income performance plus depreciation and amortization. EBITDA margin for the year ended December 31, 2012 decreased by 10 basis points, to 17.8% from 17.9% for the year ended December 31, 2011, primarily as a result of higher general expenses.

49 Liquidity and Capital Resources Liquidity Liquidity represents our ability to generate sufficient cash flows from operating activities to meet our obligations as well as our ability to obtain appropriate financing. Therefore, liquidity cannot be considered separately from capital resources that consist primarily of current and potentially available funds for use in achieving our objectives. Currently, our liquidity needs arise primarily from capital expenditures, working capital requirements, debt payments and dividends. In order to satisfy our liquidity and capital requirements, we primarily rely on our own capital, including cash generated from operations. We believe that our cash from operations, our existing credit facilities, and our long-term financing will provide sufficient liquidity to meet our working capital needs, planned capital expenditures, future contractual obligations and payment of dividends.

Cash Flows Provided by Operating Activities Six Months ended June 30, 2014 and 2013 For the six months ended June 30, 2014, net cash flows provided by operating activities increased by Ps.1,065 million to Ps.3,057 million as compared to Ps.1,992 million for the six months ended June 30, 2013, primarily as a result of a decrease in the balance of our accounts receivable loan portfolio.

Years ended December 31, 2013 and 2012 For the year ended December 31, 2013, net cash flows provided by operating activities increased by Ps.92 million to Ps.6,506 million as compared to Ps.6,414 million for the year ended December 31, 2012, primarily as a result of a gain on the sale of investment properties and interest paid under our bank borrowings.

Years ended December 31, 2012 and 2011 For the year ended December 31, 2012, net cash flows provided by operating activities increased by Ps.1,580 million to Ps.6,414 million as compared to Ps.4,834 million for the year ended December 31, 2011, primarily as a result of an increase in inventories compared to the previous year, combined with a higher recovery of income tax compared to the same period of the previous year.

Net Cash Flows Provided by Investing Activities Six Months ended June 30, 2014 and 2013 For the six months ended June 30, 2014, net cash flows provided by investing activities decreased by Ps.249 million to Ps.2,184 million as compared to Ps.2,433 million for the six months ended June 30, 2013, primarily resulting from a higher number of store openings in the first half of 2013 compared to the same period of 2014.

Years ended December 31, 2013 and 2012 For the year ended December 31, 2013, net cash flows provided by investing activities decreased by Ps.2,055 million to Ps.6,130 million as compared to Ps.8,185 million for the year ended December 31, 2012, primarily resulting from a lower number of store openings during 2013 compared to 2012.

Years ended December 31, 2012 and 2011 For the year ended December 31, 2012, net cash flows provided by investing activities increased by Ps.2,913 million to Ps.8,185 million as compared to Ps.5,272 million for the year ended December 31, 2011, primarily resulting from the opening of nine stores and three shopping centers in 2012.

50 Net Cash Flows Provided by Financing Activities Six Months ended June 30, 2014 and 2013 For the six months ended June 30, 2014, net cash flows provided by financing activities decreased by Ps.821 million to Ps.1,937 million as compared to Ps.1,116 million for the six months ended June 30, 2013, primarily resulting from higher consolidated indebtedness for the six months ended June 30, 2014, combined with the payment of a dividend in the first half of 2013.

Years ended December 31, 2013 and 2012 For the year ended December 31, 2013, net cash flows provided by financing activities decreased by Ps.3,784 million to a negative cash flow of Ps.1,668 million as compared to a positive cash flow of Ps.2,116 million for the year ended December 31, 2012, primarily resulting from higher dividend distributions in 2013 compared to dividend distributions in 2012.

Years ended December 31, 2012 and 2011 For the year ended December 31, 2012, net cash flows provided by financing activities decreased by Ps.5,938 million to a positive cash flow of Ps.2,116 million as compared to a negative cash flow of Ps.3,822 million for the year ended December 31, 2011, primarily resulting from the offering of senior notes (certificados bursátiles) in the amount of Ps.4,000 million in 2012.

Borrowings from Banks and Other Financial Institutions Our total consolidated indebtedness increased to Ps.13,521 million as of June 30, 2014, from Ps.12,921 million as of June 30, 2013, primarily as a result of a borrowing under a Ps.600 million uncommitted credit facility established with Banco Santander (Mexico), S.A., Institución de Banca Múltiple, Grupo Financiero Santander on June 30, 2014, which currently bears interest at a fixed rate of 3.24% per annum. All amounts outstanding under this credit facility were repaid in full on July 1, 2014. In May 2008, Credit Suisse AG, Cayman Islands Branch granted a credit facility to the special purpose trust no. F/789 (contrato de fideicomiso) in which Banco Invex, S.A., Institución de Banca Múltiple, Invex Grupo Financiero acts as trustee, or the CS Credit Facility. We received the proceeds of the CS Credit Facility as consideration for the assignment of a portion of the Galerías Merida and Galerías Vallarta shopping centers (not including, among others, our department stores located in such shopping centers) to such trust. As part of the transaction, we entered into a lease and assignment agreement with such trust pursuant to which we lease the assigned properties from the trust and have the right to sublease such properties to other tenants. Lease payments received by the trust under our lease agreement are the primary source of repayment of the CS Credit Facility. Under such lease agreement, we have the option to acquire the assigned properties at the end of the lease at an agreed upon price. The CS Credit Facility bears interest at a rate of 9.31% and matures on June 20, 2018. Except for certain limited circumstances, neither we nor any of our subsidiaries guarantee or are required to repay any amounts under the CS Credit Facility; however, in accordance with IFRS, we are required to consolidate such trust in our financial statements. See note 13 to our audited consolidated financial statements. We have issued and outstanding the following senior notes (certificados bursátiles) in the Mexican capital markets, some of which were issued under a program, authorized by the CNBV up to the amount of Ps.5,000 million. • Notes (certificados bursátiles) in the aggregate amount of Ps.1,000 million, maturing in August, 2018 and bearing interest at a rate of 9.36%, or the 9.36% Notes due 2018; • Notes (certificados bursátiles) in the aggregate amount of Ps.1,900 million, maturing in March, 2022 and bearing interest at a rate of 7.64%, or the 7.64% Notes due 2022; • Notes (certificados bursátiles) in the aggregate amount of 169,399,100 UDIs (approximately Ps.750 million), maturing in May, 2020 and bearing interest at a rate of 4.22%, or the 4.22% Notes due 2020; • Notes (certificados bursátiles) in the aggregate amount of Ps.2,250 million, maturing in May, 2020 and bearing interest at a rate of 8.53%, or the 8.53% Notes due 2020;

51 • Notes (certificados bursátiles) in the aggregate amount of Ps.2,100 million, maturing in March, 2017 and bearing interest at a rate of 28-day TIIE plus 0.35%, or the TIIE + 0.35% Notes due 2017; and • Notes (certificados bursátiles) in the aggregate amount of Ps.4,000 million, maturing in December, 2014 and bearing interest at a rate of 28-day TIIE plus 0.04%, or the TIIE + 0.04% Notes due 2014. The instruments governing such senior notes (certificados bursátiles) contain certain covenants, including limitations on sale of assets and limitations on consolidations, mergers, sales or conveyances. As of the date of this offering memorandum we are in compliance in all material respects with such covenants. The following table sets forth our outstanding financial indebtedness as of the dates indicated below:

As of Jue 30, As of December 31, 2014 2014 2013 Unaudited 2013 2012 2011 (in millions (in millions of U.S.$)(1) (in millions of Ps.)(2) of U.S.$)(1) (in millions of Ps.)(2) 9.36% Notes (certificados bursátiles) due 2018. . . . 77 1,000 1,000 77 1,000 1,000 1,000 7.64% Notes (certificados bursátiles) due 2022. . . . 146 1,900 1,900 146 1,900 1,900 — 4.22% Notes (certificados bursátiles) due 2020(3) . . 58 750 750 58 750 750 750 8.53% Notes (certificados bursátiles) due 2020. . . . 173 2,250 2,250 173 2,250 2,250 2,250 TIIE + 0.35% Notes (certificados bursátiles) due 2017 ...... 162 2,100 2,100 162 2,100 2,100 — TIIE + 0.04% Notes (certificados bursátiles) due 2014 ...... 308 4,000 4,000 308 4,000 4,000 4,000 CS Credit Facility(4) ...... 71 921 921 71 921 921 921 TIIE - 0.10% Loan Facility ...... — — — 78 1,006 — — TIIE - 0.15% Loan Facility ...... — — — 78 1,006 — — U.S. 3.24% Loan Facility(5) ...... 600 7,782 — — — — — Less current portion of long-term debt ...... 354 4,600 4,000 464 6,012 — — Long-term debt ...... 688 8,921 8,921 687 8,921 12,921 8,921

(1) Translated to U.S. dollars for convenience only at the rate of Ps.12.97 per U.S.$1.00, the exchange rate reported on June 30, 2014 by the Board of Governors of the Federal Reserve System, as certified by the Federal Reserve Bank of New York. See ‘‘Exchange Rates.’’ (2) The U.S. dollar amount for debt denominated in U.S. dollars represents the outstanding balance in Mexican peso of such debt as of the relevant date registered in the audited consolidated financial statements or in the unaudited condensed consolidated interim financial statements, respectively, translated to U.S. dollars using the convenience translation exchange rate used throughout this offering memorandum. (3) Translated to Mexican pesos for convenience only at the rate of Ps.5.13 per 1.00 UDI, the rate reported on June 30, 2014 by the Mexican Central Bank. (4) In accordance with IFRS 10, the trust established for the CS Credit Facility is considered our structure entity. Except for certain limited circumstances, neither we nor any of our subsidiaries guarantee or are required to repay amounts outstanding under the CS Credit Facility. (5) All amounts outstanding under this credit facility were repaid in full on July 1, 2014. We continuously explore financing alternatives, which may include future issuances of additional senior notes (certificados bursátiles). In addition, from time to time letters of credit are issued at our request by financial institutions to secure payments to some of our suppliers. As of the date of this offering memorandum, no amounts have been drawn under any such letter of credit in respect of which we have a reimbursement obligation that is outstanding.

52 Contractual Obligations The following table reflects our contractual obligations and commercial commitments as of June 30, 2014. Commercial commitments include our outstanding debt, commitments with our vendors and other potential cash outflows as follows:

Payments due by period (in thousands of Ps.) Unaudited Less than 3 months – More than Contractual Obligations 3 months 1 year 1 – 5 years 5 years Total Senior notes (certificados bursátiles)...... 114,745 4,418,058 5,577,435 5,203,903 15,314,141 Bank borrowings ...... 621,977 64,817 1,138,546 — 1,825,340 Derivative financial instruments...... — 80,471 143,511 — 223,982 Standby letters...... 67,601 495,444 230,083 — 793,128 Suppliers and creditors ...... 11,728,159 4,683,066 249,638 — 16,660,863 Operating leases ...... 315,445 351,721 829,437 1,637,317 3,133,920

Capital Expenditures We make and expect to continue to make capital expenditures to finance our land acquisition, construction, development and renovation of department stores and shopping centers. For the years ended December 31, 2013, 2012 and 2011, we made capital expenditures of Ps.5,948 million, Ps.7,732 million, Ps.5,134 million, respectively. For the six months ended June 30, 2014 we made capital expenditures in the amount of Ps.2,156 million. Historically, a high proportion of our capital expenditures have been used for the expansion of our business, and such capital expenditures have been financed mainly through retained earnings. We plan to continue to make capital expenditures to implement our expansion plan, which includes the increase in our gross leasable area through the construction of shopping centers, and department stores, major renovation of certain of our department stores, and the acquisition of additional land in different locations across Mexico. See ‘‘Cautionary Statement Regarding Forward-Looking Statements’’ elsewhere in this offering memorandum. We expect to fund our capital expenditures program with a combination of cash flows from operations and additional financing, including a portion from the proceeds of this offering. We cannot assure you that we will generate sufficient cash flow from operations, or that we will have access to external financing sources, to adequately fund such or any future capital expenditures. See ‘‘Risk Factors—Risks Related to Our Business and Industry—Our business is capital-intensive and we may not be able to generate sufficient cash flows from operations or obtain the funding required to make capital expenditures and/or implement our investment strategy.’’

Dividends We do not have a policy with respect to the payment of dividends. However, as part of our value-creation strategy, we have consistently paid dividends to our shareholders. During 2013, dividends paid totaled Ps.1.93 per-share (nominal pesos). During 2012, dividends paid totaled Ps.0.67 per share (nominal pesos). During 2011, dividends paid totaled Ps.0.54 per share (nominal pesos). The total amount of dividend payments equaled Ps.2,590 million in 2013, Ps.899 million in 2012 and Ps.725 million in 2011.

Quantitative and Qualitative Disclosure about Market Risk We are exposed to risks such as changes in the market price of real estate properties, changes in foreign currency exchange rates, volatility in interest rates and inflation, and credit risk. We use a variety of strategies and instruments to manage these risks, including derivative financial instruments to hedge our exposure to floating interest rates and Mexico’s inflation. By using derivative instruments, we seek to ensure certainty on the cash flows required to repay our debt accruing interest at floating rate and denominated in UDIs. We periodically evaluate our exposures to interest and exchange rates and determine whether to adjust or hedge our positions. Derivative instruments are used for risk management purposes only and are closely linked to the instrument being hedged. All derivative instruments are entered into with major financial institutions and it is our policy to

53 obtain at least three quotes for each instrument to ensure the best market conditions. We conduct periodic sensitivity analysis to determine the effectiveness and book value of our derivative financial instrument. Credit risk with respect to the counterparties is actively monitored but is not considered significant, since these transactions are executed with a diversified group of financial institutions.

Real Estate Risk We have a diversified real estate portfolio which includes, in the aggregate, 1.4 million square meters of retail space and an aggregate gross leasable area of approximately 395,000 square meters. Our Board of Directors is responsible for authorizing the purchase of land and buildings for the expansion of our business, prior recommendation of our real estate department. Each real estate investment decision is based primarily on the expected return in terms of sales per square meter. Our real estate operations constitute a significant independent source of revenue and an important complement to our commercial operations. Although the value of real property in Mexico is relatively stable, economic development and structural changes in the country could affect the supply and demand of real property, and affect rent levels and the risk of vacant commercial space. Usually, real property in Mexico and certain construction material denominated in U.S. dollars, depreciations of the Mexican peso with respect to the U.S. dollar could limit our expansion plans. In addition, increases in real estate prices may result in the vacancy of our premises as a result of higher rents. Historically, our retail premises have had occupancy rates above 95.0%, low turnover rates and low past-due accounts with an attractive mix of more than 1,500 tenants and no tenant representing more than 10.0% of our consolidated revenue; however, we cannot assure that this trend will continue in the future. See ‘‘Risk Factors—Risks Related to Our Business and industry’’ and note 3.1 to our audited financial statements.

Exchange Rate Risk We are exposed to risks related to fluctuations in the exchange rate of the peso against the U.S. dollar and the euro with respect to imports of merchandise mainly from Europe and Asia and certain credit facilities. For the year ended December 31, 2013, purchases of merchandise in a currency other than Mexico peso represented approximately 18.0% of our total purchases. As of December 31, 2013 and 2012, we had exposure to exchange rate risks of U.S.$181 million and €6 million and U.S.$3 million and €2 million, respectively. This increase in our exposure to exchange rate risk was primarily the result of the incurrence of indebtedness denominated in U.S. dollars. In the event of a 10.0% depreciation of the peso with respect to the U.S. dollar, we would have lost Ps.236 million and Ps.3 million, in each of those years. Such 10.0% represents the sensitivity rate used for internal reports to our Operations Committee, and represents the management’s assessment of possible changes in exchange rates. The sensitivity analysis includes only those monetary items not yet settled denominated in foreign currency on the last day of the corresponding period. In addition, the cash flows received from our investment in Regal Forest Holding, Ltd, a private company that operates a chain of stores engaged in the sale of furniture and household appliances in Central America, South America and the Caribbean, are denominated in U.S. dollars. As of the date of this offering memorandum we have not hedged the cash flows we receive from such investment.

Inflation Risk We are exposed to inflation risk with respect to our 4.22% Notes (certificados bursátiles) due 2020. UDIs are Mexican synthetic unit adjusted by inflation. We have entered into a swap to hedge such exposure. As of December 31, 2013, in a scenario of a 10.0% or higher increase in Mexico’s inflation and assuming all other variables remain constant, the effect on other comprehensive income items, net of deferred taxes, would have been a loss of approximately Ps.32 million and $24 million, respectively. Interest Rate Risk In connection with our business activities, we have issued and hold financial instruments that expose us to market-related risks from changes in interest rates. Interest rate risk exists, among others, with respect to our indebtedness that bears interest at floating rates. We usually mitigate such risk by entering into swap instruments that convert our floating interest rates into fixed interest rates in order to ensure predictability of the cash flows that will be required to pay our debts; however, fixed to variable interest rate swaps are also contracted on a temporary basis to streamline financial costs when market rates allow it. As of June 30, 2014, we had an outstanding total consolidated indebtedness of Ps.13,521 million, the majority of which bore interest at a fixed rate after the effect of such swap instruments.

54 We perform periodic analysis of our exposure to interest rates. A number of different scenarios are simulated, that consider refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, we calculate the corresponding impact on results or on our financial position. See note 3.2.2. to our audited consolidated financial statements. The following table sets forth notional amounts by scheduled maturity, interest rates and estimated fair market value of our swap instruments as of December 31, 2013. Fair value as of December 31, Notional amount(1) Effective Maturity Financial asset Financial asset (in Ps.) date date acquired hedged 2013 2012 (in thousands of Ps.) Assets 1,000,000 September 2008 August 2018 TIIE + 0.18% 9.36% 184,129 209,830 750,000 June 2010 May 2020 8.48% 4.22% 127,985 108,534 1,000,000 September 2013 January 2014 Libor + 0.04% TIIE + 0.10% 2,668 — 1,000,000 September 2013 March 2014 Libor + 0.46% TIIE + 0.15% 5,091 — Total ...... 319,873 318,364 Less long-term financial asset . . . . . 312,114 — Current short-term portion ...... 7,759 318,364 Liabilities 2,000,000 March 2008 December 2014 7.47% TIIE + 0.04% (69,816) (94,478) 2,000,000 March 2008 December 2014 7.89% TIIE + 0.04% (78,167) (110,608) 1,000,000 April 2009 August 2018 TIIE + 0.18% 7.95% (120,599) (136,151) Total ...... 268,582 (341,237) Less long-term financial asset . . . . . 120,599 341,237 Current short-term portion ...... 147,983 —

(1) The notional amounts related to derivative financial instruments reflect the reference volume contracted; however, such amounts do not reflect the amounts at risk with respect to future cash flows. Generally, amounts at risk are limited to the unrealized profit or loss resulting from the mark-to-market of such instruments, which may vary as a result of changes in the market price of the underlying asset, volatility and credit rating of the respective counterparty.

Liquidity Risk Liquidity risk refers to our inability to meet our cash requirements. Our management has established policies, procedures and limits that govern the treasury function. Our treasury is responsible for ensuring our liquidity and for managing our working capital to guaranty payments to vendors, who finance a significant part of inventory stock, our debt service and fund operating costs and expenses. Our treasury prepares a daily cash flow report to maintain the required level of cash available and determines the investment of any surpluses. The periods with increased operations and, consequently, with the highest accumulation of cash are May, July and the last quarter of the year. Most of our investments are made in pesos and a small portion in U.S. dollars. We finance our operations through a combination of reinvestment of a significant portion of profits and financings denominated in pesos. We have immediately available credit lines of Ps.10 million as well as overdraft credit lines, which allow us to quickly access short-term debt instruments. See ‘‘—Contractual Obligations’’ for a description of our contractual obligations and their maturities.

Credit Risk In connection with our business activities we are exposed to the credit risk of our customers, the financial institutions with which we maintain investments and the counterparties of our derivative agreements. With respect to our consumer credit financings, there is no credit risk concentrated in one particular customer or group of customers. Our target market is mainly represented by middle and high-income families in Mexico. See ‘‘Business—Operations—Consumer Credit Operations’’ for more information of our risk management strategy with respect to the financing products we offer.

55 Capital Risk Our objective is to continue operating as a going concern and to maintain a financial structure that allows us to optimize the cost of capital and maximize stockholders’ yields. Our capital structure is comprised of debt, which includes senior notes (certificados bursátiles) and bank facilities, cash and cash equivalents, and stockholders’ equity, which includes paid-in capital, retained earnings and reserves. Historically, we have invested substantial resources in capital goods to expand our operations, through reinvesting earnings. In addition, we do not have a policy with respect to the payment of dividends; however, the dividend payments approved during the fiscal year ended December 31, 2013 represented 13.0% of the majority net income for the immediately prior year. Our Board of Directors has established the following rules for management of financial and capital risks: • Debt, including issuance costs, shall not exceed 15.0% of our total assets. • All indebtedness must be subject to a determined interest rate. Such rules were complied during the years ended December 31, 2011, 2012 and 2013. Our management revises our capital structure annually when our budget is presented to our Board of Directors and to our shareholders for approval. Our Board of Directors verifies that the level of projected indebtedness does not exceed the limit determined by our Board of Directors.

Fair Value The financial instruments in the statement of financial position are recorded at fair value based on (i) prices quoted (not adjusted) in active markets for identical liabilities or assets, (ii) indicators different from the quoted prices referred in item (i), which include indicators that are observable directly to quoted prices or indirectly, and (iii) valuation techniques that include indicators for assets or liabilities that are not based on observable market information.

Off-Balance Sheet Arrangements We do not currently have transactions involving off-balance sheet arrangements.

56 INDUSTRY

Overview of the Retail Industry in the United States The retail industry comprises entities engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. This industry comprises different sub-industries based on the line of merchandise offered. Retail industry may be classified by types of products in different categories, such as food products, hard goods, soft goods and arts. Department stores retail a broad range of general merchandise, such as apparel, jewelry, cosmetics, home furnishings, general household products, toys, appliances and sporting goods. Big-box retailers and supercenters that offer fresh groceries in their stores and warehouse clubs that operate under membership programs are not included in this category of the retail industry. Consumption is one of the most important components of any economy and a key driver of the retail industry. The retail industry is mainly driven by consumers’ discretionary spending, which is primarily affected by general macroeconomic conditions. When disposable income is low, consumers cut back on spending by delaying purchases or substituting costlier goods with inferior products. Spending trends are heavily influenced by the unemployment rate and general economic growth, with periods of strong economic activity associated with increases in disposable income and vice versa. The department stores industry in the United States fought tough conditions over the five years to 2014, with revenue expected to grow marginally at an annualized rate of 0.3% to U.S.$199.8 billion according to IBISWorld. Weak consumer confidence and low disposable income deterred households from making discretionary purchases during the recession, causing demand and sales for traditional department stores to substantially decline. In recent years, online retailers have emerged as a threat to industry players. However, these poor conditions did not translate into lower profit for operators. Instead, industry profit in the United States rose from a low of 2.9% in 2009 to 4.8% of revenue in 2014 according to IBISWorld. This increase was due to a sales mix of high margin items and expense management. In addition, according to IBISWorld, recent improvements in economic conditions are expected to relieve some of the industry’s overall struggles and revenue is estimated to grow 0.9% in 2014. The global retail industry is in a period of unprecedented disruption and change. The impact that mobile network access is having on customers, markets and business is the most dramatic example. Consumer revolution driven by converging technologies is expected to continue changing the outlook of the retail industry.

Mexico’s Macroeconomic Environment Mexico is one of the largest economy in Latin America with nominal GDP of U.S.$1,261 billion in 2013 and a per capita GDP of U.S.$10,307 according to the World Bank, supported by a stable macroeconomic environment for the past 15 years as a result of conservative monetary, fiscal and debt policies. The Mexican economy achieved real GDP growth rates of 1.1%. 4.0% and 4.0% in 2013, 2012 and 2011, respectively, and is estimated to grow at 2.3%, 3.5% and 4.0% in 2014, 2015 and 2016, respectively, according to information of the World Bank. The Mexican peso appreciated against the U.S. dollar, ranging from an average exchange rate of Ps.13.14 in 2012 to Ps.12.86 in 2013. As of June 30, 2014, unemployment rate was 4.8%, compared to 4.9% for the previous year, according to the Mexican National Institute for Statistics and Geography (Instituto Nacional de Estadística y Geografía, or INEGI). In addition, Mexico’s inflation has decreased steadily in the last ten years according to information of the World Bank. Mexico’s economic deceleration in 2013 resulted primarily of an uncertain environment in the country with the new government of Enrique Peña Nieto, who came to power in December 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 such proposed bills, including structural reforms related to energy, political elections, labor telecommunications, financial services and taxes. On December 21, 2013, Mexico’s constitution was amended to allow private companies to explore for and produce oil in Mexico for the first time since the 1938 expropriation of the oil industry. On August 12, 2014, Mexico’s lower house of Congress passed a series of laws to help reorder the energy industry. There is no certainty about the impact of such changes on Mexico’s economy.

57 According to the International Monetary Fund, Mexico’s growth is expected to strengthen in 2014 reflecting a more expansionary macroeconomic policy stance, a reversal of the special factors behind low growth in 2013, and spillovers from higher U.S. growth, as it is expected that countries with high exposure to international trade with the U.S. will benefit from its expected economic recovery. Mexico’s growth is expected to continue in 2015 as the effect of major structural reforms takes hold. In addition to the structural reforms, it is expected that Mexico will benefit from favorable demographic dynamics. Mexico had a population of 122 million as of 2013, which is expected to increase 10.8% by 2020 (compared to 4.6% in Brazil and 6.0% in the United States), of which 32.4% is expected to be under the age of 40 according to information of the World Bank. The largest population segment will be 25 to 29 years old and it is estimated that that segment will account for 12.8% of the total population by 2020.

Mexican Retail Industry There are two main types of participants in the Mexican retail industry distinguished by the distribution channels they use: store and non-store retailers. Store retailers operate fixed point-of-sale locations designed to attract a high volume of walk-in customers, as opposed to non-store retailers, which use other methods, such as the broadcasting of infomercials, the broadcasting and publishing of direct-response advertising, the publishing of paper and electronic catalogs, door-to-door solicitation, in-home demonstration, selling from portable stalls (street vendors, except food), and distribution through vending machines, among others. In general, retail stores have extensive displays of merchandise and use mass-media advertising to attract customers. They typically sell merchandise to the general public for personal or household consumption, but some also serve business and institutional clients. In addition to retailing merchandise, some types of store retailers are also engaged in the provision of after-sales services, such as repair and installation. Other classification of retailers is based on types of products. Retail industry sales in Mexico and abroad depend heavily on the financial health of the consumer sector, which includes per capita disposable income. According to data published by the World Bank, consumption represented 79.0% of Mexico’s nominal GDP in 2013, which was reflected in an overall increase of the retail sale index by 2.2%. However, consumption remains relatively low compared to other countries in Latin America such as Chile, where private consumption expenditure increased by 5.6% in 2013 compared to an increase by 2.5% in Mexico’s private consumption expenditure for the same period, according to the Organization for Economic Co-operation and Development. Despite the weak performance of the Mexican economy in 2013, retailing posted strong positive growth in value terms in 2013 and is expected to continue to show dynamism in the next four years, growing at a CAGR of 3.5% in constant value terms according to Euromonitor. Non-store retailing was the most dynamic segment due to the accelerated expansion of internet retailing. In 2013, grocery and non-grocery retail showed positive growth of 6.9% and 6.0% in terms of sales, respectively, according to Euromonitor. The Mexican retail market continues to offer strong organic growth potential given the low levels of formal retail penetration relative to the United States and Europe. In 2013, aggregate penetration of variety stores and department stores reached 56.4 square meters of retail space per thousand of inhabitants in Mexico, compared to 65.5 and 257.8 square meters per thousand of inhabitants in Chile and the United States, respectively, according to Euromonitor. According to ANTAD, the Mexican formal retail industry sales floor has grown 8.9% on average in the last 20 years from 4.7 million square meters in 1993 to 24.7 million square meters in 2013. Also, the Mexican retail industry has daily average sales of Ps.3 billion, which represented 3.0% of the Mexican GDP for the year ended December 31, 2013, and served 18 million customers per day during such year. The department store segment is expected to benefit from the same opportunities as the overall Mexican retail industry. According to ANTAD, in 2013 the department segment outperformed other retail segments in Mexico. Sales for the department store segment grew by 9.7% in nominal terms compared to the previous year, while sales for supermarkets and specialized stores grew by 3.3% and 6.3% in nominal terms, respectively, for the same period. We believe that Mexico offers opportunities to the continued growth of the department store segment through the combination of share gains from informal channels, increasing shopping frequency from rising income trends, footprint expansion, higher credit penetration and increased assortment. According to the International Monetary Fund, the macroeconomic outlook in Mexico is positive in the mid-term and there are opportunities for consumers to increase credit and consumption.

58 Department store penetration in Mexico and other emerging countries remains low, with department store sales as a percentage of total retail sales in Mexico reaching 3.5% at the end of 2013, compared to 0.8% in Brazil, 10.9% in Chile and 4.4% in the United States. The informal economy plays an important role in Mexico. According to a 2010 study by the Mexican Chamber of Commerce, 96% of Mexicans buy from informal retailers. According to Euromonitor, clothing and footwear are among the products with higher piracy rates, informal retailing of such categories was estimated in 60.0% of the total sales of such categories in 2013. We believe there are four main opportunities to gain market share from informality and reduce this gap. First are rising income trends in Mexico. According to our internal research, awareness of department stores, shopping frequency and disposable income increase substantially as customers move to higher incomes. Second are consumer credit offerings and low penetration of consumer credit in Mexico. Third is the expansion of e-commerce. Fourth is geographic expansion. Mexico has 80 cities with populations of over 200 thousand inhabitants which could potentially support a department store. While penetration is high in the largest cities, significant opportunity to grow exists to further enter smaller cities. Another relevant factor for the continued growth of apparel sales in Mexico is the reduction in tariffs on textile imports from to Mexico, which has resulted in highly attractive opportunities for department stores and clothing retailers. According to Mexican Bank for Foreign Trade (Banco Nacional de Comercio Exterior), it is expected that this decrease in import tariffs will result in increased penetration and reduced prices of international apparel and footwear sold in department stores and clothing retailers, while allowing retailers to increase their presence in the fashion segment, expand their portfolio of private brands and increase profit margins. The Mexican retail industry is highly competitive and fragmented. The main participants in the industry include traditional department stores, vendor owned boutiques, specialty retailers, individual specialty apparel stores, designer boutiques, outlet stores, e-commerce and mail order retailers, and ‘‘flash-sale’’ businesses, among others. In addition, certain major U.S. and international retailers have established joint ventures with other Mexican companies that compete with our stores and may continue to do so in the future. The same applies for the department store segment, which main participants include our company and other major department store chains such as Palacio de Hierro, and Suburbia; individual specialty apparel stores such as H&M and Zara; specialty retailers such as Best Buy; price clubs such as Costco and Sam’s Club; and other grocery retailers such as Walmart, Comercial Mexicana and Chedrahui, among others. As of the year 2013, we were the leading Mexican department store chain in terms of number of stores and sales, with a market share of 56.2%, according to Euromonitor. The graph below shows the integration of the mixed retail industry in terms of sales in 2013. Mixed retail includes department stores, variety stores, mass merchandisers, warehouse clubs and other non-grocery retailers. , S.A. de C.V.

El Puerto de Liverpool, S.A.B. de C.V. 1.8% 2.9% 9.1% Wal-Mart de México, S.A.B. de C.V. 3.9% 25.0% , S.A.B. de C.V. 5.3% , S.A. de C.V. 7.9% Palacio de Hierro, S.A. de C.V. 19.8% 10.3% Famsa-Fabricantes Muebleros, S.A. de C.V. Costco de México, S.A. de C.V. 14.0% Organización Soriana, S.A.B. de C.V.

Others

Euromonitor

59 The Mexican retail industry is characterized by high inventory turnover, controlled operating expenses and small profit margins as a percentage of sales. Earnings in the retail industry primarily depend on the maintenance of high per-store sales volumes, efficient product purchasing and distribution and cost-effective store operations and inventory management. Advertising and promotional expenses are necessary to maintain a competitive position in major markets. In addition to the traditional brick and mortar formats, internet represents a great opportunity for retail. During the last decade, internet retailing posted double-digit growth, with the exception of 2010 when it grew 132.0% in value terms. There are several factors influencing the development of internet retailing, including internet access, ownership of electronic payment mechanisms and confidence in internet security. According to the Mexican Internet Association (Asociación Mexicana de Internet), or AMIPCI, 45 million people in Mexico were internet users in 2012, a 10.0% increase compared to 2011, and 89.0% total growth during the previous five-year period. The number of internet users in 2012 represented approximately 38.0% of the Mexican population. Among internet users there is a portion of minors whose internet purchases depend on their parents’ resources; however, 61.3% of people with internet access in Mexico were over 19 years old, according to information from the World Bank, and 93.0% of such users are from middle and high socioeconomic levels according to AMIPCI. Not only are internet users increasing, but the number of hours that they spend online is also increasing, with the average in Mexico being five hours per day, one more than the previous year according to AMIPCI. The graph below shows the growth of electronic commerce in Mexico in the last five years. In billions of Ps.

146 129 113 99 82

2014 2015 2016 2017 2018

Euromonitor

In addition, according to information from the Mexican Central Bank and the World Bank, personal banking credit cards have low penetration in Mexico covering less than 25.0% of the population. According to an e-commerce survey by AMIPCI in 2012, 57.0% of internet users who had not made any purchases over the internet declared that the reason was the lack of a credit card. Personal credit card penetration is increasing according to the Mexican Central Bank. Currently, such cards are the second most important vehicle for the banking market in Mexico, after debit cards, in terms of retail value. According to the e-commerce survey by AMIPCI, 22.0% of internet users had not made any purchase through the internet due to the lack of safety of online payments, and 14.0% were reluctant to furnish personal information online. However, many efforts have been implemented to make online transactions more secure, ranging from the Mexican Federal Personal Data Protection Law (Ley Federal de Protección de Datos

60 Personales), to AMIPCI’s certification (sello de confianza). A website is granted AMIPCI’s certificate following determination that such website meets a series of requirements, such as a privacy notice, a way for consumers to contact the site (either by email, phone or social networks), legal terms and conditions and a Secure Sockets Layer. For the year 2013, we were the leading internet retailer in terms of sales, with a market share of 3.7%, according to Euromonitor. The graph below shows the market share of our main competitors in the internet retail market.

1.6% 0.9% 0.5% 0.4%0.3% Others 2.6% 0.2% El Puerto de Liverpool, S.A.B. de C.V. 3.1% 3.4% Famsa-Fabricantes Muebleros, S.A. de C.V. 3.7% Palacio de Hierro, S.A. de C.V.

Grupo Sanborns, S.A.B. de C.V.

Wal-Mart de México, S.A. de C.V.

Coppel, S.A. de C.V.

Controladora Comercial Mexicana, S.A. de C.V.

Organización Soriana, S.A.B. de C.V. 83.3% Grupo Elektra, S.A. de C.V.

Amazon.com Inc.

Euromonitor

Internet retailing is expected to post double-digit growth in constant value in the next four years, according to Euromonitor. This channel is expected to benefit from the growth in computer ownership with internet access. Also, it is expected that the current teenage generation will support internet retailing as they become adults, according to Euromonitor. Payment alternatives are expected to continue to expand, including PayPal, select online and pick-up and pay in store, or even the creation of flexible payment methods, such as pre-paid cards accepted by a variety of retailers. In 2013, approximately 64.0% of internet purchases were completed using credit cards, according to the AMIPCI. Credit cards are likely to remain the most important payment method online and are expected to continue to expand in Mexico as a result of active promotional activities by companies, together with a burgeoning segment of entry-level consumers who are learning the benefits of using credit cards for the first time. Consumer confidence is also expected to grow as shoppers gain confidence. In addition, time savings are expected to incentivize online purchases.

61 The graph below shows the forecast growth of internet retailing. In billions of Ps.

146 129 113 99 82

2014 2015 2016 2017 2018

Euromonitor

Retailers are expected to continue to adapt to internet retailing, promising positive performance for the channel over the next three years, according to Euromonitor. This includes the development of applications to provide a more convenient option to shoppers buying through mobile devices; e-commerce is expected to continue to gain relevance due to the popularity that smartphones and tablets are enjoying. Internet retailing could threaten traditional chains which fail to create a multichannel strategy. Greater disposable income, a growing middle class and rising consumer sentiment, coupled with low levels of unemployment, household deleveraging and the potential expansion of consumer financing represent some of the factors that should continue to support the retail industry in Mexico. Additionally, expanding attractive customer promotions and credit products, such as interest-free installment programs and innovative product offerings, are likely to drive strong sales in future years.

Mexican Consumer Credit Industry As part of our comprehensive program to support our retail operations, we provide financing to our customers through the ‘‘Liverpool Credit Card’’ and the ‘‘Fábricas de Francia Credit Card,’’ which allows them to purchase goods and services exclusively at our department stores. In addition, we offer the ‘‘Liverpool Premium Card,’’ which allows cardholders to purchase goods and services at our department stores and specialized boutiques, and at any business affiliated with the VISA payment system worldwide. The Mexican consumer credit market, as well as the retail industry, is primarily affected by macroeconomic factors such as Mexican economy overall performance, unemployment, credit demand, demographic growth, exchange rates and interest rates in Mexico, among others. The Mexican consumer credit market is highly competitive and is primarily dominated by Mexican financial groups, commercial banks (including full services banks and banks created to engage in specific financing activities, called ‘‘niche banks’’), insurance companies and other retailers (some of which directly, or through affiliates, have obtained banking licenses from the CNBV, such as Walmart, Soriana and Famsa), as well as non-Mexican banks and international financial intermediaries.

62 As of June 30, 2014, the Mexican banking system was comprised of 42 private-sector banks, of which 24 are principally Mexican owned, 18 are foreign owned and six are government owned. Mexico’s six largest private sector banks, BBVA Bancomer, Banamex, Santander, -Ixe, HSBC and Scotiabank, accounted for approximately 76.6% of all outstanding assets of Mexican private sector banks as of June 30, 2012. In addition, the retail market is also served by non-bank financial companies, which offer mortgage, consumer and commercial loans mainly for low- and middle-income individuals. These institutions may engage in certain banking activities and are supervised by the same regulatory authorities as commercial banks, but are prohibited from engaging in foreign trade finance, offering checking accounts and engaging in foreign currency operations, together with other retailers who have not obtained a banking license from the CNBV. Since the Mexican economic crisis in 2009, many of these non-bank financial companies have been affected by liquidity problems as a result of difficulties experienced in obtaining funding and many have either disappeared or are in financial restructuring. The increased competition within the Mexican banking industry in recent years has led to consolidation of the industry, and further consolidation may occur. Mexican regulatory authorities have welcomed new market entrants in order to foster a more competitive market. In 2011, competition in the Mexican banking industry further increased as a consequence of organic growth through mergers and acquisitions, including the merger of Banorte and Ixe and the acquisition of General Electric Capital Corporation by Santander. The following graph shows the market share of the main Mexican banks participating in the consumer credit market as of April 30, 2014, and our company, according to information published by the Mexican Central Bank (Banco de México).

5.1% 5.1%

Others 11.3% 31.4% BBVA Bancomer Banamex

17.8% Liverpool Santander Banorte-Ixe Tarjetas 24.4% BanCoppel 22.8%

Mexican Central Bank Note: As of April 30, 2014, there were 16,189,002 active credit card holders in the Mexican banking system. Percentages above were calculated taking into account our 3,500,000 card holders for illustrative purposes only.

As of April 30, 2014, according to information from the Mexican Central Bank and our estimates, we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million card holders and we had a loan portfolio of Ps.28,181 million (U.S.$2,173 million) as of December 31, 2013.

63 According to Euromonitor, by the end of 2011, Mexico had the lowest consumer financing penetration ratio among the largest Latin American economies, with a consumer financing-to-GDP ratio of 3.3%, compared to 9.6% in Brazil, 37.1% in Chile and 8.2% in Colombia. We believe Mexico is in a great position to narrow this gap, as consumer leverage is low following the deleveraging process that began in 2008, especially in respect to credit card products. Asset quality has also improved in the overall banking industry, as evidenced by the consumer non-performing loan ratio, which decreased from 5.6% in 2008 to 4.3% at the end of September 2012. The graph below shows the value of non-performing consumer loans of the Mexican banking system during the last five years. 120,000 In millions of Ps.

100,000 97,398

80,000 67,747 59,163 60,000 58,668 49,469

40,000

20,000

0 2009 2010 2011 2012 2013

Mexican Central Bank.

Mexican Shopping Center Industry The real estate sector in Mexico is also supported by the general macroeconomic environment and is driven by the major rise of infrastructure across Mexico, which has resulted in new commercial real estate projects, and the growth of the Mexican retail industry. For the period from 2000 through the third quarter of 2012, the total retail selling floor in Mexico grew at a CAGR of 8.4%, according to ANTAD. According to Cushman & Wakefield, Inc., a global commercial real estate services organization, in 2012 and 2013 the United States, Russia, Brazil, Mexico, India, and China continued to drive activity, accounting for the majority of new shopping center space added to the shopping centers global market. Such countries are expected to remain development leaders and will account for the largest amount of new gross leasable area completed through 2016, according to Cushman Wakefield. Within the six primary countries of Latin America, total shopping center gross leasable area stands at approximately 34 million square meters as of March 2014, with the average provision per 1,000 inhabitants reaching 73.6 square meters, according to Cushman Wakefield. Brazil remains the largest market by shopping center space and accounts for nearly 36.0% of the total, with 12.7 million square meters of gross leasable area, followed closely by Mexico, which accounts for one third of the total with 11.4 million square meters. Colombia, Chile, Peru, and Argentina together account for a total of 10.6 million square meters of gross leasable area, representing 30.9% of the six-country total. According to Colliers International, a global commercial real estate services organization, as of June 30, 2012, the total sales floor for Mexico was approximately 22.2 million square meters when considering ‘‘power centers,’’ ‘‘fashion malls,’’ ‘‘mixed use,’’ ‘‘outlet malls,’’ ‘‘community centers,’’ ‘‘neighbor centers,’’ ‘‘entertainment centers’’ and ‘‘lifestyle centers.’’ During 2012, 18 shopping centers larger than 10,000 square meters opened in Mexico, with an area of 460,000 square meters. Additionally, in such year, six shopping centers were incorporated, which recorded a total increase of 100,000 square meters.

64 By geographical location, the total profitable surface in new shopping centers opened in 2012 is distributed across the Mexican territory as follows: 39.0% in the Metropolitan Area; 29.0% in the Central region; 28.0% in the Southeast; and 4% in the Northwest, according to Colliers International. The participation of fashion malls is particularly relevant because they represented approximately 58.0% of the profitable surface in the market, followed by the power centers with a 29.0% share, and neighborhood centers with a 9.0% share. In 2013, 13 shopping centers opened in Mexico, according to the International Council of Shopping Centers. At least 50 other shopping center projects with at least one anchor and a minimum of 30 stores were expected to open between 2013 and 2014, according to the International Council of Shopping Centers. The retail real estate industry in Mexico is characterized by a limited number of large-scale developers that have the financial strength and technical expertise to undertake and complete large development projects. Such developers include Grupo GICSA (Cancún, Mexico City and ), Grupo Dahnos (Mexico City) and Grupo Frisa (Cancun, State of Mexico). In addition, other specialized retail real estate developers operate in Mexico, such as Grupo Acosta Verde (Mexico City and State of Mexico), Planigrupo (State of Mexico and Jalisco), Mexico Retail Properties (Mexico City, State of Mexico and Jalisco) and Consorcio ARA (State of Mexico). The Mexican real estate industry is also benefiting from the continued growth of FIBRAS (fideicomisos de infraestructura y bienes raices, Mexico’s version of REITs) and publicly listed structured equity securities called certificados de capital de desarrollo, or CKDs, whose main source of capital is pension funds. Two of the country’s leading mall developers, Mexico Retail Properties and Planigrupo, have issued CKDs, while Fibra Uno, Mexico’s biggest REIT, obtained U.S.$1.7 billion in January 2013 on the Mexican stock market to fund its acquisition of malls and other real estate. Fibra Uno’s mall portfolio includes La Isla Shopping Center and Forum by the Sea, both in Cancún. Following this trend, on July 2013, Fibra Shop, the first Mexican REIT focused on shopping centers, obtained Ps.4.7 billion on the Mexican stock market to fund its acquisition of malls and other real estate. Fibra Shop’s mall portfolio includes Plaza Puerto Paraíso and Kukulcán Plaza, in Los Cabos and Cancún, respectively. The FIBRAS index, which tracks the development of Mexican REIT, outperformed Mexico’s national consumer price index in 2013, which reflects the expected acceleration of the industrial sector and the still-strong investor optimism in the nascent FIBRA sector. However, changes on FIBRA’s regulation are expected to have an important impact on liquidity and growth potential in the near term, as the authorities plan to top leverage ratios and set liquidity requirements in this sector. According to Colliers International, retail development in Mexico’s smaller cities has been reactivated and it is expected that the aggregate gross leasable area of retail space in Mexico will grow approximately 50.0% in 2014, primarily as a result of shopping center openings in these cities during such year. It is also expected that prime headline rents will continue to grow due to the recovery in consumer spending, according to Prudential, one of the global real estate investment managers. According to Cushman Wakefield, as of March 2014 the Latin America shopping center development pipeline for 2014 stands at 2.54 million square meters, with 72 new shopping centers, scheduled to be completed before 2014 ends. There are 23 projects in Brazil totaling 1 million square meters. Peru ranks second behind Brazil with expected 620,400 square meters of new gross leasable are to be completed in 2014, represented by 17 centers under construction. Mexico follows Peru with seven shopping centers containing approximately 350,000 square meters of gross leasable are expected for completion in 2014. Over the next three years, it is expected that Brazil and Mexico will continue to lead the growth in shopping center space in Latin America, according to Cushman Wakefield.

