quarterly financial information - walmex financiera/trimestr… · wal-mart de méxico, s.a.b. de...

Wal-Mart de México, S.A.B. de C.V. Consolidated

Ticker: WALMEX Quarter: 2 Year: 2017

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Quarterly Financial Information [105000] Management commentary.................................................................................................................................. 2

[110000] General information about financial statements ........................................................................................... 12

[210000] Statement of financial position, current/non-current ..................................................................................... 14

[310000] Statement of comprehensive income, profit or loss, by function of expense ........................................... 16

[410000] Statement of comprehensive income, OCI components presented net of tax ......................................... 17

[520000] Statement of cash flows, indirect method ...................................................................................................... 19

[610000] Statement of changes in equity - Accumulated Current .............................................................................. 21

[610000] Statement of changes in equity - Accumulated Previous ............................................................................ 24

[700000] Informative data about the Statement of financial position ......................................................................... 27

[700002] Informative data about the Income statement ............................................................................................... 28

[700003] Informative data - Income statement for 12 months ..................................................................................... 29

[800001] Breakdown of credits ......................................................................................................................................... 30

[800003] Annex - Monetary foreign currency position .................................................................................................. 32

[800005] Annex - Distribution of income by product ..................................................................................................... 33

[800007] Annex - Financial derivate instruments .......................................................................................................... 34

[800100] Notes - Subclassifications of assets, liabilities and equities ....................................................................... 40

[800200] Notes - Analysis of income and expense ....................................................................................................... 44

[800500] Notes - List of notes .......................................................................................................................................... 45

[800600] Notes - List of accounting policies .................................................................................................................. 81

[813000] Notes - Interim financial reporting ................................................................................................................... 94



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[105000] Management commentary

Management commentary [text block]

During the fi rst half of this year we del ivered broad based, sustainable and profitable growth

through operational excel lence, which has al lowed us to improve our customer’s shopping

experience and lower our cost structure so we can pass on savings to customers.

In l ine with this, price leadership has also been key to our performance, we fi rmly believe in

“Every Day Low Price” because it bui lds customer’s trust in us and it i s a clear competit ive

advantage.

We are encouraged not only by the same store sales momentum that we continue to see,

but also by the performance of eCommerce and new stores in which we are invest ing

s ignif icantly this year.

Disclosure of nature of business [text block]

Walmart de México y Centroamérica is a leading retai l sector companies in the region.

As of June 30, 2017, it operated 3,046 units, throughout 6 countries (Costa Rica, Guatemala,

Honduras, El Salvador, México, and Nicaragua), including self-service stores, membership

clubs, and pharmacies.

Walmart shares trade in the Mexican Stock Exchange since 1977; the t icker symbol i s

WALMEX .



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Disclosure of management's objectives and its strategies for meeting those

objectives [text block]

The objective of the Company is to double total sales in 10 years and to leverage operating

expenses to reinvest in the business.

Sales growth wil l come from:

Same store sales

Sales from new stores

eCommerce

Disclosure of entity's most significant resources, risks and relationships [text block]

The Company is exposed to the effects of future events that could affect the purchasing

power and/or buying habits of it s population. These events may be economic, polit ical or

social in nature and some of the most important are described below:

I . Employment and salary. Posit ive or negative changes in employment and/or real salary

levels could affect Mexico’s per capita income and, consequently, the Company’s

business performance.

I I . Changes in interest rates and exchange rates. Historically, Walmart has generated cash

surpluses in Mexico and Central America on which it earns f inancial income. A reduct ion



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in interest rates could cause a decrease in the Company’s f inancial income, which would

affect its earnings growth. However, the Company believes that a reduction in interest

rates would actual ly have a posit ive effect on its business in the medium and long -term,

s ince it would help to improve the purchasing power of it s customers.

On the other hand, exchange rate fluctuat ions tend to put upward pressure on inflat ion

and reduce the population’s purchasing power, which could ult imately hinder the

Company’s sales, in part icular, due to the purchase of import goods.

I I I . Competit ion. The reta i l sector has become very competit ive in recent years, which has led

to the need for al l the players in the market to constantly look for ways to set themselves

apart from the competit ion. This puts the Company’s market share at r i sk. Other factors

affect ing the Company’s market share could be the business expansion of its competitors

and the possible entrance of new competitors into the market.

IV. Inf lat ion. Over the last few years, inflat ion rates in Mexico and Central America have

remained at low levels. A s ignif icant increase in inflat ion rates could have a direct effect

on the purchasing power of the Company’s customers and the demand for it s products

and services.

V. Changes in government regulations. The Company is exposed to the changes in different

laws and regulations, which, after becoming effective, they could affect the Company’s

operating results, such as an impact on sales, expenses for payrol l indirect taxes and

changes in applicable rates. Currently, the level of scrut iny and discretion by the ta x

authorit ies has greatly increased. Mexican courts have changed their posit ion favoring

those authorit ies ignoring violations of form and procedure.

VI . Recent Developments. At beginning of January 2017, international and national events

have occurred, that have increased the volati l i ty of some economic indicators, creating

an environment of vulnerabil ity and uncertainty. Among the events, we can find the

possibi l i ty of the renegotiation or termination of the North American Free Trade

Agreement, possible increases in import duties or tari f fs for the export of Mexican

products, the cancelation of thi rd-party foreign investment projects previously

announced, the depreciation of the Mexican peso, the increase in the prices of gasoline,

as wel l as violent demonstrations that have affected our stores, among others. Even

though the Company’s market is internal, these events have started to have some effects

that can result in the loss of confidence by consumers and the result ing decrease of

consumption, inflat ionary pressures derived from the increases in gasoline and the



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exchange rate, possibi l i ty of general ized increase of prices of goods by suppliers and

increase in our production, operation and dist r ibution costs, al l of which in the aggregate

could have a material adverse effect on the Company’s f inancial condit ion and results of

operation. Because these events are recent, to this date we cannot define the effects

that they could have.