65 BUSINESS Overview We are the largest department store chain in Mexico in terms of number of stores and sales. We offer a wide variety of consumer products, including distinctive fashion apparel, shoes, accessories, jewelry, electronics, sporting goods, household articles, furniture, cosmetics and books. We were established in 1847 and currently operate 104 department stores nationwide under the ‘‘Liverpool,’’ ‘‘Fábricas de Francia’’ and ‘‘Liverpool Duty Free’’ names. Our brand ‘‘Liverpool’’ is iconic in Mexico and is ranked among the top five Latin American brands in the retail industry and among the top 20 brands in the retail industry worldwide, according to Interbrand. We also own or have a significant interest in 22 shopping centers in 16 cities in Mexico and, according to information from the Mexican Central Bank and our estimates, as of April 30, 2014 we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million credit card holders. Our stores are primarily located in upscale mixed-use and regional malls catering to middle and high-income families in Mexico. Through our customer-centric and omni-channel strategy we have established a leading market position in the Mexican department store industry according to Euromonitor. Our customer-centric strategy ensures that our customers find an assortment of merchandise, sizes, marketing programs, credit offers and shopping experiences that are custom-tailored to their needs. Our omni-channel strategy allows our customers to shop seamlessly through our different distribution channels while consistently experiencing our brand. Our shares are listed on the BMV under the ticker symbol ‘‘LIVEPOL.’’ As of June 30, 2014, our market capitalization was approximately Ps.206 billion (U.S.$16 billion). As a result of our expansion and the diversification of our business in the last 20 years, we have divided our operations in three different business activities that complement each other and represent independent sources of revenue: commercial, consumer credit and real estate. • Commercial Operations. We operate a total of 104 department stores, of which 75 are under the name ‘‘Liverpool,’’ 24 are under the name ‘‘Fábricas de Francia’’ and five are under the name ‘‘Liverpool Duty Free,’’ we also operate 76 specialized boutiques, including under the names of ‘‘Aéropostale,’’ ‘‘Banana Republic,’’ ‘‘Chico’s,’’ ‘‘Destination Maternity,’’ ‘‘GAP,’’ ‘‘M.A.C. Cosmetics’’ and ‘‘Sfera,’’ among others, which represent, in the aggregate, 1.4 million square meters of retail space, as well as our website www.liverpool.com.mx, through which we are the largest retailer in Mexico in terms of sales according to ANTAD. Our business model is driven by the optimization of fixed retail space based on the assortment of merchandise. As a result, the product offerings vary by size of store and specific customer preferences in each of our locations. We have a nation-wide presence, most of our stores are located at urban or suburban sites, primarily in densely populated areas across Mexico and our department stores and website generally serve the same type of customers and provide virtually the same mix of merchandise. • Consumer Credit Operations. As part of our comprehensive program to support our retail operations, we provide financing to our customers through the ‘‘Liverpool Credit Card’’ and the ‘‘Fábricas de Francia Credit Card,’’ which allows them to purchase goods and services exclusively at our department stores. In addition, we offer the ‘‘Liverpool Premium Card,’’ which allows cardholders to purchase goods and services at our department stores and specialized boutiques, and at any business affiliated with the VISA payment system worldwide. Our consumer credit operations have become an independent source of revenue, as of April 30, 2014, according to information from the Mexican Central Bank and our estimates, we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million card holders and we had a loan portfolio of Ps.28,181 million (U.S.$2,173 million) as of December 31, 2013. For the year ended December 31, 2013, sales through our credit cards accounted for Ps.33,416 million, or 52.8% of our consolidated sales and our non-performing loans rate was 3.3%. • Real Estate Operations. We are also involved in real estate operations which include developing, leasing and managing shopping centers and retail premises. We own or have a significant interest in 22 shopping centers known as ‘‘Galerías’’ and lease approximately 2,430 retail premises to third parties. Our shopping centers have presence in all of Mexico’s principal cities in terms of population. In the last ten years, we have more than doubled the gross leasable area of our shopping centers and

66 retail premises from 158,637 square meters in 2003 to 394,248 square meters in 2013. For the year ended December 31, 2013, our shopping centers had more than 100 million visitors and our retail premises had an average occupancy rate of 97.0%. Our real estate operations have become an important source of revenue and a strategic complement to our commercial operations by providing high-profile facilities to attract an increasing number of potential customers to our department stores. For the year ended December 31, 2013, we generated consolidated revenue and EBITDA of Ps.74,105 million (U.S.$5,714 million) and Ps.12,536 million (U.S.$967 million), respectively. For this period, our commercial, consumer credit and real estate operations accounted for 88.7%, 7.8% and 3.5% of our consolidated revenue, respectively. From 2009 to 2013, our consolidated revenue and EBITDA grew at a CAGR of 12.1% and 16.2%, respectively. During the same period, same store sales grew at a CAGR of 8.3%, and we opened 17 new department stores, two ‘‘Liverpool Duty Free’’ stores and six shopping centers which represent 32.6% and 36.3% of our aggregate retail space and gross leasable area, respectively.

In millions of Ps. (except percentages) 74,105 66,247 58,657 52,161 47,004

17.9% 17.8% 14.6% 17.1% 16.9%

2009* 2010* 2011 2012 2013

Consolidated Revenue EBITDA Margin

* Information prepared in accordance with Mexican GAAP.

For the year ended December 31, 2013, our and the subsidiary guarantor’s aggregate EBITDA and the aggregate EBITDA of our non-guarantor subsidiaries (in each case, without giving effect to intercompany eliminations) was Ps.7,124 million (U.S.$546 million) and Ps.5,412 million (U.S.$415 million), respectively, or 56.8% and 43.2% of our consolidated EBITDA, respectively. As of December 31, 2013, the total assets of our company and the subsidiary guarantor was Ps.53,891 million (U.S.$4,133 million), or 56.8% of our consolidated total assets, and the aggregate total assets of our non-guarantor subsidiaries was Ps.41,045 million (U.S.$3,148 million), or 43.2% of our consolidated total assets. For the six months ended June 30, 2014, we generated consolidated revenue and EBITDA of Ps.34,907 million (U.S.$2,691 million) and Ps.4,752 million (U.S.$366 million), respectively. For this period, our commercial, consumer credit and real estate operations accounted for 84.7%, 11.5% and 3.7% of our consolidated revenue, respectively.

Our Strengths As a result of our unique customer-centric corporate philosophy and deep understanding of the Mexican market and consumer, we have built a reputation for quality, creativity and uniqueness. We believe the following strengths distinguish us from our competitors and will allow us to successfully fulfill our strategy for our continued growth.

67 • Distinctive Philosophy. We recognize that our customers are paramount and we strive to provide them with an outstanding experience that transcends ordinary shopping. We believe that such customer-centric and family-orientated philosophy has allowed us to develop wide consumer recognition in Mexico. Our slogan ‘‘Liverpool Es Parte de Mi Vida’’ (Liverpool Is Part of My Life) confirms our philosophy of being a part of the Mexican lifestyle for more than 165 years. As we look towards the future, we are focused on creating diverse environments by transforming our department stores into multifunctional destinations. We believe that our department stores serve as destinations that promote social gathering while acting as a fashion stage and source of entertainment to provide a complete shopping experience. Our shopping centers have our customers in mind and have been adapted to suit their needs, by providing a diverse range of experiences, entertainment and services, as well as a broad assortment of merchandise in a comfortable, functional and safe environment. Our shopping experience includes quality events such as our biannual Fashion Fest, a festival that covers new fashion trends for the upcoming seasons and gathers supermodels, brand launches, food tastings, runways and holiday celebration events such as tree lightings. In 2011, we launched ‘‘Experiencia Gourmet,’’ our innovative gourmet food hall, to complement our entertainment and services offering within our department stores. Experiencia Gourmet combines eating venues where customers enjoy gourmet food products from different countries. Experiencia Gourmet is currently available in eight of our department stores and we plan to continue expanding this concept. We believe that our Experiencia Gourmet format enables our customers to enjoy a sophisticated yet comfortable eating experience at our department stores while promoting social gathering. • Leading Department Store Chain in Mexico. We started operations in 1847 and have become the leading department store chain in Mexico in terms of sales according to the ANTAD, offering to our customers a wide variety of consumer products, including distinctive fashion apparel, shoes, accessories, jewelry, electronics, sporting goods, household articles, furniture, cosmetics and books, all within a pleasant shopping environment. Our brand ‘‘Liverpool’’ is iconic in Mexico and is ranked among the top five Latin American brands in the retail industry and among the top 20 brands in the retail industry worldwide according to Interbrand. We operate 104 department stores located at urban or suburban sites, primarily located in densely populated areas, covering a larger portion of the Mexican territory than any one of our competitors. We believe that our current geographic diversification and our experience and knowledge of consumer preferences and habits in the regions in which we operate provide us with a significant advantage over our competitors. We believe our brands are generally associated with trust, legacy and status, coupled with a broad product assortment, personalized and high-quality customer service, convenience, good store locations and attractive promotions and sales financing programs, among others. We offer a broad selection of branded and private-label merchandise appealing to the fashion taste of our customers. The quality and breadth of our selection allow us to change the mix of our merchandise based on fashion trends and individual store locations and enable us to satisfy the needs of a broad customer base. • Wholly Owned and Strategic Real Estate Portfolio. Our department stores and shopping centers are strategically acquired to create a wholly owned portfolio of a single asset class of regional and neighborhood real estate properties with attractive location. We have nationwide presence, virtually covering every major region of Mexico. The real estate properties in our portfolio are selected based on growth potential, trade area and overall operating synergies. Currently we own approximately 88.0% of our retail space and approximately 76.0% of the gross leasable area of the shopping centers in which we have interests. Historically, our retail premises have had occupancy rates above 95.0%, low turnover rates and low past-due accounts with an attractive mix of more than 1,500 tenants and no tenant representing more than 10.0% of our consolidated revenue. Also, during the last ten years we have more than doubled the gross leasable area of our shopping centers from 158,637 square meters in 2003 to 394,248 square meters in 2013, which allowed us to host more than 100 million visitors in our stores in the last year. Our department stores and shopping centers are predominantly located within established trade areas across the 30 most populated cities in Mexico. Key areas of geographic concentration include Mexico City and other urban centers, with 8.9 million inhabitants served by 17 of our department stores and

68 seven of our shopping centers, Guadalajara, Jalisco, with 1.5 million inhabitants served by eight of our department stores, and Monterrey, Nuevo León with 1.1 million inhabitants served by four of our department stores and one of our shopping centers. We believe that such geographic concentration allows for economies of scale and provides us with market leverage while representing significant entry barriers for competitors due to the limited geographical opportunities and high costs associated with the construction of new developments. • Effective Control of Our Loan Portfolio and Flexibility To Adapt to Challenging Economic Cycles. As of April 30, 2014, according to information from the Mexican Central Bank and our estimates, we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million card holders and we had a loan portfolio of Ps.28,181 million (U.S.$2,173 million) as of December 31, 2013. Our sound and effective credit portfolio management allows us to rapidly increase and decrease our credit offerings which has a direct impact on the purchase behavior of our customers and, in turn, on our results of operations. For example, during challenging economic times with higher unemployment rates, we restrict our credit offerings, as well as credit limits of existing customers to avoid an excessive growth of our loan portfolio and non-performing loans rate. In addition, during periods of contraction in consumption with stable macroeconomic fundamentals, we usually increase our credit offerings to increase our customer base and purchase frequency. In the past, such adjustments have had an immediate favorable impact on our results of operations. We believe that such ability to adjust our loan portfolio during challenging economic cycles places us in an advantageous position with respect to our competitors. • Integrated Business Model With Strong Synergy Potential. Originally, our consumer credit and real estate operations were introduced as part of our comprehensive program to support our commercial operations and recently have become an independent source of revenue while continuing to serve as a strategic complement to our commercial operations. Since the introduction of our consumer credit and real estate operations, we have strived to share and leverage key resources and capabilities of our company across all of our operations, which has resulted in significant cost savings and enhanced revenues. Our commercial operations remain our core competency that binds together all our operations and our consumer credit and real estate operations have fueled our existing and new business growth. Our consumer credit operations have expanded significantly our customer base and purchase frequency, while our real estate segment has been focused on providing high-profile facilities to increase customer traffic in, and time enjoyed at, our department stores and shopping centers. Such business model has allowed us to capture synergies from a streamlined infrastructure and rationalized operations, while integrating customers, suppliers, processes, products, systems, and associates. As a result, we have built a strategic platform that leverages new capabilities and value propositions without disrupting or hurting business momentum, shareholder value, or financial performance. We believe that our integrated business model places us in a unique position to take advantage of the strong synergy potential of our commercial, consumer credit and real estate operations. • Strategic Distribution Network. We have developed an extensive distribution network. Our network allows us to distribute products from two national distribution centers to four regional distribution centers, 14 local warehouses, 25 storage deposits for remote stores and 104 department stores nationwide, complemented with a fleet of 250 trucks and trailers, 450 home delivery units, and services from independent operators. Our network also allows us to deliver big-ticket items sold in our department stores and products sold through our website to our customer’s homes. For example, in 2013 we completed over two million deliveries to our customers’ homes. We also maintain a highly efficient and sophisticated logistics operation to address distribution requirements, which allows us to manage over 180,000 different stock-keeping units (SKUs). Our distribution network allows us to respond to the diverse and changing needs of our customers and vendors in a cost-effective manner, which we believe contributes to the development of strong customer loyalty. • Presence in Attractive Markets with High Growth Potential. We believe that Mexico will continue to present very attractive growth opportunities for the retail industry. With a nominal GDP of U.S.$1,261 billion in 2013, a population of more than 115 million and a rapidly expanding middle class, Mexico is the second largest economy in Latin America and has experienced sustained growth in recent years. After absorbing the impact of the latest financial crisis, the Mexican economy grew at an

69 average annual rate of 3.0% in the past three years according to information of the World Bank. We believe that a favorable outlook for the Mexican economy, the growth in income per capita, and the country’s positive demographic trends will drive consumer spending in Mexico. In addition, as a result of an expected increase in income per capita and since Mexico has a young and growing population, it is estimated that, by 2025, approximately half of the population will belong to the middle class, up from approximately 30.0% at present. We believe this will create greater demand for the merchandise we sell. In light of these factors, we believe that there is great potential for significant long-term growth in the retail industry in Mexico. Over the past three years, the department store industry has been the fastest growing retail sub-sector in Mexico, with average sales growth of 14.0%, according to information from ANTAD. We believe department stores will continue to grow ahead of the industry, owing to the combination of share gains from informal channels, increasing shopping frequency from rising income trends, footprint expansion, higher credit penetration, and an increased assortment of merchandise. We believe we are uniquely positioned to take advantage of the growth opportunities offered by the Mexican market. Our portfolio of highly recognized store names combined with our deep understanding of our customers and our ability to adapt to various markets through our wide assortment of merchandise targeting different socio-economic levels, place us in a unique position to take advantage of the strong synergy potential of our commercial, consumer credit and real estate operations. • High-Quality and Motivated Management Team. Our strong senior management team has proven industry expertise, with over 149 years of service with our company in the aggregate. It has managed our company through Mexico’s economic cycles while maintaining high operating income margins and sales growth. Our management team has developed and consolidated our market leadership by focusing on our retail operations while successfully integrating our credit and real estate operations. For example, since their introduction, our credit cards have been the most frequently used payment method for our customers and for the year ended December 31, 2013, sales through our credit cards accounted for Ps.33,416 million, or 52.8% of our consolidated sales. Our management philosophy emphasizes accountability coupled with efficient control mechanisms, as a result we believe we maintain a strong balance sheet and disciplined financial policies. In addition, we benefit from a healthy financial position with low leverage levels and high capitalization which enables us to respond effectively to the constantly changing consumer demands and competitive environment in the Mexican retail market.

Our Strategy We seek to enhance our position as the leading Mexican retailer and leading non-bank credit card issuer, and increase our presence in the real estate market for stores and shopping centers in Mexico while continuing to provide our customers an experience that transcends ordinary shopping. To achieve these objectives, we plan on executing the following key strategies. • Customer-Centric Omni-Channel Strategy. Localization and omni-channel integration are key components of our strategy to achieve continued growth as we redefine customer’s shopping experience and build customer trust. Technology and social media have transformed the retail landscape. To meet new customer demands we plan to continue tracking customers across all channels simultaneously, while offering innovative sale programs to increase volumes and purchase frequency, such as our night sales (Ventas Nocturnas) and our end-of-season clearances. We believe that incorporating selling and promotion across all channels will leverage each channel’s strengths and will allow us to present ourselves seamlessly to our customers as one cohesive brand. We seek to enable our consumers to experience our brand consistently across all retail channels, while offering targeted and innovative purchase options tailored to their needs and preferences. As part of this strategy, since 2007 we have been working with SAS, the leader in business analytics software and services, to develop customer profiles which we believe will allow us to better understand our customers and engage them in targeted promotions and credit offers. We believe that a deep understanding of our customers’ preferences allows us to continue to develop integrated marketing plans with offers that address specific customers determined by purchase patterns, social network affinities, website visits, loyalty programs, and other data-mining techniques. We are aware that satisfying customers today transcends place or time, and growth is dependent on continually creating

70 best shopping experiences. In this context, our brick-and-mortar stores have become an extension of the supply chain in which purchases are made at the store, but researched through other channels of communication. We believe that our omni-channel strategy will allow us to continue to enhance customer loyalty while increasing our sales and profitability. • Continue Expanding Our Retail Space and Developing Shopping Centers on Prime Locations. Our business expansion strategy for our commercial and real estate operations focuses on acquiring or building new stores and shopping centers on prime locations and increasing same-store sales by store remodeling and improved store layouts. We believe that we are in a favorable position to capitalize on attractive growth opportunities through the constant expansion of our selling area and geographic footprint in regions that we believe offer strong growth potential. Generalized nationwide growth in recent years and a major rise of infrastructure and commercial real estate projects have resulted in increased availability of retail space that will allow us to capitalize on the positive trend of retail consumption through the expansion of our commercial and real estate operations. Currently, there are more than 250 cities in Mexico with a population of over 50,000 inhabitants without access to important retail chains, presenting an important opportunity for the expansion of our operations. Each investment decision involves a deep analysis of the geographic landscape and markets with characteristics that we believe present attractive opportunities to achieve strong profitability over a reasonable time period. Our disciplined approach to acquisitions is centered on securing premium real estate locations, expanding our geographic footprint, diversifying our retail portfolio, achieving economies of scale, realizing important revenue and cost synergies, and enhancing the return on investment of our portfolio. From 2009 to 2013 we opened 23 new department stores, two ‘‘Liverpool Duty Free’’ and nine shopping centers which represent 25.0% and 35.0% of our aggregate retail space and gross leasable area, respectively. We expect to continue implementing our expansion strategy throughout 2014 and over the next years, particularly in cities with population ranging between 200,000 and 800,000 inhabitants which we believe are underserved. We are building department stores and shopping centers in the fast growing cities of Puebla and Toluca. In addition, we expect that two Fábricas de Francia stores and 42 specialized boutiques in different cities of Mexico will start operations in 2014, which we expect will represent a 6.8% increase in our aggregate sales area. • Enhance Consumer Credit Offerings. We intend to continue enhancing our consumer credit offerings through our private label credit cards and seek to consolidate our position as the number one non-bank credit card issuer in Mexico. We believe that our credit offerings increase our customer base for our retail operations, enhance our ability to sell additional products and build lasting trust and loyalty with our customers. Besides acting as a catalyst for further growth of our commercial and real estate operations, we believe that our consumer credit offerings will increasingly become a source of independent income through the expansion of our credit card portfolio and enhancement of our offerings of financial products and services. In 2013 our consumer credit operations reached more than 3.5 million cardholders for a loan book that totaled Ps.28,181 million (U.S.$2,173 million) and grew 17.7%. We expect our consumer credit operations to continue their growing trend over the next years. As more of our customers use our private label credit cards, we expect our same-store sales to increase. In addition, our efficient consumer credit portfolio management has resulted in historically low non-performing loan rates. For the year ended December 31, 2013, our non-performing loans rate was 3.3%. We intend to continue to build upon our experience and knowledge of providing consumer financing to further expand and enhance our consumer credit offerings, while deepening the loyalty of our customers already using those cards. • Increase Customer Traffic and Sales. We believe we have a significant opportunity to increase our market share by opening new stores and shopping centers and remodeling existing ones with attractive layouts in line with our customer-centric and family-orientated philosophy, further developing our credit card portfolio by introducing new products and categories and continue our omni-channel efforts towards enhancing customer loyalty. For the year ended December 31, 2013, our shopping centers had more than 100 million visitors and our retail premises had an average occupancy rate of 97.0%.

71 While we seek to continue developing our real estate operations as an independent source of revenue, we expect that such operations will continue to be an important complement to our commercial operations by providing high-profile facilities to attract an increasing number of potential customers for our department stores. In addition, we believe that our customer-centric focus favors the alignment of our commercial offerings by providing particularized merchandise in the right stores at the right price at the right time. In line with this strategy, in recent years we have optimized the retail space in our department stores by tailoring the merchandise catalogue and targeting the preferences and needs of the customer according to each location and channel, which resulted in an increase in customer traffic and sales in stores. We believe our solid service infrastructure, supply chain and accessible IT services combined with functional, state-of-the art and conveniently located facilities are core elements of our competitive advantages and key components for our steady growth, which will allow us to continue as the preferred choice amongst our customers in each of our formats. We expect to continue to cater to our customers in ways that are aimed at efficiently and effectively increasing customer traffic in, and time enjoyed at, our department stores and shopping centers. • Improved and Efficient Operations, Technology and Customer Service. We continuously invest to improve, especially through the use of technology, our supply and distribution chains as well as the management of our customer information to enhance the effectiveness of our omni-channel retailing and marketing efforts. For example, in 2013 we invested Ps.878 million in our technology platforms, as well as in our supply chain, with the objective of fostering the further development and growth of our current businesses. Our rapid growth has required us to continuously optimize our warehousing processes and inventory management through automated warehousing and sorting systems, areas where we believe the use of technology would derive in increased efficiencies. For example, we have introduced RFID and EPC tags in most of our department stores and in our Tultitlan, Estado de México, national distribution center to improve inventory management. Additionally, in compliance with the requirements of our supply chain, our merchandise handling operation was migrated to a flow and in-line processing system in all our locations. Online shopping has become increasingly important in our customers’ preferences. To capitalize on that trend, in 2013 we re-launched our e-commerce platform to offer a greater merchandise catalog and strengthened the search engine of our e-commerce website. As a result of our work with SAS, in line with our efforts to keep up with cutting edge technology and offer immediate and efficient customer service, in 2013 we introduced the golden customer record function which allows us to unify our databases to simplify our processes and personalize our service offerings. • Sales Force Productivity and Social Responsibility. As of July 31, 2014, we had approximately 45,000 associates, and we believe that a key element to our continued growth is to promote their personal and professional growth. We believe that a well-trained and informed workforce will reduce labor costs and drive efficiencies. As a result, we plan to continue improving our sales force productivity through more effective training programs and attractive compensation schemes. We are convinced that training plays a crucial role in omni-channel success. Our store colleagues are part of our brand-delivery experience and a crucial element to maintain our brand-customer relationship, which provides us with a competitive advantage and distinguishes us from our competitors. Data and technology help us train our associates on omni-channel strategies and customer behavior so we can create a unified approach for the shopping experience we offer. We are committed to customer service and customer satisfaction by providing a combination of high-quality personalized services. We believe that such commitment is reflected in the low turnover rates of our associates. In 2014 we were ranked third among the best places to work in Mexico by the Great Place to Work Institute. In addition, as part of our commitment to the growth of our associates, in 2000 we launched the Liverpool Training Institute (Instituto de Formación Liverpool), the first virtual corporate university in Mexico, to provide our associates and their families with personal development options ranging from senior high-school programs to graduate studies. The Liverpool Education Institute offers a bachelor degree in retail management, master degrees in leadership and business administration and other programs associated with our business. As of December 31, 2013, more than 1,500 associates have obtained a degree from the Liverpool Education Institute. Through our

72 Liverpool Education Institute we seek to guarantee the continuity of our principles, identity and business philosophy, while encouraging the growth of our associates. We expect to continue offering career plans that enable us to adapt the development of our associates to our corporate growth needs.

Our History and Development We started operations in 1847 as a small retail store. On February 28, 1912, we were incorporated as a Mexican limited partnership (sociedad en comandita simple) and adopted the form of a Mexican stock corporation (sociedad anónima) under the laws of Mexico on September 30, 1944. Since 1965 our shares have been listed on the Mexican Stock Exchange and, as a result of the enactment of the Mexican Securities Market Law, in 2006 we adopted the form of publicly traded stock corporation (sociedad anónima bursátil de capital variable). We have managed to expand our geographic presence and product portfolio, and evolve from a regional company with a single line of business to one of the largest retail companies in Mexico with presence in virtually every major geographic market in Mexico, the leading non-bank credit card issuer and one of the leading shopping centers developers in the country. As one of the largest retailers in Mexico, our growth has been driven by our unique identity, customer-centric approach, focus on quality, innovation and customer service, diversification of business and operational efficiency with sustainable growth. As part of our comprehensive program to support our retail operations, since 1925 we have provided financing options to our customers in order to facilitate the purchase of goods and services at our department stores. In addition, since 1980 we have ventured into the real estate business, which includes developing, leasing and managing shopping centers and retail premises. In the last ten years our real estate operations have become an important source of revenue and a strategic complement to our commercial operations by providing high-profile facilities to attract an increasing number of potential customers for our department stores.

Operations As a result of our expansion and the diversification of our business in the last 20 years, we have divided our operations in three different business activities that complement each other and represent independent sources of revenue: commercial, consumer credit and real estate.

Commercial Operations Our department store chain offers a wide variety of consumer products, including distinctive fashion apparel, shoes, accessories, jewelry, electronics, sporting goods, household articles, furniture, cosmetics and books. Our stores are primarily located in upscale mixed-use and regional malls catering to middle and high-income families in Mexico. We have built a reputation for quality, creativity and uniqueness by providing a broad product assortment, personalized and high-quality customer service, convenience, good store locations and attractive promotions and sales financing programs, among others, for a unique shopping experience for families in Mexico. As a result, we believe our brands are generally associated with trust, legacy and status. In line with our customer-centric strategy, we have invested in talent, technology, fulfillment capacity, infrastructure and marketing, which ensures that our customers find merchandise assortments, size ranges, marketing programs, credit offers and shopping experiences that are custom-tailored to their needs in our high-profile department stores, while experiencing our engaging customer service. Our omni-channel strategy allows customers to shop seamlessly in stores and online, via computers or mobile devices while consistently experiencing our brand. A pivotal part of our omni-channel strategy is our ability to allow associates in any store to sell a product that may be unavailable locally by selecting merchandise from other stores or online fulfillment centers for shipment to the customer’s door. Likewise, our online fulfillment centers can draw on store inventories nationwide to fill orders that originate online, via computers or mobile devices.

73 The graph below shows our sales efficiency per square meter from 2009 to 2013. Sales per square meter in Ps.

51,000

49,000 49,000

46,000

44,000

2009 2010 2011 2012 2013

In addition, as part of our comprehensive customer service, our department stores also offer travel agency services through a concession with El Corte Inglés, S. A., the leading department store chain in , insurance services through an authorized insurance broker, optician, interior design and restaurant services, among others. Currently, we operate a total of 104 department stores, of which 75 are under the name ‘‘Liverpool,’’ 24 are under the name ‘‘Fábricas de Francia’’ and five are under the name ‘‘Liverpool Duty Free,’’ we also operate 76 specialized boutiques, including under the names of ‘‘Aéropostale,’’ ‘‘Banana Republic,’’ ‘‘Chico’s,’’ ‘‘Destination Maternity,’’ ‘‘GAP,’’ ‘‘M.A.C. Cosmetics’’ and ‘‘Sfera,’’ among others, which represent 1.4 million square meters of retail space in the aggregate. The chart below shows the evolution of our retail space from 2009 to 2013. In millions of square meters

1.4 1.3 1.3 1.1 1.0

2009 2010 2011 2012 2013

The product offerings in our department stores vary by size of store and specific customer preferences in each of our locations. We provide for more local decision-making in every community in which we have presence, which involves tailoring merchandise assortments, space allocations, service levels, visual merchandising, marketing and special events on a store-by-store basis. Most of our department stores are located at urban or suburban sites, primarily in densely populated areas across Mexico and our department stores and website generally serve the same type of customers and provide virtually the same mix of merchandise.

74 The following map indicates our principal locations in Mexico:

The graph below shows the number of stores per ranges of retail space as of June 30, 2014.

35 33 30 30

25

20 17

15 11 10 8 5 5

0 0-5,000 sqm 5,000-10,000 sqm 10,000-15,000 sqm 15,000-20,000 sqm 20,000-25,000 sqm >25,000 sqm

75 0-5,000 sqm 5,000-10,000 sqm 10,000-15,000 sqm 15,000-20,000 sqm 20,000-25,000 sqm >25,000 sqm

Playa del Carmen Cd. Del Carmen - Mazatlán Marina Cd. Jardín - 2012 El 76 Specialized II - 2011 2013 - 2013 Dorado - 2012 Boutiques 2005 - 2014 Kukulkán- 2010 Itsmo - 2012 - 2013 Guadalajara - 2011 Antea Querétaro - Oblatos - 2012 2014 Los Cabos - 2007 Playa del Carmen - 2013 León Sur - 2012 Atizapán - 2008 - 2012 Altabrisa - 2012 Playa del Carmen San Juan del Río Campeche - 2012 San Luis Potosí - Parque Tezontle - Guadalajara - 2007 - 2012 2011 2007 - 2008 La Isla Cancún - La Paz - 2011 Cd. Victoria - - Jalapa - 2006 Puebla - 1997 2006 2010 2011 - 2008 - 2010 Monterrey Lindavista - 2006 Santa Fe - 1993 Cumbres - 2010 - - 2010 Paseo - - Perisur - 1980 2008 2010 2005 - Cd. Juárez - 2009 - 2003 Ecatepec - 2005 Polanco - 1970 2007 San Miguel de - 2008 Monterrey Valle - Insurgentes - Allende - 2007 Oriente - 2003 2005 1962 - - 2008 - 2001 Guadalajara - 2007 2003 Tehuacán - 2006 - 2007 Querétaro - 2001 Coapa - 1992 - Mérida - 1999 2007

Lago de - 2007 - 1985 Guadalupe - 2014 Plaza Central - - Monterrey - 1983 2014 2006 Cd. Obregón - - 2006 Villahermosa - 2002 1982 Cd. Juárez -2000 - 2004 Morelia - 1979 Chihuahua - 2000 Culiacán - 2003 Satélite - 1971 Mazatlán Gran - 2003 Plaza - 1999 - 1999 - 2003 Veracruz - 1999 Torreón - 2001 Coatzacoalcos – Perinorte - 2000 1997 Córdoba - 1997 Monterrey Centro - 1999 Jalapa - 1997 Cancún - 1998 - 1997 Toluca - 1998 Villahermosa – Tuxtla Gutiérrez - 1997 1997 Puebla - 1997 Veracruz - 1997 Aguascalientes – León - 1996 1986 Guadalajara Centro - 1934 Centro – 1976

76 0-5,000 sqm 5,000-10,000 sqm 10,000-15,000 sqm 15,000-20,000 sqm 20,000-25,000 sqm >25,000 sqm Guadalajara Patria – 1974

Guadalajara Sol – - 2002 1969 Tepic - 1961 San Luis Potosí - 2001 Acapulco - 1999 Guadalajara Gran Plaza - 1999 León - 1999 We are continuously expanding and optimizing our products and service offerings throughout our department store portfolio, where we offer a broad assortment of leading brand-names and other third-party durable goods. Our store sales area is organized by merchandise category with flexibility to quickly expand or contract category offerings in response to changes in consumer preferences. Our typical store features well-balanced space between sleek modern architecture, fresh colors, natural finishes and organic shapes to create a hospitable yet stylish retail environment. In line with the layout of our department stores, we classify the products we sell in nine principal categories: furniture, consumer electronics, household articles, women, men, kids, restaurant and cosmetics. The graph below shows the breakdown of our sales by category of product as of June 30, 2014.

3% 12% Consumer Electronics 24% Women 8% Men Furniture 8% Home 20% Kids 12% Cosmetics Restaurant 12% 13% Household articles

The merchandise for each private brand available in our stores is selected to appeal to a wide range of customers. Due to our broad product assortment, as of June 30, 2014, none of the products we sell represented 10.0% or more of our consolidated sales. The following table lists some of our top selling brands among our private label brands and the many other leading international and local brands that comprise our portfolio.

77 Products Brands

Apparel and accessories

Appliances and home products

Electronics

We also operate the www.liverpool.com.mx website. Online shopping has become increasingly important in our customers’ preferences. To capitalize on that trend, in 2013 we re-launched our e-commerce platform to offer a greater merchandise catalog and strengthened the search engine of our e-commerce website. As of the date of this offering memorandum, we are the largest internet retailer in terms of sales, according to Euromonitor. For the six months ended June 30, 2014, our website visitors have increased by 77.6%, compared to the same period of the previous year.

78 We constantly strive to broaden our offer of department store formats and services. As a result of this effort, to further address customer’s preferences for recognized global brands, we also operate specialized boutiques under various brand names. In addition, in 2006 we entered into a joint venture with El Corte Inglés, S.A. As a result of this joint venture, we incorporated Moda Joven Sfera México, S. A. de C.V., where we hold a 49.0% equity interest. This entity operates a chain of 21 stores located in the major cities across Mexico, specialized in family clothing and accessories under the commercial name ‘‘Sfera.’’ The following table lists some of the brands of our specialized boutiques. In 2011, we launched ‘‘Experiencia Gourmet,’’ our innovative gourmet food hall, to complement our entertainment and services offering within our department stores. Experiencia Gourmet combines eating venues where customers enjoy gourmet food products from different countries. Experiencia Gourmet is currently available in eight of our department stores and we plan to continue expanding this concept. We believe that our Experiencia Gourmet format enables our customers to enjoy a sophisticated yet comfortable eating experience at our department stores while promoting social gathering. As part of our growth strategy, we continue to explore investment opportunities within or outside Mexico. As part of our investments outside Mexico, in 2010 we acquired a 50.0% equity interest in Regal Forest Holding, Ltd, a private company that operates a chain of stores engaged in the sale of furniture and household appliances in Central America, South America and the Caribbean.

Consumer Credit Operations Consumer credit is a key element for our organic growth as it significantly stimulates our retail operations. We provide financing to our customers through the ‘‘Liverpool Credit Card’’ and the ‘‘Fábricas de Francia Credit Card,’’ which allows them to purchase goods and services exclusively at our department stores. In addition, we offer the ‘‘Liverpool Premium Card,’’ which allows cardholders to purchase goods and services at our department stores and specialized boutiques, and at any business affiliated with the VISA payment system worldwide. As of April 30, 2014, according to information from the Mexican Central Bank and our estimates, we were the leading non-bank credit card issuer in Mexico, with approximately 3.5 million card holders and we had a loan portfolio of Ps.28,181 million (U.S.$2,173 million) as of December 31, 2013. The graph below shows the evolution of our loan portfolio compared to the evolution of consumer credit in the Mexican financial system since the most recent global financial crisis in 2008.

40.0%

30.0% 23.8% 20.0%

10.0% 10.3

0.0% 16.9%

-10.0%

-20.0%

-30.0% 2008 2009 2010 2011 2012 2013 1Q'14 Consumer finance (total system) Liverpool's loan book

Since their introduction, our credit cards have been the most frequently used payment method for our customers. Historically, proprietary credit card holders have shopped more frequently with us and purchased more merchandise than customers who pay with cash or third-party credit cards. Customers using our credit cards are eligible for additional loyalty programs which reward customers for purchases made in stores, online and, if they have a co-branded Visa card, at affiliated locations. For the year ended December 31, 2013, sales

79 through our credit cards accounted for Ps.33,416 million, or 52.8% of our consolidated sales and our non-performing loans rate was 3.3%. For the six months ended June 30, 2014, sales through our credit cards accounted for Ps.13,930 million, or 47.2% of our consolidated sales and our non-performing loans rate was 4.4%. We believe that we have one of the most comprehensive consumer financing programs in Mexico, offering a wide variety of credit options. We offer a wide variety of credit plans, the most common of which are the budget plan, installment sales without interest (MSI for its acronym in Spanish), and the fixed payment plan. In the budget plan, an average monthly balance is determined and payable by the customer, together with interest accrued on such balance. In the MSI plan, the card holder makes fixed payments without interest, whereas with the fixed payment plan, the customer pays the same amount for an established term at the same interest rate as that of the budget plan. In the fixed payment plan, a deferral option is periodically granted, whereby the customer purchases on a particular date may be paid at a later day with fixed payments that already include interest. Under the MSI plan, we offer our customers the possibility of refinancing their monthly payments, allowing them to pay only 10.0% of their loan and transferring the remaining balance to the budget plan. Loan terms fluctuate from 6, 13 and occasionally 18 months. The interest we charge to our cardholders is determined based on market conditions, the cost of funding and the interest rate charged by competitors. Since our sales are made to the general public, there is no risk concentration on one particular customer or group of customers. We target a market mainly represented by middle and high-income families in Mexico. We have developed a streamlined and low-cost application processing system to meet our customers demand for immediately available financing options. Our successful credit application process allows us to make instant credit decisions at the point of sale. Our applications can be processed in minutes rather than days, enhancing customer service and ensuring consistent application of lending criteria. Credit application forms are evaluated and approved through automated screening procedures using scorecards. The scorecard performance is reviewed periodically. The application process in some instances is complemented with telephone checks and a home visit to corroborate the veracity of the information provided by the applicant. We assign an initial credit limit to each customer through automated processes and such credit limit is periodically monitored and adjusted by our corporate credit department. Our monitoring systems allow us to identify in advance any change in the credit quality of our customers and implement adequate corrective measures. Historically, we have had low rates of non-performing loans. We believe that our success in achieving low ratios of non-performing loans is driven by the efficiency of our application processing system, combined with our expertise in monitoring our loan portfolio. We conduct monthly account cutoffs through automated systems to identify non-performing loans. Accounts that miss a payment are immediately blocked to prevent the balance from growing and default interest starts to accrue on overdue amounts. Following our risk assessment, we may conduct recovery actions, such as to request payment through telephone calls, letters and telegrams and home visits, among others. To support our recovery actions, we operate a call center with capacity to process over 5,000 calls per day. Loans that are more than 150 days overdue are automatically assigned to collection agencies to take over collection efforts, and loans that are more than 240 days overdue are written off. We have preventive reserves that cover a portion of the balance of all delinquent accounts that are overdue for more than 90 days, the preventive reserves are determined based on the individual assessment of each account and the results of the evaluation of the portfolio’s behavior and the seasonality of the business. This methodology has been applied consistently during at least the last ten years and has historically been sufficient to cover the losses resulting from non-performing loans corresponding to the following twelve months. We have a flexible approach to restructuring the loans of our defaulting lenders in order to maintain their purchase capacity and further strengthen their loyalty.

80 The graph below shows our rates of non-performing loans from 2008 to 2013. 7%

6%

5.2% 5%

4% 3.8% 3.3% 3% 3.1% 2.8% 2.7% 2%

2008 2009 2010 2011 2012 2013

Besides acting as a catalyst for further growth of our commercial and real estate operations, we believe that our consumer credit offerings will increasingly become a source of independent income through the expansion of our credit card portfolio and enhancement of our offerings of financial products and services. We seek to expand the number and use of our proprietary credit cards by, among others, providing special discounts to customers and monetary incentives to sales associates to open new credit accounts, which generally can be opened while a customer is visiting one of our stores. The graph below shows the increase in the number of credit card holders from 2008 to 2013.

4.0 In millions 3.5 3.5 3.1 3.0 2.9 2.7 2.6 2.7 2.5

2.0

1.5

1.0

0.5

0.0 2008 2009 2010 2011 2012 2013

We intend to continue to build upon our experience and knowledge of providing consumer financing to further expand and enhance our consumer credit offerings, while deepening the loyalty of our customers already using those cards.

81 Real Estate Operations We develop, lease and manage shopping centers and retail premises. Our real estate operations include management of parking lots and related services and the improvement and expansion of our existing department stores, shopping centers and other facilities such as our distribution centers. We own or have a significant interest in 22 shopping centers known as ‘‘Galerías’’ and lease approximately 2,430 retail premises to third parties. Our shopping centers have presence in all of Mexico’s principal cities in terms of population. In the last ten years, we have more than doubled the gross leasable area of our shopping centers and retail premises from 158,637 square meters in 2003 to 394,248 square meters in 2013. For the year ended December 31, 2013, our shopping centers had more than 100 million visitors and our retail premises had an average occupancy rate of 97.0%. The chart below shows the evolution of our gross leasable area from 2008 to 2013.

395

325 336 316 316

22 233 19 16 16 16

13

2008 2009 2010 2011 2012 2013

GLA in '000 Sqm Number of shopping Centers

Historically, our retail premises have had occupancy rates above 95.0%, low turnover rates and low past-due accounts with an attractive mix of more than 1,500 tenants and no tenant representing more than 10.0% of our consolidated revenue. All of our shopping centers include anchor stores, mid-sized retailers and smaller retailers, in addition to our department stores. Anchor stores in our shopping centers include Cinépolis, a Mexican leader in the Mexican first-run movie exhibition business, and supermarkets, including Soriana and Wal Mart. We lease the retail premises located in our shopping centers through a standard lease agreement, which sets forth the irrevocable term of the lease, states that the agreement is not transferrable, requires a guaranty deposit and prohibits subleases without our consent. In general terms, rent payments are calculated based on fixed rent, and for certain tenants, on a combination of a fixed rent and a percentage of each tenant’s monthly net sales. The cost of utilities, security and maintenance is passed-through to our tenants. The term of our leases varies based on the tenant’s category. Our leases have different terms ranging from 2 to 20 years. The majority of our leases are denominated in Mexican pesos.

82 The table below sets forth the main characteristics of our shopping centers as of June 30, 2014.

Gross Leasable Area Shopping Center Location (in m2) Opening Year Satélite(1) Edo. de México 52,254 1971 Perisur México, D.F. 49,877 1980 Monterrey Nuevo León 29,409 1984 Villahermosa 10,705 1986 Coapa México, D.F. 21,040 1992 Insurgentes México, D.F. 10,380 1992 Puebla(1) Puebla 26,544 1997 Metepec Edo. de México 33,157 1998 Perinorte México, D.F. 30,921 2000 Galerías Querétaro(1) Querétaro 13,537 2003 Galerías Cuernavaca 19,826 2005 Mérida Yucatán 20,922 2007 Puerto Vallarta Jalisco 22,297 2007 Galerías Atizapán Edo. de México 34,499 2009 Galerías Saltillo 16,453 2009 Galerías Chilpancingo 7,986 2009 Acapulco Guerrero 10,274 2012 Celaya 17,738 2012 Zacatecas Zacatecas 20,928 2012 San Juan del Río(1) San Juan del Río 19,553 2013 Galerías Campeche Campeche 26,516 2013 Galerías Mazatlán Marina 27,568 2013

(1) Our equity participation in these shopping centers does not exceed 30.0%. We believe that we have gained significant competitive advantages by securing strategic locations for our shopping centers in fast growing cities in Mexico, building loyal clientele, attracting popular tenants and providing a diverse range of experiences, entertainment and services, as well as a broad assortment of merchandise in high profile facilities with a comfortable, functional and safe environment, creating a strong long-term relationship with customers and tenants. Our real estate operations have become an important source of revenue and a strategic complement to our commercial operations by attracting an increasing number of potential customers for our department stores.

Distribution Channels We maintain a distribution network that covers nearly the entire territory of Mexico. We believe our established distribution network provides us with an important advantage over our competitors. Our distribution network consists of two national distribution centers, four regional distribution centers, 14 local warehouses, 25 storage deposits for remote stores and 104 department stores nationwide, complemented with a fleet of 250 trucks and trailers, 450 home delivery units, and services from independent operators. Our network allows us to distribute products from our national distribution centers to our regional distribution centers, local warehouses, storage deposits and department stores, as well as to deliver big-ticket items sold in our department stores and products sold through our website to our customer’s homes. In 2013 we completed over two million deliveries to our customer’s homes.

83 The map below shows the geographic location of our distribution centers and warehouses.

Our two national distribution centers are located in the State of Mexico, one of the most important states in terms of transport infrastructure, which facilitate our distribution efforts. Our national distribution centers handle different product categories, which allows us to specialize and focus our distribution activities by type of merchandise. The Huehuetoca national distribution center handles big-ticket items which are distributed to the regional distribution centers for further distribution to our local warehouses, storage deposits and department stores. The Tultitlan national distribution center primarily handles soft goods distributed directly to our department stores. In addition, from time to time our local suppliers of soft goods directly deliver their products to our regional distribution centers. Our regional distribution centers are strategically located across Mexico to support our storage and distribution activities in regions having a concentration of department stores. Handling merchandise in our own distribution centers allows us to centralize the acquisition and distribution to our stores and customers, verify in one location the quality and quantity of the products we sell, provide important savings in shipping costs as well as product management and ensure that our merchandise arrives at the desired destinations on time. In addition, our centralized distribution system allows us to maintain a consistent assortment of products throughout our department stores. We continuously improve our distribution facilities and invest in state-of-the-art technology to optimize inventory management and the receiving and dispatching processes in our distribution centers, see ‘‘—Innovation and Technology.’’ In addition, in 2013 we increased by 72.0% the merchandise warehousing and handling capacity of the Huehuetoca, Estado de México, our national distribution center specialized in durable goods, by building a new 97,000 square-meter wing of conventional warehouse, yards and roads. We also maintain a highly efficient and sophisticated logistics operation to address distribution requirements, which allows us to manage over 180,000 SKUs. We believe that our distribution network allows us to respond to the diverse and changing needs of our customers and vendors in a cost-effective manner, which we believe contributes to the development of strong customer loyalty.

Seasonality Our sales are seasonal, with a high proportion of revenues and operating cash flows generated during the fourth fiscal quarter, which includes the fall and holiday selling seasons. In addition, sales volumes in our department stores are higher during the months of May, June, November and December due to Mother’s Day, Father’s Day, the ‘‘Buen Fin’’ (a weekend in late November of each year during which various commercial businesses, including our company, offer sales and discounts to encourage consumer spending in Mexico) and year-end holidays.

84 Our sales for the fourth quarter of 2011, 2012 and 2013 represented 35.0%, 34.0% and 35.0%, respectively, of our total sales for such years. In addition, we incur significant additional expenses in the period leading up to the months of November and December in anticipation of higher sales volume in those periods, including the costs of additional inventory, advertising and associates. Therefore, our profitability and results of operations are affected by these seasonal trends.

Innovation and Technology We continuously invest to improve, especially through the use of technology, our supply and distribution chains as well as the management of our customer information to enhance the effectiveness of our omni-channel retailing and marketing efforts. In 2013 we invested Ps.878 million in our technology platforms as well as in our supply chain with the objective of fostering the further development and growth of our current businesses. Online shopping has become increasingly important in our customers’ preferences. In 2013 we re-launched our e-commerce platform to offer a greater merchandise catalog and strengthened the search engine of our e-commerce website. As a result of our work with SAS, in line with our efforts to keep up with cutting edge technology and offer immediate and efficient customer service, in 2013 we introduced the golden customer record function which allows us to unify our databases to simplify our processes and personalize our service offerings. In 2013 we started our supply chain optimization process focused on improving inventory management and optimizing the receiving and dispatching processes. These processes lead us to the introduction of RFID and EPC tags. RFID is an automatic data capture technology which uses radio waves to identify objects. EPC is an electronic tag that contains a unique number which identifies items and provides valuable product-related information such as physical location, dimensions and various dates, including manufacturing location and expiry date. Currently, 96 of our department stores benefit from processes using EPC RFID technology, especially in cycle counting for inventory management. There are also 263 mobile EPC RFID readers spread over our department stores, supporting solutions that enhance our customer shopping experience like ‘‘smart shelves’’ and ‘‘points of sale’’ in sections where products are EPC RFID item-level tagged. As a result of the use of EPC RFID technology, our suppliers now have visibility of their products as they travel through the supply chain, which in turn generates value in other processes such as billing and customer care. We plan to continue to improve our operating margins by leveraging our low-cost structure and inventory management systems, and by increasing our operating efficiency and profit margins through the use of technology.

Customers We specialize in retail sales of merchandise to the general public. As a result, we have no main customers that concentrate a significant percentage of our consolidated sales and we do not rely on a particular product that represents more than 10.0% of our consolidated sales. We believe that customer service in our department stores, shopping centers and specialized boutiques is a key factor in establishing a loyal and growing clientele. In 2013 we completed approximately 91 million transactions with our consumers. For our real estate operations we have an attractive mix of more than 1,500 tenants, which includes anchor tenants, mid-sized retailers and smaller retailers. For the year ended December 31, 2013, none of our tenants represented more than 10.0% of the operating income for our real estate revenues for such year.

Suppliers We purchase the products we sell from more than 4,500 suppliers and believe we maintain good relationships with them. We are not dependent on any single supplier and believe we have alternative sources of supply available for each category of merchandise we carry. No single supplier or group of related suppliers accounted for more than 10.0% of the total products purchased by us in the six month period ended June 30, 2014. We believe that our current suppliers are able to adequately provide the products we sell and we have not experienced any material difficulty in obtaining the types or quantities of the merchandise we require for our retail operations.

85 In 2012, approximately 12.6% of our consolidated sales consisted of products imported from outside of Mexico. In addition, we sell certain imported products that we acquire from multinational corporations, distributors and wholesalers in Mexico at prices denominated in pesos. We do not believe that we conduct business with our suppliers on terms that are less favorable than those generally available in the retail industry. Domestic suppliers are paid in pesos on terms that vary with the product being purchased. Foreign suppliers are paid in U.S. dollars or, less often, in other foreign currencies. We believe that our business relationships with our suppliers are a key factor for our continued success. In line with this idea, we maintain offices in New York, United States and , China. Our New York office was opened in 1989 and facilitates our purchases with vendors in the United States. As a result of the increase in operations with Asian countries, in 2010 we established an office in Shanghai. These offices enable us to maintain local presence to strengthen our business relationships with our suppliers in such regions. We believe that our presence in New York and Asia places us in an advantageous position to work closely with our suppliers in the development of exclusive programs and promotions for our customers, which in turn will generate added value through the supply chain. In addition, through such offices we are able to better monitor the quality of the products we sell and provide post-sale customer services more effectively.

Intellectual Property Trademarks Our most important brands, slogans and logos are protected by trademarks in Mexico through registration with the Mexican Industrial Property Institute (Instituto Mexicano de la Propiedad Industrial). Protection of a trademark in Mexico continues for as long as the brand is registered and used. Currently, we have approximately 1,250 brand files and registries in Mexico. Our main trademarks include ‘‘Liverpool,’’ ‘‘Fabricas de Francia,’’ ‘‘Liverpool Duty Free,’’ ‘‘Galerías Insurgentes,’’ ‘‘Perisur,’’ ‘‘Galerías Coapa,’’ ‘‘Galerías Metepec,’’ ‘‘JBE’’ and ‘‘That’s it.’’

We operate our registered websites www.liverpool.com.mx and www.galerias.com targeting consumers in Mexico for our retail and businesses.

Franchise and Other Agreements From time to time we enter into exclusive license and franchise agreements to sell distinctive apparel and other products in Mexico, and to operate retail stores in Mexico in stand-alone and store-within-a-store formats under brands owned by third parties. These agreements include standard provisions regarding distribution and supply of products, use of trademarks and requirements related to store layouts. The term of such agreements ranges from five to ten years and some of them are automatically renewable for one or two additional periods of the same tenor, subject to the right of either party to give prior notice that it does not wish to renew such

86 agreement. Such agreements are subject to termination by either party in the event of default. In return for our exclusive rights, we usually pay a royalty calculated as a percentage of the sale of the corresponding products. Currently, we have exclusive franchise or license agreements pursuant to which we sell products under the following brands:

In addition, from time to time we enter into non-exclusive agency agreements with buying offices and other intermediaries who have close relationships with manufacturers of merchandise we sell in our department stores. Services provided by such agents include assisting us in obtaining competitive prices, contacting manufacturers and organizing networking events and improving information and communication flow between the local producers and our company. These agreements usually are for indefinite terms and the compensation paid to the agents depends on the services requested, which may include fees determined as a percentage of our purchases.

Marketing We market our department stores and shopping centers across all channels simultaneously in line with our omni-channel strategy and our marketing activities are aimed towards capitalizing on the top-of-mind awareness in Mexico of our iconic brand ‘‘Liverpool.’’ We believe that incorporating selling and promoting across all channels will leverage each channel’s strengths and will allow us to present ourselves seamlessly to our customers as one cohesive brand. Advertising plays a major role in stimulating awareness, differentiation and sales of consumer products. We have developed a unique marketing strategy to promote customer traffic in our stores and shopping centers. For example, our shopping experience includes quality events such as our biannual Fashion Fest, a festival that covers new fashion trends for the upcoming seasons and gathers supermodels, brand launches, food tastings, runways and holiday celebration events such as tree lightings. In addition, our marketing and advertising activities include the use of the internet, television, radio and billboards. Our advertising strategy is to focus principally on television advertisements during prime-time hours and to reinforce this exposure with advertisements in magazines, flyers, newspapers, radio and other media outlets. We also focus on maintaining a strong presence in social media, such as Facebook, Twitter, Google+ and YouTube. As of August 31, 2014, we had over two million total followers on Facebook and over 275 thousand total followers on Twitter, which we primarily use for marketing and promotion. We have invested aggressively in advertising to maintain and expand our market share. For the year ended December 31, 2013 we invested over Ps.82 million in marketing and advertising activities. As part of our marketing strategy, since 2007 we have been working with SAS, the leader in business analytics software and services, to develop customer profiles which we believe will allow us to better understand our customers and engage them in targeted promotions and credit offers. We believe that a deep understanding of our customer’s preferences allows us to continue to develop integrated marketing plans with offers that address specific customers determined by purchase patterns, social network affinities, website visits, loyalty programs, and other data-mining techniques. As we develop our omni-channel marketing strategy, we seek to enable our consumers to experience our brand consistently across all retail channels.

87 Workforce We believe that a key element to our continued growth is to promote the personal and professional growth of our associates. We believe that a well-trained and informed workforce will reduce labor costs and drive efficiencies. Since our foundation, our policy and practice has been to align our interests with those of our associates and the outcome has been an excellent relationship with our labor force. We believe that we pay wages that are competitive with those in our industry in general and have a generous employee profit-sharing plan. In addition, we maintain a pension plan for our salaried employees, which complements the government-operated social security plan. To be eligible for our pension plan, employees must have worked at least two years with us. We plan to continue improving our sales force productivity through more effective training programs and attractive compensation schemes. As of July 31, 2014, we had approximately 45,000 regular associates. In addition, because of the seasonal nature of the retail business, we hire temporary employees from time to time, including during the holiday season. For example, as of December 23, 2013 we had additional 2,500 temporary associates, approximately. Approximately 40.0% of our associates are members of labor unions. We currently have labor relationships with various unions in Mexico, including, the Sindicato de Empleados de Comercio Similares y Conexos del Estado de Tabasco, the Sindicato Unión de Empleados y Trabajadores en Comercio Pro-Raza, the Sindicato Estatal de Dependientes y Empleados de Comercio y la Industria de Veracruz, the Sindicato Nacional ‘‘Presidente Adolfo Lopez Mateos’’ de Trabajadores y Empleados del Comercio en General y Escuelas Particulares, Similares y Conexos de la República Mexicana and the Sindicato Nacional de Trabajadores y Empleados de Comercios, Agentes de Ventas en Zonas de Concesión Federal y Empresas Ubicadas en dos o más Estados de la República Mexicana. The collective bargaining agreements with such labor unions are renegotiated every two years, with wages renegotiated once per year, the timing of which varies. We believe we have a good relationship with our employees and their labor unions. We are convinced that training plays a crucial role in omni-channel success. Our store colleagues are part of our brand-delivery experience and a crucial element to maintain our brand-customer relationship, which provides us with a competitive advantage and distinguishes us from our competitors. Data and technology help us train our associates on omni-channel strategies and customer behavior so we can create a unified approach for the shopping experience we offer. We are committed to customer service and customer satisfaction by providing a combination of high-quality personalized services. See ‘‘—Social Responsibility and Sustainability’’ for more information in connection with the training of our associates.

Competition The retail industry is highly fragmented and competitive. We compete with other omni-channel retailers, traditional department stores, vendor owned boutiques, specialty retailers, individual specialty apparel stores, designer boutiques, outlet stores, e-commerce and mail order retailers, and ‘‘flash sale’’ businesses, among others. We believe that our omni-channel approach to business, industry knowledge and customer base, superior customer service, broad selection of quality fashion merchandise at appropriate prices, innovative marketing, strategic store locations, and e-commerce presence position us for a competitive advantage. Our main competitors include Palacio de Hierro, Sears, H&M, Zara, Suburbia, Best Buy, Costco, Sams Club and other grocery retailers such as Walmart, Comercial Mexicana and Chedrahui, among others. As of the year 2013, we were the leading Mexican department store chain in terms of sales, with a market share of 56.2% according to Euromonitor. See ‘‘Industry.’’ Our department stores compete primarily on the basis of price, location, selection of merchandise, quality of merchandise, service, store conditions and promotions. We believe our main competitive strength are our omni-channel and customer-centric strategies, combined with our extensive experience in the retail industry. We expect to continue to face strong competition and anticipate that existing or new competitors may broaden their geographic scope.

Property Our properties consist primarily of department stores, shopping centers and related retail facilities, including warehouses and distribution centers. We also own or lease other properties, including corporate office space and other facilities at which centralized operational support functions are conducted.

88 We operate a total of 104 department stores, of which 75 are under the name ‘‘Liverpool,’’ 24 are under the name ‘‘Fábricas de Francia’’ and five are under the name ‘‘Liverpool Duty Free,’’ we also operate 76 specialized boutiques, including under the names of ‘‘Aéropostale,’’ ‘‘Banana Republic,’’ ‘‘Chico’s,’’ ‘‘Destination Maternity,’’ ‘‘GAP,’’ ‘‘M.A.C. Cosmetics’’ and ‘‘Sfera,’’ among others, which represent, in the aggregate, 1.4 million square meters of retail space of which we own approximately 88.0%. See ‘‘—Operations—Commercial Operations’’ for more information about the properties in which our department stores are located. We own or have a significant interest in 22 shopping centers known as ‘‘Galerías’’ and lease approximately 2,430 retail premises to third parties. Our shopping centers have presence in all of Mexico’s principal cities in terms of population. In the last ten years, we have more than doubled the gross leasable area of our shopping centers and retail premises from 158,637 square meters in 2003 to 394,248 square meters in 2013, of which we own approximately 76.0%. See ‘‘—Operations—Real Estate Operations’’ for more information about the properties in which our shopping centers are located. In addition, as part of our distribution network we own two national distribution centers, four regional distribution centers, 14 local warehouses and 25 storage deposits for remote stores, 250 trucks and trailers and 450 home delivery units. See ‘‘—Distribution Channels’’ for more information about the properties in which our distribution centers and warehouses are located. We are a party to various lease agreements with respect to our department stores located in properties owned by third parties. Such lease agreements have 20-year terms, generally, and some of these agreements require that the stores be operated under a particular name.

Inventory We carefully manage our inventory to satisfy our customer demand, consistent with the seasonality of our business, while minimizing overstock at our department stores and warehouses. We own most of our inventory, with less than 5.0% on consignment, as a result, we maintain strict controls to efficiently determine our inventory needs based mostly on actual sales and to a lesser extent on projected demand. In line with this strategy, in 2013 we implemented SAP technology to manage our inventory and supply chain. In addition, maintaining a strong relationship with our suppliers has enabled us, and we believe will continue to enable us, to quickly satisfy demand for out-of-stock product.

Insurance We maintain a comprehensive insurance program that is consistent with industry practices for facilities of a similar type, geographic location and capacity as our department stores. Our insurance policies are underwritten by recognized insurance companies in Mexico and abroad. Among other insurance policies, we maintain commercial general liability insurance, environmental liability insurance, business interruption insurance, insurance coverage for our fleet and operational ‘‘all risks’’ property insurance for our department stores.

Social Responsibility and Sustainability Our associates, shareholders and vendors form part of a community that values personal and professional excellence, generating solid returns on our business, with a strong sense of responsibility to the community, and our corporate growth model intends to integrate such economic, social and environmental goals. We are committed to the sustainability of our operations, with full recognition of our obligations with respect to the communities where we operate and the production chain that we generate. Among our sustainability initiatives, we can highlight our continuous effort and investment to reduce our consumption of energy and water, and to lower greenhouse gas emissions in our distribution channels. For example, in the last six years, we have introduced LED lightning in our department stores and shopping centers, we have built water treatment plants in 11 of our shopping centers, we have reduced the use of air conditioning in our department stores and shopping centers by using waterproofing sealants with high-reflectance materials, and we have used permeable concrete in our constructions, allowing water to permeate into the subsoil and refill the aquifer layers. Other environmental initiatives implemented in our department stores include using recycled paper, reducing water and chemical products consumption in the cleaning of our facilities, introducing ecological urinals in our department stores and shopping centers, recycling batteries and using oxo-biodegradable bags.

89 To promote the welfare of our associates, together with the Mexican Social Security Institute (Instituto Mexican del Seguro Social), we have implemented a program to prevent, detect and control illnesses and encourage personal care in all of our locations. The result has been a 4.6% year-to-year reduction in the number of sick-day absences. We are committed to customer service and customer satisfaction by providing a combination of high-quality personalized services. We believe that such commitment is reflected in the low turnover rates of our associates. In 2014 we were ranked third among the best places to work in Mexico by the Great Place to Work Institute. In addition, as part of our commitment to the growth of our associates, in 2000 we launched the Liverpool Training Institute (Instituto de Formación Liverpool), the first virtual corporate university in Mexico, to provide our associates and their families with personal development options ranging from senior high-school programs to graduate studies. The Liverpool Education Institute offers a bachelor degree in retail management, master degrees in leadership and business administration and other programs associated with our business. As of December 31, 2013, more than 1,500 associates have obtained a degree from the Liverpool Education Institute. Through our Liverpool Education Institute we seek to guarantee the continuity of our principles, identity and business philosophy, while encouraging the growth of our associates. We expect to continue offering career plans that enable us to adapt the development of our associates to our corporate growth needs.

Governmental Regulation We are subject to a wide range of government regulation and supervision in Mexico, including with regard to labor and social security, imports, profit sharing and taxes. Labor and social security regulation includes requirements for providing certain minimal benefits to employees, principally consisting of minimum wages, holidays, vacation premiums, severance payments and year-end bonuses. In addition, we are subject to the provisions of the Mexican Securities Market Law and its regulations. Several matters in connection with our ownership and possession of real estate property are regulated on a federal, state and municipal basis. In general terms, such activities are subject to (i) state and municipal laws and regulations relating to urban development, planning and zoning, (ii) state and municipal laws and regulations that govern construction and civil protection matters related to construction, including obtaining and granting of related permits and licenses, and (iii) federal and state laws and regulations that govern environmental matters.

Legal Proceedings We are currently a party to various legal proceedings in Mexico arising in the normal course of our business that we believe are routine in nature and incidental to the operations of our business. We have not been involved in any governmental, legal or arbitration proceedings (including such proceedings which are pending or threatened) of which we are aware, during the last twelve months, which may have, or have had in the recent past, significant effects upon our financial position or profitability either individually or in the aggregate.

90 MANAGEMENT Liverpool is a publicly traded stock corporation (sociedad anónima bursátil de capital variable) incorporated on February 28, 1912 and existing under the laws of Mexico. Our current Board of Directors was elected on March 6, 2014. The term of the directors ends upon the election of the new members at the annual shareholders’ meeting, which will be held within the first four months of 2015. Pursuant to the Mexican Securities Market Law, at least 25.0% of the members of our Board of Directors are required to be independent directors. According to our by-laws, independent directors are those who may serve on the board and act free from conflicts of interest and who qualify as independent directors pursuant to the Mexican Securities Market Law.

Board of Directors The following table sets forth the current members of our Board of Directors and their respective positions:

Name Position Enrique Brémond** ...... Honorary Co-Chairman Max Michel** ...... Honorary Co-Chairman José Calderón** ...... Honorary Director Juan Claudio Montant**...... Honorary Director Pedro Robert** ...... Honorary Director Max David ...... Chairman/Director Madeleine Brémond S...... Vice President/Director Miguel Guichard ...... Vice President/Director Enrique Brémond S...... Director Juan David ...... Director Pedro Velasco* ...... Director Juan Miguel Gandoulf* ...... Director Armando Garza Sada* ...... Director Ricardo Guajardo* ...... Director Graciano Guichard D...... Director Guillermo Simán* ...... Director Esteban Malpica* ...... Director Maximino Michel G...... Director Luis Tamés* ...... Director Jorge Salgado ...... Director Ignacio Pesqueira** ...... Secretary Norberto Aranzábal** ...... Deputy Secretary

* Independent director. ** Not a member of our Board of Directors. The following sets forth biographical information for each of the members of our Board of Directors, Secretary and Deputy Secretary:

Max David Mr. David joined Liverpool in 1977 and has served as Chairman of our Board of Directors since 2004.

Madeleine Brémond S. Ms. Brémond is the Chief Executive Officer of Orion Tours S.A. de C.V. and has served as Vice President of our Board of Directors since 2003. Ms. Brémond is a member of the Board of Directors of various entities, including Banco Invex S.A de C.V. is former president of the Alliance Francaise de México A.C. is a member of the Board of Patrons of the Museo Nacional de Antropología, A.C. among other filantropic activities. Ms. Brémond holds a degree in Business Administration from Universidad Anáhuac.

91 Miguel Guichard Mr. Guichard joined Liverpool in 1975 and has served as board member and Vice President of our Board of Directors since 1979 and 2003, respectively. Mr. Guichard has served as Chairman of our Operations Committee since 2004.

Enrique Brémond S. Mr. Brémond is a member of the Board of Directors of various entities, including Tobanis, S.A de C.V. and has served as manager of Victium, S.A. de C.V. Mr. Brémond holds a degree in Business Administration from Universidad Iberoamericana.

Juan David Mr. David is a Director at Invex Banco, S.A. de C.V. and is a member of the Board of Directors of various entities, including Invex Controladora, S.A.B. de C.V. and Grupo Industrial Maseca, S.A.B. de C.V. Mr. David holds a degree in Industrial Engineering from Universidad Anáhuac and a Master of Business Administration from Intituto Tecnológico Autónomo de México.

Pedro Velasco Mr. Velasco is a partner at Santamarina y Steta, S.C. and member of the Legislative Analysis Commission of the Consejo Coordinador Empresarial. Mr. Velasco has acted as chairman of the Labour Commission of the Asociación Nacional de Abogados de Empresa and holds a degree in Law from the Universidad Nacional Autónoma de México.

Juan Miguel Gandoulf Mr. Gandoulf is a member of the Board of Directors of various entities, including Sagnes Constructores, S.A. de C.V. Mr. Gandoulf is a Public Accountant certified by the Instituto Mexicano de Contadores Públicos, A.C. and holds a Master of Business Administration from the United States International University at San Diego, .

Armando Garza Sada Mr. Garza Sada is the Chairman of the Board of Directors of Alfa, S.A.B. de C.V., a Mexican multinational conglomerate headquartered in Monterrey, and is member of the Board of Directors of various entities, including Fomento Económico Mexicano, S.A.B. de C.V., Instituto Tecnológico y de Estudios Superiores de Monterrey, Grupo Lamosa S.A.B. de C.V. and Grupo Financiero Banorte S.A.B. de C.V. Mr. Garza Sada holds a degree in Management from the Massachusetts Institute of Technology and a Master of Business Administration from Stanford University.

Ricardo Guajardo Mr. Guajardo is member of the Board of Directors of various entities, including Grupo Financiero BBVA Bancomer, S.A. de C.V., Instituto Tecnológico y de Estudios Superiores de Monterrey, Fomento Económico Mexicano, S.A.B. de C.V., Coca-Cola FEMSA, S.A.B. de C.V., Alfa, S.A.B. de C.V., , S.A.B. de C.V., Grupo Aeroportuario del Sureste, S.A.B. de C.V., Coppel, S.A. de C.V. and Vitro, S.A.B. de C.V., as well as Vice Chairman of Fondo para la Paz and Chairman of SOLFI.

Graciano Guichard D. Mr. Guichard D. is Chairman at M. Lambert y Cia. and is a member of the Board of Directors of various entities, including Invex Controladora, S.A.B. de C.V. Mr. Guichard D. holds a degree in Business Administration from Universidad Anáhuac.

Guillermo Simán Mr. Simán is Executive Vice President at Almacenes Siman (Siman Commerce Group) and Regal Forest Holding. Mr. Simán is president of the Board of Directors of Regal Forest Holdings and a member of the Board of Directors of various entities, including Compartamos, S.A.B. de C.V. Mr. Simán holds a degree in Management and Economy from the Loyola University - New Orleans and a Master of Business Administration from the Sloan School of Management at the Massachusetts Institute of Technology.

92 Esteban Malpica Mr. Malpica is a managing partner of Praemia, S.C. and member of the Board of Directors of various entities, including Kimberly Clark de México, S.A.B. de C.V., , S.A.B. de C.V., Empresas ICA, S.A.B. de C.V., and Hypermarcas, S.A. in Brasil. Mr. Malpica is a Public Accountant certified by the Instituto Mexicano de Contadores Públicos, A.C.

Maximino Michel G. Mr. Michel is Operations Manager at our Company and is a member of the Board of Directors of various entities, including Grupo Lamosa S.A.B. de C.V., Fomento Económico Méxicano, S.A.B. de C.V. and Afianzadora Sofimex, S.A. de C.V. Mr. Michel is also part of the Consejo Consultivo of Coca Cola Femsa. Mr. Michel holds a degree in business administration from Universidad Iberoamericana.

Luis Tamés Mr. Tamés is a member of the Board of Directors of various entities, including Grupo Jumex, S.A. de C.V., one of the largest fruit-based drinks producer in Mexico. Mr. Tamés holds a degree in Economics as well as a Master of Business Administration from Instituto Tecnológico y de Estudios Superiores de Monterrey.

Jorge Salgado Mr. Salgado joined our company in 1995 and has served as our Chief Executive Officer since 2011. Mr. Salgado also served our company as Chief Financial Officer from 1995 to 2011. Other positions of Mr. Salgado before joining our company include Chief Financial Officer at Sears Roebuck de México. Mr. Salgado holds a degree in Public Accounting from the Universidad Nacional Autónoma de México (UNAM).

Ignacio Pesqueira Mr. Pesqueira is a partner at Galicia Abogados, S.C. Mr. Pesqueira has served as Secretary of our Board of Directors since 2000. Mr. Pesqueira holds a degree in Law from the Universidad Nacional Autónoma de México, a Master of Laws from New York University, School of Law and a High Management Degree (AD-2) from the IPADE Business School.

Norberto Aranzábal Mr. Aranzábal joined our company in 1979 and has served as our General Counsel since then. Mr. Aranzábal also serves as Deputy Secretary of our Board of Directors. Mr. Aranzábal is in charge of all legal affairs of our company and represents us before several associations such as ANTAD. Mr. Aranzábal holds a degree in Law from Universidad Panamericana as graduated from the Diploma in Management for Lawyers and Corporate Governance from Yale University. Except as indicated above, there are no potential material conflicts of interest between the duties of the members of our Board of Directors and their private interests. Our Honorary Co-Chairmans and Honorary Directors are not required to attend the meetings of our Board of Directors and do not have any voting rights at such meetings. The business address of our directors is Mario Pani 200, Colonia Santa Fe, Delegación Cuajimalpa, 05384, México City, Mexico.

93 Key Executive Officers Our Chief Executive Officer is appointed by the Board of Directors and holds office at its discretion. Our current key executive officers are as follows:

Years in Name Position Liverpool Jorge Salgado...... Chief Executive Officer 19 Enrique Güijosa ...... Chief Financial Officer 6 Miguel Bordes ...... Real Estate Director 23 Santiago de Abiega ...... Financial Business Director 15 Graciano Guichard G...... Commercial Director 14 Juan Ernesto Gómez ...... Internal Audit Director 6 Iñigo Biscarguenaga ...... Construction Director 16 Alejandro Mora ...... Human Resources Director 15 Norberto Aranzábal ...... General Counsel and Deputy Secretary 35 The following sets forth selected biographical information for each of our executive officers:

Jorge Salgado See ‘‘Management—Board of Directors—Jorge Salgado.’’

Enrique Güijosa Mr. Güijosa joined our company in 2008 and has served as our Chief Financial Officer since 2011. Mr. Güijosa also served our company as Director of Finance & Control from 2008 to 2011. Prior to joining our company, Mr. Güijosa served as Chief Financial Officer of Procter & Gamble Chile, Procter & Gamble Brazil and . Mr. Güijosa holds a degree in Applied Mathematics and a Master of Business Administration from the Instituto Tecnológico Autónomo de México.

Miguel Bordes Mr. Bordes joined our company in 1990 and has served as our Real Estate Director since 1996. Mr. Bordes also served our company as New Developments Manager and Shopping Malls Manager from 1990 to 1996. Mr. Bordes is in charge of our shopping center operations. Mr. Bordes holds a degree in Business Administration from Universidad Iberoamericana and has graduated from executive programs at Instituto Tecnológico Autónomo de México and Harvard Business School.

Santiago de Abiega Mr. de Abiega joined our company in 1998 and has served as our Financial Business Director since 2006. Mr. de Abiega also served our company as Buying Director from 2002 to 2006 and as Consumer Credit Director from 1998 to 2002. Mr. de Abiega also represents our company as Member of the Board of Directors at Regal Forest Holdings. Mr. de Abiega holds a degree in Industrial Engineer from Universidad Anáhuac.

Graciano Guichard G. Mr. Guichard G. joined our company in 2000 and has served as our Commercial Director since 2013. Mr. Guichard also served our company as our Director of Hard Line from 2011 to 2012 and as Director for Multimedia from 2008 to 2010. Mr. Guichard G. is in charge of purchases to suppliers, operations, marketing and logistics of our company. Mr. Guichard G. holds a degree in Industrial Engineering from Universidad Iberoamericana and a Master in Business Administration from UCLA Anderson School of Business.

Juan Ernesto Gómez Mr. Gómez joined our company in 2008 and has served as our Internal Audit Director since then. Prior to joining our company, Mr. Gómez held various positions related to internal audit and risk management at a global financial institution. Mr. Gómez holds a degree in Information Systems from Instituto Tecnológico y de Estudios

94 Superiores de Monterrey, a diploma in Finance and a master degree in International Management from Instituto Tecnológico Autónomo de México. Mr. Gómez is a Certified Internal Auditor by the Institute of Internal Auditors, and has graduated from the Management Development Program at Instituto Panamericano de Alta Dirección de Empresas.

Iñigo Biscarguenaga Mr. Biscarguenaga joined our company in 1998 and has served as our Construction Director since 2008. Mr. Biscarguenaga also served our company as Loss Prevention Director from 2001 to 2007 and as Maintenance Director from 2003 to 2007. Mr. Biscarguenaga is in charge for the maintenance, engineering, store planning and construction oversight. Mr. Biscarguenaga holds a degree in Industrial Engineering, a Master of Business Administration and has graduated from executive programs at Harvard Business School and Insead Business School.

Alejandro Mora Mr. Mora joined our company in 1999 and has served as our Director of Human Resources since 2006. Mr. Mora also has held various positions at our Human Resources department, including Director of Human Capital Development and Education from 2005 to 2006. Mr. Mora holds a degree in Business Administration and a Masters in Business Administration for Executives. Mr. Mora is Vice President of the National Commission for Human Resources in COPARMEX.

Norberto Aranzábal See ‘‘Management—Board of Directors—Norberto Aranzábal.’’ The following directors and officers are related by blood stem up to third degree: Max Michel, Maximino Michel G., Max David, Juan David, Miguel Guichard, Graciano Guichard G., Enrique Brémond, Madeleine Brémond and Enrique Brémond S. Except as indicated above, there are no potential material conflicts of interest between the duties of our key officers and their private interests. Our key officers can be reached at our principal executive offices. See ‘‘Summary—Company Information.’’

Committees of the Board of Directors The Board of Directors of Liverpool has formed an Operations Committee, a Patrimony Board and an Audit and Corporate Practices Committee.

Operations Committee The Operations Committee is comprised of Miguel Guichard, who serves as Chairman of the committee, Max David, Miguel Bordes, Graciano Guichard and Jorge Salgado, and Mr. Norberto Aranzábal serves as Secretary of the Operations Committee. The Operations Committee is responsible for making operating decisions, assigning resources among our independent revenue sources and evaluating the yield of the operations related to such sources of revenue. The activities of the Operations Committee also include providing assistance to our Board of Directors in the preparation of reports with respect to the principal accounting guidelines used to prepare our financial information. The Operations Committee also is in charge of analyzing and presenting for approval of our Board of Directors the comprehensive remuneration package for our senior management. The Operations Committee also assists our Board of Directors in the analysis and long-term strategy of our company and assists our Board of Directors in the selection of our Chief Executive Officer. The Operations Committee meets approximately four times per year.

Audit and Corporate Practices Committee Surveillance of our business is entrusted by the Securities Market Law to our Audit and Corporate Practices Committee. The Audit and Corporate Practices Committee is comprised of Pedro Velasco, who serves as Chairman of the committee, Juan Miguel Gandoulf and Luis Tamés, and Mr. Norberto Aranzábal serves as Secretary of the Audit and Corporate Practices Committee. All members of the Audit and Corporate Practices Committee are independent within the meaning of the Mexican Securities Market Law. The Audit and Corporate Practices Committee is responsible for reviewing and overseeing the internal audit function and approving annual

95 internal audit work plans and budgets, and its activities include drafting and recommending policies to our Board of Directors and to our general management, reviewing and recommending improvements to controls and internal procedures, coordinating internal auditing, supervising our compliance with laws, conducting special internal or external studies, providing a channel for anonymous internal complaints and complaints from contributors or third parties, as well as sanctioning conduct which contravenes internal or external regulations. The Audit and Corporate Practices Committee also reviews and oversees the external audit function and all non-audit services to be conducted by external auditors, reviewing external auditor reports and significant findings and reviewing and recommending for approval to the Board of Directors Liverpool’s financial statements. The Audit and Corporate Practices Committee meets approximately four times per year, investigates any recommendations for improvement of internal and external controls and reviews significant audit and accounting findings and recommendations and management’s responses to such recommendations. The Audit and Corporate Practices Committee also issues opinions on any material changes in the accounting policies, criteria and practices applied in the preparation of Liverpool’s financial statements, as well as on matters concerning the execution of material or unusual transactions.

Patrimony Board The Patrimony Board is comprised of Enrique Brémond P. and Max Michel, who serve as Co-Chairmen of the Patrimony Board, Juan David, Juan Guichard and Mr. Alejandro Duclaud, who serves as Secretary of the Patrimony Board. The Patrimony Board is entrusted to prepare and recommend policies with respect to strategic aspects of our business and operations, to guarantee compliance with, and achievement of, our long-term goals and objectives. The Patrimony Board meets once every month.

Code of Ethics We rely on self-regulatory measures to govern our business practices. Our Code of Ethics is approved by our Board of Directors and covers, for example, general aspects and policies for Liverpool’s interaction with society, government and our competitors, as well as our associates, suppliers, consumers, clients, partners and shareholders.

96 SHAREHOLDERS Our outstanding capital stock consists of two classes of shares: Series 1 shares and Series C-1 shares. Series 1 shares are ordinary shares with full voting rights, with no par value. Series C-1 shares are shares with full economic rights but with non-voting rights and no par value. Our Series 1 shares are publicly traded in Mexico and listed on the Mexican Stock Exchange under the ticker symbol ‘‘LIVEPOL.’’ As of June 30, 2014, our market capitalization was Ps.206 billion (U.S.$16 billion). Our Series C-1 shares also are traded in the European over-the-counter market in the form of Global Depositary Shares, or GDSs, through Clearstream Banking, société anonyme and Euroclear S.A./N.V., as operator of the Euroclear System. Each GDS represents an interest in 20 Series C-1 shares. The following table sets forth information concerning the percentage of our share ownership as of June 30, 2014.

Number of Shares Percentage Ownership Shareholder of Common Stock of Common Stock (in %) Banco Nacional de México, S.A., Institución de Banca Múltiple, Grupo Financiero Banamex—Trust No. 15228-3 ...... 278,691,361 20.7 Banco INVEX, S.A., Institución de Banca Múltiple, INVEX Grupo Financiero—Trust No. 0327 ...... 217,169,450 16.2 UBS—ZURICH...... 123,165,000 9.2 Banco Nacional de México, S.A., Institución de Banca Múltiple, Grupo Financiero Banamex—Trust No. 504288-5 ...... 109,114,664 8.1 Banco INVEX, S.A., Institución de Banca Múltiple, INVEX Grupo Financiero—Trust No. 0387 ...... 101,119,450 7.5 BBVA Bancomer Servicios, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer—Trust No. 25078-7...... 76,047,567 5.7 Pictet Bank & Trust Limited...... 57,137,573 4.3 Scotiabank Inverlat S.A., Institución de Banca Múltiple—Trust No. 11033735...... 36,839,656 2.7 Pictec and Cie ...... 5,434,000 0.4 Citiacciones Flexible, S.A. de C.V. Sociedad de Inversión de Renta Variable ...... 2,769,555 0.2 Banco Credit Suisse (México), S.A., Institución de Banca Múltiple ...... 2,076,213 0.2 Others...... 332,631,611 24.8 Total...... 1,342,196,100 100.0% To the best of our knowledge, except for Messrs. Max Michel and his family, and Enrique Brémond S. and his family, none of our shareholders has control (control), significant influence (influencia significativa) or decision-making power (poder de mando) in our company, as such terms are defined in the Mexican Securities Market Law.

97 CERTAIN TRANSACTIONS WITH RELATED PARTIES In the ordinary course of our business, we enter into commercial transactions with some of our subsidiaries, affiliates and related parties. We believe that our transactions with related parties are on terms comparable to those that would result from arm’s length negotiations with unaffiliated parties and are reviewed and approved by our Audit and Corporate Practices Committee which is comprised of independent members, in accordance with the Mexican Securities Market Law. Among others, Grupo Financiero Invex, S. A. de C. V., or Invex, provides our company with pension plan and workers’ savings fund administration services, as well as with trust services. Certain of our principal shareholders are shareholders of Invex. The aggregate amount of fees and commissions paid to Invex for these services was approximately Ps.2 million for the six months ended June 30, 2014, and Ps.2 million for each of the years ended December 31, 2013, 2012 and 2011. We also purchase corporate travel services for our employees from Orion Tours, S. A. de C. V., or Orion Tours. The Chief Executive Officer of Orion Tours also acts as Vice Chairman of our Board of Directors. The aggregate amount of fees and commissions paid to Orion Tours for these services was approximately Ps.26.1 million for the six months ended June 30, 2014, and Ps.185 million, Ps.153 million and Ps.153 million for the years ended December 31, 2013, 2012 and 2011, respectively. We expect to continue to enter into transactions with affiliates in the future in compliance with applicable Mexican law. See note 20 to our audited consolidated financial statements included in this offering memorandum for additional information about our transactions with related parties.

98 DESCRIPTION OF THE NOTES This section of the offering memorandum summarizes the material terms of the indenture and the notes. It does not, however, describe all of the terms of the indenture and the notes. Upon request, we will provide you with copies of the indenture. See ‘‘Available Information’’ for information concerning how to obtain such copies. In this section of the offering memorandum, references to ‘‘we,’’ ‘‘us’’ and ‘‘our’’ are to El Puerto de Liverpool, S.A.B. de C.V. only and do not include our subsidiaries or affiliates. References to ‘‘holders’’ mean those who have notes registered in their names on the books that we or the trustee maintain for this purpose, and not those who own beneficial interests in notes issued in book-entry form through DTC or in notes registered in street name. Owners of beneficial interests in the notes should refer to ‘‘Form of Notes, Clearing and Settlement.’’

General Indenture The notes will be issued under an indenture to be dated as of October 2, 2014, among us, the subsidiary guarantor and Citibank, N.A., as trustee (the ‘‘trustee,’’ which term includes any successor as trustee).

Principal and Interest The aggregate principal amount of the notes will initially be U.S.$300,000,000. The notes will mature on October 2, 2024. The notes will bear interest at a rate of 3.950% per year from October 2, 2014. Interest on the notes will be payable semi-annually in arrears on April 2 and October 2 of each year, beginning on April 2, 2015, to the holders in whose names the notes are registered at the close of business on the March 20 or September 20 immediately preceding the related interest payment date. We will pay interest on the notes on the interest payment dates stated above and at maturity. Each payment of interest due on an interest payment date or at maturity will include interest accrued from and including the last date to which interest has been paid or made available for payment, or from the issue date, if none has been paid or made available for payment, to but excluding the relevant payment date. We will compute interest on the notes on the basis of a 360-day year consisting of twelve 30-day months. If any payment under the notes is due on a day that is not a Business Day, we will make such payment on the next Business Day. Payments postponed to the next Business Day in this situation will be treated under the indenture as if they were made on the original due date. Postponement of this kind will not result in a default under the notes or the indenture. No interest will accrue on the postponed amount from the original due date to the next Business Day.

Ranking of the Notes and the Subsidiary Guarantee The notes and the subsidiary guarantee will be unsecured obligations and will, other than with respect to certain obligations given preferential treatment pursuant to the laws of Mexico, rank pari passu in right of payment with all of our and the subsidiary guarantor’s unsecured and unsubordinated Indebtedness. The notes and the subsidiary guarantee will not have the benefit of any collateral securing any of our or the subsidiary guarantor’s existing and future secured Indebtedness, and will be effectively junior to such secured Indebtedness to the extent of the value of the assets securing such Indebtedness. The notes and the subsidiary guarantee will be structurally subordinated to all existing and future Indebtedness and trade payables of our subsidiaries, other than the subsidiary guarantor, in respect of the assets of and revenues generated by those subsidiaries. Accordingly, each of our subsidiaries, other than the subsidiary guarantor, will pay its respective Indebtedness (including trades payable) before such non-guarantor subsidiary will be able to distribute any of its assets to us in the event of a bankruptcy, concurso mercantil, quiebra, liquidation or reorganization. In addition, holders of minority interests in such non-guarantor subsidiaries may receive distributions prior to or pro rata with us depending on the terms of the equity interests. See ‘‘Risk Factors—Risk Related to the Notes. The notes are not secured by our assets and the notes and the subsidiary guarantee will be effectively subordinated to our and the subsidiary guarantor’s secured debt. As of June 30, 2014, our total consolidated Indebtedness was Ps.13,521 million (U.S.$1,042 million), all of which constituted unsecured Indebtedness. As of such date, our non-guarantor subsidiaries had no indebtedness

99 (other than intercompany indebtedness). After giving pro forma effect to the offer and sale of the notes and the application of the net proceeds from this offering as described under ‘‘Use of Proceeds,’’ we and the subsidiary guarantor would have had Ps.17,412 million (U.S.$1,342 million) of total consolidated Indebtedness, all of which would have constituted unsecured Indebtedness.

Form and Denominations The notes will be issued only in registered form without coupons and in denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. Except in limited circumstances, the notes will be issued in the form of global notes. See ‘‘Form of Notes, Clearing and Settlement.’’

Further Issues We reserve the right, from time to time without the consent of holders of the notes, to issue additional notes on terms and conditions identical to those of the notes, which additional notes will increase the aggregate principal amount of, and will be consolidated and form a single series with, the notes.

Subsidiary Guarantee On the issue date, Distribuidora Liverpool, S.A. de C.V., will fully and unconditionally guarantee the payment of all our obligations under the indenture and the notes (the ‘‘subsidiary guarantee’’). The subsidiary guarantor will waive any right to which it may be entitled under any applicable law so that enforcement for the full amount due under the notes may be sought against it. The obligations of the subsidiary guarantor in respect of its subsidiary guarantee will be limited to the maximum amount that will result in the obligations not constituting a fraudulent conveyance, fraudulent transfer or similar illegal transfer under applicable law. See ‘‘Risk Factors Risk Related to the Notes—The subsidiary guarantee may not be enforceable against the subsidiary guarantor.’’ The subsidiary guarantor will be released and relieved of its obligations under its subsidiary guarantee in the event: • there is a legal defeasance or a covenant defeasance of the notes as discussed under ‘‘—Defeasance;’’ • there is a sale or other disposition of capital stock of the subsidiary guarantor (including by way of merger, stock purchase or otherwise) otherwise permitted by the indenture, following which the subsidiary guarantor is no longer our direct or indirect subsidiary; or • in the event that, at any time, the fair market value of the assets of the subsidiary guarantor (as reasonably determined by our board of directors) is less than U.S.$1 million.

Payment of Additional Amounts We will make payment of the principal of and interest on the notes without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of any taxing authority, unless such withholding or deduction is required by law or by the official interpretation or application thereof (including as described under ‘‘Taxation—Certain Mexican Federal Income Tax Considerations’’). Subject to the limitations and exceptions described below, we will pay to holders of the notes all additional amounts that may be necessary so that every net payment of interest or principal to the holder will not be less than the amount provided for in the notes. By net payment, we mean the amount that we or our paying agent will pay the holder after deducting or withholding an amount for or on account of any present or future taxes, duties, assessments or other governmental charges imposed with respect to that payment by a taxing authority of Mexico or of any jurisdiction in which any applicable subsidiary guarantor is organized, or the jurisdiction in which any successor of us or successor of the subsidiary guarantor is organized (wherein any successor assumes the obligations of the notes and the indenture following a merger, consolidation or transfer, lease or conveyance of substantially all of our assets and properties), or through which payments on the notes are made (each, a ‘‘Relevant Taxing Jurisdiction’’).