Disclosure of results of operations and prospects [text block]

Note: The percentages of sale growth related to Central America are determined on a

constant currency basis.

In the second quarter total revenue was strong, Walmex del ivered 9.1% growth: Mexico grew

8.6% and Central America 11.0%.

During the fi rst six months of the year, total Walmex revenues grew 8.2%, Mexico achieved a

6.8% growth and Central America 8.1%.

Our growth continues to be driven by a healthy same store sales performance.

During the second quarter, same stores sales in Mexico grew 7.2% and in Central America

6.9%. For the fi rst s ix months of the year, same store sales grew 5.7% in Mexico and 4.4% in

Central America.

We have been able to maintain the quality of our growth. Our two year stack for same store

sales in Mexico was 15.1% for the quarter and 14.3% for the fi rst half of the year.

In Central America we achieved 11.0% same store sales on a two year stack dur ing the

second quarter and 8.9% in the fi rst s ix months of the year.

Our growth has been consistent and sustainable across al l the countries and regions in which

we operate.

In Central America al l countries had a strong performance; Nicaragua was the country with

the highest same store sales growth.



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Performance was also consistent across regions in Mexico; the Northern region of the

country had the highest same store sales growth, fol lowed by the Central region. We also

saw a sol id performance in the Southern and Metro regions.

The way we are delivering each format’s value proposit ion and the consistency of our

execution has allowed us to maintain our customer’s preference.

Walmart Supercenter delivered the highest same store sales growth during the quarter. A

sol id execution of seasonal events such as Easter Week and a successful start of the summer

campaign “Precios Chaparros” have been key to the format’s sol id performance.

Sam’s Club continues to grow st rong despite a challenging comparison base. Dur ing the

quarter Sam’s celebrated its annual Open House event which is fundamental in our priority

of growing the member base. We have been t ransforming Sam’s Club, with unique

merchandise for both business and savings members, increased omnichannel access, and a

more sophist icated use of data analyt ics.

In Bodega Aurrera the focus on “Every Day Low Cost” and productivity are al lowing us to

further improve price competit iveness. Supported by the “Me pongo a las vivas” campaign,

we increased our price aggressiveness in basic products and high value items which has

been greatly appreciated by customers.

Superama delivered a lower growth, pr imari ly because of an in -stock issue experienced in

the quarter and a negative calendar effect. We continue to offer customers a compell ing

value proposit ion through high quality products, great service and differentiated events.

We are dr iving healthy sales growth across al l merchandise divis ions.

During the quarter, Apparel del ivered the highest growth, fol lowed by our core division,

Food and Staples and General Merchandise.

Within Food and Staples we would l ike to highl ight the contr ibution of Fruits and Vegetables,

a key department in which we have been invest ing in price and quality.

As of June we had converted 1,129 self -service stores into centers of excellence, 858

Bodegas, 208 Walmarts and 63 Superamas. With this progress, 53% of our self -service store

base is operating as a center of excellence. Al l Sam’s Clubs have been already turned into



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centers of excellence and currently we are developing the 2.0 version with focus on

redefining the categor ies and omnichannel integration.

In the centers of excellence we are tracking our customers’ and members’ satisfaction to

provide a better shopping experience while developing a more digital and productive way

of working. The concept has helped us to del iv er a clear value proposit ion by format.

We plan to turn al l stores into centers of excellence by the end of the thi rd quarter.

In the fi rst half of the year we surpassed ANTAD by 160 bps, 180 bps in the fi rst quarter and

140 bps in the second quarter.

Cons idering this result , we have outperformed ANTAD’s self -service division for 10

consecutive quarters which demonstrates the consistency of our results.

During the second quarter each one of our merchandise divis ion outperformed ANTAD self -

service.

Apparel outpaced ANTAD by 470bps, Food and Staples by 150bps and General Merchandise

by 130bps.

During the quarter we opened 21 new stores; 12 stores in Mexico and 9 in Central America.

This compares to 14 new stores opened during the second quarter 2016.

We are accelerating expansion in a profitable way, dur ing the second quarter new stores

contributed with 2.2% of our growth while in 1Q17 they contributed with 1.9%.

Our eCommerce business continues to strengthen. We delivered another quarter of a

double-digit sales increase reaching a 35.0% growth.

eCommerce sales contributed approximately 20 basis points of our growth and represented

0.8% of total sales. eCommerce is helping us to bui ld a digital relat ionship with our customers

and to offer them an omnichannel experience.

In June we had a successful “Hot Sale” event led by a strong customer response to our great

assortment and pr ices.

Sales grew 59% vs. last year’s event, t ransactions grew 65% and conversion rate improved by

55%.



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We are pleased with the event execution and coordination between the online business and

physical stores.

SECOND QUARTER RESULTS

MEXICO:

Gross profit margin expanded by 30bps, of which 16 bps are related to the reclassif ication of

vendor al lowances used for promotional in -store activit ies that were previously al located to

expenses. This reclassi f ication started in 3Q16 and does not impact EBITDA.