100 Our obligation to pay additional amounts is, however, subject to several important exceptions. We will not pay additional amounts to any holder for or on account of any of the following: • any taxes, duties, assessments or other governmental charges imposed solely because at any time there is or was a connection between the holder or beneficial owner of such note, as the case may be, and Mexico (or a Relevant Taxing Jurisdiction), including such holder or beneficial owner being or having been a citizen or resident of such Relevant Taxing Jurisdiction or treated as a resident thereof or being or having been physically present or engaged in a trade or business having or having had a permanent establishment therein (other than the mere receipt of a payment or the ownership or holding of a note); • any estate, inheritance, gift or other similar tax, assessment or other governmental charge imposed with respect to the notes; • any taxes, duties, assessments or other governmental charges imposed solely because the holder or any other person fails to comply with any certification, identification or other reporting requirement concerning the nationality, residence, identity or connection with Mexico (or a Relevant Taxing Jurisdiction) of the holder or any beneficial owner of the note if compliance is required by law, regulation or by an applicable income tax treaty, as a precondition to exemption from, or reduction in the rate of, such tax, assessment or other governmental charge and we have given the holders at least 30 days’ notice prior to the first payment date with respect to which such certification, identification or reporting requirement is required to the effect that holders will be required to provide such information and identification; • any tax, duty, assessment or other governmental charge payable otherwise than by deduction or withholding from payments on the notes; • any taxes, duties, assessments or other governmental charges with respect to a note presented for payment more than 30 days after the date on which the payment became due and payable or the date on which payment thereof is duly provided for and notice thereof given to holders, whichever occurs later, except to the extent that the holders of such note would have been entitled to such additional amounts on presenting such note for payment on any date during such 30-day period; • any payment on a note to a holder that is a fiduciary or partnership or a person other than the sole beneficial owner of any such payment, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such a partnership or the beneficial owner of the payment would not have been entitled to the additional amounts had the beneficiary, settlor, member or beneficial owner been the holder of the note; • any tax, duty, assessment or governmental charge imposed on a payment to an individual and required to be made pursuant to any law implementing or complying with, or introduced in order to conform to, any European Union Directive on the taxation of savings; and • any combination of the foregoing. The limitations on our obligations to pay additional amounts described in the third bullet point above will not apply if the provision of information, documentation or other evidence described in such bullet point would be materially more onerous, in form, in procedure or in the substance of information disclosed, to a holder or beneficial owner of a note, in such holder’s reasonable judgment taking into account any relevant differences between U.S. and Mexican law, regulation or administrative practice, than comparable information or other reporting requirements imposed under U.S. tax law (including the United States/Mexico Income Tax Treaty), regulations (including proposed regulations) and administrative practice (such as IRS Form W-8 BEN and W-9). Applicable Mexican laws and regulations currently allow us to withhold at a reduced rate, provided that we comply with certain information reporting requirements. The limitations on our obligations to pay additional amounts described in the third bullet point above also will not apply unless (a) the provision of the information, documentation or other evidence described in such bullet point is expressly required by the applicable Mexican laws and regulations, (b) we cannot obtain the information, documentation or other evidence necessary to comply with the applicable Mexican laws and regulations on our own through reasonable diligence and (c) we otherwise would meet the requirements for application of the applicable Mexican laws and regulations.

101 In addition, the limitation described in the third bullet point above does not require that any person, including any non-Mexican pension fund, retirement fund or financial institution, register with the Mexican Tax Management Service (Servicio de Administración Tributaria), or the Ministry of Finance and Public Credit to establish eligibility for an exemption from, or a reduction of, Mexican withholding tax. We will remit the full amount of any Mexican or other taxes withheld to the applicable taxing authorities in accordance with applicable law. We will also provide the trustee with documentation satisfactory to the trustee evidencing the payment of Mexican or other taxes in respect of which we have paid any additional amounts. We will provide copies of such documentation to the holders of the notes or the relevant paying agent upon written request. To give effect to the foregoing, we will, upon the written request of any holder, indemnify and hold harmless and reimburse the holder for the amount of any such taxes (including interest and penalties) described above (other than any taxes for which the holder would not have been entitled to receive additional amounts pursuant to any of the conditions described above) so imposed on, and paid by, such holder as a result of any payment of principal or interest on the notes, so that the net amount received by such holder after such reimbursement will not be less than the net amount the holder would have received if such tax had not been imposed or levied and so paid. Holders will be obligated to provide reasonable documentation in connection with the foregoing. We will also pay any stamp, administrative, court, documentary, excise or similar taxes arising in Mexico (or a Relevant Taxing Jurisdiction) in connection with the notes and will indemnify the holders for any such taxes paid by holders. Any reference in this offering memorandum, the indenture or the notes to principal, interest or any other amount payable in respect of the notes by us or the subsidiary guarantor will be deemed also to refer to any additional amount that may be payable with respect to that amount under the obligations referred to in this subsection. In the event that additional amounts actually paid with respect to the notes pursuant to the preceding paragraphs are based on rates of deduction or withholding in excess of the appropriate rate applicable to the holder of such notes, and as a result thereof such holder is entitled to make a claim for a refund or credit of such excess from the authority imposing such withholding tax, then such holder shall, by accepting such notes, be deemed to have assigned and transferred all right, title and interest to any such claim for a refund or credit of such excess to us. However, by making such assignment, the holder makes no representation or warranty that we will be entitled to receive such claim for a refund or credit and incurs no other obligation with respect thereto. Optional Redemption We will not be permitted to redeem the notes before their stated maturity, except as set forth below. The notes will not be entitled to the benefit of any sinking fund, meaning that we will not deposit money on a regular basis into any separate account to repay your notes. In addition, you will not be entitled to require us to repurchase your notes from you before the stated maturity, except as set forth under ‘‘—Repurchase at the Option of Holders Upon a Change of Control.’’ Optional Redemption We will have the right at our option to redeem the notes in whole or in part, at any time or from time to time prior to their maturity, on at least 30 but not more than 60 days’ written notice, at a redemption price equal to the greater of (i) 100% of the principal amount of such notes and (ii) the sum of the present values of each remaining scheduled payment of principal and interest thereon (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 25 basis points, plus accrued and unpaid interest, if any, on the principal amount of the notes being redeemed to the date of redemption. In connection with such optional redemption, the following defined terms apply: ‘‘Comparable Treasury Issue’’ means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such notes.

102 ‘‘Comparable Treasury Price’’ means, with respect to any redemption date (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (ii) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. ‘‘Independent Investment Banker’’ means one of the Reference Treasury Dealers appointed by us from time to time. ‘‘Reference Treasury Dealer’’ means each of Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated or their respective affiliates which are primary United States government securities dealers and not less than two other leading primary United States government securities dealers in the city of New York selected from time to time by us; provided, however, that if any of the foregoing shall cease to be a primary United States government securities dealer in the city of New York (a ‘‘Primary Treasury Dealer’’), we will substitute therefor another Primary Treasury Dealer. ‘‘Reference Treasury Dealer Quotation’’ means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Independent Investment Bank, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Bank by such Reference Treasury Dealer at 3:30 p.m., time on the third Business Day preceding such redemption date. ‘‘Treasury Rate’’ means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) (as computed on the third Business Day immediately preceding that redemption date) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. On and after the redemption date, interest will cease to accrue on the notes or any portion of the notes called for redemption (unless we default in the payment of the redemption price and accrued interest). On or before the redemption date, we will deposit with the trustee money sufficient to pay the redemption price of and (unless the redemption date shall be an interest payment date) accrued and unpaid interest to the redemption date on the notes to be redeemed on such date. If less than all of the notes are to be redeemed, selection of the notes for redemption will be made in compliance with the requirements of the principal national securities exchange, if any, on which the notes are listed or, if such national securities exchange has no requirements governing redemption, or the notes are not listed but are in global form, then by lot or otherwise in accordance with the procedures of DTC or, if the notes are not listed or if such national securities exchange has no requirements governing redemption and the notes are not in global form, on a pro rata basis, by lot or by such other method as the trustee in its sole discretion will deem to be fair and appropriate. We may at any time purchase notes in the open market or otherwise at any price. Any time the trustee is asked to send out a notice of redemption on behalf of the Company, the trustee shall receive a written instruction to do so, along with a copy of the notice of redemption to be sent, at least five Business Days prior to the date on which such notice is to be sent.

Redemption for Taxation Reasons If, as a result of any amendment to, or change in, the laws (or any rules or regulations thereunder) of any Relevant Taxing Jurisdiction or any political subdivision or taxing authority thereof or therein affecting taxation, or any amendment to or change in an official interpretation or application of such laws, rules or regulations, which amendment to or change of such laws, rules or regulations or official interpretation or application thereof becomes effective on or after the date of this offering memorandum or on or after the date a jurisdiction becomes a Relevant Taxing Jurisdiction, we or the subsidiary guarantor, if the subsidiary guarantor is required to make payments, would be obligated, after taking all reasonable measures to avoid this requirement (including reasonable measures to change the jurisdiction of the paying agent), to pay additional amounts in excess of those attributable to a withholding tax rate of 4.9% with respect to the notes (see ‘‘—Payment of Additional Amounts’’ and ‘‘Taxation—Certain Mexican Federal Income Tax Considerations’’), then, at our option, all, but not less than all, of the notes may be redeemed at any time on giving not less than 30 nor more than 60 days’ written notice, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest, if any, and any additional amounts due thereon up to but not including the date of redemption; provided, however,

103 that (i) no notice of redemption for tax reasons may be given earlier than 90 days prior to the earliest date on which we or the subsidiary guarantor would be obligated to pay such additional amounts if a payment on the notes were then due and (ii) at the time such notice of redemption is given such obligation to pay such additional amounts remains in effect. Prior to the sending of any notice of redemption pursuant to this provision, we will deliver to the trustee: • an officers’ certificate in a form reasonably satisfactory to the trustee stating that we are entitled to effect the redemption and setting forth a statement of facts showing that the conditions precedent to our right of redemption for taxation reasons have occurred; and • an opinion of legal counsel in Mexico or in the Relevant Taxing Jurisdiction (which may be our external counsel) of recognized standing in a form reasonably satisfactory to the trustee to the effect that we or the subsidiary guarantor have or will become obligated to pay such additional amounts as a result of such change or amendment. This written notice, after it is delivered by us to the trustee, will be irrevocable. Any time the trustee is asked to send out a notice of redemption on behalf of the Company, the trustee shall receive a written instruction to do so, along with a copy of the notice of redemption to be sent, at least five Business Days prior to the date on which such notice is to be sent.

Merger, Consolidation or Sale of Assets We may not, in a single transaction or series of related transactions, consolidate with or merge into any other person (whether or not we are the surviving or continuing person) or, directly or indirectly, transfer, convey, sell, assign, lease or otherwise dispose of all or substantially all of our assets and properties and may not permit any person to consolidate with or merge into us unless all of the following conditions are met: • if we are not the successor, surviving, or continuing person in the transaction, the successor is organized and validly existing under the laws of Mexico or the United States or any country that is a member of the European Union or any political subdivision thereof and expressly assumes our obligations under the notes and the indenture; • immediately after the transaction, no default under the notes has occurred and is continuing; and • we have delivered to the trustee an officers’ certificate and opinion of counsel, each in a form reasonably satisfactory to the trustee, stating, among other things, that the transaction is authorized or permitted by the indenture and that all conditions precedent under the indenture related to the consummation of the transaction have been met. Except in case the subsidiary guarantee is to be released as provided under ‘‘—Subsidiary Guarantee,’’ the subsidiary guarantor may not, in a single transaction or series of related transactions, consolidate with or merge into any other person (whether or not such subsidiary guarantor is the surviving or continuing person) or, directly or indirectly, transfer, convey, sell, assign, lease or otherwise dispose of all or substantially all of its assets and properties and may not permit any person to consolidate with or merge into it unless all of the following conditions are met: • if the subsidiary guarantor is not the successor, surviving, or continuing person in the transaction, the successor is organized and validly existing under the laws of Mexico or the United States or any country that is a member of the European Union or any political subdivision thereof and expressly assumes all of the obligations of such subsidiary guarantor under the indenture; • immediately after the transaction, no default under the notes has occurred and is continuing; and • such subsidiary guarantor has delivered to the trustee an officers’ certificate and opinion of counsel, each in a form reasonably satisfactory to the trustee, stating, among other things, that the transaction is authorized or permitted by the indenture and that all conditions precedent under the indenture related to the consummation of the transaction have been met. For this purpose, ‘‘default under the notes’’ means an event of default or an event that would be an event of default with respect to the notes if the requirements for giving us default notice and for our default having to continue for a specific period of time were disregarded. See ‘‘—Defaults, Remedies and Waiver of Defaults.’’

104 If the conditions described above are satisfied, we or the subsidiary guarantor will not have to obtain the approval of the holders of the notes in order to merge or consolidate or to sell or otherwise dispose of our or their properties and assets substantially as an entirety. In addition, these conditions will apply only if we or the subsidiary guarantor wish to merge into, consolidate with another person, or sell or otherwise dispose of all or substantially all of our assets and properties. We or the subsidiary guarantor will not need to satisfy these conditions if we or the subsidiary guarantor enter into other types of transactions, including any transaction in which we or the subsidiary guarantor acquire the stock or assets of another person, any transaction that involves a change of control of our company, but in which we do not merge or consolidate and any transaction in which we or the subsidiary guarantor sell or otherwise dispose of less than substantially all our or their assets.

Repurchase at the Option of Holders Upon a Change of Control Upon the occurrence of any Change of Control, each holder of notes will have the right to require us to repurchase all or any part of such holder’s notes pursuant to the offer described below (the ‘‘Change of Control Offer’’) at a purchase price (the ‘‘Change of Control Purchase Price’’) equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the purchase date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Within 30 days following the occurrence of a Change of Control, we shall send written notice to each holder, with a copy to the trustee, at such holders’ address appearing in the register of notes, which notice shall state: • that a Change of Control has occurred and a Change of Control Offer is being made and that all notes timely tendered will be accepted for payment; • the Change of Control Purchase Price and the purchase date, which shall be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 nor later than 60 days from the date such notice is mailed (such specified date, the ‘‘Change of Control Payment Date’’); • the circumstances and relevant facts regarding the Change of Control; and • the procedures that holders of notes must follow in order to tender their notes (or portions thereof) for payment, and the procedures that holders of notes must follow in order to withdraw an election to tender notes (or portions thereof) for payment. We will send such notice pursuant to any rules of the Irish Stock Exchange. On the Business Day preceding the Change of Control Payment Date, we will deposit with the paying agent funds in an amount equal to the Change of Control Purchase Price in respect of all notes or portions thereof so tendered. ‘‘Business Day’’ means each Monday, Tuesday, Wednesday, Thursday and Friday that is not (i) a day on which banking institutions in New York or Mexico generally are authorized or obligated by law, regulation or executive order to close or (ii) a day on which banking and financial institutions in New York or Mexico are closed for business with the general public. ‘‘Change of Control’’ means the occurrence of any of the following: (i) any event as a result of which the Permitted Holders shall cease, in the aggregate, directly or indirectly, to possess the power to (x) vote more than 50.0% of our voting stock, (y) appoint the majority of the members of our board of directors, or (z) direct or cause the direction of our management and policies, whether through the ownership of voting securities, by contract or otherwise, (ii) the adoption of a plan relating to our liquidation or dissolution, or (iii) the direct or indirect sale, transfer, conveyance or other disposition in one or a series of related transactions, of all or substantially all of our and our subsidiaries’ properties or assets taken as a whole. ‘‘Permitted Holders’’ means, collectively the members of the Michel family and the members of the Brémond family, including lineal descendants, estates and heirs, or any trust or other investment vehicle for the primary benefit of any of the foregoing. We will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture and purchases all notes validly tendered and not withdrawn under such Change of Control Offer.

105 We will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described above, we will comply with the applicable securities laws and regulations and will not be deemed to have breached our obligations under this covenant by virtue of such compliance. Our obligation to make an offer to repurchase the notes as a result of a Change of Control may be waived or modified at any time prior to the occurrence of such Change of Control with the written consent of the holders of a majority in principal amount of the notes. See ‘‘—Modification and Waiver.’’

Covenants The following covenants will apply to us and our subsidiaries for so long as any note remains outstanding. These covenants restrict our ability and the ability of our subsidiaries to enter into certain transactions. However, these covenants do not limit our ability to incur Indebtedness or require us to comply with financial ratios or to maintain specified levels of net worth or liquidity.

Limitation on Liens We may not, and we may not allow any of our subsidiaries to, permit to exist any Indebtedness or Guarantee, if such Indebtedness or Guarantee is secured by a Lien upon any Operating Property, unless, concurrently with the issuance or assumption of such Indebtedness or Guarantee or the creation of such Lien, the notes (together with, at our option, any other Indebtedness of or Guarantee by us or our subsidiaries then existing or thereafter created which is not subordinated to the notes) shall be secured equally and ratably with (or at our option prior to) such Indebtedness or Guarantee for so long as such Indebtedness or Guarantee is so secured; provided, however, that the foregoing restriction shall not apply to: (i) any Lien on (a) any Operating Property acquired, constructed, developed, extended or improved by us or any of our subsidiaries (singly or together with other Persons) after the date of the indenture or any property reasonably incidental to the use or operation of such Operating Property (including any real property on which such Operating Property is located), or (b) any shares or other ownership interest in, or any Indebtedness of, any Person which holds, owns or is entitled to such property, products, revenues or profits, in each of clauses (a) and (b) above, to the extent such Lien is created, incurred or assumed (x) during the period such Operating Property was being constructed, developed, extended or improved, or (y) contemporaneously with, or within 360 days after, such acquisition or the completion of such construction, development, extension or improvement in order to secure or provide for the payment of all or any part of the purchase price or other consideration of such Operating Property or the other costs of such acquisition, construction, development, extension or improvement (including costs such as escalation, interest during construction and financing and refinancing costs); (ii) any Lien on any Operating Property existing at the time of acquisition thereof and which (a) is not created as a result of or in connection with or in anticipation of such acquisition and (b) does not attach to any other Operating Property other than the Operating Property so acquired; (iii) any Lien on any Operating Property acquired from a Person which is merged with or into us or any of our subsidiaries or any Lien existing on Operating Property of any Person at the time such Person becomes our subsidiary, in either such case which (a) is not created as a result of or in connection with or in anticipation of any such transaction and (b) does not attach to any other Operating Property other than the Operating Property so acquired; (iv) any Lien which secures Indebtedness or a Guarantee owing by any of our subsidiaries to us or any other of our subsidiaries; (v) any Lien existing on the date of the indenture; or (vi) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any Lien referred to in the foregoing clauses (i) through (v) inclusive; provided, however, that the principal amount of Indebtedness or Guarantee secured thereby shall not exceed the principal amount of Indebtedness or Guarantee so secured at the time of such extension, renewal or replacement plus an amount necessary to pay any fees and expenses, including premiums and defeasance costs

106 related to such transaction, and that such extension, renewal or replacement shall be limited to all or a part of the property which secured the Lien so extended, renewed or replaced (plus improvements on such property). Notwithstanding the foregoing, we or any of our subsidiaries may issue or assume Indebtedness or a Guarantee secured by a Lien which would otherwise be prohibited under the provisions of the indenture described in this section or enter into a sale and leaseback transaction that would otherwise be prohibited by the provision of the indenture described below under ‘‘—Limitations on Sale and Leasebacks;’’ provided, however, that the aggregate amount of such Indebtedness, Guarantee or Attributable Debt of such sale and leaseback transaction together with the aggregate amount (without duplication) of (i) Indebtedness or Guarantees outstanding at such time that we or our subsidiaries previously incurred pursuant to this section, plus (ii) the Attributable Debt of all of our and our subsidiaries’ sale and leaseback transactions outstanding at such time that were previously incurred pursuant to the provisions of the indenture described below under the first bullet point of ‘‘—Limitation on Sales and Leasebacks,’’ shall not exceed 15.0% of Consolidated Net Tangible Assets. ‘‘Attributable Debt’’ means, with respect to any sale and leaseback transaction, the lesser of (i) the fair market value of the asset subject to such transaction and (ii) the present value, discounted at a rate per annum equal to the discount rate inherent in the applicable lease, of the obligations of the lessee for net rental payments (excluding, however, any amounts required to be paid by such lessee, whether or not designated as rent or additional rent, on account of maintenance and repairs, services, insurance, taxes, assessments, water rates or similar charges and any amounts required to be paid by such lessee thereunder contingent upon monetary inflation or the amount of sales, maintenance and repairs, insurance, taxes, assessments, water rates or similar charges) during the remaining term of the lease (as determined in good faith by us in accordance with IFRS). ‘‘Consolidated Net Tangible Assets’’ means total consolidated assets less (1) all current liabilities, (2) all goodwill, (3) all trade names, trademarks, patents and other intellectual property assets and (4) all licenses, each as set forth on our most recent annual or quarterly consolidated balance sheet and computed in accordance with IFRS. ‘‘Guarantee’’ means any obligation, contingent or otherwise (including an aval), of any Person directly or indirectly guaranteeing any Indebtedness of any other Person, direct or indirect, contingent or otherwise, or entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term ‘‘Guarantee’’ shall not include endorsements for collection or deposit in the ordinary course of business. The term ‘‘Guarantee’’ used as a verb has a corresponding meaning. The term ‘‘Guarantee’’ shall not apply to a guarantee of intercompany Indebtedness among us and our subsidiaries or among our subsidiaries. ‘‘Indebtedness’’ means, with respect to any Person (without duplication) (i) any obligation of such Person (a) for borrowed money, under any reimbursement obligation relating to a letter of credit (other than letters of credit payable to suppliers in the ordinary course of business), under any reimbursement obligation relating to a financial bond or under any reimbursement obligation relating to a similar instrument or agreement, (b) for the payment of money relating to any obligations under any capital lease of real or personal property or (c) under any agreement or instrument in respect of an interest rate or currency swap, exchange or hedging transaction or other financial derivatives transaction (other than any such agreements as are entered into in the ordinary course of business and are not for speculative purposes or the obtaining of credit); and (ii) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clause (i) above. For the purpose of determining any particular amount of Indebtedness under this definition, Guarantees of (or obligations with respect to letters of credit) Indebtedness otherwise included in the determination of such amount shall not be included. ‘‘IFRS’’ means International Financial Reporting Standards as approved by the International Accounting Standards Board. ‘‘Lien’’ means any mortgage, pledge, lien or security interest. ‘‘Operating Property’’ means as of any date of determination, (i) any real and tangible property owned by us or any of our subsidiaries that constitutes, without limitation, all or any part of any store, warehouse, service center or distribution center and is used in the ordinary course of our business, other than any such property which, individually or, in the case of a series of related transactions, in the aggregate, in the good faith opinion

107 of our board of directors, is not of material importance to the business conducted or assets owned by us and our subsidiaries taken as a whole; and (ii) all merchandise, inventories, furniture and equipment (including all transportation and warehousing equipment, store racks and showcases but excluding office equipment and data processing equipment) owned by us or any of our subsidiaries. ‘‘Person’’ means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or government or other entity.

Limitation on Sales and Leasebacks We may not, and we may not allow any of our subsidiaries to, enter into any sale and leaseback transaction with respect to any Operating Property, unless: • the aggregate principal amount of all debt then outstanding that is secured by any lien on any Operating Property that does not ratably secure the notes (excluding any secured Indebtedness permitted under (i) to (vi) of ‘‘—Limitation on Liens’’ above) plus the aggregate amount of our Attributable Debt and the Attributable Debt of our subsidiaries in respect of sale and leaseback transactions then outstanding (other than any sale and leaseback transaction permitted under the following bullet point) would not exceed an amount equal to 15.0% of our Consolidated Net Tangible Assets; or • we or one of our subsidiaries, within 12 months of the sale and leaseback transaction, (i) retire an amount of our secured debt, which is not subordinated to the notes and which shall, at the time of incurrence, have a remaining maturity of at least 12 months, in an amount equal to the greater of (a) the net cash proceeds of the sale or transfer of the Operating Property that is the subject of the sale and leaseback transaction or (b) the fair market value (as determined in good faith by our board of directors) of the Operating Property leased, or (ii) apply the net cash proceeds of such sale or transfer, or, in the case such sale or transfer is other than for cash, the fair market value (as determined in good faith by our board of directors) to the acquisition, purchase, construction, development, extension or improvement of any property or assets constituting Operating Property. A ‘‘sale and leaseback transaction’’ is an arrangement between us or one of our subsidiaries and a bank, insurance company or other lender or investor where we or our subsidiary leases Operating Property for an initial term of three years or more that was or will be sold by us or our subsidiary to that lender or investor for a sale price of U.S.$5.0 million or its equivalent or more.

Provision of Information For so long as the notes remain outstanding, we will provide to the holders (or to the trustee, with a written direction to send to the holders) a URL address providing access to the following items in English: (i) our consolidated annual financial statements audited by an internationally recognized firm of independent public accountants within 120 days of the end of each fiscal year (which fiscal year ends December 31), and our consolidated quarterly financial statements within 60 days of the end of each of the first three fiscal quarters of each fiscal year. These annual and quarterly financial statements will be prepared in accordance with IFRS and such annual financial statements will be accompanied by a management discussion on our results of operations for the periods presented; (ii) copies of all public filings containing material information about our business made with any stock exchange or securities regulatory agency within 30 days after filing (or a summary thereof); and (iii) any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the notes are not freely transferable under the Securities Act, provided, however, that the trustee shall have no obligation whatsoever to determine whether or not such information, documents or reports have been provided, and provision of access to such reports, information and documents to the trustee is for informational purposes only and the trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the trustee is entitled to rely exclusively on officers’ certificates).

108 If we become aware that a default or event of default or an event that with notice or the lapse of time would be an event of default has occurred and is continuing, as the case may be, we will also deliver an officers’ certificate with the trustee describing the details thereof and the action we are taking or propose to take.

Listing Application has been made to the Irish Stock Exchange for the notes to be admitted to the Official List and trading on the Global Exchange Market, which is the exchange regulated market of the Irish Stock Exchange.

Defaults, Remedies and Waiver of Defaults Holders of the notes will have special rights if an event of default with respect to the notes that occurs and is not cured, as described below.

Events of Default Each of the following will be an ‘‘event of default’’ with respect to the notes: • we fail to pay the principal (or premium, if any) of the notes on its due date, including the failure to make a required payment to purchase notes tendered pursuant to a Change of Control Offer; • we fail to pay interest on the notes within 30 days after its due date; • we or the subsidiary guarantor remain in breach of any covenant in the indenture for the benefit of holders of the notes, for 60 days after we receive a notice of default (sent by the trustee or the holders of not less than 25.0% in principal amount of the notes) stating that we are in breach; • we or the subsidiary guarantor file for bankruptcy, insolvency, reorganization, concurso mercantil, quiebra, or similar insolvency proceedings, or other events of bankruptcy, insolvency, reorganization, concurso mercantil, quiebra, or similar proceedings relating to us or the subsidiary guarantor occur; • we or the subsidiary guarantor are in a default under any instrument relating to Indebtedness exceeding individually or in the aggregate U.S.$100.0 million (or its equivalent in other currencies) due to a failure to pay principal or interest when due or that results in the acceleration of the debt prior to its maturity and such default continues for more than the period of grace, if any, applicable thereto and the period for payment has not been expressly extended; or • a final judgment is rendered against us or the subsidiary guarantor in an aggregate amount in excess of U.S.$100.0 million (or its equivalent in other currencies) that is not discharged or bonded in full within 60 days.

Remedies Upon Event of Default If an event of default with respect to the notes occurs and is not cured or waived, the trustee, at the written request of holders of not less than 25.0% in principal amount of the notes, may declare the entire principal amount of all the notes to be due and payable immediately, and upon any such declaration the principal, any accrued interest and any additional amounts shall become due and payable. If, however, an event of default occurs because of bankruptcy, insolvency, reorganization, concurso mercantil or quiebra relating to us, the entire principal amount of the notes and any accrued interest and any additional amounts will be automatically accelerated, without any action by the trustee or any holder and any principal, interest or additional amounts will become immediately due and payable. Each of the situations described in the preceding paragraph is called an acceleration of the maturity of the notes. The right of the holders to give such acceleration notice shall terminate if the event giving rise to such right shall have been cured before such right is exercised. If the maturity of the notes is accelerated and a judgment for payment has not yet been obtained, the holders of a majority in aggregate principal amount of the notes may cancel the acceleration for all the notes, provided that all amounts then due (other than amounts due solely because of such acceleration) have been paid and all other defaults with respect to the notes have been cured or waived. If any event of default occurs, the trustee will be obligated to exercise its rights and powers under the indenture, and to use the same degree of care and skill in doing so, that a prudent person would use under the circumstances in conducting his or her own affairs.

109 Except as described in the prior paragraph, the trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the trustee security or indemnity, or both, satisfactory to it against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction. If the trustee receives an indemnity or security, or both, that is satisfactory to it, the holders of a majority in principal amount of the notes may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. These majority holders may also direct the trustee in performing any other action under the indenture with respect to the notes; provided, however, that the trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with such direction. Before a holder of the notes bypasses the trustee and brings its own lawsuit or other formal legal action or takes other steps to enforce its rights or protect its interests relating to the notes, the following must occur: • the trustee must have received written notice that an event of default has occurred and the event of default has not been cured or waived; • the holders of not less than 25.0% in principal amount of the notes must make a written request that the trustee take action with respect to the notes because of the default and they or other holders must offer to the trustee indemnity, security, or both, satisfactory to the trustee against the cost and other liabilities of taking that action; • the trustee must not have taken action for 60 days after the above steps have been taken; and • during those 60 days, the holders of a majority in principal amount of the notes must not have given the trustee directions that are inconsistent with the written request of the holders of not less than 25.0% in principal amount of the notes. A holder will be entitled, however, at any time to bring a lawsuit for the payment of money due on any note held by that holder on or after its due date. Book-entry and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and how to declare or cancel an acceleration of the maturity.

Waiver of Default The holders of not less than a majority in principal amount of the notes may waive a past default for all the notes. If this happens, the default will be treated as if it had been cured. No one can waive a payment default on any note, however, without the approval of the particular holder of that note.

Modification and Waiver There are three classes of changes we can make to the indenture or the outstanding notes under the indenture.

Changes Requiring Each Holder’s Approval The following changes cannot be made without the approval of each holder of an outstanding note affected by the change: • a change in the stated maturity of any principal or interest payment on the notes; • a reduction in the principal amount, the interest rate or the redemption price for the notes; • a change in the obligation to pay additional amounts; • a change in the obligation and price for repurchase following the occurrence of a Change of Control; • a change in the currency of any payment on the notes; • a change in the place of any payment on the notes; • an impairment of the holder’s right to sue for payment of any amount due on its notes;

110 • a reduction in the percentage in principal amount of the notes needed to change the indenture, the outstanding notes under the indenture or the notes; and • a reduction in the percentage in principal amount of the notes needed to waive our compliance with the indenture or to waive defaults.

Changes Not Requiring Approval Some changes will not require the approval of holders of notes. These changes are limited to specific kinds of changes, like the addition of covenants, events of default or security, and other clarifications and changes that would not adversely affect the holders of outstanding notes under the indenture in any material respect.

Changes Requiring Majority Approval Any other change to the indenture or the notes will be required to be approved by the holders of a majority in principal amount of the notes affected by the change or waiver. The required approval must be given by written consent. The same majority approval will be required for us to obtain a waiver of any of our covenants in the indenture. Our covenants include, among other restrictions, restrictions on our ability to merge and create liens on our interests, which we describe above under ‘‘—Mergers, Consolidation or Sale of Assets’’ and ‘‘—Covenants.’’ If the holders approve a waiver of a covenant, we will not have to comply with it. The holders, however, cannot approve a waiver of any provision in the notes or the indenture, as it affects any note, that we cannot change without the approval of each holder of that note as described under ‘‘—Modification and Waiver—Changes Requiring Each Holder’s Approval’’ above, unless each holder approves the waiver. Book-entry and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the indenture or the notes or request a waiver.

Defeasance We may, at our option, elect to terminate (i) all of our obligations with respect to the notes (‘‘legal defeasance’’), except for certain obligations, including those regarding any trust established for defeasance and obligations relating to the transfer and exchange of the notes, the replacement of mutilated, destroyed, lost or stolen notes and the maintenance of agencies with respect to the notes, or (ii) our obligations under the covenants in the indenture, so that any failure to comply with such obligations will not constitute an event of default (‘‘covenant defeasance’’) in respect of the notes. In order to exercise either legal defeasance or covenant defeasance, we must irrevocably deposit with the trustee money or U.S. government obligations, or any combination thereof, in such amounts as will be sufficient (as certified by an independent financial professional), to pay the principal, premium, if any, and interest (including additional amounts) in respect of the notes then outstanding on the maturity date of the notes, and comply with certain other conditions. In the case of legal defeasance, we must deliver to the trustee an opinion of U.S. tax counsel of recognized standing in a form reasonably satisfactory to the trustee, confirming that: (a) We have received from, or there has been published by, the U.S. Internal Revenue Service a ruling; or (b) Since the issue date, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall state that, the holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such legal defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred. In the case of covenant defeasance, we must deliver to the trustee an opinion of U.S. tax counsel of recognized standing in a form reasonably satisfactory to the trustee to the effect that the holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. In the case of legal defeasance or covenant defeasance, we must deliver to the trustee an opinion of Mexican tax counsel and/or tax counsel in the Relevant Taxing Jurisdiction, in each case of recognized standing

111 and in a form reasonably satisfactory to the trustee, to the effect that the holders will not recognize income, gain or loss for Mexican tax purposes, including withholding tax (except for withholding tax then payable on interest payments due), as a result of such legal defeasance or covenant defeasance and will be subject to Mexican taxes on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance or covenant defeasance had not occurred. In order to exercise either legal defeasance or covenant defeasance no default or event of default shall have occurred and be continuing on the date of the deposit pursuant to the first paragraph of this section. If we elect either legal defeasance or covenant defeasance with respect to the notes, we must so elect it with respect to all of the notes.

Special Rules for Actions by Holders When holders take any action under the indenture, such as giving a notice of default, declaring an acceleration, approving any change or waiver or giving the trustee an instruction, we will apply the following rules.

Only Outstanding Notes are Eligible for Action by Holders Only holders of outstanding notes will be eligible to vote or participate in any action by holders of notes. In addition, we will count only outstanding notes in determining whether the various percentage requirements for voting or taking action have been met. For these purposes, a note will not be ‘‘outstanding’’ if it has been surrendered for cancellation or if we have deposited or set aside, in trust for its holder, money for its payment or redemption and all other amounts due until such date. Notes held by us or any of our affiliates are not eligible to vote.

Determining Record Dates for Action by Holders We will generally be entitled to set any day as a record date for the purpose of determining the holders that are entitled to take action under the indenture. In some limited circumstances, only the trustee will be entitled to set a record date for action by holders. If we or the trustee set a record date for an approval or other action to be taken by holders, that vote or action may be taken only by persons or entities who are holders on the record date and must be taken during the period that we specify for this purpose, or that the trustee specifies if it sets the record date. We or the trustee, as applicable, may shorten or lengthen this period from time to time. This period, however, may not extend beyond the 180th day after the record date for the action. In addition, record dates for any global notes may be set in accordance with procedures established by the depositary from time to time.

Payment Provisions Payments on the Notes We will pay interest on the notes on the interest payment dates, and at maturity, to the holders in whose names the notes are registered at the close of business on the regular record date relating to the interest payment date, but we will pay the interest on the notes due at maturity but on a day that is not an interest payment date to the persons or entities entitled to receive the principal of such notes. We will pay the amount of principal due at maturity to the holders of the notes against surrender of such notes at the proper place of payment. The regular record dates relating to the interest payment dates for the notes are March 20 and September 20. For the purpose of determining the holder at the close of business on a regular record date when business is not being conducted, the close of business will mean 5:00 p.m., New York City time, on that day.

Payments on Global Notes For notes issued in global form, we will make payments on the notes in accordance with the applicable policies of the depositary as in effect from time to time. Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the notes. An indirect holder’s right to receive such payments will be governed by the rules and practices of the depositary and its participants.

112 Payments on Certificated Notes For notes issued in certificated form, if any, we will pay interest that is due on an interest payment date by check mailed on such interest payment date to the holder at the holder’s address appearing in the register of notes as of the close of business on the regular record date, and we will make all other payments by check against presentation of the note. All payments by check will be made in same-day funds, that is, funds that become available on the day the check is cashed. If we issue notes in certificated form, holders of notes in certificated form will be able to receive payments of principal and interest on their notes at the office of our paying agent maintained in the city of New York and, for so long as the notes are listed on the Global Exchange Market of the Irish Stock Exchange, at the office of our paying agent in Ireland. Alternatively, upon the request of a holder of an aggregate principal amount of notes of at least U.S.$1,000,000, we will pay any amount that becomes due on such notes by wire transfer of immediately available funds to an account at a bank in the city of New York, on the due date. To request wire payment, the holder must give the paying agent appropriate wire transfer instructions at least 10 Business Days before the requested wire payment is due. In the case of interest payments due on interest payment dates, the instructions must be given by the person or entity who is the holder on the relevant regular record date. In the case of any other payment, payment will be made only after the notes are surrendered to the paying agent. Any wire instructions, once properly given, will remain in effect unless and until new instructions are given in the manner described above.

Paying Agents If we issue notes in certificated form, we may appoint one or more financial institutions to act as our paying agents, at whose designated offices the notes may be surrendered for payment at their maturity. We may add, replace or terminate paying agents from time to time, provided that if any notes are issued in certificated form, so long as such notes are outstanding, we will maintain a paying agent in the city of New York. Initially, we have appointed the trustee, at its corporate trust office in the city of New York, as our principal paying agent. We must notify you of changes in the paying agents as described under ‘‘—Notices’’ below.

Unclaimed Payments All money paid by us to a paying agent that remains unclaimed at the end of two years after the amount is due to a holder will be repaid to us. After the expiration of such two-year period, the holder may look only to us for payment and not to the trustee, any other paying agent or any other Person.

Transfer Agents We may appoint one or more transfer agents, at whose designated offices any notes in certificated form may be transferred or exchanged and also surrendered before payment is made at maturity. For so long as the notes remain outstanding, we will maintain a transfer agent in the city of New York. Initially, we have appointed the trustee, at its corporate trust office in the city of New York, as transfer agent. We must notify you of changes in the transfer agents as described under ‘‘—Notices.’’ If we issue notes in certificated form, holders of notes in certificated form will be able to transfer their notes, in whole or in part, by surrendering the notes, with a duly completed form of transfer, for registration of transfer at the office of our transfer agent in the city of New York, Citibank, N.A., 388 Greenwich Street, 14th Floor, New York, New York 10013. We will not charge any fee for the registration or transfer or exchange, except that we may require the payment of a sum sufficient to cover any applicable tax or other governmental charge payable in connection with the transfer.

Notices As long as we issue notes in global form, notices to be given to holders will be given to DTC, in accordance with its applicable policies as in effect from time to time. If we issue notes in certificated form, notices, including upon the occurrence of a Change of Control, to be given to holders will be sent by mail to the respective addresses of the holders as they appear in the trustee’s records, and will be deemed given when mailed. From and after the date the notes are listed on the Global Exchange Market of the Irish Stock Exchange we will provide notices to holders as required by the rules of such exchange for so long as it is required by its rules.

113 Neither the failure to give any notice to a particular holder, nor any defect in a notice given to a particular holder, will affect the sufficiency of any notice given to another holder.

Governing Law The indenture and the notes will be governed by, and construed in accordance with, the laws of the State of New York, United States of America.

Submission to Jurisdiction In connection with any legal action or proceeding arising out of or relating to the notes or the indenture (subject to the exceptions described below), we have agreed: • to submit to the exclusive jurisdiction of any U.S. federal or New York state court in the Borough of Manhattan, the City of New York and to the courts of our own corporate domicile; • that all claims in respect of such legal action or proceeding may be heard and determined in such New York state or U.S. federal court and will waive, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding and any right of jurisdiction in such action or proceeding on account of the place of residence or domicile of us; and • to appoint CT Corporation System, with an office at 111 Eighth Avenue, New York, New York 10011, United States of America as process agent. The process agent will receive, on our behalf, service of copies of the summons and complaints and any other process which may be served in any such legal action or proceeding brought in such New York state or U.S. federal court sitting in the city of New York. Service may be made by mailing or delivering a copy of such process to us at the address specified above for the process agent. In addition to the foregoing, the holders may serve legal process in any other manner permitted by applicable law. A final judgment in any of the above legal actions or proceedings will be conclusive and may be enforced in other jurisdictions, in each case, to the extent permitted under the applicable laws of such jurisdiction. To the extent that we have or hereafter may acquire or have attributed to us any sovereign or other immunity under any law, we have agreed to waive, to the fullest extent permitted by law, such immunity in respect of any claims or actions regarding our obligations under the notes.

Currency Indemnity Our obligations under the notes, will be discharged only to the extent that the relevant holder is able to purchase U.S. dollars with any other currency paid to that holder in accordance with any judgment or otherwise. If the holder cannot purchase U.S. dollars in the amount originally to be paid, we have agreed to pay the difference. The holder, however, agrees that, if the amount of U.S. dollars purchased exceeds the amount originally to be paid to such holder, the holder will reimburse the excess to us. The holder will not be obligated to make this reimbursement if we are in default of our or its obligations under the notes. See ‘‘Risk Factors—Risk Related to the Notes—Payments of judgments against us on the notes would be in pesos.’’

Our Relationship with the Trustee Citibank, N.A. is initially serving as the trustee for the notes. Citibank, N.A. and its affiliates may have other business relationships with us from time to time.

114 FORM OF NOTES, CLEARING AND SETTLEMENT

Global Notes The notes will be issued in the form of one or more registered notes in global form, without interest coupons, or the global notes, as follows: • notes sold to qualified institutional buyers under Rule 144A will be represented by one or more Rule 144A global notes; and • notes sold in offshore transactions to non-U.S. persons in reliance on Regulation S will be represented by one or more Regulation S global notes. Upon issuance, each of the global notes will be deposited with the trustee as custodian for DTC and registered in the name of Cede & Co., as nominee of DTC. Ownership of beneficial interests in each global note will be limited to persons who have accounts with DTC, or DTC participants, or persons who hold interests through DTC participants, including Euroclear Bank S.A./N.V., or Euroclear, and Clearstream Banking, société anonyme, or Clearstream. The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, and the address of Clearstream, Luxembourg is 42 Avenue JF Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg. We expect that under procedures established by DTC: • upon deposit of each global note with DTC’s custodian, DTC will credit portions of the principal amount of the global note to the accounts of the DTC participants designated by the initial purchasers; and • ownership of beneficial interests in each global note will be shown on, and transfer of ownership of those interests will be effected only through, records maintained by DTC (with respect to interests of DTC participants) and the records of DTC participants (with respect to other owners of beneficial interests in the global note). Beneficial interests in the global notes may not be exchanged for notes in physical, certificated form except in the limited circumstances described below. Each global note and beneficial interests in each global note will be subject to restrictions on transfer as described under ‘‘Transfer Restrictions.’’

Transfers Within and Between Global Notes Beneficial interests in a Regulation S global note may be transferred to a person who takes delivery in the form of a beneficial interest in the Rule 144A global note only if the transfer is made pursuant to Rule 144A and the transferor first delivers to the trustee a certificate (in the form provided in the Indenture) to the effect that such transfer is being made to a person who the transferor reasonably believes is a ‘‘qualified institutional buyer’’ within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and in accordance with all applicable securities laws of the states of the United States and other jurisdictions. Beneficial interests in a Rule 144A global note may be transferred to a person who takes delivery in the form of a beneficial interest in a Regulation S global note only upon receipt by the trustee of a written certification (in the form provided in the Indenture) from the transferor to the effect that such transfer is being made in accordance with Regulation S under the Securities Act. Transfers of beneficial interests within a global note may be made without delivery of any written certification or other documentation from the transferor or the transferee. Transfers of beneficial interests in a Regulation S global note for beneficial interests in the Rule 144A global note or vice versa will be effected by DTC by means of an instruction originated by the trustee through the DTC Deposit/Withdraw at Custodian system. Accordingly, in connection with any transfer, appropriate adjustments will be made to reflect a decrease in the principal amount of the Regulation S global note and a corresponding increase in the principal amount of the Rule 144A global note or vice versa, as applicable. Any beneficial interest in one of the global notes that is transferred to a person who takes delivery in the form of an interest in another global note will, upon transfer, cease to be an interest in such global note and will become an interest in the other global note and, accordingly,

115 will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other global note for so long as it remains such an interest. Such transfer shall be made on a delivery free of payment basis and the buyer and seller will need to arrange for payment outside the clearing system.