Through effective negot iat ions with suppliers we have been able to expand our competit ive

advantage in pr ice while improving profitabil ity.

About expenses, we were able to leverage expenses and to invest in the business. The

reclassi f ication of vendor al lowances represented 16 bps. One -t ime effects related to a

store fi re dur ing the quarter represented 13 bps. We were able to reduce our operating

expenses base by 65 bps through productivity in it iat ives and strong sales performance. The

operating expenditures related to store remodeling and maintenance increased by 7 bps

and we invested 14 bps in new stores and eCommerce.

In summary, total revenues grew 8.6%, gross margin expanded by 30bps to 21.7% and

expenses grew 7.5%. We achieved expense leverage by operating with discipl ine and sol id

sales growth.

Operating income grew by 14.1% and EBITDA grew 12.3% to reach a 9.3% EBITDA margin.

Both operating income and EBITDA grew above total revenues growth.

CENTRAL AMERICA:

Total revenues grew 11.0% on a constant currency basis.

Gross prof it margin increased 20 bps to 24.0% and general expenses grew 10.1% which is

below the 11.0% growth in total revenues.

Operating income and EBITDA grew 19.2% and 17.1% respectively.

CONSOLIDATED:



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Consolidated results for Walmex were posit ive.

Total revenues grew 9.1%.

Gross profit improved 20bps to 22.1% and we achieved expenses leverage by growing

expenses 8.2%, 90bps below revenues growth.

Operating income grew 15.0%.

EBITDA grew 13.2%, and EBITDA margin expanded by 30bps to reach a 9.2% margin.

Both operating income and EBITDA grew above revenues growth.

Net income grew 117.9% as in the quarter we recognized a net gain of $7.0B pesos related

to the sale of Suburbia, which it subject to the corresponding closing adjustments.

Financial position, liquidity and capital resources [text block]

Our cash posit ion decreased by 10.1% to approximately $16B pesos, $1.7B pesos below last

year’s level . We continue to distr ibute to shareholders the excess cash that we are not using

to fund strategic projects.

Inventories increased 2.2%, s ignif icantly below the 9.1% total revenues increase.

We are focused on delivering shareholder value.

Over the last 12 months cash generation increased by 6%, reaching $52B pesos.

After invest ing $15.7B pesos in the business, over the last twelve months we returned $44B

pesos in the form of dividends to our shareholders; th is includes the extraordinary dividend

related to the sel l of Suburbia.



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Internal control [text block]

For the Company, having the highest regulation standards and the proper control

environment is fundamental to meeting its objectives.

The exist ing internal controls are oriented towards guaranteeing the asset security,

compliance with established policies, the accurate recording of operations, rel iable and

t imely f inancial data, the prevention, identi f ication and detection of fraud, as well as the

ful l f i lment of the law and regulations.

We have an area devoted to Ethics and Regulatory Compliance, which is in charge of

disseminting and promoting our policies on ethical behavior, corporate governance and

str ict compliance with any and al l lega l provisions to which we are subject.

Disclosure of critical performance measures and indicators that management uses to

evaluate entity's performance against stated objectives [text block]

Total sales

•Same store sales

•Gross margin

•Expenses

•Operating earnings

•EBITDA

• Cash generation



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•ROI

•Inventory

•Financing



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[110000] General information about financial statements

Ticker: WALMEX

Period covered by financial statements: 2017-01-01 al 2017-06-30

Date of end of reporting period: 2017-06-30

Name of reporting entity or other means of

identification:

Wal-Mart de México, S.A.B. de C.V.

Description of presentation currency: MXN

Level of rounding used in financial statements: THOUSANDS OF PESOS

Consolidated: Yes

Number of quarter: 2

Type of issuer: ICS

Explanation of change in name of reporting entity or

other means of identification from end of preceding

reporting period:

Description of nature of financial statements:

Disclosure of general information about financial statements [text block]

The accompanying consolidated financial statements include the Financial Statements of

WALMEX and those of its subsidiaries in which has control in Mexico and abroad, and they

are prepared for the same accounting period.

The Mexican peso is the Company’s functional and report ing currency. The degree of

rounding used in the f inancial statements is thousands of pesos, except where otherwise

indicated.



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Follow-up of analysis [text block]

Actinver - Carlos Hermosi l lo

Bank of America Merr i l l Lynch - Robert Ford

Banorte - IXE – Valentín Mendoza

Barclays Capital - Benjamin M. Theurer

BBVA Bancomer - Miguel Ul loa

BTG Pactual – Álvaro García

Bradesco – Richard Catchard

Cit i - Accival – Alexander Robarts

Credit Suisse - Antonio González

Deutsche Bank – Marcel Moraes

GBM - Luis Wi l lard

Goldman Sachs - I rma Sgarz

HSBC – Ravi Jain

Intercam - Alejandra Marcos

I taú BBA - Joaquin Ley

J.P. Morgan – Pedro Leduc

Morgan Stanley - Franco Abelardo

Punto Casa de Bolsa - Crist ina Morales

Santander - Reinaldo Santana

Scotiabank - Rodrigo Echagaray

UBS - Gustavo Pi ras Oliveira

Vector Casa de Bolsa – José David Gómez



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[210000] Statement of financial position, current/non-current

Concept Close Current

Quarter

2017-06-30

Close Previous

Exercise

2016-12-31

Statement of financial position [abstract]

Assets [abstract]

Current assets [abstract]