Book-Entry Procedures for the Global Notes All interests in the global notes will be subject to the operations and procedures of DTC, Euroclear and Clearstream. We provide the following summaries of those operations and procedures solely for the convenience of investors. The operations and procedures of each settlement system are controlled by that settlement system and may be changed at any time. Neither we, the trustee, nor the initial purchasers are responsible for those operations or procedures. DTC has advised that it is: • a limited purpose trust company organized under the New York State Banking Law; • a ‘‘banking organization’’ within the meaning of the New York State Banking Law; • a member of the U.S. Federal Reserve System; • a ‘‘clearing corporation’’ within the meaning of the New York Uniform Commercial Code; and • a ‘‘clearing agency’’ registered under Section 17A of the Securities Exchange Act of 1934. DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between its participants through electronic book-entry changes to the accounts of its participants. DTC’s participants include securities brokers and dealers, including the initial purchasers; banks and trust companies; clearing corporations; and certain other organizations. Indirect access to DTC’s system is also available to others such as banks, brokers, dealers and trust companies; these indirect participants clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly. Investors who are not DTC participants may beneficially own securities held by or on behalf of DTC only through DTC participants or indirect participants in DTC (including Euroclear or Clearstream). So long as DTC or its nominee is the registered owner of a global note, DTC or its nominee will be considered the sole owner or holder of the notes represented by that global note for all purposes under the indenture. Except as provided below, owners of beneficial interests in a global note: • will not be entitled to have notes represented by the global note registered in their names; • will not receive or be entitled to receive physical, certificated notes; and • will not be considered the registered owners or holders of the notes under the indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee under the indenture. As a result, each investor who owns a beneficial interest in a global note must rely on the procedures of DTC to exercise any rights of a holder of notes under the indenture (and, if the investor is not a participant or an indirect participant in DTC, on the procedures of the DTC participant through which the investor owns its interest). Payments of principal, premium, if any, and interest with respect to the notes represented by a global note will be made by the trustee to DTC’s nominee as the registered holder of the global note. Neither we nor the trustee will have any responsibility or liability for the payment of amounts to owners of beneficial interests in a global note, for any aspect of the records relating to or payments made on account of those interests by DTC, or for maintaining, supervising or reviewing any records of DTC relating to those interests. Payments by participants and indirect participants in DTC to the owners of beneficial interests in a global note will be governed by standing instructions and customary practices and will be the responsibility of those participants or indirect participants and not of DTC, its nominee or us. Transfers between participants in DTC will be effected under DTC’s procedures and will be settled in same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in the ordinary way under the rules and operating procedures of those systems.

116 Cross-market transfers within a 144A global note or a Regulation S global note between DTC participants, on the one hand, and Euroclear or Clearstream, Luxembourg participants, on the other hand, will be effected within DTC through the DTC participants that are acting as depositaries for Euroclear and Clearstream. To deliver or receive an interest in a global note held in a Euroclear or Clearstream account, an investor must send transfer instructions to Euroclear or Clearstream, as the case may be, under the rules and procedures of that system and within the established deadlines of that system. If the transaction meets its settlement requirements, Euroclear or Clearstream, as the case may be, will send instructions to its DTC depositary to take action to effect final settlement by delivering or receiving interests in the relevant global notes in DTC, and making or receiving payment under normal procedures for same-day funds settlement applicable to DTC. Euroclear or Clearstream participants may not deliver instructions directly to the DTC depositaries that are acting for Euroclear or Clearstream. Because of time zone differences, the securities account of a Euroclear or Clearstream participant that purchases an interest in a global note from a DTC participant will be credited on the business day for Euroclear or Clearstream immediately following the DTC settlement date. Cash received in Euroclear or Clearstream from the sale of an interest in a global note to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Euroclear or Clearstream cash account as of the business day for Euroclear or Clearstream following the DTC settlement date. DTC, Euroclear and Clearstream have agreed to the above procedures to facilitate transfers of interests in the global notes among participants in those settlement systems. However, the settlement systems are not obligated to perform these procedures and may discontinue or change these procedures at any time. Neither we nor the trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream or their participants or indirect participants of their obligations under the rules and procedures governing their operations.

Certificated Notes Beneficial interests in the global notes may not be exchanged for notes in physical, certificated form unless: • DTC notifies us at any time that it is unwilling or unable to continue as depositary for the global notes and a successor depositary is not appointed within 90 days; • DTC ceases to be registered as a clearing agency under the Securities Exchange Act of 1934 and a successor depositary is not appointed within 90 days; • we, at our option, notify the trustee that we elect to cause the issuance of certificated notes; or • certain other events provided in the indenture should occur, including the occurrence and continuance of an event of default with respect to the notes. In all cases, certificated notes delivered in exchange for any global note will be registered in the names, and issued in any approved denominations, requested by the depositary and will bear a legend indicating the transfer restrictions of that particular global note. For information concerning paying agents and transfer agents for any notes in certificated form, see ‘‘Description of the Notes—Payment Provisions—Paying Agents’’ and ‘‘—Transfer Agents.’’

117 TAXATION POTENTIAL PURCHASERS OF THE NOTES SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR MEXICAN, UNITED STATES OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING, IN PARTICULAR, THE APPLICATION TO THEIR PARTICULAR SITUATIONS OF THE TAX CONSIDERATIONS DISCUSSED BELOW.

Certain Mexican Federal Income Tax Considerations General The following is a general summary of the principal Mexican federal income tax consequences of the purchase, ownership and disposition of the notes by holders that are not residents of Mexico for tax purposes and that do not hold the notes through a permanent establishment in Mexico to which the income under the notes is attributable for tax purposes. For purposes of this summary, each such holder is a ‘‘foreign holder.’’ This summary is based upon the provisions of the Ley del Impuesto Sobre la Renta, or the Mexican Income Tax Law, and the Código Fiscal de la Federación, or the Mexican Federal Tax Code, in effect on the date of this offering memorandum, which is subject to change or to new or different interpretations, which could affect the continued validity of this summary. This summary does not constitute tax advice and does not address all of the Mexican tax consequences that may be applicable to specific holders of the notes and does not purport to be a comprehensive description of all the Mexican tax considerations that may be relevant to a decision to purchase, own or dispose of the notes. This summary does not describe any tax consequences arising under the laws of any state, municipality or taxing jurisdiction other than under Mexican Income Tax Law. For purposes of Mexican taxation, residence in Mexico is a highly technical and fact-oriented definition included in the Mexican Federal Tax Code. An individual is a resident of Mexico for tax purposes, if such person has established his or her home in Mexico. When such person has a home in another country, the individual will be considered a resident of Mexico for tax purposes if his/her center of vital interests is located in Mexico, which is deemed to occur if (i) more than 50.0% of such individual’s total income, in any calendar year, is from a Mexican source, or (ii) such individual’s principal center of professional activities is located in Mexico. Unless proven otherwise, a Mexican national is deemed a resident of Mexico for tax purposes. A legal entity is a resident of Mexico for tax purposes if it maintains the principal administration of its business or the effective location of its management in Mexico. A permanent establishment of a foreign person in Mexico will be treated as a resident of Mexico for tax purposes and will be required to pay taxes in Mexico in accordance with applicable tax laws, for income attributable to such permanent establishment.

Taxation of Payments of Interest Under the Mexican Income Tax Law, payments of interest (including original issue discount and premiums, which are deemed interest under the Mexican Income Tax Law) made by us or the subsidiary guarantor in respect of the notes to a foreign holder will generally be subject to a Mexican withholding tax assessed at a rate of 4.9%, if, as expected, the following requirements are met: • the notes are placed outside Mexico through banks or broker-dealers, in a country with which Mexico has a treaty for the avoidance of double taxation in effect; • a notice is filed before the CNBV describing the main characteristics of the notes offering pursuant to Article 7 of the Mexican Securities Market Law; and • the information requirements specified from time to time by the Mexican Tax Administration Service (Servicio de Administración Tributaria) under its general rules, including, after completion of the offering of the notes, the filing of certain information related to the notes offering and this offering memorandum, are duly and timely complied with. If any of such requirements is not met, the withholding tax applicable to interest payments under the notes made by us or the subsidiary guarantor to non-residents of Mexico will be imposed at a rate of 10.0% or higher.

118 In addition, if the effective beneficiaries, whether acting directly or indirectly, severally or jointly with related parties, receiving more than 5.0% of the aggregate amount of each interest payment under the notes are (i) shareholders holding more than 10.0% of our voting stock, directly or indirectly, severally or jointly with related parties, or (ii) corporations or other entities having more than 20.0% of their stock owned, directly or indirectly, jointly or severally, by persons related to us, the Mexican withholding tax will be applied at substantially higher rates (currently 35.0%). For these purposes, persons will be related if: • one person holds an interest in the business of the other person; • both persons have common interests; or • a third party has an interest in the business or assets of both persons. Payments of interest in respect of the notes made by us to a non-Mexican pension or retirement fund will be exempt from Mexican withholding taxes if: • such fund is organized 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 taxes in such country. Holders or beneficial owners of the notes may be requested, subject to specified exemptions and limitations, to provide certain information or documentation necessary to enable us to apply the appropriate Mexican withholding tax rate on interest payments that we make to such holders or beneficial owners. Additionally, the Mexican Income Tax Law provides that, in order for a foreign holder to be entitled to the benefits under the treaties for the avoidance of double taxation entered into by Mexico, it is necessary for the foreign holder to meet the procedural requirements established in such law. In the event that the specified information or documentation concerning the holder or beneficial owner, if requested, is not timely or completely provided, we may withhold Mexican tax from that interest payment on the notes to that holder or beneficial owner at the maximum applicable rate, and our obligation to pay additional amounts relating to those withholding taxes would be limited as described under ‘‘Description of the Notes—Additional Amounts.’’

Taxation of Principal Payments Under the Mexican Income Tax Law, payments of principal made by us or the subsidiary guarantor in respect of the notes to a foreign holder will not be subject to Mexican withholding taxes.

Taxation of Dispositions and Acquisitions of the Notes Under the Mexican Income Tax Law, gains resulting from the sale or disposition of the notes by a foreign holder to another foreign holder are not subject to income or other tax in Mexico. Gains resulting from the sale of the notes by a foreign holder to a purchaser who is 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 Mexican federal income or other taxes pursuant to the rules described above in respect of interest payments, unless an applicable income tax treaty provides otherwise. The acquisition of the notes at a discount by a foreign holder will be deemed interest income, and subject to Mexican withholding taxes, if the seller is a Mexican resident or a foreign resident deemed to have a permanent establishment in Mexico.

Taxation of Make-Whole Amounts Under the Mexican Income Tax Law, the payment of make-whole amounts as a result of the optional redemption of the notes, as provided in ‘‘Description of the Notes—Optional Redemption—Optional Redemption.’’ 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, there are no estate, inheritance, succession or gift taxes generally applicable to the purchase, ownership or disposition of the notes by a foreign holder. Gratuitous transfers of the notes in certain circumstances may result in the imposition of Mexican income taxes upon the recipient. There are no Mexican stamp, issuer registration or similar taxes or duties payable by foreign holders of the notes with respect to the notes.

119 Certain United States Federal Income Tax Consequences The following is a general summary of certain U.S. federal income tax consequences associated with the purchase, beneficial ownership and disposition of the notes. This summary is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, rulings, official pronouncements and judicial decisions, all as in effect on the date of this offering memorandum and all of which are subject to change, possibly with retroactive effect, and different interpretations. This summary addresses tax considerations only for holders that purchase the notes pursuant to this offering at the original issue price and that hold the notes as ‘‘capital assets’’ (generally, property held for investment). Moreover, this summary is for general information only and does not address all of the tax consequences that may be relevant to specific investors in light of their particular circumstances or to investors subject to special treatment under U.S. federal income tax laws (such as banks, insurance companies, tax-exempt entities, dealers in securities, traders in securities that elect to use a mark to market method of accounting, brokers, expatriates, entities treated as partnerships for U.S. federal income tax purposes, and partners therein, persons who hold their notes as part of a straddle, hedge, conversion transaction or other integrated investment, U.S. holders (as defined below) whose functional currency is not the U.S. dollar, persons subject to the alternative minimum tax or persons deemed to sell the notes under the constructive sale provisions of the Code), all of whom may be subject to tax rules that differ significantly from those summarized below. The discussion below does not address U.S. federal estate and gift tax considerations or the effect of any state, local or non-U.S. tax law. We have not sought any ruling from the Internal Revenue Service, or the IRS, or an opinion of counsel with respect to the statements made and the conclusions reached in this discussion, and there can be no assurance that the IRS will agree with such statements and conclusions. HOLDERS OF THE NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSIDERATIONS TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE OR LOCAL TAX LAWS OR NON-U.S. TAX LAWS, ANY CHANGES IN APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS. For purposes of this summary, a ‘‘U.S. holder’’ is a beneficial owner of a note that is, for U.S. federal income tax purposes: • an individual who is a citizen or resident of the United States; • a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia; • an estate the income of which is subject to U.S. federal income tax regardless of the source thereof; or • a trust (1) if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (2) if it has made a valid election to be treated as a U.S. person for U.S. federal income tax purposes. A ‘‘non-U.S. holder’’ is a beneficial owner of a note that is an individual, corporation, estate or trust and is not a U.S. holder.

U.S. Holders Payment of Interest A U.S. holder must include in the U.S. holder’s gross income all payments of interest (which will include all Mexican tax withheld from the interest payments and all additional amounts paid) in respect of the notes, at the time accrued or paid, in accordance with the U.S. holder’s usual method of tax accounting for U.S. federal income tax purposes. Subject to applicable limitations (including minimum certain holding period requirements), a U.S. holder may be entitled to a credit against such U.S. holder’s U.S. federal income tax liability (or a deduction in computing such U.S. holder’s U.S. taxable income) for any foreign income taxes withheld. Interest on the notes generally will (1) be treated as foreign source income for U.S. federal income tax purposes, and (2) constitute passive income, or in the case of certain U.S. holders, general category income for foreign tax credit purposes. The rules governing the foreign tax credit are complex. Prospective noteholders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

120 It is expected that the notes will not be issued with original issue discount for U.S. federal income tax purposes in excess of a de minimis amount, and this disclosure assumes as much. In general, however, in the event that the notes are issued with more than de minimis OID, U.S. holders will be required to accrue OID on a constant-yield method and include such amounts in gross income over the life of the notes.

Sale, Exchange, Redemption, Retirement or Other Dispositions A U.S. holder generally will recognize gain or loss for U.S. federal income tax purposes upon the sale, exchange, redemption, retirement or other taxable disposition of the notes in an amount equal to the difference between the amount realized and the U.S. holder’s adjusted tax basis in the notes. For this purpose, the amount realized will not include any amount attributable to accrued but unpaid interest on the notes, which will be subject to tax as ordinary income as described above to the extent not previously included in income. A U.S. holder’s adjusted tax basis in the notes generally will equal the cost of such notes to such holder. The gain or loss upon the taxable disposition of the notes generally will be capital gain or loss. If, at the time of such disposition, the notes have been held for more than one year, the gain or loss will be a long-term capital gain or loss. Under current law, long-term capital gains recognized by individuals or other non-corporate U.S. holders are generally subject to a reduced U.S. federal income tax rate. Capital losses are subject to limits on deductibility. Any gain or loss recognized by a U.S. holder generally will be treated as from sources within the United States for U.S. federal income tax purposes; therefore, a U.S. holder may not be able to claim credit for the Mexican tax, if any, imposed upon a disposition of a note.

Information Reporting and Backup Withholding In general, information reporting requirements will apply to certain payments of principal and interest on the notes and to the proceeds from the sale of a note unless the recipient is treated as an exempt recipient. Backup withholding at the applicable rate (currently 28.0%) will apply to the payments if a U.S. holder fails to provide its taxpayer identification number and otherwise comply with the applicable requirements of the U.S. backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a U.S. holder may be refunded or credited against the U.S. holder’s U.S. federal income tax liability, if any, if the U.S. holder timely provides the required information to the IRS. Pursuant to the Hiring Incentives to Restore Employment Act, certain U.S. holders may be required to submit to the IRS certain information with respect to their beneficial ownership of the notes, if such notes are not held on their behalf by a financial institution. This new law imposes substantial penalties if a U.S. holder is required to submit such information to the IRS and fails to do so.

Non-U.S. Holders In general, a non-U.S. holder will not be subject to U.S. federal income tax or withholding tax on payments of interest on, or gain upon the sale, exchange, redemption, retirement or other disposition of, notes, unless: • the interest or gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States, or • in the case of gain, the non-U.S. holder is an individual present in the United States for 183 or more days in the taxable year of the sale or disposition and certain other conditions exist. A non-U.S. holder will be subject to U.S. federal income tax in respect of any interest or gain on the notes that is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States in the same manner as if it were a U.S. holder, unless an applicable income tax treaty provides otherwise. A corporate non-U.S. holder will be subject to an additional ‘‘branch profits tax’’ at a 30.0% rate or at a lower applicable treaty rate. If a non-U.S. holder is an individual described in the second bullet point above, any such gain (net of certain U.S. source capital losses) will be subject to 30.0% (or lower treaty rate) of U.S. federal income tax. Payments within the United States of principal, interest and any additional amounts to a non-U.S. holder will not be subject to backup withholding tax and information reporting requirements if an appropriate certification is provided by the non-U.S. holder to the payor and the payor does not have actual knowledge or reason to know that the certificate is incorrect.

121 PLAN OF DISTRIBUTION Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are acting as joint book-running managers of the offering and as representatives of the initial purchasers named below. Subject to the terms and conditions stated in the purchase agreement dated the date of this offering memorandum, each initial purchaser named below has severally agreed to purchase, and we have agreed to sell to that initial purchaser, the principal amount of the notes set forth opposite the initial purchaser’s name.

Principal Initial Purchaser Amount of Notes Citigroup Global Markets Inc...... U.S.$150,000,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated ...... 150,000,000 Total ...... U.S.$300,000,000

The purchase agreement provides that the obligations of the initial purchasers to purchase the notes are subject to approval of legal matters by counsel, including the validity of the notes, and other conditions contained in the purchase agreement, such as the receipt by the initial purchasers of officer’s certificates and legal opinions. The initial purchasers must purchase all the notes, severally and not jointly, if they purchase any of the notes. If an initial purchaser defaults, the purchase agreement provides that the purchase commitments of the non-defaulting initial purchasers may be increased, the commitments of the defaulting initial purchaser may be assumed by other persons satisfactory to us or the purchase agreement may be terminated. We have agreed to indemnify the initial purchasers and their controlling persons against certain liabilities in connection with this offering, including liabilities under the Securities Act, or to contribute to payments the initial purchasers may be required to make in respect of those liabilities. The initial purchasers propose to resell the notes at the offering price set forth on the cover page of this offering memorandum within the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. See ‘‘Transfer Restrictions.’’ The price at which the notes are offered may be changed at any time without notice. The notes have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. See ‘‘Transfer Restrictions.’’ In connection with sales outside of the United States, each of the initial purchasers has agreed that it will not offer, sell or deliver the notes to, or for the account of, U.S. persons (unless in reliance on Rule 144A) (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, and that it will send to each dealer to whom it sells such notes during such period a confirmation or other notice setting forth the restrictions on offers and sales of the notes within the United States or to, or for the account or benefit of, U.S. persons. See ‘‘Transfer Restrictions.’’ In addition, until 40 days after the commencement of this offering, an offer or sale of notes within the United States by a dealer (whether or not participating in this offering) may violate the registration requirements of the Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A or another exemption from registration under the Securities Act. Each purchaser of the notes will be deemed to have made acknowledgements, representations and agreements as described under ‘‘Transfer Restrictions.’’ The notes will constitute a new class of securities with no established trading market. We do not intend to apply for listing of the notes on any U.S. national securities exchange. Application has been made to admit the notes to listing on the Official List of the Irish Stock Exchange and to trading on the Global Exchange Market of the Irish Stock Exchange. However, we cannot assure you that the listing application will be approved. We cannot assure you that the prices at which the notes will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for the notes will develop and continue after this offering. The initial purchasers have advised us that they currently intend to make a market in the notes. However, they are not obligated to do so and they may discontinue any market-making activities with respect to

122 the notes at any time without notice. Accordingly, we cannot assure you as to the liquidity of, or the trading market for, the notes. If an active trading market for the notes does not develop, the market price and liquidity of the notes may be adversely affected. If the notes are traded, they may trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities, our operating performance and financial condition, general economic conditions and other factors. We expect that delivery of the notes will be made against payment of the notes on or about October 2, 2014, which will be the fifth business day following the date of this offering memorandum (such settlement being referred to as ‘‘T+5’’). Under Rule 15c6-1 of the Exchange Act, trades in the secondary market are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade notes prior to the delivery of the notes hereunder may be required, by virtue of the fact that the notes initially settle in T+5, to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the notes who wish to trade the notes prior to their date of delivery hereunder should consult their advisors. We and the subsidiary guarantor have agreed that, for a period of 30 days from the date of this offering memorandum, we and the subsidiary guarantor will not, without the prior written consent of each initial purchaser, offer, sell, issue, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or announce the offering of, any U.S. dollar denominated debt securities issued or guaranteed by us or the subsidiary guarantor (other than the notes). In connection with the offering, the initial purchasers may purchase and sell notes in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions and stabilizing purchases. • Short sales involve secondary market sales by the initial purchasers of a greater number of notes than they are required to purchase in the offering. • Covering transactions involve purchases of notes in the open market after the distribution has been completed in order to cover short positions. • Stabilizing transactions involve bids to purchase notes so long as the stabilizing bids do not exceed a specified maximum. Purchases to cover short positions and stabilizing purchases, as well as other purchases by the initial purchasers for their own accounts, may have the effect of preventing or retarding a decline in the market price of the notes. They may also cause the price of the notes to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The initial purchasers may conduct these transactions in the over-the-counter market or otherwise. If the initial purchasers commence any of these transactions, they may discontinue them at any time. Some of the initial purchasers and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. In particular, certain of the initial purchasers or their affiliates are lenders under certain of our credit facilities and counterparties to several of our derivative transactions, and may receive a portion of the proceeds of the offering to the extent used to repay indebtedness under such credit facilities. See ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.’’ In addition, in the ordinary course of their business activities, the initial purchasers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. Certain of the initial purchasers or their affiliates that have a lending relationship with us routinely hedge their credit exposure to us consistent with their customary risk management policies. Typically, such initial purchasers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the notes offered hereby. Any such short positions could adversely affect future trading prices of the notes offered

123 hereby. The initial purchasers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Sales Outside of the United States Neither we nor the initial purchasers are making an offer to sell, or seeking offers to buy, the notes in any jurisdiction where the offer and sale is not permitted. You must comply with all applicable laws and regulations in effect in any jurisdiction in which you purchase, offer or sell the notes or possess or distribute this offering memorandum, and you must obtain any consent, approval or permission required for your purchase, offer or sale of the notes under the laws and regulations in effect in any jurisdiction to which you are subject or in which you make such purchases, offers or sales. Neither we nor the initial purchasers will have any responsibility therefor.

Notice to Prospective Investors in Mexico The notes have not been and will not be registered with the RNV maintained by the CNBV, and, therefore, may not be offered publicly in Mexico. The notes may only be offered in Mexico pursuant to the exemptions to registration provided in article 8 of the Mexican Securities Market Law. We will notify the CNBV of the terms and conditions of this offering of the notes outside of Mexico, for informational and statistical purposes only. The delivery to, and the receipt by, the CNBV of such notice does not constitute or imply a certification as to the investment quality of the notes, our or the subsidiary guarantor’s solvency, liquidity or credit quality or the accuracy or completeness of the information set forth in this offering memorandum. This offering memorandum is solely our responsibility and has not been reviewed or authorized by the CNBV. The acquisition of the notes by investors, including Mexican investors, will be made under their own responsibility.

Notice to Prospective Investors in the European Economic Area In relation to each member state of the European Economic Area, which has implemented the Prospectus Directive, or Relevant Member States, with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, or the Relevant Implementation Date, an offer to the public of any notes which are the subject of the offering contemplated by this offering memorandum may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any notes may be made at any time with effect from and including the Relevant Implementation Date under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: • to any legal entity which is a qualified investor as defined in the Prospectus Directive; • to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 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 relevant dealer or dealers nominated by us for any such offer; or • in any other circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such offer of notes shall result in a requirement for the publication by us, the initial purchasers or any representative of a prospectus pursuant to Article 3 of the Prospectus Directive. Any person making or intending to make any offer of notes within the European Economic Area should only do so in circumstances in which no obligation arises for us or the initial purchasers to produce a prospectus for such offer. Neither we nor the initial purchasers have authorized, nor do they authorize, the making of any offer of notes through any financial intermediary, other than offers made by the initial purchasers which constitute the final offering of notes contemplated in this offering memorandum. For the purposes of this provision, and your representation below, the expression an ‘‘offer 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 any notes to be offered so as to enable an investor to decide to purchase any notes, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and 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 each Relevant Member State. The expression ‘‘2010 PD Amending Directive’’ means Directive 2010/73/EU.

124 Each person in a Relevant Member State who receives any communication in respect of, or who acquires any notes under, the offer of notes contemplated by this offering memorandum will be deemed to have represented, warranted and agreed to and with us and the initial purchasers that: (1) it is a ‘‘qualified investor’’ within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and (2) in the case of any notes acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (a) the notes acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than ‘‘qualified investors’’ (as defined in the Prospectus Directive), or in circumstances in which the prior consent of the representatives has been given to the offer or resale; or (b) where notes have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those notes to it is not treated under the Prospectus Directive as having been made to such persons.

Notice to Prospective Investors in the United Kingdom Each of the initial purchasers has: (1) only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the United Kingdom FSMA) received by it in connection with the issue or sale of any notes in circumstances in which Section 21(1) of the FSMA does not, or would not, apply to us; and (2) complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom.

Notice to Prospective Investors in Chile Pursuant to Law No. 18,045 of Chile (the securities market law of Chile) and Rule (Norma de Carácter General) No. 336, dated June 27, 2012, issued by the Superintendency of Securities and Insurance of Chile (Superintendencia de Valores y Seguros de Chile or the SVS), the notes may be privately offered in Chile to certain ‘‘qualified investors’’ identified as such by Rule 336 (which in turn are further described in rule No. 216, dated June 12, 2008,of the SVS). Rule 336 requires the following information to be provided to prospective investors in Chile: (1) Date of commencement of the offer: September 18, 2014. The offer of the notes is subject to Rule (Norma de Carácter General) No. 336, dated June 27, 2012, issued by the SVS; (2) The notes and this offering memorandum are not registered with the Securities Registry (Registro de Valores) of the SVS, nor with the foreign securities registry (Registro de Valores Extranjeros) of the SVS and as such as not subject to the oversight of the SVS; (3) Since the notes are not registered in Chile, there is no obligation by the issuer to make publicly available information about the notes in Chile; and (4) The notes shall not be subject to a public offering in Chile unless registered with the relevant Securities Registry of the SVS.

Notice to Prospective Investors in Neither this offering memorandum nor any other offering material relating to the notes described in this offering memorandum has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The notes have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this offering memorandum nor any other offering material relating to the notes has been or will be: • released, issued, distributed or caused to be released, issued or distributed to the public in France; or • used in connection with any offer for subscription or sale of the notes to the public in France.

125 Such offers, sales and distributions will be made in France only: • to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier; • to investment services providers authorized to engage in portfolio management on behalf of third parties; or • in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne). The notes may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code Monétaire et Financier.

Notice to Prospective Investors in The notes may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a ‘‘prospectus’’ within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to notes which are or are intended to be disposed of only to persons outside Hong Kong or only to ‘‘professional investors’’ within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Notice to Prospective Investors in The notes offered in this offering memorandum have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. The notes have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan (including any corporation or other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

Notice to Prospective Investors in This offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the notes may not be circulated or distributed, nor may the notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore, or the SFA, (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA. Where the notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is: • a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) 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 • a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, shares, debentures and units

126 of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the notes pursuant to an offer made under Section 275 of the SFA except: • to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA; • where no consideration is or will be given for the transfer; or • where the transfer is by operation of law.

Notice to Prospective Investors in Switzerland This offering memorandum, as well as any other material relating to the notes which are the subject of the offering contemplated by this offering memorandum, do not constitute an issue prospectus pursuant to Article 652a of the Swiss Code of Obligations. The notes will not be listed on the SWX Swiss Exchange and, therefore, the documents relating to the notes, including, but not limited to, this offering memorandum, do not claim to comply with the disclosure standards of the listing rules of SWX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SWX Swiss Exchange. The notes are being offered in Switzerland by way of a private placement, i.e., to a small number of selected investors only, without any public offer and only to investors who do not purchase the notes with the intention to distribute them to the public. The investors will be individually approached by us from time to time. This offering memorandum, as well as any other material relating to the notes, is personal and does not constitute an offer to any other person. This offering memorandum may only be used by those investors to whom it has been handed out in connection with the offering described herein and may neither directly nor indirectly be distributed or made available to other persons without our express consent. It may not be used in connection with any other offer and shall in particular not be copied and/or distributed to the public in (or from) Switzerland.

Notice to Prospective Investors in the Dubai International Financial Centre This offering memorandum relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or the DFSA. This offering memorandum is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this offering memorandum nor taken steps to verify the information set forth herein and has no responsibility for this offering memorandum. The notes to which this offering memorandum relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the notes offered should conduct their own due diligence on the notes. If you do not understand the contents of this offering memorandum you should consult an authorized financial advisor.

127 TRANSFER RESTRICTIONS The notes have not been registered, and will not be registered, under the Securities Act or any other applicable securities laws, and the notes may not be offered or sold except pursuant to an effective registration statement or pursuant to transactions exempt from, or not subject to, registration under the Securities Act. Accordingly, the notes are being offered and sold only: (1) to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A under the Securities Act; and (2) outside of the United States, to certain persons other than U.S. persons (or non-U.S. purchasers, which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for non-U.S. beneficial owners (other than an estate or trust)) in offshore transactions meeting the requirements of Rule 903 of Regulation S under the Securities Act. The notes have not been registered in Mexico with the RNV maintained by the CNBV. Accordingly, the notes may not be offered publicly in Mexico. The notes may only be offered in Mexico pursuant to the exemptions to registration provided in Article 8 of the Mexican Securities Market Law. Purchasers’ Representations and Restrictions on Resale and Transfer Each purchaser of notes (other than the initial purchasers in connection with the initial issuance and sale of notes) and each owner of any beneficial interest therein will be deemed, by its acceptance or purchase thereof, to have represented and agreed as follows: (1) It is purchasing the notes for its own account or an account with respect to which it exercises sole investment discretion and it and any such account is either (a) a qualified institutional buyer and is aware that the sale to it is being made in reliance on Rule 144A or (b) a non-U.S. purchaser that is outside the United States or a non-U.S. purchaser that is a dealer or other fiduciary as referred above. (2) It acknowledges that the notes have not been registered under the Securities Act or with any securities regulatory authority of any jurisdiction 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) It understands and agrees that notes initially offered in the United States to qualified institutional buyers will be represented by one or more global notes and that notes offered outside the United States in reliance on Regulation S will also be represented by one or more global notes. (4) It will not resell or otherwise transfer any of such notes except (a) to us, (b) within the United States to a qualified institutional buyer in a transaction complying with Rule 144A under the Securities Act, (c) outside the United States to non-U.S. purchasers in offshore transactions in compliance with Rule 903 or 904 under the Securities Act, (d) pursuant to the exemption from registration under the Securities Act (if available) or (e) pursuant to an effective registration statement under the Securities Act. (5) It agrees that it will give to each person to whom it transfers the notes notice of any restrictions on transfer of such notes. (6) It acknowledges that prior to any proposed transfer of notes (other than pursuant to an effective registration statement or in respect of notes sold or transferred either pursuant to (a) Rule 144A or (b) Regulation S) the holder of such notes may be required to provide certifications relating to the manner of such transfer as provided in the indenture. (7) It acknowledges that the trustee, registrar or transfer agent for the notes will not be required to accept for registration transfer of any notes acquired by it, except upon presentation of evidence satisfactory to us and the trustee, registrar or transfer agent that the restrictions set forth herein have been complied with. (8) It acknowledges that we, the initial purchasers and other persons will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that if any of the acknowledgements, representations and agreements deemed to have been made by its purchase of the notes are no longer accurate, it will promptly notify us and the initial purchasers. If it is acquiring the notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment

128 discretion with respect to each such account and it has full power to make the foregoing acknowledgements, representations, and agreements on behalf of each account. The following is the form of restrictive legend which will appear on the face of the Rule 144A Global Note, and which will be used to notify transferees of the foregoing restrictions on transfer: ‘‘This Note has not been registered under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’), or any other securities laws. The holder hereof, by purchasing this Note, agrees that this Note or any interest or participation herein may be offered, resold, pledged or otherwise transferred only (1) to us, (2) so long as this Note is eligible for resale pursuant to Rule 144A under the Securities Act (‘‘Rule 144A’’), to a person who the seller reasonably believes is a qualified institutional buyer (as defined in Rule 144A) in accordance with Rule 144A, (3) in an offshore transaction in accordance with Rule 903 or 904 of Regulation S under the Securities Act, (4) pursuant to an exemption from registration under the Securities Act (if available) or (5) pursuant to an effective registration statement under the Securities Act, and in each of such cases in accordance with any applicable securities laws of any state of the United States or other applicable jurisdiction. The holder hereof, by purchasing this Note, represents and agrees that it will notify any purchaser of this Note from it of the resale restrictions referred to above. The foregoing legend may be removed from this Note only with the consent of the issuer.’’ The following is the form of restrictive legend which will appear on the face of the Regulation S Global Note and which will be used to notify transferees of the foregoing restrictions on transfer: ‘‘This Note has not been registered under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’), or any other securities laws. The holder hereof, by purchasing this Note, agrees that neither this Note nor any interest or participation herein may be offered, resold, pledged or otherwise transferred in the absence of such registration unless such transaction is exempt from, or not subject to, such registration. The foregoing legend may be removed from this Note after 40 days beginning on and including the later of (a) the date on which the notes are offered to persons other than distributors (as defined in Regulation S under the Securities Act) and (b) the original issue date of this Note.’’ For further discussion of the requirements (including the presentation of transfer certificates) under the indenture to effect exchanges or transfers of interest in global notes and certificated notes, see ‘‘Form of Notes, Clearing and Settlement.’’

129 LEGAL MATTERS Certain legal matters in connection with this international offering will be passed upon for Liverpool with respect to New York law by Skadden, Arps, Slate, Meagher & Flom LLP, with respect to Mexican law by Ritch, Mueller, Heather y Nicolau, S.C. Certain legal matters in connection with this international offering will be passed upon for the initial purchasers with respect to New York law by Cleary Gottlieb Steen & Hamilton LLP and with respect to Mexican law by Galicia Abogados, S.C.

130 INDEPENDENT AUDITORS Our consolidated financial statements as of and for the years ended December 31, 2013, 2012 and 2011, were audited by PricewaterhouseCoopers, S.C. PricewaterhouseCoopers, S.C. is a member of the Association of Public Accountants of Mexico (Colegio de Contadores Públicos de México, A.C.).

131 AVAILABLE INFORMATION We will furnish, upon prior written request of any registered owner of a note, or note holder, or beneficial owner of a note, or note owner, such information as is specified in paragraph (d)(4) of Rule 144A under the Securities Act: (a) to such note holder or note owner, (b) to a prospective purchaser of such note (or beneficial interest therein) who is a qualified institutional buyer designated by such note holder or note owner or (c) to the trustee for delivery to such note holder or note owner or such prospective purchaser so designated, in each case in order to permit compliance by such note holder or note owner with Rule 144A in connection with the resale of such note (or a beneficial interest therein) in reliance upon Rule 144A unless, at the time of such request, (1) we are subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or (2) we qualify for the exemption to Rule 12g3-2(b). In addition, for so long as the notes are listed on the Global Exchange Market of the Irish Stock Exchange, copies of the following items will be available in physical form at Mario Pani 200, Colonia Santa Fe, Delegación Cuajimalpa, 05384, Mexico City, Mexico: • these Listing Particulars; • a copy of our by-laws (estatutos sociales); • our audited consolidated financial statements and our unaudited condensed consolidated interim financial statements; • a copy of the indenture governing the notes; and • any other documents relating to the offering of the notes referred to herein. There has been no material adverse change in our prospects since December 31, 2013 and there has been no significant change in our financial or trading position since June 30, 2014.

132 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page Consolidated annual financial statements as of December 31, 2012 and 2013 and for the each of the three years ended December 31, 2013 ...... F-2 Independent auditor’s report ...... F-3 Consolidated balance sheets ...... F-4 Consolidated statements of comprehensive income, expenses by function ...... F-5 Consolidated statements of changes in stockholders’ equity...... F-6 Consolidated cash flow statements ...... F-7 Notes to the consolidated financial statements ...... F-8 Unaudited condensed consolidated interim financial statements as of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013...... F-53 Unaudited condensed consolidated interim balance sheets ...... F-54 Unaudited condensed consolidated interim statements of comprehensive income, expenses by function ...... F-55 Unaudited condensed consolidated interim statements of changes in stockholders’ equity ...... F-56 Unaudited condensed consolidated interim cash flow statements...... F-57 Notes to the consolidated financial statements ...... F-58

F-1 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Consolidated Annual Financial Statements As of December 31, 2012 and 2013 and for each of the three years ended December 31, 2013

F-2 Independent Auditor’s Report Mexico City, February 21 , 2014 To the Stockholders of El Puerto de Liverpool, S. A. B. de C. V.

Report on the consolidated financial statements We have audited the consolidated financial statements of El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries, which comprise the consolidated balance sheet at December 31, 2013 and the consolidated statements of comprehensive income, changes in stockholders’ equity and cash flows for the year then ended, as well as a summary of the significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements The Management of the company is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and for such internal control as management determines is necessary to enable the preparation consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on auditor’s judgment including the assessment of the risk of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessment, the auditor considers internal control relevant to the company preparation and fair presentation of the consolidated financial statements, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes valuating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries at December 31, 2013, and their consolidated results of operation and cash flows for the year then ended, in accordance with International Financial Reporting Standards (IFRS). José Luis Guzmán Audit Partner

F-3 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Consolidated Balance Sheets December 31, 2012 and 2013 (Thousands of pesos) December 31, Note 2012 2013 Assets Current assets: Cash and cash equivalents...... 7 $ 2,910,124 $ 1,618,060 Loan portfolio - net ...... 8 17,561,620 21,436,709 Value added tax recoverable - net...... 994,584 1,043,057 Income tax recoverable - net...... 23 402,997 814,611 Other accounts receivable - net...... 9 920,354 597,059 Inventories ...... 11 10,558,247 11,421,969 Derivative financial instruments ...... 10 — 7,759 Prepaid expenses ...... 2.28 520,160 617,387 Total current assets ...... 33,868,086 37,556,611 Non-current assets: Long-term loan portfolio - net ...... 8 6,389,578 6,744,558 Other accounts receivable - net...... 9 172,117 141,132 Derivative financial instruments ...... 10 318,364 312,114 Investments in associates...... 12 4,007,211 4,616,854 Intangible assets - net ...... 15 1,503,847 1,793,911 Investment properties - net ...... 13 12,360,087 14,233,786 Property, furniture and equipment - net ...... 14 26,490,563 29,054,263 Employee benefits-net ...... 19 — 483,675 Total ...... $85,109,853 $94,936,904 Liabilities and stockholders’ equity Current liabilities: Suppliers...... $10,288,069 $11,454,374 Provisions...... 16 1,501,543 1,282,636 Deferred income...... 2.23 1,480,314 1,541,032 Creditors...... 4,446,520 5,189,318 Bank borrowings ...... 17 — 2,011,128 Senior notes ...... 18 — 4,000,000 Derivative financial instruments ...... 10 — 147,983 Total current liabilities ...... 17,716,446 25,626,471 Long-term bank borrowings ...... 17 921,456 921,456 Long-term Senior notes ...... 18 12,000,000 8,000,000 Derivative financial instruments ...... 10 341,237 120,599 Employee benefits-net ...... 19 398,645 355,459 Deferred income tax ...... 23.2 4,202,359 5,085,587 Total liabilities ...... 35,580,143 40,109,572 Stockholders’ equity: Capital stock...... 24 3,374,282 3,374,282 Retained earnings: Prior years’...... 37,919,186 42,645,852 For the period...... 7,197,700 7,701,930 Capital reserves ...... 24 1,036,515 1,102,919 Stockholders’ equity attributable to parent company ...... 49,527,683 54,824,983 Non-controlling interests ...... 2,027 2,349 Total stockholders’ equity ...... 49,529,710 54,827,332 Total ...... $85,109,853 $94,936,904

The accompanying notes are an integral part of these consolidated financial statements.

F-4 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Consolidated Statements of Comprehensive Income, Expenses by Function For the years ended December 31, 2011, 2012 and 2013 (Thousands of pesos, unless earnings per share)

December 31, Note 2011 2012 2013 Operating revenue: Net sales of merchandise...... 2.22 $50,881,125 $57,017,252 $63,528,386 Interest income from customers ...... 2.22 4,577,386 5,352,964 5,809,777 Leasing of investment property...... 2.22 1,731,041 2,115,854 2,579,680 Services ...... 2.22 1,467,257 1,760,434 2,187,601 Total revenue ...... 58,656,809 66,246,504 74,105,444 Costs and Expenses: Cost of sales...... 21 34,932,775 39,526,608 44,134,370 Administrative expenses ...... 21 14,700,673 16,756,502 19,397,781 Total costs and expenses ...... 49,633,448 56,283,110 63,532,151 Other income - net...... 22 204,454 342,682 262,789 Operating income...... 9,227,815 10,306,076 10,836,082 Finance costs ...... 18 (847,293) (985,129) (1,088,892) Finance income ...... 7 227,312 200,660 181,983 Foreign exchange (loss) gain - net ...... (7,669) 12,776 (38,236) Share of profits of associates ...... 12 304,727 414,941 510,011 Profit before income tax ...... 8,904,892 9,949,324 10,400,948 Income taxes ...... 23 2,360,947 2,750,744 2,698,115 Consolidated net income ...... 6,543,945 7,198,580 7,702,833 Other items comprising comprehensive income: Cash flow hedges ...... 10 (20,145) 95,026 66,404 Other movements in equity ...... — — 51,576 Actuarial loss on post-employment benefits obligations ...... (112,280) (123,614) 67,247 Consolidated comprehensive income ...... $ 6,411,520 $ 7,169,992 $ 7,888,060 Net income attributable to: Owners of the parent ...... $ 6,543,365 $ 7,197,700 $ 7,701,930 Non-controlling interests ...... 580 880 903 $ 6,543,945 $ 7,198,580 $ 7,702,833 Basic and diluted earnings per share ...... 24 $ 4.88 $ 5.36 $ 5.73 Comprehensive income attributable to: Owners of the parent ...... $ 6,410,689 $ 7,169,382 $ 7,887,738 Non-controlling interests ...... 831 610 322 $ 6,411,520 $ 7,169,992 $ 7,888,060 Basic and diluted earnings per share ...... $ 4.78 $ 5.34 $ 5.87

The accompanying notes are an integral part of these consolidated financial statements.

F-5 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Consolidated Statements of Changes in Stockholders’ Equity At December 31, 2011, 2012 and 2013 (Thousands of pesos)

Total stockholders’ equity attributable Non Total Capital Retained Capital to the owners of controlling stockholders’ stock earnings reserves the controlling co. equity equity Balance at January 1, 2011...... $3,374,282 $33,235,753 $ 961,634 $37,571,669 $ 586 $37,572,255 Comprehensive income Net income ...... 6,543,365 6,543,365 580 6,543,945 Actuarial gains loss on post-employment benefits obligations ...... (112,531) (112,531) 251 (112,280) Cash Flow hedges...... — (20,145) (20,145) — (20,145) Total comprehensive income...... — 6,430,834 (20,145) 6,410,689 831 6,411,520 Transactions with owners: Dividends paid at $0.54 pesos per share ...... — (724,786) — (724,786) — (724,786) Total transactions with stockholders . — (724,786) — (724,786) — (724,786) Balance at December 31, 2011 . . . . . 3,374,282 38,941,801 941,489 43,257,572 1,417 43,258,989 Comprehensive income Net income ...... 7,197,700 7,197,700 880 7,198,580 Actuarial loss on post-employment benefits obligations ...... (123,344) (123,344) (270) (123,614) Cash Flow hedges...... — 95,026 95,026 — 95,026 Total comprehensive income...... — 7,074,356 95,026 7,169,382 610 7,169,992 Transactions with owners: Dividends paid at $0.67 pesos per share ...... — (899,271) — (899,271) — (899,271) Total transactions with stockholders . — (899,271) — (899,271) — (899,271) Balance at December 31, 2012 . . . . . 3,374,282 45,116,886 1,036,515 49,527,683 2,027 49,529,710 Comprehensive income Net income ...... 7,701,930 7,701,930 903 7,702,833 Actuarial gains loss on post-employment benefits obligations ...... 67,247 67,247 (581) 66,666 Other movements in equity...... 52,157 52,157 52,157 Cash Flow hedges...... — 66,404 66,404 — 66,404 Total comprehensive income...... — 7,821,334 66,404 7,887,738 322 7,888,060 Transactions with owners: Dividends paid at $1.93 pesos per share ...... — (2,590,438) — (2,590,438) — (2,590,438) Total transactions with stockholders . — (2,590,438) — (2,590,438) — (2,590,438) Balance at December 31, 2013 . . . . . $3,374,282 $50,347,782 $1,102,919 $54,824,983 $2,349 $54,827,332

The accompanying notes are an integral part of these consolidated financial statements.

F-6 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Consolidated Cash Flow Statements December 31, 2011, 2012 and 2013 (Thousands of pesos) December 31, 2011 2012 2013 Operations Profit before income tax ...... $ 8,904,892 $ 9,949,324 $10,400,948 Adjustment from items not implying cash flows: Depreciation and amortization included in costs and expenses ...... 1,282,746 1,462,907 1,700,245 Provision for impairment of loan portfolio...... 953,242 1,076,930 1,640,312 Share of profit of associates ...... (304,727) (414,941) (510,011) (Gain) Loss on sale of investment properties ...... (1,302) (3,592) 45,384 (Gain) on sale of property, furniture and equipment ...... (17,246) (78,427) (69,371) Net cost for the period of labor obligations ...... 70,416 90,411 112,166 Interest earned ...... (3,025,211) (3,334,932) (3,576,015) Accrued interest expense ...... 847,293 985,129 1,088,892 (194,789) (216,515) 431,602 (Increase) decrease in: Interest earned from customers ...... 2,790,641 3,149,057 3,388,167 Short-term loan portfolio ...... (2,288,668) (2,663,209) (5,509,536) Inventories ...... (2,028,123) (449,224) (863,722) Value added tax recoverable ...... (136,242) (75,309) (48,473) Other accounts receivable ...... (222,722) (75,158) 323,295 Income tax recoverable...... — (402,997) (611,169) Prepaid expenses ...... (136,563) (17,561) (136,483) Long-term loan portfolio...... (780,616) (1,621,104) (354,980) Other long-term accounts receivable ...... (29,751) (13,471) 30,985 Deferred income...... 101,380 141,770 60,718 Suppliers ...... 1,140,759 704,310 1,166,305 Creditors ...... 312,708 525,876 1,011,299 Taxes paid ...... (2,613,576) (2,645,973) (2,191,361) Provisions ...... 72,894 109,111 (218,907) Employee benefits paid...... (58,403) 9,683 (571,780) Tax recovery ...... — 5,784 199,555 Net cash flows provided by operating activities ...... 4,833,821 6,414,394 6,506,463 Investment activities Gain on investments ...... 227,312 200,660 181,983 Acquisition of property, furniture and equipment ...... (3,752,208) (5,284,038) (3,802,540) Sale of property, furniture and equipment ...... 13,545 116,633 50,161 Sale of investment properties ...... 21,284 59,555 182,274 Acquisition of investment property ...... (1,381,734) (2,447,588) (2,146,941) Investment in new IT developments ...... (400,054) (830,607) (595,262) Net cash flows provided by investment activities ...... (5,271,855) (8,185,385) (6,130,325) Cash (insufficiency) surplus to be used in financing activities...... (438,034) (1,770,991) 376,138 Financing activities Issuance of senior notes ...... — 4,000,000 — Dividends paid ...... (724,786) (899,271) (2,590,438) Bank Borrowings repaid ...... (2,250,000) — 2,011,128 Interest paid ...... (847,293) (985,129) (1,088,892) Net cash flows provided by financing activities ...... (3,822,079) 2,115,600 (1,668,202) (Decrease) increase in cash and cash equivalents ...... (4,260,113) 344,609 (1,292,064) Cash and cash equivalents at beginning of year ...... 6,929,737 2,681,547 2,952,408 Exchange loss on cash and cash equivalents ...... (104,109) (116,032) (42,284) Cash and cash equivalents at end of year...... $ 2,565,515 $ 2,910,124 $ 1,618,060

The accompanying notes are an integral part of these consolidated financial statements.

F-7 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013 (Thousands of pesos, unless otherwise specified)

Note 1 - General information: El Puerto de Liverpool, S.A. B. de C.V. and subsidiaries (‘‘the Company’’) operate a chain of department stores, founded in 1847, engaged in selling a broad variety of products such as clothes and accessories for men, women and children, household articles, furniture, cosmetics and other consumer products. The Company is registered on the Mexican Stock Exchange and has an important presence in Mexico City and in 30 of the 32 states on Mexico. At December 31, 2013, the Company operated a total 96 department stores, 73 under the name of Liverpool, 23 under the name Fábricas de Francia, 5 Duty Free stores and 39 specialized boutiques. In 2012, the Company opened nine new stores locations: Villahermosa, Tabasco; Guadalajara, Jalisco; San Juan del Río, Queretaro; Veracruz, Veracruz; Playa del Carmen, ; León, Guanajuato; Ciudad Jardin, Estado de México; Campeche, Campeche; and Salina Cruz, Oaxaca. In 2013, four new stores commenced operations: Mazatlan, Sinaloa; , Campeche; Tuxpan, Veracruz; Mexicali, and 23 boutiques. The Company grants its customers financing through the ‘‘Liverpool Credit Card’’, with which customers can make purchases at exclusively at Company stores. Additionally, the Company offers the ‘‘Liverpool Premium Card (LPC)’’, with which cardholders can acquire goods and services at both stores and boutiques pertaining to the chain, and at any establishment affiliated to the VISA system worldwide. During 2011, the Company began offering a third card. the‘‘Galerías Fashion Card’’, which closely resembles the LPC. Additionally, the Company is a partner, stockholder or co-owner of shopping malls and holds an interest in 22 different malls, known as ‘‘Galerías’’, through which it leases commercial space to tenants engaged in a broad number of businesses. In 2013, three new shopping malls started operations: San Juan del Rio, Queretaro; Campeche, Campeche and Mazatlan, Sinaloa. In 2012, two new Shopping malls started up operations: Zacatecas, Zacatecas; Celaya, Guanajuato, and a recently acquired mall in Acapulco, Guerrero. The Company’s headquarters and main place of business is: Mario Pani 200 Col. Santa Fe, Cuajimalpa México, D.F. C.P. 05348

Note 2 - Summary of significant accounting policies: The following is a summary of the main accounting policies applied in preparing the consolidated financial statements. These policies have been applied consistently in each of the years presented, unless otherwise specified. 2.1 Basis of preparation The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (‘‘IFRS’’) and their Interpretations (IFRIC) issued by the International Accounting Standards Board (IASB). In accordance with the changes to the Rules for Public Companies traded on the Mexican Stock Exchange, as issued by the National Banking and Securities Commission on January 27, 2009, the Company is required to prepare its financial statements using IFRS as the regulatory framework for accounting purposes. The Company early adopted IAS 19 (revised) - ‘‘Employee Benefits’’. The application of this standard is required for accounting periods beginning on January 1, 2013, however early adoption is permitted. The consolidated financial statements have been prepared on the historical cost basis of accounting, except for cash and cash equivalents and cash-flow hedges which are both measured at fair value.

F-8 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. The areas involving a greater degree of judgment or complexity or the areas in which the assumptions and estimates are significant for the consolidated financial statements are described in Note 4. 2.1.1 Going concern The Company meets its working capital needs through reinvestment of a significant portion of its annual profits, as well as by contracting short and long-term credit lines, while respecting the debt ceiling approved by the Board of Directors. The Company’s financial structure allows the Company to take on debt, despite its investments in capital expenditures carried out annually to increase the Company’s total sales space by opening new stores and shopping malls. Interest payments are covered more than 8 times by operating income, which is an objective established by the Board of Directors. Taking into account the possible variations in operating performance, the Company believes its budget and projections allow it to operate with its current level of financing and meet all debt obligations. The Company is currently in compliance with its payment obligations and all debt covenants. Management expects the Company to secure the resources necessary to continue operating as a going concern in the foreseeable future. Consequently, the consolidated financial statements were prepared on a going-concern basis. 2.1.2 Changes in accounting policies and disclosures The following are new standards, changes and interpretations issued but not in effect as of January 1, 2013. • IFRS 7 ‘‘Financial Instruments’’. This amendment requires disclosure of information about the significance of financial instruments to an entity, and the nature and extent of risks arising from those financial instruments, both in qualitative and quantitative terms. Specific disclosures are required in relation to transferred financial assets and a number of other matters. The modification is applicable for periods as from July 1, 2013. • IAS 1 ‘‘Presentation of financial statements’’. This modification requires that the entity separates the elements presented in Other Comprehensive Income items into two groups, based on whether or not then will be recycled to income in the future. Elements that will not be recycled must be presented separately from those that can be recycled in the future. The modification is applicable for periods beginning July 1, 2013. • IFRS 10 ‘‘Consolidated Financial Statements’’ establishes the principles for presentation and preparation of consolidated financial statements, when an entity controls one or more entities. This new standard modifies the definition of the control principle and provides additional guidelines for how to determine control for more complex situations. The standard replaces IAS 27 ‘‘Consolidated and Individual Consolidated Financial Statements’’ and SIC 12 ‘‘Consolidation - Special Purpose Entities’’. This standard is mandatory beginning January 1, 2013. • IFRS 12 ‘‘Disclosure of Interest in Other Entities’’ requires disclosure of information that allows the users of financial information to evaluate the nature and risk related to their interest in other entities, including joint ventures, associated companies, special purpose entities and other off balance sheet vehicles, other than from the effects of these interests on their financial position and performance, as well as on their cash flows. This standard is mandatory beginning January 1, 2013. • IFRS 13 ‘‘Fair Value Measurement’’ provides a definition of fair value and establishes, in a single standard, the framework for measuring fair value and the requirements for the disclosure of those measurements. This standard is applicable when other IFRS require or allow for fair value measurement, except for transactions

F-9 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

under the scope of IFRS 2 ‘‘Share-based Payments’’, IAS 17 ‘‘Leases’’, measurements closely resembling fair value, but which are not considered as such, as well as the net realization value under the scope of IAS 2 ‘‘Inventories’’ or the value in use as outlined in IAS 36 ‘‘Impairment of Long-lived Assets’’. This standard is mandatory beginning January 1, 2013. • IAS 27 ‘‘Individual Financial Statements’’ establishes the standards applicable to investments in subsidiary and associates, and joint ventures when an entity opts or is required by local regulations to present non-consolidated financial statements. This standard does not specify which entities must produce individual financial statements available for public use, but it does apply to entities preparing individual financial statements in accordance with IFRS. Individual financial statements are those presented by a controlling company, an investor with joint control or significant influence, on which investments are recognized at cost as per IFRS 9 ‘‘Financial Instruments’’. This standard is mandatory beginning January 1, 2013. • IAS 28 ‘‘Investments in Associates and Joint Ventures’’ describes the requirements for applying the equity method for investments in associates and joint ventures. The standard replaces the prior version of IAS 28 ‘‘Investments in Associates’’ and is mandatory as from January 1, 2013. • IFRS 9 - ‘‘Financial instruments’’ addresses 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 Valuation’’ on matters related to classification and measurement of financial instruments. IFRS 9 requires that financial assets be classified in either of the following two categories: assets measured at fair value or those measured at their amortized cost. The determination must be on the amount of the initial recognition of those assets. The classification depends on the business model used by the entity in handling its financial instruments and the contractual characteristics of the cash flows of the individual instruments. For financial liabilities, the standard has retained most of the requirements of IAS 39. The major change is in the fair value option used, the valuation effect related to the Company’s credit risk must be recognized as part of comprehensive income or loss, unless it gives rise to an accounting mismatch. The Company expects to adopt this standard on January 1, 2015. The Company is currently in the process of evaluating the impact of these standards on its financial statements. There are no other changes or interpretations to existing standards that although mandatory, could have a material impact on the Company’s financial information. 2.2 Consolidation a. Subsidiaries Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases. In accordance with IFRS 10 ‘‘Consolidated Financial Statements’’ the Structured entities’’ (previously called Special purpose entities or ‘‘SPE’’) are consolidated when the substance of the relationship between de Company and the Structured entity indicates that the Company has Control. The balances and unrealized profits or losses in intercompany operations are eliminated in the consolidation process. When necessary, accounting policies have been modified in subsidiary entities in order to be consistency with the policies adopted by the Company.

F-10 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The following is a summary of the Company’s interest in subsidiaries at December 31, 2013 and 2012:

Company Shareholding % Activity Operadora Liverpool, S. A. de C. V. 100% Sub-holding of Distribuidora Liverpool, S. A. de C. V. and other companies that operate the department stores. Bodegas Liverpool, S. A. de C. V. y 99.99% Storage and distribution of merchandise. Almacenadora Liverpool, S.A. de C.V. Servicios Liverpool, S. A. de C. V. 99.99% Advisory and administrative services provided to the Company’s subsidiaries. 7 real estate companies 99.93% Development of real-estate projects, mainly shopping malls. Additionally, the Company consolidates a trust over which it has control on the basis of the indicators mentioned in IFRS 11 ‘‘Consolidated Financial Statements’’. This trust is described in Notes 13 to the consolidated financial statements. b. Associates Associates are all those entities over which the Company exercises significant influence, but not control. Usually, associates are those of which the Company holds between 20% and 50% of the voting rights. Investments in associates are recorded by the equity method and are initially recognized at cost. The Company’s investment in associates includes goodwill (net of any accumulated impairment loss, if any) identified at the time of the acquisition. The Company’s equity in the profits or losses following acquisition of associates is recognized in the statement of income and its equity in the comprehensive results of an associated company, following its acquisition, is recognized in the Company’s ‘‘Other comprehensive results’’. Post-acquisition accrued movements are adjusted against the book value of the investment. When the Company’s equity in the losses of an entity equals or exceeds its interest in the entity, including any unsecured account receivable, the Company does not recognize a greater loss, unless it has incurred obligations or has made payments on behalf of the associated. The associated companies’ accounting policies have been modified when necessary, for consistency with the policies adopted by the Company. 2.3 Segment information Segmental information is presented to be consistent with the internal reports provided to the Operations Committee, which is the body responsible for making operating decisions, of assigning the resources and evaluating the operating segments’ yield. 2.4 Foreign currency transactions a. Functional and presentation currency The items included in each of the subsidiaries’ financial statements are stated in the currency of the primary economic environment in which the entity operates (the ‘‘functional currency’’). The Company’s currency reporting for preparation of the consolidated financial statements is the Mexican Peso, which in turn is the functional currency of El Puerto de Liverpool, S. A. B. de C. V. and of all its subsidiaries.

F-11 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013 b. Transactions and balances Foreign currency transactions are converted to the functional currency using the exchange rates in effect on the transaction or valuation dates, when the items are re-measured. The profits and losses resulting from such transactions and from other conversion at the exchange rates in effect at the year-end close of all monetary assets and liabilities denominated in foreign currency are recognized as exchange fluctuations under financing cost in the statement of comprehensive income. 2.5. Financial assets 2.5.1 Classification The Company classifies its financial assets as loans and accounts receivable, and at fair value through profit and loss. Classification depends on the purpose of the financial assets. Management determines the classification of its financial assets at the date of initial recognition. Loans and accounts receivable are non-derivative financial assets allowing for fixed or determinable payments and which are not quoted on an active market. They are classified as current assets, except for those maturing in over 12 months, which are classified as non-current assets. Financial assets held at fair value that affect profit and loss are financial assets that are held for sale. A financial asset could be classified under such category only if it’s acquired mainly with the purpose of selling in the short term. Derivative financial instruments are also classified as held for sale unless they are designated as cash flow hedges. Financial Assets held for sale are classified as current if they are expected to be recovered within a period of less than twelve months; otherwise, they will be classified as a non-current. 2.5.2 Recognition and measurement a. Loans and receivables Accounts receivable comprise loans granted by the Company to its customers to acquire goods and services at its department stores or establishments affiliated to the VISA system. If recovery of these receivables is expected in a year or less, these loans are classified as current assets; otherwise, they are shown as non-current assets. Accounts receivable are initially recognized at fair value and subsequently measured at their amortized cost, using the effective interest rate method, less the reserve for impairment. Loans and accounts receivable are no longer recognized when the rights to receive cash flows from investments mature or are transferred and the Company has transferred all the risks and benefits arising from ownership. If the Company does not transfer or substantially retain all the risks and benefits inherent to ownership and continues to retain control of the assets transferred, the Company recognizes its equity in the asset and the related obligation with respect to the amounts it would be required to pay. If the Company substantially retains all the risks and benefits inherent to ownership of a financial asset that has been transferred, the Company continues to recognize the financial asset, as well as a liability for the resources received. b. Financial assets at fair value through profit and loss Financial assets at fair value through profit and loss are investments in highly liquid government bonds with a maturity of less than 28 days. These assets are stated at fair value and value fluctuations are recorded in the results of the period. 2.6. Impairment of non-financial assets

F-12 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

2.6.1 Assets carried at amortized cost At the end of every reporting period, the Company evaluates whether there is objective evidence of impairment of a financial assets or group of financial assets. Impairment of a financial asset or group of financial assets and the impairment loss are recognized only if there is objective evidence of impairment resulting from one or more events (a ‘loss event’) and the loss event or events have an impact on the estimated cash flows of the financial asset that can be reliably estimated. The Company records a provision for impairment of its loan portfolio, when receivables surpass 90 days due with no payment. This provision is done according to an individual assessment of each account and the results of the evaluation of the portfolio’s behavior and the seasonality of the business. The increases to this provision are recorded as administrative expenses in the statement of income. The methodology used by the Company in determining the balance of this provision has been applied consistently during at least the last ten years and has historically been sufficient to cover the losses pertaining to the following twelve months arising from irrecoverable loans. See Note 3.3.2. 2.7. Derivative financial instruments and hedging activities Derivative financial instruments are initially recognized at fair value on the date on which the derivative financial instrument agreement was entered into and are subsequently re-measured at their fair value. The method for recognizing the profit or loss of changes in fair value of derivative financial instruments depends on whether or not they are designated as cash flow hedge, and if so, on the nature of the item being hedged. The Company has only contracted cash flow hedge derivative financial instruments. At the outset of the transaction, the Company documents the relationship between the hedging instruments and the items covered, as well as the objectives and Risk Management’s strategy to back its hedging transactions. The Company periodically documents whether or not the derivative financial instruments used in hedging transactions are highly effective in hedging the cash flows of the items hedged. The fair value of the derivative financial instruments used as hedging instruments is disclosed in Note 10. The total fair value of the derivative financial instruments used as hedging instruments is classified as a non-current asset or liability when maturity of the remaining hedge amount is more than twelve months, and is classified as a current asset or liability when the remaining hedge amount is under twelve months. When a hedging instrument matures or is sold, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time is recognized in the income statement. The effective portion of changes in fair value of derivatives that are designated and qualify as cash flow hedges is applied to comprehensive income. The profit or loss related to the ineffective portion is immediately applied to the statement of income as other expenses or income. 2.8. Cash and cash equivalents In the consolidated cash flow statements, cash and cash equivalents include available cash, deposits in checking accounts, bank deposits in foreign currency and short-term investments. These short-term investments are highly liquid securities that mature in less than 28 days and are not subject to material changes in value. Cash is shown at its nominal value and cash equivalents are valued at fair value. Fluctuations in value are applied to income for the period. Cash equivalents are mainly represented by investments in government instruments. See Note 7. 2.9. Inventories Inventories are recorded at the lower of cost or its net realizable value. Cost of sales includes the cost of merchandise, plus costs related to importation, freight, handling, shipment, and storage at customs and at distribution centers, less the value of the returns. The net realization value is the selling price estimated in the normal course of operations, less sales costs. The cost is determined by the average cost method.

F-13 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Physical inventory counts are conducted periodically at the stores, boutiques and distribution centers and inventory records are adjusted to the results of physical inventory counts. Historically, due to the Company’s loss prevention programs and control procedures, shrinkage has been immaterial. See Note 11. 2.10. Investment properties Investment properties are real estate (land and buildings) held to obtain economic benefits through collection of rent or for the capital gains, and are initially valued at cost, including transaction costs. After their initial recognition, investment properties continue to be valued at cost, less accumulated depreciation and impairment losses, if any. The Company owns shopping malls that house their department stores, as well as commercial space it leases to third parties. In such cases, only the portion leased to third parties is considered as Investment Property and the Company’s stores are recorded as property, furniture and equipment, in the statement of financial position. Depreciation is calculated by the straight-line method to distribute the cost at its residual value over their remaining useful lives, as follows:

Shell and core stage of construction ...... 75 years Structural work...... 75 years Fixed facilities and accessories ...... 35 years 2.11. Property, furniture and equipment The items comprising property, furniture and equipment are recognized at their historical cost, less depreciation and impairment losses . The historical cost includes expenses directly attributable to the acquisition of these assets and all expenses related to the location of assets at the site and in the conditions necessary for them to operate as expected by Management. For qualified assets, the cost includes the cost of loans capitalized in accordance with the Company’s policies. See Note 2.13. Expansion, remodeling and improvement costs represent an increase in capacity and so they are recognized as an extension of the useful life of goods are they capitalized. Maintenance and repair expenses are charged to income for the period in which they are incurred. The carrying amount of replaced assets is derecognized when they are replaced, recording the entire amount in the income statement. Works in progress represent stores under construction and includes investments and costs directly attributable to the startup of operations. These investments are capitalized upon opening the store and depreciation is computed from that point. Land is not depreciated. Depreciation of other assets is calculated by the straight-line method to distribute the cost at its residual value over their remaining useful lives, as follows:

Shell and core stage of construction ...... 75 years Structural work...... 75 years Fixed facilities and accessories ...... 35 years Operating, communications and security equipment ...... 10 years Furniture and equipment ...... 10 years Computer equipment ...... 3 years Leasehold improvements ...... Over the term of the lease agreement The Company assigns the amount initially recorded with respect to an element of property, furniture and equipment, in its different significant parts (components) and depreciates separately each of those components.

F-14 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The residual values and useful life of the Company’s 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 at its recovery value if the book value of the asset is greater than its estimated recovery value. See Note 2.14. Gains and losses from the sale of assets are due to the difference between income from the transaction and the book value of the assets. They are included in the statement of income as ‘‘Other income (expenses)’’. 2.12. Borrowings Costs Borrowing costs directly attributable to the acquisition and construction of qualified assets, which constitute assets requiring a substantial period of time up until they are ready for use or sale are added to the cost during that time, until such time as they are ready for use or sale. Income obtained from the temporary investment of specific loans not yet used on qualified assets is deducted from the cost of loans eligible for capitalization. At December 31, 2013 and 2012, there was no capitalization of comprehensive financing income due to the fact that during those periods, there were no assets that, according to the Company’s policies, qualified as requiring a construction period longer than a year. 2.13. Intangible assets Activities involved in the development of computer systems and programs include the plan or design and production of a new or substantially improved software or computer system. Expenses pertaining to the development of computer programs are only capitalized when they meet the following criteria: – It is technically possible to complete the computer program so that it is available for use; – Management intends to complete the computer program and use it; – The Company has the capacity to use the computer program; – It can be proven that the computer program will generate future economic benefits; – The Company has the technical, financial and other resources necessary to conclude the development of the program for its use; and – Expenses related to the development of the computer program can be reliably measured. The licenses acquired for use of programs, software and other systems are capitalized at the value of the costs incurred for their acquisition and preparation for their use. Other development costs failing to meet these criteria and research expenses, as well as maintenance expenses are recognized and expensed as they are incurred. Development costs previously recognized as expenses are not recognized as assets in subsequent periods. Costs incurred in the development of computer programs recognized as assets are amortized on the basis of their estimated useful lives, provided that they do not exceed five years. 2.14. Impairment of non-financial assets Non-financial assets subject to depreciation are subject to impairment testing. Impairment losses correspond to the amount at which the book value of the asset exceeds its recovery value. The recovery value of assets is the greater of the fair value of the asset less costs incurred for its sale and its value in use. For the purposes of impairment assessment, assets are grouped at the lowest levels at which they generate identifiable cash flows (cash-generating units). Non-financial assets subject to write-offs due to impairment are valued at each reporting date to identify possible reversals of the impairment.

F-15 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

2.15. Accounts payable Accounts payable are obligations of goods or services acquired from vendors in the normal course of operations. Accounts payable are classified as current liabilities if the payment is to be made within a year or less (or in the normal cycle of business operations if it is greater). Otherwise, they are shown as non-current liabilities. Accounts payable are initially recognized at fair value and subsequently re-measured at their amortized cost, using the effective interest rate method. 2.16. Bank borrowings and issuance of senior notes Loans from financial institutions and issuance of senior notes are initially recognized at fair value, net of costs incurred in the transaction. This financing is subsequently recorded at its amortized cost. Differences, if any, between the funds received (net of transaction costs) and the redemption value are recognized in the statement of income during the period of the financing, using the effective interest rate method. Fees incurred to obtain said financing are recognized as transaction costs to the extent that a part of or the entire loan is likely to be received. 2.17. Cancellation of financial liabilities The Company cancels financial liabilities if, and only if, the Company’s obligations are met, cancelled or matured. 2.18. Provisions Provisions are estimated by the expenditure required to settle the present obligation at the end of the reporting period under review. 2.19. Income tax The income tax comprises currently-payable and deferred taxes. The tax is recognized in the statement of income, except when it relates to items applied directly to other comprehensive income or losses or to stockholders’ equity. In this case, the tax is also recognized in other items pertaining to comprehensive income or directly to stockholders’ equity, respectively. The income tax currently payable is comprised of the great of the two: the Company’s income tax or a flat tax, applied to income for the year in which the taxes were incurred. These taxes are based on taxable profits and cash flows for each year, respectively. The charge corresponding to taxes on profits currently payable is calculated according to the tax laws approved as of the balance sheet date in Mexico and in the countries in which the Company’s associates operate and generate a taxable base. Management periodically evaluates their tax positions with respect to tax refunds as tax laws are subject to interpretation. In recognizing deferred taxes, it is determined whether or not, based on financial projections, the Company will incur an income tax or flat tax, and the deferred tax is recognized according to the tax to be paid in each period. Deferred income tax is reserved in its entirety, by the assets and liabilities method, of the temporary differences arising between the tax bases of assets and liabilities and their respective values, as shown in the consolidated financial statements. The deferred tax on profits is determined using the tax rates and laws in effect at the balance sheet date and the dates that are expected to be applicable when the deferred tax on profits asset is realized or the deferred tax on profits liability is paid. The deferred tax asset, tax-on-profits, is only recognized to the extent future tax benefits are likely to be achieved and can be applied against any temporary differences in liabilities.

F-16 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The deferred tax on profits is generated on the basis of the temporary differences between investments in subsidiaries and associates, except when the Company can control when those temporary differences will be reinvested and the temporary difference is unlikely to be reinvested in the foreseeable future. The balances of deferred asset and liabilities, tax-on-profits, are offset when there is a legal right to offset current tax assets against current tax liabilities and when the deferred tax-on-profit assets and liabilities relate to the same tax entity, or different tax entities where the balances are to be settled on a net basis. 2.20. Employee benefits a. Pensions and seniority premium The Company’s subsidiaries operate pension plans and seniority premiums that are usually funded through payments to trust funds, based on annual actuarial calculations. The Company also has defined benefit plans. A defined benefit pension plan is a plan that determines the amount of the pension benefits to be received by an employee upon retirement, which usually depends on one or more factors, such as the employee’s age, years of service and compensation. The liability or asset recognized in the balance sheet with respect to defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date, less the fair value of the plan assets, along with the adjustments arising from unrecognized actuarial profits or losses and the costs of past services. The defined benefit obligation is calculated annually by independent actuaries, using the projected unit credit method. The present value of defined benefit obligations is determined, discounting estimated cash flows at the interest rates of government bonds denominated in the same currency as that in which the benefits are to be paid, and that have expiration terms that approximate the terms of pension obligations. Actuarial remeasurements arising from adjustments based on the experience and changes in actuarial assumptions are charged or credited to stockholders’ equity in other comprehensive-income items in the period in which they arise. Due to the Company’s early adoption of IAS 19 (revised) ‘‘Employee Benefits’’, the costs of past services were immediately applied to capital reserves on equity. b. Annual bonus for retaining executives Some of the Company’s executives receive an annual retainer bonus, calculated as a percentage of their annual compensation and depending on the completion of certain goals established for each officer at the beginning of the year. The Company has set up a reserve of $121,334 at December 31, 2013 ($212,751 at December 31, 2012), that is included in Note 16 within Bonds and Compensation paid to employees. c. Employees’ statutory profit sharing and bonuses The Company recognizes a liability and a bonus expense and employees’ statutory profit sharing based on a calculation that considers the profit after certain adjustments. The Company recognizes a provision when it is contractually obligated or when there is a past practice that generates an assumed obligation. d. Other benefits granted to employees The Company grants certain benefits to employees that leave the Company either by termination or voluntary decision after 20 years of service. In accordance with IAS 19 (revised) ‘‘Employee Benefits’’, this practice constitutes an assumed obligation of the Company with its employees, which is recorded based on annual actuarial studies prepared by independent actuaries. See Note 19.

F-17 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013 e. Benefits paid to employees for severance required by the law This kind of benefits is payable and recorded in the income statement upon termination of the labor relationship with the personnel before the retirement date or when the employee accepts a voluntary resignation in exchange of such benefits. 2.21. Capital stock Common shares are classified as capital. 2.22. Revenue recognition Income represents the fair value of cash collected or receivable arising from the sale of goods or the rendering of services in the normal course of Company operations. Income is shown net of discounts granted to customers. The Company recognizes revenue when the related amount can be measured reliably, the entity is likely to receive future economic benefits and the transaction meets the specific criteria for each of the Company’s activities, as described above. a. Sale of merchandise Revenue from the sale of merchandise is recognized when the customer takes possession of the goods at the stores or when the merchandise is delivered at the customer’s domicile. Approximately half of merchandise sales are paid for by the customers with the Company branded credit cards and the other half are settled in cash or through other bank debit or credit cards. In accordance with IAS 18 ‘‘Revenue’’, the cash received from promotions involving interest free sales on credit for a determined number of months is deferred over time and therefore, its fair value can be less than the nominal amount of the sale. In these cases, the Company determines the fair value of the cash to be received, less all future cash flows, using an interest rate prevailing in the market for a similar instrument. The difference between the nominal value of the sale at a certain number of months free of interest and the value discounted as per the above paragraph is recognized as interest income. See point c. of this Note. The Company’s policy is to sell a number of products with the right to return them. Customer returns usually involve a change of size, color, etc.; however, in those cases in which the customer wishes to return the product, the Company offers its customers the possibility of crediting the value of the merchandise to their account, if the purchase was made with the Company’s own cards, or to return the amount of the purchase in an e-wallet or a credit to the customer’s bank credit card, if the purchase was made in cash or with external cards, respectively. In the Company’s experience, returns on sales are not material with respect to total sales, therefore, the Company does not set up a reserve in this regard. b. E-wallets and gift certificates • E-wallets The Company offers promotions, some of which involve benefits granted to its customers represented by e-wallets, the value of which is referred to a percentage of the selling price. E-wallets can be used by customers to settle future purchases at the Company’s department stores. The Company deducts the amount granted to its customers in e-wallets from revenue. In the Company’s historical experience, the likelihood of customers using e-wallets accounts that have been inactive for 24 months is very low. Therefore, e-wallets showing these characteristics are cancelled, with a credit to sales. At December 31, 2013 and 2012 the value of e-wallets issued and not yet redeemed totals $ 1,541,032 , and $1,480,314, respectively, and is included in the deferred revenue account in the statement of financial position.

F-18 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

• Gift certificates The Company offers its customers gift certificates with no specific expiration date. Upon their sale, gift certificates are recognized in the deferred revenue account in the statement of financial position. This account is cancelled when the customer redeems the gift certificate; whether partially or entirely, through the acquisition of merchandise, recognizing revenue in the same amount. In the Company’s historical experience, the likelihood of customers using gift certificates that have been inactive for 24 months being is remote. Therefore, certificates with these characteristics are cancelled against service income and other operating income. c. Interest income In accordance with IAS 18 ‘‘Revenue’’, interest income is recognized by the effective interest rate method. See Note 4.1.1. Late payment interest is recorded as income as it is earned and late payment interest is not accrued once the credit has remained past due for 90 days. Income from the recovery of previously-cancelled credit is recorded as service income. d. Services Income stemming from service agreements is determined as follows: • Commission income from the sale of insurance policies are recorded as income as they are incurred. • Service income is recognized when the customer receives the benefit of the service, such as: beauty salon, travel agency, opticians or interior design. e. Lease revenue The Company’s policy for recognition of operating lease revenue is described in Note 2.25.1 2.23. Deferred income The Company records deferred income arising from different transactions in which cash was received, and in which the conditions for revenue recognition described in paragraph 2.22 have not been met. Deferred revenue is shown separately in the statement of financial position. 2.24. Other accounts receivable The Company classifies as other accounts receivable all loans or advance payments made to employees and other parties or companies other than the general public. If collection rights or recovery of this amount is realized within 12 months from the period close, they are classified as short term; otherwise, they are shown as long term. 2.25. Leases Leases are classified as capital leases when the terms of the lease transfer all the risks and benefits inherent in the property to the lessee. All other leases are classified as operating leasing. 2.25.1 Lessor Rent income pertaining to the Company’s Investment Property is recognized by the straight-line method over the term of the lease. Initial direct costs incurred in negotiating an operating lease are added to the book value of the leased asset, and are recognized by the straight-line method over the term of the lease. The Company has no assets leased through capital leasing plans.

F-19 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

2.25.2 Lessee Rent payments under operating leases are charged to income by the straight-line method during the term of the lease. Variable rent is recognized as an expense in the period in which it is incurred. 2.26. Earnings per share Basic earnings per ordinary share are calculated by dividing the holding interest by the weighted average of ordinary shares outstanding during the period. Earnings per diluted share are determined by adjusting the holding interest and ordinary shares, under the assumption that the entity’s commitments to issue or exchange the Company’s own shares would be realized. Basic earnings are the same as diluted earnings due to the fact that there are no transactions that could dilute earnings. See Note 24. 2.27. Supplier rebates The Company receives rebates from suppliers as reimbursement of discounts granted to customers. Supplier reimbursements related to discounts granted to customers with respect to merchandise sold are negotiated and documented by the purchasing areas and are credited to the cost of sales in the period in which they are received. 2.28. Prepaid payments The Company recognizes prepaid payments for television advertisement and insurance premiums. Those amounts are recorded at the value that was contracted and are recorded in income when the advertisements are broadcasted and on a straight line basis for insurance premiums. Contracts for television advertisement and insurance policies are less than one year.

Note 3 - Risk management: The main risks to which the Company is exposed are: 3.1. Real estate risk 3.2. Market risks 3.2.1. Exchange rate risk 3.2.2. Interest rate risk 3.2.3. Inflation risk 3.3. Financial risks 3.3.1. Liquidity risk 3.3.2. Credit risk 3.3.3. Capital risk 3.1 Real estate risk The Company has a diversified real estate property base distributed throughout 30 states in Mexico and 52 cities of different sizes. The Company owns department stores and either owns or co-owns 22 shopping malls. The Board of Directors is responsible for authorizing the purchase of land and buildings proposed by the Company’s real estate area. For every real estate investment, sales are estimated per square meter and the return on the investment to be generated. Real estate activities constitute a source of income by leasing approximately 2,050 commercial spaces located in 22 company-owned shopping malls. Although the value of real estate in Mexico is relatively stable, economic development and structural changes in the country are risk factors that could affect the supply and demand of real estate, and affect rent levels and the risk of vacant commercial space. Commonly, real estate in Mexico is quoted in US dollars, and thus an excessive rise in the exchange rate of the peso to the dollar or in the prices of property available to the Company or in construction materials could limit the Company’s plans to expand. The Company has no risk concentration in

F-20 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013 accounts receivable from lessees, as it has a diversified base and periodically evaluates their payment capacity, especially prior to renewing their lease agreements. The historical occupancy rate of the Company’s commercial space is above 95% and the rent-related uncollectible rate has historically remained below 2%, thus the credit risk related to lease agreements is considered low. The Company has insurance that duly covers its assets against the risk of fire, earthquake and other natural disasters. All insurance has been contracted with leading companies in the insurance market. 3.2 Market risks: The Company’s risk management is handled by the Operations Committee, including interest rate risks, the use of hedge derivative financial instruments and investment of treasury surpluses. Company Management identifies and evaluates the decisions for hedging the market risks to which it is exposed. The Company contracts derivative financial instruments to reduce the uncertainty of the return on its projects. The derivative financial instruments contracted are assigned for hedge accounting purposes and are closely linked to the financing contracted by the Company. The Company’s policies require that quotes be obtained by three different financial instruments in order to guarantee the best rates on derivative contracts. The Company’s internal control policies require that the representatives of the finance and legal areas conduct an analysis prior to contracting financing or to conducting operations with derivative financial instruments. In evaluating the use of derivatives, to cover the financing risks, sensitivity analysis are conducted of the different variables and effectiveness testing is conducted to determine the book treatment of the derivative financial instrument, once contracted. 3.2.1 Exchange rate risk Except as mentioned in note 17, the Company has not contracted financing in foreign currencies; however, the Company is exposed to risks related to movements in the exchange rate of the peso to the US dollar and the euro with respect to importations of merchandise mainly from Europe and Asia. Purchases of merchandise in a currency other than the Mexico peso represent approximately 18% of total purchases. At December 31, 2013 and 2012, at the consolidated level, the Company’s exposure to exchange rate risks amounted to US$180,502, €6,452 and US$2,867, €2,471, respectively. In the event of a 10% increase in the exchange rate of the peso to the US dollar, the Company’s loss would approximate $236,174 and $3,717 ($ 645, (income) and $4,223, respectively for the Euro position), in each of those years. The 10% represents the sensitivity rate used when the exchange risk is reported internally to the Operations Committee, and represents Management’s assessment of possible changes in exchange rates. The sensitivity analysis includes only those monetary items not yet settled that are denominated in foreign currency at the period close. Additionally, the Company maintains an investment in Regal Forest Holding (RFH), and the cash flows received from RFH are denominated in US dollars. The risk of conversion is the risk that the variations in exchange rates will cause volatility in the peso value of these cash flows. The Company has not hedged the cash flows that it receives from this investment. The Company had the following foreign currency monetary assets and liabilities: December 31, 2012 2013 Thousands of US dollars Monetary assets ...... US $5,553 US $5,107 Monetary liabilities...... (8,420) (185,609) Net (short) long position ...... (US $2,867) (US $180,502) Equivalent in pesos ...... ($37,173) ($2,361,742)

F-21 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

December 31, 2012 2013 Thousands of Euros: Monetary assets ...... €5,855 €3,883 Monetary liabilities...... (3,384) (10,335) Net short position...... €2,471 (€6,452) Equivalent in pesos ...... $42,227 ($116,200)

The exchange rates of the peso to the dollar, in effect at the date of the consolidated balance sheet and at the date of the independent auditor’s report, were as follows:

February 21, December 31, 2014 2013 US dollar...... $13.2913 $13.0843 Euro...... $18.2455 $18.0079 3.2.2 Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect the Company’s net financing cost. Bank borrowings and long-term issues of senior notes are subject to both fixed and variable interest rates and expose the Company to the risk of variability in interest rates, and thus variability its cash flows. Bank borrowings and debt issuances contracted at fixed rates expose the Company to the risk of drops in reference rates, possibly representing a greater financial cost of the liability. The Company’s policy is to hedge most of its bank borrowings and issuances of senior notes and its preference is to maintain fixed interest rates for its debt. However, fixed to variable interest rate swaps are also contracted on a temporary basis to streamline financial costs when market rates allow it. The main reason for using derivative financial instruments is to better predict the cash flows that the Company will pay to meet its contractual obligations. With these interest-rate swaps, the Company agrees with other parties to deliver or receive, monthly, the existing difference between the interest amount of variable rates set forth in debt agreements and the interest amount corresponding to fixed rates contracted in derivative financial instruments. The Company continuously analyzes its exposure to interest rates. A number of different interest rate scenarios are evaluated such as, refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the corresponding impact on results or on its financial position. Sensitivity analysis for interest rates The following sensitivity analyses have been determined considering the current derivative financial instruments at December 31, 2013 and assuming the following: If interest rates had been 10 basis points higher and all the other variables remained constant: The other items comprising comprehensive income for the year ended December 31, 2013 and 2012 would have decreased / increased by $98,975 and $75,415, net of deferred taxes, mainly as a result of the changes in fair value of hedge derivative financial instruments contracted to hedge against exposure to changes in interest rates. The information corresponding to interest rate derivative financial instruments contracted is shown in Note 10 to the consolidated financial statements. 3.2.3. Inflation risk At December 31, 2013, the Company had financing denominated in Investment Units (UDIs, the monetary unit linked to inflation in Mexico). The Company contracted a swap to hedge against exposure to the risk that the

F-22 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013 value of the issuance of senior notes could be affected by the increase in the inflation rate in Mexico. Assuming inflation of 10% or higher in Mexico and maintaining all the other variables constant, the effect on the other comprehensive income items due to exposure of the debt in UDIs, net of deferred taxes, would be a loss of approximately $ 32,145 and $23,986, respectively. 3.3. Financial risks 3.3.1. Liquidity risk Liquidity risk is the risk that the Company will be unable to meet its fund requirements. Company Management has established policies, procedures and limits that govern the Treasury function. The Treasury is responsible for ensuring the Company’s liquidity and for managing its working capital to guaranty payments to vendors, who finance a significant part of inventory stock, the debt service and fund operating costs and expenses. The Treasury prepares a daily cash flow report to maintain the required level of cash available and plan the investment of any surpluses. The months with highest operations for the Company and consequently with the highest accumulation of cash are May, July and the last quarter of the year. Most of the Company’s investments are made in pesos and small portion in US dollars. The Company finances its operations through a combination of: 1) reinvestment of a significant portion of profits and 2) contracting financing and leasing denominated in pesos. The Company has immediately available credit lines of approximately $10,600,000 as well as overdraft lines of credit to give the Company immediate access to short-term debt instruments. The following table shows the contractual maturities of the Company’s financial liabilities according to the expiration periods. The table was prepared on a cash flow basis without discounting, from the first date on which the Company will be required to pay. The table includes interest and the main cash flows.

Less than Between 3 months Between More 3 months and 1 year 1 and 5 years than 5 years December 31, 2012 Issuance of senior notes...... $ 227,619 $ 695,502 $10,250,156 $5,730,715 Bank borrowings ...... 21,447 65,532 1,312,504 — Derivative financial instruments ...... — — 205,086 136,151 Standby letters ...... 5,126 218,305 72,664 — Vendors and creditors ...... 11,274,985 4,820,794 140,353 — $11,529,177 $5,800,133 $11,980,763 $5,866,866

Less than Between 3 months Between More 3 months and 1 year 1 and 5 years than 5 years December 31, 2013 Issuance of senior notes...... $ 222,148 $4,678,786 $5,755,472 $5,324,465 Bank borrowings ...... 2,034,782 65,532 1,225,525 — Derivative financial instruments ...... — 147,983 120,599 — Standby letters ...... 39,392 452,040 — — Vendors and creditors ...... 13,870,115 3,839,891 216,322 — $16,166,437 $9,184,232 7,317,918 5,324,465

F-23 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

3.3.2. Credit risk Credit risk is the risk of the Company suffering losses as a result of customers defaulting on payments, financial institutions in which it maintains investments or the counterparties with which derivative financial statements are contracted. Loan portfolio The Company’s accounts receivable are comprised of loans granted to our customers through the use of credit cards issued by the Company to purchase merchandise, goods and services at our stores or at establishments affiliated to the Visa system. The Company handles a wide variety of credit pans, the most common of which are: 1) Budget; 2) sales at Months without Interest (MSI for its acronym in Spanish), and 3) the Fixed Payment Plan. In the Budget Plan, an average monthly balance is determined, based on which interest is generated. In the MSI Plan, the card holder makes fixed payments at a 0% interest rate, whereas with the Fixed Payment Plan, the customer pays the same amount for an established term at the same interest rate as that of the Budget Plan. In the Fixed Payment Plan, a deferral option is periodically granted, whereby the customer purchases on a particular date, to begin paying at a later day with fixed payments that already include interest. Under the MSI Plan, the Company offers its customers the possibility of refinancing their monthly payments, allowing for paying only 10% and transferring the remaining balance to the Budget Plan, with which interest begins to be generated. Loan terms fluctuate from 6, 13 and on occasion, 18 months. Due to the fact that Company sales are made to the general public, there is no risk concentration on one particular customer or group of customers. The Company’s target market is mainly represented by the segment of the population located in socioeconomic levels A, B, and C. The Company has a risk management system for the loan portfolio, whose main components include: 1) the risk of default and loss, involved in the process for granting loans, authorization of purchase transactions and collections management, 2) the operational risk, which includes the information security, technology infrastructure and processes and procedures, both in-store and corporate, of the Credit Management, 3) the regulatory risk, which includes aspects related to compliance with the provisions issued by the Consumer Advocacy Agency and, with respect to the Liverpool Premium card and Galerias Fashion Card, the regulation for preventing money laundering and those established by the National Protection and Defense of Financial Services Users Commission (Condusef for its Spanish acronym) and 4) the risk of fraud, which comprises the prevention, analysis and detection, recovery and solution. These activities include, among others, a transactional analysis of cardholders’ behavior patterns, contracting of anti-fraud insurance, implementation of a safe web portal and use of automated detection systems. Credit application forms are evaluated and approved through automated procedures using parameterized scorecards (grading factors) determined by the Company, both for applicants with credit experience in the credit bureau, and for those with none. Scorecard performance is reviewed periodically and, as required, evaluation of the credit application forms is complemented with a telephone check and visit to corroborate the veracity of the information provided by the applicant. Initial credit limits are also calculated individually and automatically by the Company’s system and are periodically monitored by the corporate credit department to increase or decrease them based on the cardholder’s record. The Company has a process in place for review of its customer’s credit quality, for early identification of potential changes in payment capacity, prompt corrective decision taking and determination of current and potential losses. Through automated systems, monthly account cutoffs are conducted and any accounts failing to show the requirement payment are detected. Accounts not receiving payment are immediately blocked to prevent the balance from continuing to grow and the automated computation of late-payment interest begins. Based on the evaluation of certain variables, late-payment risks of the accounts in default and the actions to be taken on those

F-24 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013 accounts are determined. The following actions are taken on accounts in default: telephone calls to customers, sending of letters and home visits, among others. Accounts showing no payment after 150 days are automatically assigned to collection agencies to take over collection efforts, and accounts showing more than 240 days default are written off. The Company permanently monitors recovery of its portfolio based on a broad range of tools and mathematical models, as well as considering a number of factors that include historical trends of portfolio aging, record of cancellations and future expectations of performance, including trends in unemployment rates in Mexico. In times of economic crisis and with high unemployment indexes, the Company restricts approval of applications and loans made, as well as restricting credit limits of current customers. Given the Company’s line of business, there are no real guarantees related to accounts receivable. Financial institutions and counterparties in derivative operations Cash surpluses are invested in credit institutions with a high credit rating such as in government instruments and counterparties in derivative operations are high credit quality financial institutions. It should be mentioned that none of the Company’s derivative financial instruments require the Company to keep cash deposits in margin accounts to guarantee these operations. 3.3.3. Capital risk The Company’s objective is continue operating as a going concern and to maintain a financial structure that will optimize the cost of capital and maximize stockholders’ yields. The Company’s capital structure is comprised of debt - which includes senior notes and bank borrowings - cash and cash equivalents, and stockholders’ equity, which includes subscribed capital, retained earnings and reserves. Historically, the Company has invested substantial resources in capital goods to expand its operations, through reinvesting earnings. The Company has no established policy for issuing dividends; however, the dividend payment approved annual has represented 13% of the majority net income for the immediately prior year. The Board of Directors has established the following rules for management of financial and capital risks. • Debt including issuance costs must not exceed 15% of total assets. • All debts must be subject to a fixed interest rate. All these rules were complied at December 31, 2011, 2012 and 2013. Management annually reviews the Company’s capital structure when it presents the budget to the Board of Directors and the stockholders. The Board of Directors verifies that the level of indebtedness planned does not exceed the established limit. 3.4. Fair value estimate The financial instruments in the statement of financial position are recorded at fair value based on the following hierarchy. • Level 1 fair values are derived from prices quoted (not adjusted) in active markets for identical liabilities or assets. • Level 2 fair values are derived from indicators different from the quoted prices included in Level 1, but that include indicators that are observable directly to quoted prices or indirectly, that is to say, derived from these prices; and • Level 3 fair values are derived from valuation techniques that include indicators for assets or liabilities that are not based on observable market information.