Cash and cash equivalents 15,975,348,000 27,975,536,000

Trade and other current receivables 6,083,172,000 9,241,107,000

Current tax assets, current 898,594,000 576,771,000

Other current financial assets 0 0

Current inventories 51,731,721,000 53,665,239,000

Current biological assets 0 0

Other current non-financial assets 843,811,000 935,125,000

Total current assets other than non-current assets or disposal groups classified as held for sale or as held for

distribution to owners

75,532,646,000 92,393,778,000

Non-current assets or disposal groups classified as held for sale or as held for distribution to owners 0 11,628,894,000

Total current assets 75,532,646,000 104,022,672,000

Non-current assets [abstract]

Trade and other non-current receivables 0 0

Current tax assets, non-current 603,575,000 584,754,000

Non-current inventories 0 0

Non-current biological assets 0 0

Other non-current financial assets 817,441,000 934,012,000

Investments accounted for using equity method 0 0

Investments in subsidiaries, joint ventures and associates 0 0

Property, plant and equipment 127,770,210,000 134,034,410,000

Investment property 5,155,993,000 2,315,193,000

Goodwill 34,316,051,000 39,420,548,000

Intangible assets other than goodwill 1,723,809,000 1,918,984,000

Deferred tax assets 5,133,515,000 4,699,729,000

Other non-current non-financial assets 0 0

Total non-current assets 175,520,594,000 183,907,630,000

Total assets 251,053,240,000 287,930,302,000

Equity and liabilities [abstract]

Liabilities [abstract]

Current liabilities [abstract]

Trade and other current payables 81,971,502,000 84,945,132,000

Current tax liabilities, current 2,690,375,000 3,222,964,000

Other current financial liabilities 523,503,000 613,856,000

Other current non-financial liabilities 0 0

Current provisions [abstract]

Current provisions for employee benefits 0 0

Other current provisions 1,438,561,000 1,223,328,000

Total current provisions 1,438,561,000 1,223,328,000

Total current liabilities other than liabilities included in disposal groups classified as held for sale 86,623,941,000 90,005,280,000

Liabilities included in disposal groups classified as held for sale 0 3,951,542,000

Total current liabilities 86,623,941,000 93,956,822,000

Non-current liabilities [abstract]

Trade and other non-current payables 5,367,045,000 0

Current tax liabilities, non-current 82,456,000 97,810,000

Other non-current financial liabilities 14,001,104,000 14,680,893,000



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Quarter

2017-06-30

Close Previous

Exercise

2016-12-31

Other non-current non-financial liabilities 0 0

Non-current provisions [abstract]

Non-current provisions for employee benefits 1,645,713,000 1,685,324,000

Other non-current provisions 0 0

Total non-current provisions 1,645,713,000 1,685,324,000

Deferred tax liabilities 9,183,635,000 10,483,437,000

Total non-current liabilities 30,279,953,000 26,947,464,000

Total liabilities 116,903,894,000 120,904,286,000

Equity [abstract]

Issued capital 45,468,428,000 45,468,428,000

Share premium (3,151,498,000) (2,467,507,000)

Treasury shares 0 0

Retained earnings 77,172,621,000 99,650,564,000

Other reserves 14,659,795,000 24,374,531,000

Total equity attributable to owners of parent 134,149,346,000 167,026,016,000

Non-controlling interests 0 0

Total equity 134,149,346,000 167,026,016,000

Total equity and liabilities 251,053,240,000 287,930,302,000



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[310000] Statement of comprehensive income, profit or loss, by function of

expense

Concept Accumulated

Current Year

2017-01-01 - 2017-

06-30

Accumulated

Previous Year

2016-01-01 - 2016-

06-30

Quarter Current

Year

2017-04-01 - 2017-

06-30

Quarter Previous

Year

2016-04-01 - 2016-

06-30

Profit or loss [abstract]

Profit (loss) [abstract]

Revenue 268,288,075,000 248,024,243,000 135,723,675,000 124,352,345,000

Cost of sales 208,512,414,000 193,660,833,000 105,687,988,000 97,165,917,000

Gross profit 59,775,661,000 54,363,410,000 30,035,687,000 27,186,428,000

Distribution costs 0 0 0 0

Administrative expenses 40,359,304,000 36,785,168,000 20,350,774,000 18,812,309,000

Other income 497,094,000 309,203,000 255,930,000 174,704,000

Other expense 360,060,000 213,622,000 284,015,000 149,270,000

Profit (loss) from operating activities 19,553,391,000 17,673,823,000 9,656,828,000 8,399,553,000

Finance income 643,420,000 546,855,000 342,224,000 161,564,000

Finance costs 967,305,000 782,439,000 477,726,000 401,050,000

Share of profit (loss) of associates and joint ventures accounted for

using equity method

0 0 0 0

Profit (loss) before tax 19,229,506,000 17,438,239,000 9,521,326,000 8,160,067,000

Tax income (expense) 5,421,472,000 5,028,238,000 2,774,793,000 2,288,816,000

Profit (loss) from continuing operations 13,808,034,000 12,410,001,000 6,746,533,000 5,871,251,000

Profit (loss) from discontinued operations 6,800,873,000 495,449,000 6,732,201,000 314,854,000

Profit (loss) 20,608,907,000 12,905,450,000 13,478,734,000 6,186,105,000

Profit (loss), attributable to [abstract]

Profit (loss), attributable to owners of parent 20,608,907,000 12,903,453,000 13,478,734,000 6,185,151,000

Profit (loss), attributable to non-controlling interests 0 1,997,000 0 954,000

Earnings per share [text block]

Earnings per share [abstract]

Earnings per share [line items]

Basic earnings per share [abstract]

Basic earnings (loss) per share from continuing operations 0.79 0.71 0.39 0.34

Basic earnings (loss) per share from discontinued operations 0.39 0.03 0.38 0.01

Total basic earnings (loss) per share 1.18 0.74 0.77 0.35

Diluted earnings per share [abstract]

Diluted earnings (loss) per share from continuing operations 0.79 0.71 0.39 0.34

Diluted earnings (loss) per share from discontinued operations 0.39 0.03 0.38 0.01

Total diluted earnings (loss) per share 1.18 0.74 0.77 0.35



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[410000] Statement of comprehensive income, OCI components presented net

of tax

Concept Accumulated

Current Year

2017-01-01 - 2017-

06-30

Accumulated

Previous Year

2016-01-01 - 2016-

06-30

Quarter Current

Year

2017-04-01 - 2017-

06-30

Quarter Previous

Year

2016-04-01 - 2016-

06-30

Statement of comprehensive income [abstract]

Profit (loss) 20,608,907,000 12,905,450,000 13,478,734,000 6,186,105,000

Other comprehensive income [abstract]

Components of other comprehensive income that will not be

reclassified to profit or loss, net of tax [abstract]

Other comprehensive income, net of tax, gains (losses) from

investments in equity instruments

0 0 0 0

Other comprehensive income, net of tax, gains (losses) on

revaluation

0 0 0 0

Other comprehensive income, net of tax, gains (losses) on

remeasurements of defined benefit plans

0 0 0 0

Other comprehensive income, net of tax, change in fair value of

financial liability attributable to change in credit risk of liability

0 0 0 0

Other comprehensive income, net of tax, gains (losses) on hedging

instruments that hedge investments in equity instruments

0 0 0 0

Share of other comprehensive income of associates and joint

ventures accounted for using equity method that will not be

reclassified to profit or loss, net of tax

0 0 0 0

Total other comprehensive income that will not be reclassified to

profit or loss, net of tax

0 0 0 0

Components of other comprehensive income that will be

reclassified to profit or loss, net of tax [abstract]

Exchange differences on translation [abstract]

Gains (losses) on exchange differences on translation, net of tax (9,714,736,000) 3,260,547,000 (2,643,392,000) 3,774,578,000

Reclassification adjustments on exchange differences on

translation, net of tax

0 0 0 0

Other comprehensive income, net of tax, exchange differences on

translation

(9,714,736,000) 3,260,547,000 (2,643,392,000) 3,774,578,000

Available-for-sale financial assets [abstract]

Gains (losses) on remeasuring available-for-sale financial assets,

net of tax

0 0 0 0

Reclassification adjustments on available-for-sale financial assets,

net of tax

0 0 0 0

Other comprehensive income, net of tax, available-for-sale financial

assets

0 0 0 0

Cash flow hedges [abstract]

Gains (losses) on cash flow hedges, net of tax 0 0 0 0

Reclassification adjustments on cash flow hedges, net of tax 0 0 0 0

Amounts removed from equity and included in carrying amount of

non-financial asset (liability) whose acquisition or incurrence was

hedged highly probable forecast transaction, net of tax

0 0 0 0

Other comprehensive income, net of tax, cash flow hedges 0 0 0 0

Hedges of net investment in foreign operations [abstract]

Gains (losses) on hedges of net investments in foreign operations,

net of tax

0 0 0 0

Reclassification adjustments on hedges of net investments in

foreign operations, net of tax

0 0 0 0

Other comprehensive income, net of tax, hedges of net investments

in foreign operations

0 0 0 0

Change in value of time value of options [abstract]

Gains (losses) on change in value of time value of options, net of 0 0 0 0



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Concept Accumulated

Current Year

2017-01-01 - 2017-

06-30

Accumulated

Previous Year

2016-01-01 - 2016-

06-30

Quarter Current

Year

2017-04-01 - 2017-

06-30

Quarter Previous

Year

2016-04-01 - 2016-

06-30

tax

Reclassification adjustments on change in value of time value of

options, net of tax

0 0 0 0

Other comprehensive income, net of tax, change in value of time

value of options

0 0 0 0

Change in value of forward elements of forward contracts

[abstract]

Gains (losses) on change in value of forward elements of forward

contracts, net of tax

0 0 0 0

Reclassification adjustments on change in value of forward

elements of forward contracts, net of tax

0 0 0 0

Other comprehensive income, net of tax, change in value of forward

elements of forward contracts

0 0 0 0

Change in value of foreign currency basis spreads [abstract]

Gains (losses) on change in value of foreign currency basis

spreads, net of tax

0 0 0 0

Reclassification adjustments on change in value of foreign currency

basis spreads, net of tax

0 0 0 0

Other comprehensive income, net of tax, change in value of foreign

currency basis spreads

0 0 0 0

Share of other comprehensive income of associates and joint

ventures accounted for using equity method that will be reclassified

to profit or loss, net of tax

0 0 0 0

Total other comprehensive income that will be reclassified to profit

or loss, net of tax

(9,714,736,000) 3,260,547,000 (2,643,392,000) 3,774,578,000

Total other comprehensive income (9,714,736,000) 3,260,547,000 (2,643,392,000) 3,774,578,000