F-25 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Book value Level 1 Level 2 Level 3 December 31, 2012 Assets arising from hedge derivative financial instruments ...... $ 318,364 $ — $ 318,364 $ — Cash and cash equivalents...... 2,210,787 2,210,787 — — Liabilities arising from hedge derivative financial instruments ...... (341,237) — (341,237) — Total ...... $2,187,914 $2,210,787 ($ 22,873) $ —

Book value Level 1 Level 2 Level 3 December 31, 2013 Assets arising from hedge derivative financial instruments ...... $ 319,873 $ — $ 319,873 $ — Cash and cash equivalents...... 1,014,760 1,014,760 — — Liabilities arising from hedge derivative financial instruments ...... (268,582) — (268,582) — Total ...... $1,066,051 $1,014,760 $ 51,291 $ —

During the years ended December 31, 2013 and 2012, there were no transfers between levels 1 and 2.

Note 4 - Critical accounting judgments and key sources of uncertainty in estimates: In applying the Company’s accounting policies, which are described in Note 2, Management makes judgments, estimates and assumptions on the book figures of assets and liabilities. The related estimates and assumptions are based on historical experience and other factors considered relevant. Actual results could differ from those estimates. Estimates and underlying assumptions are analyzed on a regular basis. The reviews of book estimates are recognized in the review period or future periods, if the review affects both the current period and subsequent periods. 4.1. Critical accounting judgments Following is a summary of the most essential judgments, aside from those that involve estimates (see Note 4.2) made by Management in applying the entity’s accounting policies and that have an significant effect on the amounts recognized in the consolidated financial statements. 4.1.1. Revenue recognition - sales with months without interest Notes 2.22 a. and c. describe the Company’s policies for recording of sales when payment includes months without interest. The above implies that Company Management applies its judgment to identify the interest rate applicable to calculate the present value of sales at months with no interest. To determine its discounted cash flows, the Company uses an imputed interest rate, taking into account the rate that can best be determined between: i) the rate prevailing in the market for a similar instrument available to Company customers with a similar credit rating, or ii) the interest rate that equals the nominal value of the sale, duly discounted, at the cash price of the merchandise sold. In making its judgment, management considered the interest rates used by the main banking institutions in Mexico to finance programs of sales at months without interest.

F-26 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

4.1.2. Consolidation structure entities The Company evaluates the control indicators established by IFRS 10 ‘‘Consolidated financial statements’’ for consolidation of the trusts in which the Company has no ownership; however, the activities, decision making and economic aspects indicate that the Company exercises control. That trust is described in Note 13 to the consolidated financial statements. 4.2. Key sources of uncertainty in estimates Following are the key sources of uncertainty in the estimates made at the date of the statement of financial position, and that represent a significant risk of leading to an adjustment to the book values of assets and liabilities during the following financial period. 4.2.1. Provision for impairment of loan portfolio The methodology applied by the Company in determining the balance of this provision is described in Note 2.6.1. Also, see Note 8. 4.2.2. Determination of tax on profits For the purpose of determining deferred taxes, the Company must make tax projections to determine whether or not the Company is to incur flat tax or income tax, and thus consider the tax incurred as the base for determining deferred taxes. 4.2.3. Estimate of useful lives and residual values of property, furniture and equipment As described in Note 2.14, the Company reviews the estimated useful life and residual values of property, furniture and equipment at the end of every annual period. During this period, it was determined that the life and residual values do not need to be modified, as according to management’s assessment, the useful lives and residual values reflect the economic conditions of the Company’s operating environment. 4.2.4. Fair value of derivative financial instruments As mentioned in Note 2.7, the Company determines the value of its derivative financial instruments using valuation techniques, usually used by the counterparties with which it maintains current operations, and which require judgments to develop and interpret fair value estimates in using assumptions based on the existing market conditions at each of the dates of the consolidated statement of financial position. Consequently, the estimated amounts presented are not necessarily indicative of the amounts that the Company could use in a real market exchange. The use of estimation methods could result in amounts different from those shown at maturity. 4.2.5 Employee benefits The cost of employee benefits that qualify as defined benefit plans as per IAS 19 (modified) ‘‘Employee Benefits’’ is determined using actuarial valuations. An actuarial valuation involves assumptions with respect to discount rates, future salary increases, personnel turnover rates and mortality rates, among others. Due to the long-term nature of these plans, such estimations are subject to a significant amount of uncertainty.

F-27 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 5 - Category of financial instruments:

Financial Loans and assets Derivatives accounts through profit used for receivable and loss hedging Total December 31, 2012 Financial assets: Cash one hand and banks ...... $ 699,337 $ 699,337 Investments ...... $2,210,787 2,210,787 Short and long-term loan portfolio ...... 23,951,198 23,951,198 Other short and long-term accounts receivable ...... 1,092,471 1,092,471 Derivative financial instruments ...... $318,364 318,364

Derivatives Other financial used for liabilities at hedging amortized cost Total Financial liabilities: Issuance of long-term senior notes ...... $12,000,000 $12,000,000 Long-term bank borrowings ...... 921,456 921,456 Suppliers and creditors ...... 14,734,589 14,734,589 Derivative financial instruments...... $341,237 341,237

Financial Loans and assets Derivatives accounts through profit used for receivable and loss hedging Total December 31, 2013 Financial assets: Cash one hand and banks ...... $ 603,300 $ 603,300 Investments ...... $1,014,760 1,014,760 Short and long-term loan portfolio ...... 28,181,267 28,181,267 Other short and long-term accounts receivable ...... 738,191 738,191 Derivative financial instruments to short and long term . . . $319,873 319,873

Derivatives Other financial used for liabilities at hedging amortized cost Total Financial liabilities: Issuance of long-term senior notes ...... $12,000,000 $12,000,000 Short and long-term bank borrowings ...... 2,932,584 2,932,584 Suppliers and creditors ...... 16,643,692 16,643,692 Derivative financial instruments to short and long term...... $268,582 268,582

F-28 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 6 - Credit quality of financial instruments: The credit quality of the financial assets that are neither past-due or impaired is assessed with respect to the external risk ratings, if any, or based on historical information of counterparty default index.

December 31, 2012 2013 Accounts receivable Counterparties without external risk ratings: Group 1 - Customers with Liverpool credit card ...... $20,416,688 $22,779,492 Group 2 - Customers with Visa credit card ...... 2,357,806 4,018,486 Total unimpaired accounts receivable ...... 22,774,494 26,797,978 Cash in banks and short-term bank deposits1 AAA...... 2,693,259 1,601,126 AA...... 200,000 — A...... —— 2,893,259 1,601,126 Financial assets - derivative financial instruments2 AAA...... 318,364 319,873 AA...... —— 318,364 319,873 $25,986,117 $28,718,977

1 The rest of cash equivalents in the balance sheet correspond to cash on hand. 2 The Company does not consider there are risk factors arising from default on counterparty obligations, due to which, it has not been necessary to set up reserves in this regard at December 31, 2013 and 2012. • Group 1 - For the Company, loans granted through the Liverpool credit card represent a lesser risk due to the fact that its use is sporadic and seasonal and is restricted to the products sold at Company stores. • Group 2 - The Visa credit cards operated by the Company imply a different risk level, due mainly to the fact that they can be used at a broad number of establishments, allow their holders to draw cash from ATMs and are intended for continuous use.

Note 7 - Cash and cash equivalents:

December 31, 2012 2013 Cash one hand and banks ...... $ 699,337 $ 603,300 Investments...... 2,210,787 1,014,760 Total...... $2,910,124 $1,618,060

F-29 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 8 - Short-term and long-term loan portfolio:

December 31, 2012 2013 Current loans ...... $22,774,494 $26,797,978 Past due loans...... 2,485,395 3,150,296 25,259,889 29,948,274 Provision for impairment of loan portfolio...... (1,308,691) (1,767,007) $23,951,198 $28,181,267 Total short-term ...... $17,561,620 $21,436,709 Total long-term ...... $ 6,389,578 $ 6,744,558

8.1. Movements in provision for impairment of loan portfolio:

December 31, 2012 2013 Balance at beginning of year...... $1,173,720 $ 1,308,691 Impairment provisions ...... 1,076,930 1,640,312 Write-offs ...... (941,959) (1,181,996) Balance at end of year ...... $1,308,691 $ 1,767,007

8.2. Aging of past due balances Accounts receivable at the closing of each year include past due amounts of $ 3,150,296 and $2,485,395 at December 31, 2013 and 2012. Amounts more than 30 days past due are entirely covered by the impairment provision.

Note 9 - Other accounts receivable:

December 31, 2012 2013 Short-term accounts receivable: GPR Controladora, S. A. de C. V...... $ 337,652 $ — Insurance companies ...... 39,583 7,414 Short-term loans to employees ...... 170,161 61,651 Other debtors1...... 372,958 527,994 920,354 597,059 Long-term accounts receivable: Long-term loans to employees...... 172,117 141,132 Total...... $1,092,471 $738,191

1 Includes accounts receivable to tenants, companies that issue coupons and other recoverable taxes.

F-30 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 10 - Derivative financial instruments: The Company uses hedge derivative financial instruments to reduce the risk of adverse movements in the interest rates of its long-term debt and inflationary increases in Mexico, to reduce the volatility of the cash flows to be paid for compliance with its contractual obligations. The main instruments used are interest rate swaps and the positions contracted at the close of each year are as follows:

Fair value at Dates Interest date December 31, Contracted Agreed in Notional Amount1 Contracting Maturity by IFD the debt 2012 2013 Assets $ 1,000,000 September 2008 August 2018 TIIE + 0.18% 9.36% $ 209,830 $ 184,129 750,000 June 2010 May 2020 8.48% 4.22% 108,534 127,985 1,000,000 September 2013 January 2014 Libor + 0.04% TIIE - 0.10% — 2,668 1,000,000 September 2013 March 2014 Libor + 0.46% TIIE- 0.15% — 5,091 Total $ 318,364 $ 319,873 IFD less long-term $ — $ 312,114 Portion current short-term $ 318,364 $ 7,759 Liabilities $ 2,000,000 March 2008 December 2014 7.47% TIIE + 0.04% ($ 94,478) ($ 69,816) 2,000,000 March 2008 December 2014 7.89% TIIE + 0.04% (110,608) (78,167) 1,000,000 April 2009 August 2018 TIIE + 0.18% 7.95% (136,151) (120,599) Total ($ 341,237) $ 268,582 IFD les long term $ 341,237 $ 120,599 Portion current short-term $ — $ 147,983

1 The notional amounts related to derivative financial instruments reflect the reference volume contracted; however, they do not reflect the amounts at risk as concerns future flows. Amounts at risk are generally limited to the unrealized profit or loss in from valuation to market of those instruments, which can vary depending on changes in the market value of the underlying item, its volatility and the credit rating of the counterparties.

Note 11 - Inventories:

December 31, 2012 2013 Merchandise for sale ...... $10,558,247 $11,421,969

The cost of sales includes, at December 31, 2013 and 2012 $456,883 and $699,251, respectively, related to inventory write-offs.

F-31 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 12 - Investments in associates: Proportion of shareholding and voting power Amount Place of incorporation December 31, December 31, Concept Activity and operations 2012 2013 2012 2013 Investment in associated Mexico and companies (i) and (ii) ...... Sales Central America 50% 50% $3,500,396 $3,944,927 Other investments (iii) In associated ...... Malls Mexico Several Several 506,815 671,927 $4,007,211 $4,616,854

(i) Regal Forest Holding Co. (RFH) RFH is a private company that operates a chain of stores engaged in the sale of furniture and household appliances, with different formats in Central America, South America and the Caribbean. The Company has a 50% shareholding in RFH. This acquisition gave rise to goodwill of $757,623, which is included as part of the investment value. The Company does not exercise joint control over RFH because the criteria for control is not met. Under IFRS it exercises significant influence over RFH, due to the fact that it owns 50% of the voting rights and is entitled to designate two members of the Board of Directors. (ii) Moda Joven Sfera México, S. A. de C. V. In 2006, the Company incorporated an entity in association with El Corte Inglés, S. A. (the leading department store chain in Spain). This entity operates a chain of ten stores in Mexico, specialized in family clothing and accessories under the commercial name Sfera. (iii) Other investments Mainly correspond to the Company’s equity in the following malls: Angelópolis in the city of Puebla, Plaza Satélite in the state of México and Galerías Querétaro in the city of Querétaro. Following is a summary of the combined financial information pertaining to the Company’s associates: December 31, 2012 2013 Total assets ...... $19,732,318 $21,429,320 Total liabilities ...... 14,103,669 15,085,146 Net assets ...... $ 5,628,649 $ 6,344,174 Equity in net assets of associates ...... $ 2,809,708 $ 3,172,074 Total income ...... $14,688,774 $19,013,027 Net income for the year...... $ 824,014 $ 1,044,540 Company’s equity in profits of associates...... $ 414,941 $ 510,011

The reconciliation of associated companies is as follows: Balance at January 1, 2012 ...... $3,568,978 Equity method ...... 438,233 Balance at December 31, 2012 ...... 4,007,211 Equity method ...... 609,643 Balance at December 31, 2013 ...... $4,616,854

F-32 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 13 - Investment properties: Amount Balance at January 1, 2012 Cost...... $11,623,756 Accumulated depreciation ...... (1,520,963) 10,102,793 Acquisitions ...... 2,489,817 Disposals ...... (80,434) Depreciation ...... (152,089) Balance at December 31, 2012 12,360,087 Acquisitions ...... 2,094,424 Disposals ...... (60,386) Depreciation ...... (160,339) Balance at December 31, 2013 ...... $14,233,786

Investment properties include shopping malls, works in progress and other land intended for construction of future shopping malls. In May 2008, the Company sold its interest in the shopping malls in Mérida, Yucatán and Puerto Vallarta, Jalisco to a Trust set up for these purposes. In accordance with IFRS 10, this Trust was considered a structure entity; therefore, the assets and liabilities pertaining to this trust were consolidated in the corresponding captions. The fair value of the investment properties at December 31, 2013 total $35,561,678. Revenue from leasing of investment properties is described in Note 26. At December 31, 2013 and 2012, the Company holds the following accounts receivable under non cancelable agreements: December 31, 2012 2013 Up to one year ...... $ 1,317,453 $ 1,528,755 From one year to five years ...... 5,913,028 7,241,391 More than five years ...... 4,742,195 5,807,530 Total...... $11,972,676 $14,577,676

The operating costs directly related to the income from the leasing of investment property is comprised as follows: December 31, 2011 2012 2013 Personnel compensation and benefits...... $ 51,162 $ 48,877 $ 54,283 Advertising ...... 61,678 70,449 82,133 Real estate taxes and water ...... 45,918 46,985 57,273 Electrical power and utilities ...... 13,287 5,670 16,362 Services contracted ...... 5,792 6,478 5,936 Other expenses ...... 5,627 10,058 17,012 Travel expenses ...... 3,175 3,505 4,007 Rent of equipment...... 29,955 12,550 2,350 Repairs and maintenance ...... 277,970 381,816 381,344 Total...... $494,564 $586,388 $620,700

F-33 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 14 - Property, furniture and equipment - net:

Buildings Furniture Works and and Leasehold Computer Transportation in Land structures equipment improvements equipment equipment progress Total At January 1, 2012 Cost ...... 3,350,502 16,025,737 7,018,837 2,101,687 2,634,911 155,017 1,152,314 32,439,005 Accumulated depreciation ...... — (2,643,869) (4,143,551) (853,092) (2,398,208) (80,880) — (10,119,600) Ending balance ...... 3,350,502 13,381,868 2,875,286 1,248,595 236,703 74,137 1,152,314 22,319,405 At December 31, 2012 Beginning balance . . . . . 3,350,502 13,381,868 2,875,286 1,248,595 236,703 74,137 1,152,314 22,319,405 Acquisitions ...... 71,449 3,139,361 940,158 313,728 286,309 55,638 6,574,883 11,381,526 Disposals...... (5,403) (16,470) (14,764) (84,982) (43,933) (9,363) (6,071,958) (6,246,873) Depreciation ...... — (219,447) (536,800) (109,376) (81,350) (16,522) — (963,495) Ending balance ...... 3,416,548 16,285,312 3,263,880 1,367,965 397,729 103,890 1,655,239 26,490,563 At December 31, 2012 Cost ...... 3,416,548 19,148,628 7,944,231 2,330,433 2,877,287 201,292 1,655,239 37,573,658 Accumulated depreciation ...... — (2,863,316) (4,680,351) (962,468) (2,479,558) (97,402) — (11,083,095) Ending balance ...... 3,416,548 16,285,312 3,263,880 1,367,965 397,729 103,890 1,655,239 26,490,563 At December 31, 2013 Beginning balance . . . . . 3,416,548 16,285,312 3,263,880 1,367,965 397,729 103,890 1,655,239 26,490,563, Acquisitions ...... 258,596 1,986,954 971,398 344,472 304,340 38,470 5,053,278 8,957,508 Disposals...... (42,734) (154,487) (13,560) (43,282) (1,447) (412) (4,881,537) (5,137,459) Depreciation...... — (322,661) (586,677) (139,991) (178,490) (28,530) — (1,256,349) Ending balance ...... 3,632,410 17,795,118 3,635,041 1,529,164 522,132 113,418 1,826,980 29,054,263 At December 31, 2013 Cost ...... 3,632,410 20,981,094 8,902,070 2,631,624 3,180,181 239,349 1,826,980 41,393,708 Accumulated depreciation ...... — (3,185,976) (5,267,029) (1,102,460) (2,658,049) (125,931) — (12,339,445) Ending balance ...... $3,632,410 $17,795,118 $ 3,635,041 $ 1,529,164 $ 522,132 $ 113,418 $ 1,826,980 $ 29,054,263

The balance of work in progress at the 2013 period close corresponds to sundry projects in which the Company is building stores, and remodeling existing stores.

F-34 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 15 - Intangible assets, net:

Licenses New IT and fees developments Total At January 1, 2012 Cost...... $ 739,785 $1,252,519 $ 1,992,304 Accumulated amortization ...... (457,259) (607,903) (1,065,162) Ending balance ...... 282,526 644,616 927,142 At December 31, 2012 Investments ...... 351,639 478,968 830,607 Disposals ...... Amortization ...... (87,307) (166,595) (253,902) Ending balance ...... 264,332 312,373 576,705 At December 31, 2012 Cost ...... 1,091,424 1,731,487 2,822,911 Accumulated amortization ...... (544,566) (774,498) (1,319,064) Ending balance ...... 546,858 956,989 1,503,847 At December 31, 2013 Investments ...... 103,365 491,877 595,242 Disposals ...... — — — Amortization ...... (107,102) (198,075) (305,177) Ending balance ...... (3,737) 293,802 290,065 At December 31, 2013 Cost ...... 1,194,790 2,223,363 3,418,153 Accumulated amortization ...... (651,669) (972,573) (1,624,242) Ending balance ...... $ 543,121 $1,250,790 $ 1,793,911

Note 16 - Provisions:

Bonds and compensation paid Other to employees Advertising provisions Total At January 1, 2012 ...... $ 917,585 $ 96,865 $ 377,982 $ 1,392,432 Charged to income statement ...... 2,052,109 948,985 872,071 3,873,165 Used during the year ...... (2,007,807) (960,308) (795,939) (3,764,054) At December 31, 2012 ...... 961,887 85,542 454,114 1,501,543 Charged to income statement ...... 2,248,225 957,825 926,341 4,132,391 Used during the year ...... (2,482,473) (971,537) (897,288) (4,351,298) At December 31, 2013 ...... $ 727,639 $ 71,830 $ 483,167 $ 1,282,636

Other provisions include liabilities for services rendered by consultants and maintenance of stores and offices.

F-35 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 17 - Bank Borrowings:

December 31, 2012 2013 Borrowings received by the trust F/789, mentioned in Note 13, from Credit Suisse, payable in June 2018 and bearing a fixed interest rate of 9.31%(1) ...... $ 921,456 $ 921,456 Bank borrowings in US dollars payable in January 2014 subject and interest rate of TIIE - 0.10%(2) ...... — 1,005,564 Bank borrowings in US dollars payable in March 2014 subject an interest rate of TIIE - 0.15%(3) ...... — 1,005,564 Long-term liabilities...... (921,456) (921,456) Less - Current portion ...... $ — $2,011,128

(1) At December 31, 2013 and 2012 the fair value of the borrowing received by the Trust F/789 was $928,832 and $932,625, respectively. (2) At December 31, 2013 the fair value of the borrowing payable in January 2014 was $1,003,506. (3) At December 31, 2013 the fair value of the borrowing payable in March 2014 was $1,000,071.

Note 18 - Issuance of senior notes:

Interest December 31 Maturity payable Interest rate 2012 2013 Dec 2014 Monthly TIIE at 28 days plus 0.04 points $ 4,000,000 $ 4,000,000 Aug 2018 Semiannually Fixed at 9.36% 1,000,000 1,000,000 May 2020 Semiannually Fixed at 4.22% 750,000(*) 750,000(*) May 2020 Semiannually Fixed at 8.53% 2,250,000 2,250,000 Mar 2017 Monthly TIIE at 28 days plus 0.35 points 2,100,000 2,100,000 Mar 2022 Semiannually Fixed at 7.64% 1,900,000 1,900,000 $12,000,000 $12,000,000 Less - emissions of long-term senior notes ($12,000,000 ) ($ 8,000,000 ) Current short-term portion $ — $ 4,000,000

(*) Issuance of senior notes equivalent to 169,399,100 UDIs. Maturities pertaining to the long term portion of this liability at December 31, 2013 are as follows:

Year Amount 2017 ...... $2,100,000 2018 ...... 1,000,000 2020 ...... 3,000,000 2022 ...... 1,900,000 $8,000,000

Debt convenants from senior notes require that the Company and the significant subsidiaries set out in the respective agreements comply with certain restrictions for payment of dividends, mergers, spinoffs, change of business purpose, issuance and sale of capital stock, capital investments and encumbrances. At December 31, 2013 and 2012, the Company was in compliance with the aforementioned conditions.

F-36 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The Company has contracted a ‘‘cross currency swap’’ on the issuance of unsecured notes denominated in UDIs and interest rate derivative financial instruments on the financings mentioned above. See Note 10. The fair value of issuances of senior notes is as follows:

December 31, 2012 2013 Maturity date Book Value Fair Value Book Value Fair Value Dec 2014 ...... $ 4,000,000 $ 4,000,368 $ 4,000,000 $ 4,009,530 Mar 2017 ...... 2,100,000 2,107,564 2,100,000 2,112,060 Aug 2018 ...... 1,000,000 1,176,311 1,000,000 1,153,600 May 2020 ...... 750,000 833,761 750,000 793,970 May 2020 ...... 2,250,000 2,400,995 2,250,000 2,443,229 Mar 2022 ...... 1,900,000 2,078,394 1,900,000 1,960,705 $12,000,000 $12,597,393 $12,000,000 $12,473,094

Note 19 - Employee benefits: The value of employee benefit obligations at December 31, 2013 and 2012, amounted to $128,216 and $398,645, are as follows:

December 31, 2012 2013 Pension plans ...... ($ 92,473) $ 483,675 Seniority premium ...... (51,212) (33,724) Other employee benefits ...... (254,960) (321,735) ($ 398,645) $ 128,216

The net cost for the period for the years ended on December 31, 2013 and 2012, is as follows:

December 31, 2012 2013 Pension plans ...... $110,219 ($ 1,518) Seniority premium ...... 33,652 10,687 Other employee benefits ...... 69,884 35,750 $213,755 $44,919

Pension plans The significant actuarial assumptions in nominal and real terms are as follows:

December 31, 2012 2013 Discount rate ...... 6.75% 8.00% Inflation rate...... 3.50% 3.50% Salary growth rate ...... 4.75% 4.75%

F-37 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Net cost for the period is as follows:

December 31, 2012 2013 Service cost ...... $ 22,795 $ 29,371 Interest cost - Net ...... 1,374 6,242 Labor cost settlements ...... 1,913 — Actuarial remeasurements ...... 84,137 (37,131) Net cost for the period...... $110,219 $ 1,518

The amount included as liability in the balance sheets is as follows:

December 31, 2012 2013 Defined benefit obligations ...... ($722,969) ($ 642,037) Fair value of plan assets ...... 630,496 1,125,712 Actual situation ...... (92,473) 483,675 Present value of unfunded obligation ...... — — Unrecognized prior service costs ...... — — Asset (liability) in the consolidated balance sheet ...... ($ 92,473) $ 483,675

The movement in the defined benefit obligation is as follows:

2012 2013 Beginning balance at January 1 ...... ($ 619,551) ($722,969) Service cost ...... (24,708) (29,371) Interest cost ...... (43,539) (46,064) Actuarial remeasurements ...... (131,969) 25,862 Benefits paid ...... 96,798 130,505 Ending balance at December 31 ...... ($ 722,969) ($642,037)

The movement in the liability is as follows:

2012 2013 Beginning balance at January 1 ...... ($ 17,733) ($ 92,473) Provision for the year ...... (26,083) (35,613) Company contributions ...... 35,480 540,305 Actuarial remeasurements ...... (84,137) 71,456 Ending balance at December 31 ...... ($ 92,473) $483,675

F-38 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The movement in plan assets is as follows:

2012 2013 Beginning balance at January 1 ...... $601,818 $ 630,496 Return on plan assets...... 42,164 39,823 Company contributions ...... 35,480 540,305 Amortization effects of beginning balance ...... (23,432) (22,964) Actuarial remeasurements ...... 47,832 11,269 Benefits paid ...... (73,366) (73,217) Ending balance at December 31 ...... $630,496 $1,125,712

Principal categories of plan assets at the end of the reporting period are as follows:

Fair value of plan assets at December 31, 2012 2013 Debt instruments ...... $226,979 $ 270,171 Equity instruments ...... 403,517 855,541 $630,496 $1,125,712

The expected return on plan assets represents the weighted average expected return for the different categories of plan assets. The Company’s assessment of expected yields is based on historical trends and analysts predictions on the market of assets for the life of related obligations. Seniority premium The significant actuarial assumptions in real and nominal terms are as follows:

December 31, 2012 2013 Discount rate ...... 6.75% 8.00% Inflation rate...... 3.50% 3.50% Salary growth rate ...... 4.75% 4.75% Net cost for the period is as follows:

December 31, 2012 2013 Service cost ...... $20,030 $ 24,718 Interest cost - Net ...... 991 3,457 Actuarial remeasurements ...... 12,631 (17,488) Net cost for the period...... $33,652 $ 10,687

F-39 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The amount included as liability in the consolidated balance sheet is as follows:

December 31, 2012 2013 Defined benefit obligations ...... ($183,370) ($187,862) Fair value of plan assets ...... 132,158 154,138 Actual situation ...... (51,212) (33,724) Present value of unfunded obligation ...... — — Unrecongnized prior service costs ...... — — Liability in the balance sheet ...... ($ 51,212) ($ 33,724)

The movement in the net project liability is as follows:

2012 2013 Beginning balance at January 1 ...... ($ 38,581) ($ 51,212) Company contributions ...... 23,020 28,175 Provision for the year ...... (23,020) (28,175) Actuarial remeasurements ...... (12,631) 17,488 Ending balance at December 31 ...... ($ 51,212) ($ 33,724)

The movement in the defined benefit obligation is as follows:

2012 2013 Beginning balance at January 1 ...... ($149,382) ($183,370) Service cost ...... (20,030) (24,718) Interest cost ...... (10,928) (11,608) Actuarial losses ...... (13,978) 19,469 Benefits paid ...... 10,948 12,365 Ending balance at December 31 ...... ($183,370) ($187,862)

The movement in plan assets is as follows:

2012 2013 Beginning balance at January 1 ...... $110,801 $132,158 Return on plan assets...... 7,938 8,152 Company contributions ...... 23,020 28,175 Actuarial remeasurements ...... 1,347 (1,981) Benefits paid ...... (10,948) (12,365) Ending balance at December 31 ...... $132,158 $154,139

F-40 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Principal categories of plan assets at the end of the reporting period are as follows:

Fair value of plan assets at December 31, 2012 2013 Debt instruments ...... $ 96,475 $114,061 Equity instruments ...... 35,683 40,078 $132,158 $154,139

The expected return on plan assets represents the weighted average expected return for the different categories of plan assets. The Company’s assessment of expected yields is based on historical trends and analysts predictions on the market of assets for the life of related obligations. Other employee benefits The significant actuarial economic assumptions in real and nominal terms are as follows:

December 31, 2012 2013 Discount rate ...... 6.75% 8.00% Inflation rate...... 3.50% 3.50% Salary growth rate ...... 4.75% 4.75% Net cost for the period is as follows:

December 31, 2012 2013 Service cost ...... $24,517 $ 31,867 Actuarial remeasurements ...... 26,576 16,511 Interest cost ...... 18,791 (12,628) Net cost for the period...... $69,884 $ 35,750

The amount included as liability in the consolidated balance sheet is as follows:

December 31, 2012 2013 Defined benefit obligations ...... ($ 254,960) ($ 321,735) Fair value of plan assets ...... Actual situation ...... (254,960) (321,735) Present value of unfunded obligations ...... — — Unrecognized prior service cost ...... — — Liability in the balance sheet ...... ($ 254,960) ($ 321,735)

F-41 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The movement in the net projected liability is as follows:

2012 2013 Beginning balance at January 1 ...... ($208,690) ($254,960) Provision for the year ...... (43,308) (82,703) Actuarial remeasurements ...... (26,576) 12,628 Benefits paid ...... 23,614 3,300 Ending balance at December 31 ...... ($254,960) ($321,735)

The movement in the defined benefit obligation is as follows:

2012 2013 Beginning balance at January 1 ...... ($208,690) ($254,960) Service cost ...... (24,517) (31,867) Interest cost ...... (16,172) (16,512) Actuarial remeasurements ...... (29,195) (21,696) Benefits paid ...... 23,614 3,300 Ending balance at December 31 ...... ($254,960) ($321,735)

Note 20 - Balances and transactions with related parties: During 2013 and 2012, Grupo Financiero Invex, S. A. de C. V. (Invex) provided the Company with pension plan and workers’ savings fund administration services, as well as with fiduciary services. Invex and the Company share some stockholders. Fees paid to Invex for these services totaled $1,758 and $1,769 in 2013 and 2012 respectively. At December 31, 2013 and 2012, there were no outstanding balances for these items. During 2013 and 2012, the Company contracted corporate travel services for its employees with Orion Tours, S. A. de C. V., whose General Director is Vice-Chairman of the Company’s Board of Directors. These services were contracted using market conditions. Fees paid to Orion for these services totaled $185,435 and $153,211 in 2013 and 2012 respectively. At December 31, 2013 and 2012 there were no balances pending to be paid for these items. Compensation for directors and other key members of management during the year was as follows:

December 31, 2012 2013 Short-term benefits...... $51,259 $25,641 Post-retirement benefits ...... — — Other long-term benefits ...... — — Termination benefits ...... —— Share based payments ...... —— Total...... $51,259 $25,641

Compensation paid to directors and key executives is determined by the Operations Committee, based on their performance and market trends.

F-42 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 21 - Costs and expenses by nature: The cost of sales and administration expenses are comprised as shown below:

December 31, 2011 2012 2013 Cost of merchandise ...... $34,004,014 $38,446,753 $42,914,982 Cost of distribution and logistics ...... 928,761 1,079,855 1,219,388 Personnel compensation and benefits...... 6,404,489 7,273,801 8,217,062 Services contracted ...... 1,807,476 2,139,793 2,390,845 Depreciation and amortization ...... 1,282,746 1,462,907 1,700,245 Repairs and maintenance ...... 1,136,647 1,116,724 1,322,163 Provision for impairment of loan portfolio ...... 953,242 1,076,930 1,640,312 Leases ...... 646,108 657,533 686,824 Electrical power and utilities ...... 620,625 697,806 771,380 Other(1) ...... 1,849,340 2,331,008 2,668,950 Total...... $49,633,448 $56,283,110 $63,532,151

(1) Includes insurance premiums, travel expenses, real estate taxes and other non significant expenses. Personnel compensation benefits are comprised as follows:

December 31, 2011 2012 2013 Salary and bonds...... $5,237,381 $5,827,801 $6,601,186 Commissions paid to sales staff ...... 1,029,383 1,297,673 1,441,047 Other payments ...... 137,725 148,327 174,829 $6,404,489 $7,273,801 $8,217,062

Note 22 - Other income (expenses):

December 31, 2011 2012 2013 Other income: Suppliers’ recovery ...... $ 22,126 $ 11,784 $ 8,765 VISA commissions earned ...... 18,663 38,066 55,241 Recovered amount from insurance companies ...... — 165,917 — Ticketmaster commissions earned ...... 11,515 11,838 11,369 Advertising recovery...... 16,850 16,191 21,973 Rent of logistic units...... 14,791 17,706 23,418 Write off of provisions ...... 12,000 — — Other ...... 117,931 98,242 160,521 Total other income ...... $213,876 $359,744 $281,287 Other expenses: Expenses of merchandise stolen...... $ 9,422 $ 17,062 $ 18,498 Other income - net ...... $204,454 $342,682 $262,789

F-43 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 23 - Income Tax: 23.1. The income tax is comprised as follows: December 31, 2011 2012 2013 Income tax...... $2,400,439 $2,174,364 $1,809,376 Deferred income tax ...... (44,937) 576,380 888,739 Deferred flat tax ...... 5,445 — — $2,360,947 $2,750,744 $2,698,115

23.2. The deferred tax balance is composed as follows: December 31, 2012 2013 Deferred income tax asset: Tax loss carry-forwards ...... $ 8,537 $ 418,919 Provision for impairment of loan portfolio...... 491,621 700,570 Provisions...... 621,089 342,028 Inventories ...... 106,671 110,744 Other items...... 42,053 161,337 1,269,971 1,733,598 Deferred income tax liability Installment sales - Net ...... 1,368,465 1,430,477 Real estate and property, furniture and equipment...... 3,530,130 4,212,810 Investment in associates ...... 189,227 268,875 Other items...... 456,312 972,729 5,544,134 6,884,891 Deferred income tax ...... 4,274,163 5,151,293 Asset tax recoverable...... (71,804) (65,706) Total liabilities ...... $4,202,359 $5,085,587

Deferred tax assets and liabilities are analyzed as follows: December 31, 2012 2013 Deferred tax asset: Deferred tax asset recoverable over the following 12 months ...... $1,154,953 $1,699,909 Deferred tax asset recoverable after 12 months ...... 3,069 — 1,158,022 1,699,909 Deferred tax liability: Deferred tax liability payable within the following 12 months...... 1,398,650 1,701,000 Deferred tax liability payable after 12 months...... 4,033,535 5,150,202 5,432,185 6,851,202 Asset tax recoverable...... (71,804) (65,706) Deferred tax liability (net)...... $4,202,359 $5,085,587

F-44 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Net movements of deferred tax assets and liabilities during the year are explained as follows:

Provision for Real estate impairment property, Investment Unamortized of furniture in tax loss loan Installment and associated carry-forwards portfolio Provisions sales equipment Inventories companies Other Total At January 1, 2012 . . $ 77,600 $421,721 $ 572,555 ($ 1,251,562)($ 3,059,584) ($123,106) ($ 116,761) ($ 218,646)($ 3,697,783) Charged / credited to the statement of income ...... (69,062) 69,901 48,540 (116,902) (470,546) 229,777 (72,466) (195,622) (576,380) At December 31, 2012...... 8,538 491,622 621,095 (1,368,464) (3,530,130) 106,671 (189,227) (414,268) (4,274,163) Charged / credited to the statement of income ...... 410,381 208,948 (117,730) (62,013) (682,680) 4,073 (79,648) (558,461) (877,130) At December 31, 2013...... $418,919 $700,570 $ 503,365 ($ 1,430,477)($ 4,212,810) $110,744 ($ 268,875) ($ 972,729)($ 5,151,293)

At December 31, 2013, the Company has unamortized tax loss carry-forwards for income tax purposes, to be indexed in the year in which they are applied, for a restated amount of:

Amortizable tax Year loss carry-forwards 2016...... $ 60 2018 ...... 17,460 2019 ...... 16,363 2020...... 11,028 2021 ...... 27,561 2022 ...... 22,257 2023 ...... 1,296,388 $1,391,117

In determining deferred income tax at December 31, 2013 and 2012, the Company applied to temporary differences, the applicable rates according to their estimated date of reversal.

F-45 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

23.3. The reconciliation of the legal income tax rate and the effective rate, stated as a percentage of the profit before income tax, is as follows:

December 31, 2011 2012 2013 Pre-tax income ...... $8,904,892 $9,949,324 $10,400,948 Statutory rate...... 30% 30% 30% Income tax at statutory rate ...... 2,671,468 2,984,797 3,120,284 Plus (less) effects of taxes of the following permanent items: Non deductible expenses ...... 5,972 6,332 14,877 Non taxable income ...... (216,255) (202,550) (161,870) Annual inflation adjustment ...... 79,708 72,157 115,895 Share of profit of associates...... (91,418) (124,482) (153,003) Investment property, furniture and equipment - net ...... (16,709) 93,550 (183,190) Other permanent items ...... (71,819) (79,060) (54,878) Income tax in the income statement ...... $2,360,947 $2,750,744 $ 2,698,115 Effective income tax rate ...... 27% 28% 26%

23.4 Applicable tax rates In October 2013 the Chamber of Mexican Parliament, passed major reforms to our tax framework effective on January 1, 2014. Main changes in tax laws and the impact it will have on our operations are described below: In 2002, the Income Tax Law in effect at that time was repealed and a new one was issued. Under this new tax law, income could be accumulated under installment sales, rather than when collected. The above scheme allowed the company to accumulate tax amounts actually received and beginning with this new tax law, the Company will now have to pay the tax from the time of sales, regardless of when collected, which will impact the cash flow of the Company because the tax must be paid even if the cash is not collected (as in a credit card transaction). Regarding the installment sales made until December 31, 2013, the tax authorities gave companies three years to pay the amounts that would be accumulated in 2014, 2015 and 2016. The current tax law eliminates the immediate deduction of fixed assets and limits deductions to pension contributions, exempt wages, car leasing and social security contributions. Eliminating these deductions, especially the immediate deduction of fixed assets, will also impact the cash flow that the Company will allocate to the payment of taxes. Now, the Company can no longer rapidly deduct investments in new stores, remodels and other assets, but the Company must do so within normal limits established in the new Income Tax Law, which are significantly longer. This law also modifies the procedure for determining the tax base for the Employees’ Profit Sharing (PTU). The Company does not anticipate a significant impact from this change. An income tax rate beginning in 2014 was also established in the tax law of 30%, in contrast to the previously stated rates of 30%, 29% and 28% for 2013, 2014 and 2015, respectively. Also, the October 1, 2007 flat tax was repealed in these tax reforms; however, the Company did not recognized any current or deferred flat tax and therefore the repeal had no effect in the financial statements of the Company. The Company also appealed to the Law on Cash Deposits which had no effect on the results of the Company because this tax is credited against the income tax payable.

F-46 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Note 24 - Stockholders’ equity: 24.1. Capital stock at December 31, 2013, 2012, is comprised of the follows:

Minimum fixed Capital 1,144,750,000 Series ‘‘1’’ shares with no par value, entirely subscribed and paid in 197,446,100 Series ‘‘C-1’’ shares with no par value, entirely subscribed and paid in...... $ 269,112 Cumulative inflation increase at December 31, 1997 ...... 3,105,170 Total...... $3,374,282

At the March 7, 2013 Annual Ordinary General Stockholders’ Meeting, the stockholders approved dividends to be paid out of the After Tax Earnings Account (CUFIN for its acronym in Spanish) in the amount of $979,803 ($899,271 in 2012), which were paid on May 2, 2012 and October 19, 2012, through the securities depository firm. On November 15, 2013, the Board of Directors approved the payment of dividends to be paid out of the After Tax Earnings Account (CUFIN) in the amount of $ 1,610,635 which was paid on December 5th of the same year, through the securities depository firm. In accordance with IAS 29 ‘‘Hyperinflation’’, an entity must recognize the effects of inflation in the financial information when an economy accumulates 100% inflation in a three - year period. Mexico was considered a hyperinflationary economy until 1997, and for that reason the Company recognized all the cumulative inflation effects up to that year. A group of non public investors of approximately of 10 people own 80,897,219 shares of the Company’s series 1 share and 11,314,218 shares of series C-1 shares for a total of 6.87% of all outstanding shares. Additionally, the entities and the trust mentioned below own approximately 79% of all outstanding shares of series-1 common stock as of December 2013 and 2012.

Trust Shares % Equity BBVA Bancomer ...... 76,047,567 6% Banco Invex Fid. 0387 ...... 101,119,450 9% SIS Segaintersettle AG ...... 123,000,000 11% Banco Invex Fid. 0327 ...... 217,169,450 19% Banamex Div. Fiduciaria ...... 387,887,325 34% 79%

24.2 Capital reserves Capital reserves are comprised as follows:

December 31, 2011 2012 2013 Legal reserve...... $ 582,500 $ 582,500 $ 582,500 Reserve for acquisition of own shares...... 467,432 467,432 467,432 Investment reserve ...... 94,319 94,319 94,319 Actuarial losses of employee benefits ...... — — — Reserve for valuation of derivative financial instruments ...... (202,762) (107,736) (41,332) $ 941,489 $1,036,515 $1,102,919

F-47 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

The reconciliation of the reserve for valuation of derivative financial instruments is as follow:

At January 1, 2012 Reserve ...... ($202,762) Charged to income ...... 95,026 At December 31, 2012 ...... ($107,736) Charged to income ...... $ 66,404 At December 31, 2013 ...... ($ 41,332)

The Company’s Stockholders have authorized a reserve for the acquisition of its own shares. The Company must comply with its bylaws and the provisions of the Securities Market Law, in order to acquire its own shares. According to the Corporations Law, a minimum of 5% must be set aside from net earnings for the period in order to meet the legal reserve until funds in reserve reaches 20% of the capital stock. The legal reserve can be capitalized, but must not be distributed unless the Company is dissolved, and the difference must be made up if the reserve falls below 20% of capital stock for any reason. 24.3. The balances of the tax accounts of stockholders’ equity are:

December 31, 2011 2012 2013 Capital contributions account ...... $ 26,232,926 $ 27,237,938 $ 27,291,660 After-tax earnings account (CUFIN) ...... 46,720,449 52,794,410 57,077,812 Reinvested after tax earnings account (CUFINRE)...... 113,075 117,101 121,750 Total...... $ 73,066,450 $ 80,149,449 $ 84,491,222 Average weighted number of ordinary shares to determine the basic earnings per share at December 31, 2013 and 2012 . . . . $1,342,196,100 $1,342,196,100 $1,342,196,100

24.4. Tax provisions related to stockholders’ equity: Dividends are free of income tax if paid out from the After Tax Earnings Account (CUFIN). Any dividend paid in excess of the CUFIN is taxable at a rate fluctuating between 4.62% and 7.69%, if paid out from the reinvested CUFIN (CUFINRE). Dividends in excess of the after tax earnings account (CUFIN) are subject to 42.86% tax if paid in 2013. Tax incurred is payable by the Company and may be credited against income tax for the period and for the following two periods or, if applicable, against the flat tax for the period. Dividends paid from previously taxed earnings are not subject to any tax withholdings or additional taxes. In the event of a capital reduction, any excess of stockholders’ equity over the capital contributions account is given the same tax treatment as dividends. Note 25 - Contingencies and commitments: 25.1 Contingencies The Company is party to a number of lawsuits and claims arising from the normal course of its operations. Management does not expect these lawsuits will have a significant adverse effect on its consolidated financial statements. 25.2 Commitments The Company has granted stand-by letters to certain vendors in the amount of $ 491,432. These letters are used by the vendors to obtain the financing required to satisfy production requests and/or the acquisition of merchandise ordered by the Company. In the event of default by vendors with the financial institutions that

F-48 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013 granted the financing, the Company would be obligated to settle the aforementioned amount. At the date of issuance of the consolidated financial statements, the Company has not been informed of any default of such vendors. 25.3 Capital investments The Company has entered into a number of agreements with third parties, for the acquisition of real estate, in connection with which $38,000 has yet to be settled uder the terms established in the contracts.