Total comprehensive income 10,894,171,000 16,165,997,000 10,835,342,000 9,960,683,000

Comprehensive income attributable to [abstract]

Comprehensive income, attributable to owners of parent 10,894,171,000 16,164,000,000 10,835,342,000 9,959,729,000

Comprehensive income, attributable to non-controlling interests 0 1,997,000 0 954,000



19 of 94

[520000] Statement of cash flows, indirect method

Concept Accumulated

Current Year

2017-01-01 - 2017-

06-30

Accumulated

Previous Year

2016-01-01 - 2016-

06-30

Statement of cash flows [abstract]

Cash flows from (used in) operating activities [abstract]

Profit (loss) 20,608,907,000 12,905,450,000

Adjustments to reconcile profit (loss) [abstract]

Discontinued operations (6,800,873,000) (495,449,000)

Adjustments for income tax expense 5,421,472,000 5,028,238,000

Adjustments for finance costs 230,034,000 338,820,000

Adjustments for depreciation and amortisation expense 5,690,141,000 5,341,891,000

Adjustments for impairment loss (reversal of impairment loss) recognised in profit or loss (16,893,000) 6,408,000

Adjustments for provisions 0 0

Adjustments for unrealised foreign exchange losses (gains) 0 0

Adjustments for share-based payments 140,470,000 144,508,000

Adjustments for fair value losses (gains) 0 0

Adjustments for undistributed profits of associates 0 0

Adjustments for losses (gains) on disposal of non-current assets 45,947,000 155,174,000

Participation in associates and joint ventures 0 0

Adjustments for decrease (increase) in inventories 403,815,000 (454,920,000)

Adjustments for decrease (increase) in trade accounts receivable 1,401,147,000 (490,372,000)

Adjustments for decrease (increase) in other operating receivables 84,247,000 (629,517,000)

Adjustments for increase (decrease) in trade accounts payable (10,915,851,000) (4,177,490,000)

Adjustments for increase (decrease) in other operating payables (1,012,189,000) (1,723,690,000)

Other adjustments for non-cash items 0 0

Other adjustments for which cash effects are investing or financing cash flow 0 0

Straight-line rent adjustment 0 0

Amortization of lease fees 0 0

Setting property values 0 0

Other adjustments to reconcile profit (loss) 0 728,964,000

Total adjustments to reconcile profit (loss) (5,328,533,000) 3,772,565,000

Net cash flows from (used in) operations 15,280,374,000 16,678,015,000

Dividends paid 0 0

Dividends received 0 0

Interest paid 0 0

Interest received 0 0

Income taxes refund (paid) 7,067,954,000 2,691,254,000

Other inflows (outflows) of cash 0 0

Net cash flows from (used in) operating activities 8,212,420,000 13,986,761,000

Cash flows from (used in) investing activities [abstract]

Cash flows from losing control of subsidiaries or other businesses 19,153,952,000 0

Cash flows used in obtaining control of subsidiaries or other businesses 0 1,127,000

Other cash receipts from sales of equity or debt instruments of other entities 0 0

Other cash payments to acquire equity or debt instruments of other entities 0 0

Other cash receipts from sales of interests in joint ventures 0 0

Other cash payments to acquire interests in joint ventures 0 0

Proceeds from sales of property, plant and equipment 78,575,000 153,747,000

Purchase of property, plant and equipment 6,231,894,000 4,911,534,000

Proceeds from sales of intangible assets 0 0

Purchase of intangible assets 0 0

Proceeds from sales of other long-term assets 0 0



20 of 94

Concept Accumulated

Current Year

2017-01-01 - 2017-

06-30

Accumulated

Previous Year

2016-01-01 - 2016-

06-30

Purchase of other long-term assets 0 0

Proceeds from government grants 0 0

Cash advances and loans made to other parties 0 0

Cash receipts from repayment of advances and loans made to other parties 0 0

Cash payments for future contracts, forward contracts, option contracts and swap contracts 0 0

Cash receipts from future contracts, forward contracts, option contracts and swap contracts 0 0

Dividends received 0 0

Interest paid 0 0

Interest received 477,081,000 292,431,000

Income taxes refund (paid) 0 0

Other inflows (outflows) of cash (824,461,000) (243,984,000)

Net cash flows from (used in) investing activities 12,653,253,000 (4,710,467,000)

Cash flows from (used in) financing activities [abstract]

Proceeds from changes in ownership interests in subsidiaries that do not result in loss of control 0 0

Payments from changes in ownership interests in subsidiaries that do not result in loss of control 0 0

Proceeds from issuing shares 0 0

Proceeds from issuing other equity instruments 0 0

Payments to acquire or redeem entity's shares 0 0

Payments of other equity instruments 0 0

Proceeds from borrowings 0 0

Repayments of borrowings 0 0

Payments of finance lease liabilities 727,080,000 787,130,000

Proceeds from government grants 0 0

Dividends paid 30,847,035,000 15,859,119,000

Interest paid 0 0

Income taxes refund (paid) 0 0

Other inflows (outflows) of cash 0 0

Net cash flows from (used in) financing activities (31,574,115,000) (16,646,249,000)

Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes (10,708,442,000) (7,369,955,000)

Effect of exchange rate changes on cash and cash equivalents [abstract]

Effect of exchange rate changes on cash and cash equivalents (1,291,746,000) 343,153,000

Net increase (decrease) in cash and cash equivalents (12,000,188,000) (7,026,802,000)

Cash and cash equivalents at beginning of period 27,975,536,000 24,790,838,000

Cash and cash equivalents at end of period 15,975,348,000 17,764,036,000



21 of 94

[610000] Statement of changes in equity - Accumulated Current

Components of equity [axis]

Sheet 1 of 3 Issued capital [member]

Share premium

[member]

Treasury shares

[member]

Retained earnings

[member]

Revaluation surplus

[member]

Reserve of exchange

differences on

translation [member]

Reserve of cash flow

hedges [member]

Reserve of gains and

losses on hedging

instruments that hedge

investments in equity

instruments [member]

Reserve of

change in

value of time

value of

options

[member]

Statement of changes in equity [line items]

Equity at beginning of period 45,468,428,000 (2,467,507,000) 0 99,650,564,000 0 24,530,193,000 0 0 0

Changes in equity [abstract]

Comprehensive income [abstract]

Profit (loss) 0 0 0 20,608,907,000 0 0 0 0 0

Other comprehensive income 0 0 0 0 0 (9,714,736,000) 0 0 0

Total comprehensive income 0 0 0 20,608,907,000 0 (9,714,736,000) 0 0 0

Issue of equity 0 0 0 0 0 0 0 0 0

Dividends recognised as distributions to owners 0 0 0 43,086,850,000 0 0 0 0 0

Increase through other contributions by owners, equity 0 0 0 0 0 0 0 0 0

Decrease through other distributions to owners, equity 0 0 0 0 0 0 0 0 0

Increase (decrease) through other changes, equity 0 0 0 0 0 0 0 0 0

Increase (decrease) through treasury share transactions, equity 0 0 0 0 0 0 0 0 0

Increase (decrease) through changes in ownership interests in subsidiaries that do not

result in loss of control, equity

0 0 0 0 0 0 0 0 0

Increase (decrease) through share-based payment transactions, equity 0 (683,991,000) 0 0 0 0 0 0 0

Amount removed from reserve of cash flow hedges and included in initial cost or other

carrying amount of non-financial asset (liability) or firm commitment for which fair value

hedge accounting is applied

0 0 0 0 0 0 0 0 0

Amount removed from reserve of change in value of time value of options and included in

initial cost or other carrying amount of non-financial asset (liability) or firm commitment for

which fair value hedge accounting is applied

0 0 0 0 0 0 0 0 0

Amount removed from reserve of change in value of forward elements of forward

contracts and included in initial cost or other carrying amount of non-financial asset

(liability) or firm commitment for which fair value hedge accounting is applied

0 0 0 0 0 0 0 0 0

Amount removed from reserve of change in value of foreign currency basis spreads and

included in initial cost or other carrying amount of non-financial asset (liability) or firm

commitment for which fair value hedge accounting is applied

0 0 0 0 0 0 0 0 0

Total increase (decrease) in equity 0 (683,991,000) 0 (22,477,943,000) 0 (9,714,736,000) 0 0 0

Equity at end of period 45,468,428,000 (3,151,498,000) 0 77,172,621,000 0 14,815,457,000 0 0 0



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Sheet 2 of 3 Reserve of change in

value of forward

elements of forward

contracts [member]

Reserve of change in

value of foreign


[member]


losses on remeasuring

available-for-sale

financial assets

[member]

Reserve of share-based

payments [member]

Reserve of

remeasurements of

defined benefit plans

[member]

Amount recognised in

other comprehensive

income and

accumulated in equity

relating to non-current

assets or disposal

groups held for sale

[member]


losses from




fair value of financial

liability attributable to

change in credit risk of

liability [member]

Reserve for

catastrophe

[member]


Equity at beginning of period 0 0 0 0 (155,662,000) 0 0 0 0



Profit (loss) 0 0 0 0 0 0 0 0 0

Other comprehensive income 0 0 0 0 0 0 0 0 0

Total comprehensive income 0 0 0 0 0 0 0 0 0

Issue of equity 0 0 0 0 0 0 0 0 0

Dividends recognised as distributions to owners 0 0 0 0 0 0 0 0 0







0 0 0 0 0 0 0 0 0

Increase (decrease) through share-based payment transactions, equity 0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0

Total increase (decrease) in equity 0 0 0 0 0 0 0 0 0

Equity at end of period 0 0 0 0 (155,662,000) 0 0 0 0



23 of 94


Sheet 3 of 3 Reserve for

equalisation [member]

Reserve of

discretionary

participation features

[member]

Other comprehensive

income [member]

Other reserves

[member]

Equity attributable to

owners of parent

[member]

Non-controlling

interests [member]

Equity [member]


Equity at beginning of period 0 0 0 24,374,531,000 167,026,016,000 0 167,026,016,000



Profit (loss) 0 0 0 0 20,608,907,000 0 20,608,907,000

Other comprehensive income 0 0 0 (9,714,736,000) (9,714,736,000) 0 (9,714,736,000)

Total comprehensive income 0 0 0 (9,714,736,000) 10,894,171,000 0 10,894,171,000

Issue of equity 0 0 0 0 0 0 0

Dividends recognised as distributions to owners 0 0 0 0 43,086,850,000 0 43,086,850,000

Increase through other contributions by owners, equity 0 0 0 0 0 0 0

Decrease through other distributions to owners, equity 0 0 0 0 0 0 0

Increase (decrease) through other changes, equity 0 0 0 0 0 0 0

Increase (decrease) through treasury share transactions, equity 0 0 0 0 0 0 0



0 0 0 0 0 0 0

Increase (decrease) through share-based payment transactions, equity 0 0 0 0 (683,991,000) 0 (683,991,000)