Note 26 - Operating leases: The Company as lessee. The Company has entered into a number of operating lease agreements for 17 stores, 5 Duty Free and 22 commercial spaces for the boutiques it operates. Additionally, it has entered into lease agreements for tractor trailers and trailers for delivery of merchandise to the stores, and has also acquired computer equipment and servers. The lease terms are between one and five years. All operating lease agreements for more than 5 years contain clauses for a review of market rent every five years. The Company does not have an option to buy the space leased at the date of expiration of the lease terms. The following table summarizes the lease expenses recognized in:

December 31, 2011 2012 2013 Fixed rent ...... $178,966 $218,208 $243,928 Variable rent ...... 279,847 278,479 286,638 $458,813 $496,687 $530,566

The following table summarizes the minimum annual payments stipulated in lease agreements entered into at terms of over one year:

Year ending December 31, Amount 2014...... $ 315,445 2015...... 351,721 2016...... 392,169 2017...... 437,268 2018 and thereafter...... 1,637,317 Total minimum payments agreed...... $3,133,920

The Company as lessor. Operating leases are related to the leasing of commercial space. The lease periods range from one to five years. All operating lease agreements for more 5 years contain clauses for the review of market rent every two years. The agreements do not establish the option for tenants to buy the space leased at the date of expiration of the lease terms. Following is an analysis of lease income:

December 31, 2011 2012 2013 Fixed rent ...... $1,112,235 $1,368,742 $1,742,569

F-49 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

Following is an analysis of the minimum annual payments agreed with the lessees in the lease agreements entered into at terms of over one year:

Year ending December 31, Amount 2014...... $1,829,697 2015...... 1,912,034 2016...... 1,988,515 2017...... 2,058,113 Total minimum payments agreed...... $7,788,359

Note 27 - Segment information: Information per segment is reported on the basis of the information used by the Operations Committee in making strategic and operating decisions. An operating segment is defined as a component of an entity in which there is separate financial information which is evaluated on a regular basis. Income from the Company’s segments arises mainly from the sale of products at retail (commercial segment), and from real estate activities involving the renting of commercial space (real estate segment). IFRS 8 requires disclosure of assets and liabilities pertaining to one segment, if measurement is regularly provided to the decision making body; however, with respect to the Company, the Operations Committee only evaluates the performance of the operating segments based on an analysis of income and operating profit, but not of each segment’s assets and liabilities. The income reported by the Company represents income generated by external customers, as there are no intersegment sales. Commercial segment Due to the fact that the Company specializes in retail sales of merchandise to the general public, it has no main customers that would account for a significant percentage of total sales, and does not rely on a particular product that would represent 10% of consolidated sales. Also, the Company operates with a broad base of different size vendors, and therefore does not rely on any particular vendor as concerns the products it sells. Real estate segment The Company owns or co-owns, manages and leases commercial space located in shopping malls throughout Mexico. This segment is engaged in the design, expansion and remodeling of stores, shopping malls and other facilities. Other Segment Income from other services such as commissions for insurance, travel agency, etc. is included in this segment.

F-50 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

27.1. Income and results per segment The Company reports its results for each operating segments at the income, costs and expenses, and operating profit level. The other income statement items are not assigned, as they are managed on a corporate level. The following is an analysis of income and results per segment to be reported:

Commercial Real estate Other Consolidated December 31, 2013 Net revenue ...... $ 71,525,764 $2,579,680 $ — $ 74,105,444 Costs and expenses ...... (62,618,693) (913,458) — (63,532,151) Other Income ...... 262,789 262,789 Operating income...... 8,907,071 1,666,222 262,789 10,836,082 Financing costs, gain on investments, exchange fluctuations and results of associated companies . . (435,134) Income tax ...... (2,698,115) Consolidated net income ...... $ 8,907,071 $1,666,222 $262,789 $ 7,702,833 December 31, 2012 Net revenue ...... $ 64,130,650 $2,115,854 $ — $ 66,246,504 Costs and expenses ...... (55,435,529) (847,581) — (56,283,110) Other Income ...... 342,682 342,682 Operating income...... 8,695,121 1,268,273 342,682 10,306,076 Financing costs, gain on investments, exchange fluctuations and results of associated companies . . (356,752) Income tax ...... (2,750,744) Consolidated net income ...... $ 8,695,121 $1,268,273 $342,682 $ 7,198,580 December 31, 2011 Net revenue ...... $ 56,925,768 $1,731,041 — $ 58,656,809 Costs and expenses ...... (48,882,474) (750,974) — (49,633,448) Other Income ...... $204,454 204,454 Operating income...... 8,043,294 980,067 204,454 9,227,815 Financing costs, gain on investments, exchange fluctuations and results of associated companies . . (322,923) Income tax ...... (2,360,947) Consolidated net income ...... $ 8,043,294 $ 980,067 $204,454 $ 6,543,945

The information disclosed in each segment is shown net of eliminations corresponding to transactions conducted between Group companies. Inter-segment results and transactions are eliminated at the consolidated level, forming part of the Group’s final consolidation. This form of presentation is the same as that used by management in its periodic review processes of the Company’s performance. Taxes and financing costs are viewed at the Group level and not within the reporting segments. As a result, this information is not shown in each reporting segment. Operating income is the key performance metric for management, which is reported on a monthly basis to the Operations Committee.

F-51 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Consolidated Financial Statements December 31, 2011, 2012 and 2013

27.2. Geographic information All income obtained from third parties is realized in Mexico and therefore, no information is disclosed per geographic segment.

Note 28 - Authorization of issuance of consolidated financial statements: The consolidated financial statements were authorized for issuance on February 14, 2014 by the Board of Directors, and are subject to approval by the Stockholders Meeting. *****

F-52 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013

F-53 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Unaudited Condensed Consolidated Interim Balance Sheets As of June 30, 2014 and December 31, 2013 Thousands of pesos

Note June 30, 2014 December 31, 2013 (Unaudited) Assets Current assets: Cash and cash equivalents...... $ 553,458 $ 1,618,060 Loan portfolio - Net...... 6 18,793,664 21,436,709 Value added tax recoverable - Net ...... 1,091,775 1,043,057 Income tax recoverable - Net ...... 806,745 814,611 Other accounts receivable - Net ...... 542,815 597,059 Inventories ...... 12,730,921 11,421,969 Derivative financial instruments ...... — 7,759 Prepaid expenses ...... 1,140,721 617,387 Total current assets ...... 35,660,099 37,556,611 Non-Current assets: Long-Term loan portfolio - Net ...... 6 7,262,284 6,744,558 Other accounts receivable - Net ...... 160,295 141,132 Derivative financial instruments ...... 308,361 312,114 Investment in associates ...... 4,895,581 4,616,854 Intangibles assets - Net ...... 1,783,993 1,793,911 Investment properties - Net ...... 7 15,077,688 14,233,786 Property, furniture and equipment - Net...... 8 29,589,636 29,054,263 Employee benefits - Net ...... 479,216 483,675 Total ...... $95,217,153 $94,936,904 Liabilities and stockholders’ equity Current liabilities: Suppliers...... $10,314,813 $11,454,374 Provisions...... 1,411,037 1,282,636 Deferred income...... 1,462,914 1,541,032 Creditors...... 4,935,013 5,189,318 Bank borrowings ...... 9 600,000 2,011,128 Senior notes ...... 10 4,000,000 4,000,000 Derivative financial instruments ...... 80,471 147,983 Total current liabilities ...... 22,804,248 25,626,471 Long-term bank borrowings ...... 9 921,456 921,456 Long-term Senior notes ...... 10 8,000,000 8,000,000 Derivative financial instruments ...... 143,511 120,599 Employee benefits - Net ...... 392,882 355,459 Deferred income tax ...... 5,395,960 5,085,587 Total liabilities ...... 37,658,057 40,109,572 Stockholders’ equity: Capital stock...... 14 3,374,282 3,374,282 Retained earnings: Prior years’...... 50,348,239 42,645,852 For the period...... 2,689,167 7,701,930 Capital reserves ...... 1,143,767 1,102,919 Stockholders’ equity attributable to parent company ...... 57,555,455 54,824,983 Non-Controlling interests...... 3,641 2,349 Total stockholders’ equity ...... 57,559,096 54,827,332 Total ...... $95,217,153 $94,936,904

The accompanying notes are an integral part of these consolidated financial statements.

F-54 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Unaudited Condensed Consolidated Interim Statements of Comprehensive Income, Expenses by Function For the three and six-months ended June 30, 2014, and 2013 Thousands of pesos, unless earnings per share

Six months Three months ended June 30, June 30, Note 2014 2013 2014 2013 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating revenue: Net sales of merchandise ...... $29,537,614 $27,415,598 $16,758,729 $15,479,569 Interest income from customers...... 4,029,899 3,619,019 2,195,359 2,025,593 Leasing of investment property ...... 1,307,067 1,117,287 651,884 558,311 Services...... 31,029 42,226 20,158 30,547 Total revenue ...... 34,905,609 32,194,130 19,626,130 18,094,020 Costs and expenses: Cost of sales ...... 11 20,825,736 19,279,245 11,856,191 10,805,736 Administrative expenses...... 11 10,411,987 9,133,220 5,463,541 4,735,145 Total costs and expenses ...... 31,237,723 28,412,465 17,319,732 15,540,881 Other income - Net ...... 12 151,639 119,652 144,273 75,450 Operating income ...... 3,819,525 3,901,317 2,450,671 2,628,589 Finance costs ...... (507,451) (506,137) (264,796) (259,703) Finance income...... 50,263 77,363 26,714 30,522 Foreign exchange (loss) gain - Net ...... 6,648 (3,884) 7,683 (16,119) Share of profits of associates...... 268,119 278,350 197,267 135,271 Profit before income tax ...... 3,637,104 3,747,009 2,417,539 2,518,560 Income taxes...... 13 946,645 931,120 677,053 667,563 Consolidated net income ...... 2,690,459 2,815,889 1,740,486 1,850,997 Other items comprising comprehensive income, net of tax: Items that will be reclassified to income Cash flow hedges ...... 40,848 31,000 (14,780) 23,724 Other movements in equity ...... 457 — 457 — Consolidated comprehensive income ...... $ 2,731,764 $ 2,846,889 $ 1,726,163 $ 1,874,721 Net income attributable to: Owners of the parent ...... $ 2,689,167 $ 2,815,397 $ 1,741,107 $ 1,850,867 Non-controlling interests ...... 1,292 492 (621) 130 $ 2,690,459 $ 2,815,889 $ 1,740,486 $ 1,850,997 Basic and diluted earnings per share...... $ 2.00 $ 2.10 $ 1.30 $ 1.38 Comprehensive income attributable to: Owners of the parent ...... $ 2,730,472 $ 2,846,397 $ 1,726,784 $ 1,874,591 Non-controlling interests ...... 1,292 492 (621) 130 $ 2,731,764 $ 2,846,889 $ 1,726,163 $ 1,874,721 Basic and diluted earnings per share...... $ 2.03 $ 2.12 $ 1.29 $ 1.40

The accompanying notes are an integral part of these consolidated financial statements.

F-55 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Unaudited Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity For the six-months ended June 30, 2014 and 2013 Thousands of pesos

Total stockholders’ equity attributable to the Non Total Capital Retained Capital owners of the controlling stockholders’ stock earnings reserves controlling co. equity equity Balances at December 31, 2012 ...... $3,374,282 $45,116,886 $1,036,515 $49,527,683 $2,027 $49,529,710 Comprehensive income: Net income ...... 2,815,397 2,815,397 492 2,815,889 Cash flow hedges net of tax . . . 31,000 31,000 — 31,000 Total comprehensive income . . . — 2,815,397 31,000 2,846,397 492 2,846,889 Transactions with owners: Dividends paid at $0.72 pesos per share ...... (979,803) (979,803) — (979,803) Total transactions with stockholders ...... (979,803) (979,803) — (979,803) Balances at June 30, 2013 . . . . . $3,374,282 $46,952,480 $1,067,515 $51,394,277 $2,519 $51,396,796 Balances at December 31, 2013 ...... $3,374,282 $50,347,782 $1,102,919 $54,824,983 $2,349 $54,827,332 Comprehensive income: Net income ...... 2,689,167 2,689,167 1,292 2,690,459 Other movements in equity . . . . 457 457 457 Cash flow hedges net of tax . . . 40,848 40,848 — 40,848 Total comprehensive income . . . 2,689,624 40,848 2,730,472 1,292 2,731,764 Balances at June 30, 2014 . . . . . $3,374,282 $53,037,406 $1,143,767 $57,555,455 $3,641 $57,559,096

The accompanying notes are an integral part of these consolidated financial statements.

F-56 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Unaudited Condensed Consolidated Interim Cash Flow Statements For six-months ended June 30, 2014, and 2013 Thousands of pesos

Six months ended June 30, 2014 2013 (Unaudited) (Unaudited) Operations Profit before income tax ...... $ 3,637,104 $ 3,747,009 Adjustment from items not implying cash flows: Depreciation and amortization included in costs and expenses ...... 933,611 829,034 Provision for impairment of loan portfolio...... 1,160,055 721,029 Share of profit of associates ...... (268,119) (278,350) (Gain) on sale of property, furniture and equipment ...... (56,065) (4,796) Net cost for the period of labor obligations ...... 55,645 60,912 Interest earned ...... (1,985,296) (1,703,877) Accrued interest expense ...... 505,633 502,678 345,464 126,630 (Increase) decrease in: Interest earned from customers ...... 1,840,024 1,571,673 Loan portfolio...... 1,578,594 (954,092) Inventories ...... (1,308,952) (465,234) Value added tax recoverable ...... (48,718) (253,777) Other accounts receivable ...... 31,562 458,822 Income tax recoverable ...... 720,328 (69,103) Prepaid expenses ...... (515,574) (290,070) Long-Term loan portfolio...... (517,727) (155,426) Other long-Term accounts receivable ...... (19,162) (22,183) Deferred income...... (78,118) (79,187) Suppliers ...... (1,139,560) (356,118) Creditors ...... (233,744) 143,468 Taxes paid...... (1,348,732) (1,249,162) Provisions ...... 128,401 (143,957) Employee benefits paid ...... (13,763) (16,943) Net cash flows provided by operating activities...... 3,057,427 1,992,350 Investment activities Gain on investments...... 50,263 77,363 Acquisition of investment property and property, furniture and equipment . . (2,154,601) (2,322,744) Sale of property, furniture and equipment ...... 88,771 90,920 Investment in new IT developments ...... (169,138) (278,631) Net cash flows provided by investment activities ...... (2,184,705) (2,433,092) Cash (insufficiency) surplus to be used in financing activities ...... 872,722 (440,742) Financing activities Bank borrowings paid ...... (2,011,128) — Dividends paid ...... — (590,496) Bank borrowings ...... 600,000 — Interest paid ...... (526,196) (525,569) Net cash flows provided by financing activities...... (1,937,324) (1,116,065) Decrease in cash and cash equivalents ...... (1,064,602) (1,556,807) Cash and cash equivalents at beginning of year...... 1,618,060 2,915,823 Exchange loss on cash and cash equivalents ...... — — Cash and cash equivalents at end of year...... $ 553,458 $ 1,359,016

The accompanying notes are an integral part of these consolidated financial statements.

F-57 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013

Thousands of pesos, unless otherwise specified

Note 1 - General information: El Puerto de Liverpool, S.A. B. de C.V. and subsidiaries (‘‘the Company’’) operate a chain of department stores, founded in 1847, engaged in selling a broad variety of products such as clothes and accessories for men, women and children, household articles, furniture, cosmetics and other consumer products. The Company is registered on the Mexican Stock Exchange and has an important presence in Mexico City and in 30 of the 32 states in Mexico. The Company operated a total 97 department stores, 74 under the name of Liverpool, 23 under the name Fábricas de Francia, 5 Duty Free stores and 39 specialized boutiques. In 2014, a new store commence operations: Querétaro, Querétaro. The Company grants its customers financing through the ‘‘Liverpool Credit Card’’, with which customers can make purchases exclusively at Company stores. Additionally, the Company offers the ‘‘Liverpool Premium Card (LPC)’’, with which cardholders can acquire goods and services at both stores and boutiques pertaining to the chain, and at any establishment affiliated to the VISA system worldwide. During 2011, the Company began offering a third card the‘‘Galerías Fashion Card’’, which closely resembles the LPC. Additionally the Company is a partner, stockholder or co-owner of shopping malls and holds an interest in 22 different malls known as ‘‘Galerías’’, through which it leases commercial space to tenants engaged in a broad number of businesses. The Company’s head quarters and main place of business is: Mario Pani 200 Col. Santa Fe, Cuajimalpa México, D.F. C.P. 05348 These condensed interim financial statements have been reviewed, not audited.

Note 2 - Summary of significant accounting policies: 2.1 Basis of preparation These condensed interim financial statements for the six months ended 30 June 2014 have been prepared in accordance with IAS 34, ‘Interim financial reporting’. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2013, which have been prepared in accordance with IFRSs. In the opinion of management, all normal and recurring adjustments considered necessary for a fair statement of the results for the interim period have been included. 2.2 Accounting policies The accounting policies adopted are consistent with those of the previous financial year except as described below: i) The company has adopted IFRIC 21 ‘Levies’. IFRIC 21 addresses the accounting for a liability to pay a levy if that liability is within the scope of IAS 37 ‘Provisions’. The interpretation addresses what the obligating event is that gives rise to pay a levy, and when should a liability be recognized. The group is not currently subject to significant levies. The adoption of the interpretation has had no significant effect on the financial statements for earlier periods and on the interim financial statements for the period ended 30 June 2014. The group does not expect IFRIC 21 to have a significant effect on the results for the financial year ending 31 December 2014.

F-58 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 ii) Other amendments to IFRSs effective for the financial year ending December 31, 2014 are not expected to have a material impact on the group. iii) Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. See note 13. 2.3 New accounting pronouncements effective from January 1, 2014 or later Following are the new pronouncements and amendments issued and effective from January 1, 2014 that have not been early adopted by the Company. – IAS 36, ‘‘Impairment of Assets’’. In May 2013, the International Accounting Standards Board (IASB) amended IAS 36 to require disclosure of information on the recoverable amount of impaired assets if the amount is calculated based on the method of fair value less costs to sell. – IFRS 9, ‘‘Financial Instruments’’ IFRS 9 was issued in November 2009 and contains the requirements for the classification and measurement of financial assets. Requirements for financial liabilities were included as part of IFRS 9 in October 2010. IFRS 9 is the first standard issued as part of the project to replace IAS 39. IFRS 9 retains and simplifies both types of measurement models and establishes two main categories of financial assets: amortized cost and fair value. The basis of classification depends on the business model of the Company and the characteristics of the contractual cash flows of the financial asset. The guidance set forth in IAS 39 for impairment of financial assets and hedge accounting continues to apply. This amendment is mandatory for the Company from January 1, 2018. IAS 32, ‘‘Financial instruments: Presentation’’ On December 2011, the IASB amended IAS 32. Such changes represent the application guidelines and clarify some of the requirements for offsetting financial assets and financial liabilities in the statement of financial position. This modification is mandatory for the Company from January 1, 2014. IAS 39, ‘‘Financial Instruments: Recognition and Measurement’’ On June 2013 the IASB amended IAS 39 to clarify that there is no need to discontinue hedge accounting upon the novation of a derivative hedging instrument, provided certain conditions are present. For the Company, this amendment applies to annual periods beginning on or after January 1, 2014. IFRS 15, ‘‘Revenue from contracts with customers’’ IFRS 15 ‘‘Revenue from contracts with customers’’ addresses the deficiencies in the previous revenue recognition standard, establishing a broad and solid framework for the recognition, measurement and disclosure of revenue. In particular, IFRS 15 improves the comparability of revenue from contracts with customers, reducing the need for interpretative guidance in the future for specific industries to address emerging issues of revenue recognition, and provides more useful information through improved disclosure requirements. IFRS 15 establishes a general framework for determining the moment to recognize revenue and the amount of revenue recognized. The basic principle of this framework is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. It is expected that IFRS 15 will have little effect, if any, on the amount and timing of recognition of revenue. For other contracts, such as contracts for long-term service agreements and multiple elements, IFRS 15 could lead to some changes, either in the amount or in the temporary distribution of income recognized by a company. At the date of the financial statements the Company’s Directors are in the process of quantifying the effects of the adoption of the aforementioned new standards and amendments. There are no other standards, amendments and interpretations issued but not yet in force that could have a significant impact on the Company.

F-59 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 Note 3 - Risk management: The main risks to which the Company is exposed are:

3.1. Real estate risk

3.2. Market risks 3.2.1. Exchange rate risk 3.2.2. Interest rate risk 3.2.3. Inflation risk

3.3. Financial risks 3.3.1. Liquidity risk 3.3.2. Credit risk 3.3.3. Capital risk The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the company’s annual financial statements as of December 31, 2013. There have been no changes in the risk management area or in any risk management policies since the year end. 3.3.1. Liquidity risk The following table shows the contractual maturities of the Company’s financial liabilities according to the expiration periods. The table was prepared on a cash flow basis without discounting, from the first date on which the Company will be required to pay. The table includes interest and the main cash flows.

Less than Between 3 months Between More than 3 months and 1 year 1 and 5 years 5 years June 30, 2014 Senior notes ...... $ 114,745 $4,418,058 $5,577,435 $5,203,903 Bank borrowings ...... 621,977 64,817 1,138,546 Derivative financial instruments ...... 80,471 143,511 Standby letters ...... 67,601 495,444 230,083 Suppliers and creditors ...... 11,728,159 4,683,066 249,638 $12,532,482 $9,741,856 $7,339,213 $5,203,903

3.4. Fair value estimation The financial instruments based on the following hierarchy in the statement of financial position are recorded at fair value. • Level 1 fair values are derived from prices quoted (unadjusted) in active markets for identical liabilities or assets, • Level 2 fair values are derived from indicators different from the quoted prices included in Level 1, but that include indicators that are observable directly to quoted prices or indirectly, that is to say, derived from these prices; and, • Level 3 fair values are derived from valuation techniques that include indicators for assets or liabilities that are not based on observable market information.

F-60 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 The following table presents the group’s assets and liabilities that are measured at fair value at June 30, 2014:

Book value Level 1 Level 2 Level 3 June 30, 2014 Assets arising from hedge derivative financial instruments ...... $ 308,361 $ — $ 308,361 $ — Cash and cash equivalents...... 116,580 116,580 Liabilities arising from hedge derivative financial instruments ...... (223,982) — (223,982) — Total ...... $ 200,959 $116,580 $ 84,379 $ —

Book value Level 1 Level 2 Level 3 December 31, 2013 Assets arising from hedge derivative financial instruments ...... $ 319,873 $ — $ 319,873 $ — Cash and cash equivalents...... 1,014,760 1,014,760 — — Liabilities arising from hedge derivative financial instruments ...... (268,582) — (268,582) — Total ...... $1,066,051 $1,014,760 $ 51,291 $ —

There were no transfers between Levels 1 and 2 during the period ended June 30, 2014 nor changes in valuation techniques during the period presented. 3.5. Valuation techniques used to derive Level 2 fair values Level 2, hedging derivatives comprise forward foreign exchange contracts and interest rate swaps. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. Interest rate swaps are fair valued using forward interest rates extracted from observable yield curves. The effects of discounting are generally insignificant for Level 2 derivatives.

Note 4 - Critical accounting judgments and key sources of uncertainty in estimates: The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed interim financial statements, the significant judgments made by management in applying the group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2013, with the exception of changes in estimates that are required in determining the provision for income taxes.

Note 5 - Seasonality of operations: Our business is seasonal, with a high proportion of revenues and operating cash flows generated during the fourth fiscal quarter, which includes the fall and holiday selling seasons. In addition, sales volumes in our department stores are higher during the months of May, June, November and December due to Mothers’ Day, Fathers’ Day, the ‘‘Buen Fin’’ (a weekend in late November of each year where various commercial businesses offer sales and discounts to encourage consumer spending in Mexico) and year-end holidays.

F-61 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 Note 6 - Short-term and long-term loan portfolio:

June 30, December 31, 2014 2013 Current loans ...... $24,150,091 $26,797,978 Past due loans ...... 4,056,265 3,150,296 28,206,356 29,948,274 Provision for impairment of loan portfolio...... (2,150,408) (1,767,007) $26,055,948 $28,181,267 Total short-term ...... $18,793,664 $21,436,709 Total long-term...... $ 7,262,284 $ 6,744,558

6.1. Movements in provision for impairment of loan portfolio:

June 30, December 31, 2014 2013 Balance at beginning of year...... $1,767,007 $ 1,308,691 Impairment provisions ...... 1,159,291 1,640,312 Write-offs ...... (775,890) (1,181,996) Balance at end of year...... $2,150,408 $ 1,767,007

6.2. Aging of past due balances Accounts receivable at June 30, 2014, and December 31, 2013, include past due amounts of $4,056,265 and $3,150,296 respectively. Amounts more than 30 days past due are entirely covered by the impairment provision.

Note 7 - Investment properties:

Amount Balance at December 31, 2012 ...... $12,360,087 Acquisitions ...... 2,094,424 Disposals ...... (60,386) Depreciation ...... (160,339) Balance at December 31, 2013 ...... $14,233,786 Acquisitions ...... 957,894 Disposals ...... (16,648) Depreciation ...... (97,344) Balance at June 30, 2014 ...... $15,077,688

Investment properties include shopping malls, works in progress and other land intended for construction of future shopping malls. The fair value of the investment properties at December 31, 2013 totals $35,561,678; through discontinued cash flows using a discount rate averaged 2.50%, within Level 2.

F-62 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 Revenue from leasing of investments properties is described in Note 16. At June 30, 2014 and for three and six months ended June 30, 2014 and 2013, the Company holds the following accounts receivable under non cancelable agreements:

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Up to one year ...... $ 844,302 $ 764,378 $ 422,151 $ 328,189 From one year to five years ...... 3,789,420 3,620,696 1,894,710 1,810,348 More than five years ...... 3,039,080 2,903,765 1,519,540 1,451,882 $7,672,802 $7,288,839 $3,836,401 $3,590,419

The operating costs directly related to income from the leasing of investment property is comprised as follows:

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Personnel compensations and benefits ...... $ 28,019 $ 26,610 $ 13,913 $ 13,623 Advertising ...... 54,376 39,604 26,422 18,363 Real estate taxes and water ...... 28,927 24,423 14,417 12,239 Electrical power and utilities...... 3,351 6,701 1,691 3,442 Services contracted ...... 3,121 2,814 1,846 1,562 Other expenses ...... 2,621 11,933 1,123 995 Travel expenses ...... 1,545 1,648 784 1,091 Rent of equipment ...... 1,315 1,337 653 737 Repairs and maintenance ...... 213,982 180,320 103,274 87,455 Total ...... $337,257 $295,390 $164,123 $139,507

Note 8 - Property, furniture and equipment - Net:

Buildings Furniture Works and and Leasehold Computer Transportation in Land structures equipment improvements equipment equipment progress Total At December 31, 2013 Beginning balance . . . . . $3,416,548 $16,285,312 $ 3,263,880 $ 1,367,965 $ 397,729 $ 103,890 $ 1,655,239 $ 26,490,563 Acquisitions ...... 258,596 1,986,954 971,398 344,472 304,340 38,470 5,053,278 8,957,508 Disposals...... (42,734) (154,487) (13,560) (43,282) (1,447) (412) (4,881,537) (5,137,459) Depreciation...... — (322,661) (586,677) (139,991) (178,490) (28,530) — (1,256,349) Ending balance ...... 3,632,410 17,795,118 3,635,041 1,529,164 522,132 113,418 1,826,980 29,054,263

At December 31, 2013 Cost ...... 3,632,410 20,981,094 8,902,070 2,631,624 3,180,181 239,349 1,826,980 41,393,708 Accumulated depreciation ...... — (3,185,976) (5,267,029) (1,002,460) (2,658,049) (125,931) — (12,339,445) Ending balance ...... $3,632,410 $17,795,118 $ 3,635,041 $ 1,529,164 $ 522,132 $ 113,418 $ 1,826,980 $ 29,054,263

F-63 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013

Buildings Furniture Works and and Leasehold Computer Transportation in Land structures equipment improvements equipment equipment progress Total At June 30, 2014 Beginning balance . . . . . $3,632,410 $17,795,118 $ 3,635,041 $ 1,529,164 $ 522,132 $ 113,418 $1,826,981 $ 29,054,264 Acquisitions ...... — 525,805 119,947 70,520 84,745 19,057 375,243 1,195,317 Disposals...... (1,492) (9,410) (10,958) (785) (438) (555) — (23,638) Depreciation ...... — (137,207) (299,640) (75,355) (106,808) (17,297) — (636,307) Ending balance ...... 3,630,918 18,174,306 3,444,390 1,523,544 499,631 114,623 2,202,224 29,589,636

At June 30, 2014 Cost ...... 3,630,918 21,497,490 9,011,057 2,701,358 3,264,487 257,851 2,202,224 42,565,385 Accumulated depreciation ...... — (3,323,184) (5,566,667) (1,177,814) (2,764,856) (143,228) — (12,975,749) Ending balance ...... $3,630,918 $18,174,306 $ 3,444,390 $ 1,523,544 $ 499,631 $ 114,623 $2,202,224 $ 29,589,636

The balance of work in progress at the 2014 period close corresponds to sundry projects in which the Company is building stores, and remodeling existing stores.

Note 9 - Bank borrowings:

June 30, December 31, 2014 2013 Bank borrowings received by the trust F/789, mentioned in Note 13, from Credit Suisse, payable in June 2018 and bearing a fixed interest rate of 9.31%(1) . . . . . $ 921,456 $ 921,456 Bank borrowings in US dollars payable in January 2014 subject and interest rate of TIIE - 0.10%(2) ...... — 1,005,564 Bank borrowings in US dollars payable in March 2014 subject an interest rate of TIIE - 0.15%(3)...... — 1,005,564 Bank borrowings in US dollars payable in July 2014 subject an interest rate of 3.24%...... 600,000 — 1,521,456 2,932,584 Long-term liabilities...... (921,456) (921,456) Less - Current portion ...... $ 600,000 $2,011,128

(1) At June 30, 2014, and December 31, 2013, the fair value of the loan received by the Trust F/789 was $ 934,829 and $928,832, respectively, within Level 1. (2) At December 31, 2013 the fair value of the loan payable in January 2014 was $1,003,506, within Level 1. (3) At December 31, 2013 the fair value of the loan payable in March 2014 was $1,000,071, within Level 1.

F-64 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 Note 10 - Issuance of senior notes:

Interest June 30, December 31, Maturity payable Interest rate 2014 2013 Dec 2014 Monthly TIIE at 28 days plus 0.04 points $ 4,000,000 $ 4,000,000 Aug 2018 Semiannually Fixed at 9.36% 1,000,000 1,000,000 May 2020 Semiannually Fixed at 4.22% 750,000 750,000(*) May 2020 Semiannually Fixed at 8.53% 2,250,000 2,250,000 Mar 2017 Monthly TIIE at 28 days plus 0.35 points 2,100,000 2,100,000 Mar 2022 Semiannually Fixed at 7.64% 1,900,000 1,900,000 $12,000,000 $12,000,000 Less - long-term emissions of senior notes ($ 8,000,000) ($ 8,000,000) Current short-term portion $ 4,000,000 $ 4,000,000

(*) Issuance of senior notes equivalent to 169,399,100 UDIs. At June 30, 2014 there are no significant changes in the fair value amounts compared to those published in the annual financial statements, the indicators used to estimate the fair value are consistent, and no significant changes in these. Maturities pertaining to the long term portion of this liability at June 30, 2014 are as follows:

Year Amount 2017...... $2,100,000 2018...... 1,000,000 2020...... 3,000,000 2022...... 1,900,000 $8,000,000

Debt covenants from senior notes require that the Company and the significant subsidiaries set out in the respective agreements comply with certain restrictions for payment of dividends, mergers, spinoffs, change of business purpose, issuance and sale of capital stock, capital investments and encumbrances. At June 30, 2014 and December 2013, the Company was in compliance with the aforementioned conditions. The Company has contracted a ‘‘cross currency swap’’ on the debt covenants from senior notes denominated in UDIs and interest rate derivative financial instruments on the financings mentioned above.

Note 11 - Costs and expenses by nature: The cost of sales and administration expenses are comprised as shown below:

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Cost of merchandise ...... $20,187,380 $18,723,678 $11,523,760 $10,521,384 Cost of distribution and logistics ...... 638,356 555,567 332,431 284,351 Personnel compensation and benefits ...... 4,212,370 3,841,418 2,134,512 1,949,409 Services contracted ...... 1,303,438 1,170,329 646,029 537,442 Depreciation and amortization...... 933,611 829,034 471,334 414,058 Repairs and maintenance ...... 686,574 709,361 335,885 356,531

F-65 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Provision for impairment of loan portfolio...... 1,159,291 720,149 739,008 498,411 Leases...... 372,717 336,977 186,043 171,354 Electrical power and utilities...... 395,189 369,671 206,943 193,534 Other(1) ...... 1,348,797 1,156,281 743,787 614,407 Total ...... $31,237,723 $28,412,465 $17,319,732 $15,540,881

(1) Includes insurance premiums, travel expenses, real estate taxes and other non significant expenses. Personnel compensation benefits are comprised as follows:

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Salary and bonds ...... $3,470,295 $3,125,340 $1,729,049 $1,554,467 Commissions paid to sales staff ...... 659,677 632,169 372,291 357,280 Other payments ...... 82,398 83,909 33,172 37,662 $4,212,370 $3,841,418 $2,134,512 $1,949,409

Note 12 - Other income (expenses):

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Other income: Suppliers’ recovery ...... $ 6,084 $ 20,894 $ 2,806 $11,858 VISA commissions earned...... 36,872 9,036 18,572 — Ticketmaster commissions earned...... 4,311 6,785 2,210 3,629 Advertising recovery ...... 1,477 10,996 — 10,996 Rent of logistic units ...... 12,798 8,499 6,374 5,550 Other...... 99,584 96,227 114,311 43,416 Total other income ...... $161,126 $152,437 $144,273 $75,449

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Other expenses: Expenses of merchandise stolen and others ...... $ 9,487 $ 32,785 $ — $ — Other income - Net ...... $151,639 $119,652 $144,273 $75,449

F-66 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 Note 13 - Income Tax: Income taxes in the interim periods are accrued using the income tax rate that would be applicable to expected total annual earnings. Income tax for the six and three months ended on June 30, is as follows:

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Current ...... $636,270 $664,528 $478,384 $487,376 Deferred ...... 310,375 266,592 198,669 180,187 Income tax expense ...... $946,645 $931,120 $677,053 $667,563

Interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period. The estimated average annual tax rate used for 2014 is 26%. The effective income tax rate for the six months ended June 30, 2014 and 2013 was 26% and 25%, respectively.

Note 14 - Stockholders’ equity: 14.1. Capital stock at June 30, 2014 and December 31, 2013, are comprised as follows:

Minimum fixed capital 1,144,750,000 Series ‘‘1’’ shares with no par value, entirely subscribed and paid in 197,446,100 Series ‘‘C-1’’ shares with no par value, entirely subscribed and paid in ...... $ 269,112 Cumulative inflation increase at December 31, 1997 ...... 3,105,170 Total...... $3,374,282

The company has a control group of non public investors made up of approximately of 10 person owning 80,897,219 shares of series-1 and 11,314,218 shares of series C-1 a total of 6.87% of all outstanding shares. Additionally, the societies and the trust mention below own approximately 79% of all outstanding shares of series-1 common stock as of June 30, 2014, December 31, 2013.

Percentage Number of Shares Ownership of Shareholder of Common Stock Common Stock (%) Banco Nacional de México, S.A., Institución de Banca Múltiple, Grupo Financiero Banamex—Trust No. 15228-3...... 278,691,361 20.7 Banco INVEX, S.A., Institución de Banca Múltiple, INVEX Grupo Financiero—Trust No. 0327 ...... 217,169,450 16.2 UBS—ZURICH ...... 123,165,000 9.2 Banco Nacional de México, S.A., Institución de Banca Múltiple, Grupo Financiero Banamex—Trust No. 504288-5...... 109,114,664 8.1 Banco INVEX, S.A., Institución de Banca Múltiple, INVEX Grupo Financiero—Trust No. 0387 ...... 101,119,450 7.5 BBVA Bancomer Servicios, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer—Trust No. 25078-7 ...... 76,047,567 5.7 Pictet Bank & Trust Limited ...... 57,137,573 4.3 Scotiabank Inverlat S.A., Institución de Banca Múltiple—Trust No. 11033735 ...... 36,839,656 2.7

F-67 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013

Percentage Number of Shares Ownership of Shareholder of Common Stock Common Stock (%) Pictec and Cie...... 5,434,000 0.4 Citiacciones Flexible, S.A. de C.V. Sociedad de Inversión de Renta Variable...... 2,769,555 0.2 Banco Credit Suisse (México), S.A., Institución de Banca Múltiple...... 2,076,213 0.2 Others ...... 332,631,611 24.8 Total...... 1,342,196,100 100%

Note 15 - Contingencies and commitments: 15.1 Contingencies The Company is party to a number of lawsuits and claims arising from the normal course of its operations, which Management does not expect will have a significant adverse effect on its consolidated financial statements. 15.2 Commitments The Company has granted Stand-by letters to certain vendors in the amount of $793,128. These letters are used by the vendors to obtain the financing required to satisfy production and/or the acquisition of merchandise ordered by the Company. In the event of default by vendors with the financial institutions that granted the financing, the Company would be obligated to settle the aforementioned amount. At the date of issuance of the consolidated financial statements, the Company has not been informed of any default of such vendors. 15.3 Capital investments The Company has entered into a number of agreements with third parties, for the acquisition of real estate, in connection with which $ 38,000 has yet to be settled, in the terms established in said agreements.

Note 16 - Operating leases: The Company as lessee, the following table summarizes the lease expenses recognized in June 30 2014 and 2013:

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Fixed rent ...... $144,778 $128,717 $ 72,389 $ 64,358 Variable rent ...... 125,132 127,920 62,566 63,960 $269,910 $256,637 $134,955 $128,318

The Company as lessor. The following is an analysis of lease income:

Six months ended Three months ended June 30, June 30, 2014 2013 2014 2013 Fixed rent ...... $143,837 $123,946 $71,918 $61,972

Note 17 - Segment information: Information per segment is reported on the basis of the information used by the Operations Committee in making strategic and operating decisions. An operating segment is defined as a component of an entity in which there is

F-68 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013 separate financial information which is evaluated on a regular basis. Income from the Company’s segments arises mainly from the sale of products at retail (commercial segment), and from real estate activities involving the renting of commercial space (real estate segment). IFRS 8 requires disclosure of assets and liabilities pertaining to one segment, if measurement is regularly provided to the decision making body; however, with respect to the Company, the Operations Committee only evaluates the performance of the operating segments based on an analysis of income and operating profit, but not of each segment’s assets and liabilities. The income reported by the Company represents income generated by external customers, as there are no intersegment sales. Commercial segment Due to the fact that the Company specializes in retail sales of merchandise to the general public, it has no main customers that would account for a significant percentage of total sales, and does not rely on a particular product that would represent 10% of consolidated sales. Also, the Company operates with a broad base of different size vendors, and therefore does not rely on any particular vendor as concerns the products it sells. Real estate segment The Company owns or co-owns, manages and leases commercial space located in shopping malls throughout Mexico. This segment is engaged in the design expansion and remodeling of stores, shopping malls and other facilities. Other Segment Income from other services such as commissions for insurance, travel agency, etc. is included in this segment. 17.1. Income and results per segment The Company reports its results for each of the operating segments at the income, costs and expenses, and operating profit level. The other income statement items are not assigned, as they are managed on a corporate level. The following is an analysis of income and results per segment to be reported:

Commercial Real estate Other Consolidated Six months ended June 30, 2014 Net revenue ...... $ 33,598,542 $1,307,067 $151,639 $ 35,057,248 Costs and expenses ...... (30,742,218) (495,505) — (31,237,723) Operating income ...... 2,856,324 811,562 151,639 3,819,525 Financing costs, gain on investments, exchange fluctuations and results of associated companies . . (182,421) Income tax ...... (946,645) Consolidated net income ...... $ 2,856,324 $ 811,562 $151,639 $ 2,690,459 Six months ended June 30, 2013 Net revenue ...... $ 31,076,843 $1,117,287 $119,652 $ 32,313,782 Costs and expenses ...... (27,974,407) (438,058) — (28,412,465) Operating income ...... 3,102,436 679,229 119,652 3,901,317 Financing costs, gain on investments, exchange fluctuations and results of associated companies . . (154,308) Income tax ...... (931,120) Consolidated net income ...... $ 3,102,436 $ 679,229 $161,878 $ 2,815,889

F-69 El Puerto de Liverpool, S. A. B. de C. V. and subsidiaries Notes to the Unaudited Condensed Consolidated Interim Financial Statements As of June 30, 2014, December 31, 2013 and for the three and six months ended June 30, 2014 and 2013

Commercial Real estate Other Consolidated Three months ended June 30, 2014 Net revenue ...... $ 18,974,245 $ 651,884 $144,273 $ 19,770,402 Costs and expenses ...... (17,076,675) (243,056) — (17,319,731) Operating income ...... 1,897,570 408,828 144,273 2,450,671 Financing costs, gain on investments, exchange fluctuations and results of associated companies . . (33,132) Income tax ...... (677,053) Consolidated net income ...... $ 1,897,570 $ 408,828 $144,273 $ 1,740,486 Three months ended June 30, 2013 Net revenue ...... $ 17,535,709 $ 558,311 $ 75,450 $ 18,169,470 Costs and expenses ...... (15,329,587) (211,294) — (15,540,881) Operating income ...... 2,206,122 347,017 75,450 2,628,589 Financing costs, gain on investments, exchange fluctuations and results of associated companies . . (110,029) Income tax ...... (667,563) Consolidated net income ...... $ 2,206,122 $ 347,017 $ 75,450 $ 1,850,997

The information disclosed in each segment is shown net of eliminations corresponding to transactions conducted between Group companies. Inter-segment results and transactions are eliminated a consolidated level, forming part of the Group’s final consolidation. This form of presentation is the same as that used by management in its periodic review processes of the Company’s performance. Taxes and financing costs are viewed at the Group level and not within the reporting segments. As a result, this information is not shown distributed in each reporting segments. Operating income is the key performance metric for management, which is reported on a monthly basis to the Operations Committee. 17.2. Geographic information All income obtained from third parties is realized in Mexico and therefore, no information is disclosed per geographic segment.

Note 18 - Authorization of issuance of consolidated financial statements: The consolidated financial statements were authorized for issuance on August 29, 2014 by the Board of Directors, and are subject to approval by the Stockholders Meeting.

F-70 EL PUERTO DE LIVERPOOL, S.A.B. DE C.V. Mario Pani 200 Colonia Santa Fe Delegación Cuajimalpa, 05348 Mexico City, Mexico

INDEPENDENT AUDITORS PricewaterhouseCoopers, S.C. Mariano Escobedo 573 Colonia Rincón del Bosque Delegación Miguel , 11580 Mexico City, Mexico

TRUSTEE, PAYING AGENT, REGISTRAR AND TRANSFER AGENT IRISH LISTING AGENT

Citibank, N.A 388 Greenwich Street, 14th Floor, Arthur Cox Listing Services Limited New York, New York 10013 Earlsfort Centre Attention: Global Transaction Services – El Puerto Earlsfort Terrace Liverpool, S.A.B. de C.V. Dublin 2 United States Ireland

LEGAL ADVISORS

To Liverpool as to To the Initial Purchasers as to U.S. Law U.S. Law

Skadden, Arps, Slate, Meagher & Flom LLP Cleary Gottlieb Steen & Hamilton LLP 4 Times Square One Liberty Plaza New York, New York 10036 New York, New York 10006 United States United States

To Liverpool as to To the Initial Purchasers as to Mexican Law Mexican Law

Ritch, Mueller, Heather y Nicolau, S.C. Galicia Abogados, S.C. Blvd. Manuel Ávila Camacho 24, 20th floor Blvd. Manuel Ávila Camacho 24, 7th floor Col. , 11000 Col. Lomas de Chapultepec, 11000 Mexico City, Mexico Mexico City, Mexico LISTING PARTICULARS

U.S.$300,000,000

3.950% Senior Notes due 2024

OFFERING MEMORANDUM

Joint Bookrunners and Joint Lead Managers

BofA Merrill Lynch Citigroup

October 2, 2014