0 0 0 0 0 0 0




0 0 0 0 0 0 0




0 0 0 0 0 0 0




0 0 0 0 0 0 0

Total increase (decrease) in equity 0 0 0 (9,714,736,000) (32,876,670,000) 0 (32,876,670,000)

Equity at end of period 0 0 0 14,659,795,000 134,149,346,000 0 134,149,346,000



24 of 94

[610000] Statement of changes in equity - Accumulated Previous


Sheet 1 of 3 Issued capital [member]

Share premium

[member]

Treasury shares

[member]

Retained earnings

[member]

Revaluation surplus

[member]

Reserve of exchange

differences on

translation [member]

Reserve of cash flow

hedges [member]


losses on hedging

instruments that hedge



Reserve of

change in

value of time

value of

options

[member]


Equity at beginning of period 45,468,428,000 (2,794,446,000) 0 95,293,029,000 0 14,211,864,000 0 0 0



Profit (loss) 0 0 0 12,903,453,000 0 0 0 0 0

Other comprehensive income 0 0 0 0 0 3,260,547,000 0 0 0

Total comprehensive income 0 0 0 12,903,453,000 0 3,260,547,000 0 0 0

Issue of equity 0 0 0 0 0 0 0 0 0

Dividends recognised as distributions to owners 0 0 0 28,966,904,000 0 0 0 0 0







0 0 0 (972,000) 0 0 0 0 0

Increase (decrease) through share-based payment transactions, equity 0 (99,476,000) 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0

Total increase (decrease) in equity 0 (99,476,000) 0 (16,064,423,000) 0 3,260,547,000 0 0 0

Equity at end of period 45,468,428,000 (2,893,922,000) 0 79,228,606,000 0 17,472,411,000 0 0 0



25 of 94


Sheet 2 of 3 Reserve of change in

value of forward

elements of forward

contracts [member]


value of foreign


[member]


losses on remeasuring

available-for-sale

financial assets

[member]

Reserve of share-based

payments [member]

Reserve of

remeasurements of

defined benefit plans

[member]

Amount recognised in

other comprehensive

income and

accumulated in equity

relating to non-current

assets or disposal


[member]


losses from




fair value of financial

liability attributable to

change in credit risk of

liability [member]

Reserve for

catastrophe

[member]


Equity at beginning of period 0 0 0 0 (384,069,000) 0 0 0 0



Profit (loss) 0 0 0 0 0 0 0 0 0

Other comprehensive income 0 0 0 0 0 0 0 0 0

Total comprehensive income 0 0 0 0 0 0 0 0 0

Issue of equity 0 0 0 0 0 0 0 0 0

Dividends recognised as distributions to owners 0 0 0 0 0 0 0 0 0







0 0 0 0 0 0 0 0 0

Increase (decrease) through share-based payment transactions, equity 0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0




0 0 0 0 0 0 0 0 0

Total increase (decrease) in equity 0 0 0 0 0 0 0 0 0

Equity at end of period 0 0 0 0 (384,069,000) 0 0 0 0



26 of 94


Sheet 3 of 3 Reserve for

equalisation [member]

Reserve of

discretionary

participation features

[member]

Other comprehensive

income [member]

Other reserves

[member]

Equity attributable to

owners of parent

[member]

Non-controlling

interests [member]

Equity [member]


Equity at beginning of period 0 0 0 13,827,795,000 151,794,806,000 25,844,000 151,820,650,000



Profit (loss) 0 0 0 0 12,903,453,000 1,997,000 12,905,450,000

Other comprehensive income 0 0 0 3,260,547,000 3,260,547,000 0 3,260,547,000

Total comprehensive income 0 0 0 3,260,547,000 16,164,000,000 1,997,000 16,165,997,000

Issue of equity 0 0 0 0 0 0 0

Dividends recognised as distributions to owners 0 0 0 0 28,966,904,000 0 28,966,904,000

Increase through other contributions by owners, equity 0 0 0 0 0 0 0

Decrease through other distributions to owners, equity 0 0 0 0 0 0 0

Increase (decrease) through other changes, equity 0 0 0 0 0 0 0

Increase (decrease) through treasury share transactions, equity 0 0 0 0 0 0 0



0 0 0 0 (972,000) (1,367,000) (2,339,000)

Increase (decrease) through share-based payment transactions, equity 0 0 0 0 (99,476,000) 0 (99,476,000)




0 0 0 0 0 0 0




0 0 0 0 0 0 0




0 0 0 0 0 0 0




0 0 0 0 0 0 0

Total increase (decrease) in equity 0 0 0 3,260,547,000 (12,903,352,000) 630,000 (12,902,722,000)

Equity at end of period 0 0 0 17,088,342,000 138,891,454,000 26,474,000 138,917,928,000



27 of 94

[700000] Informative data about the Statement of financial position


Quarter

2017-06-30

Close Previous

Exercise

2016-12-31

Informative data of the Statement of Financial Position [abstract]

Capital stock (nominal) 42,526,627,000 42,526,627,000

Restatement of capital stock 2,941,801,000 2,941,801,000

Plan assets for pensions and seniority premiums 675,453,000 709,437,000

Number of executives 204 233

Number of employees 231,164 228,621

Number of workers 0 0

Outstanding shares 17,461,402,631 17,461,402,631

Repurchased shares 0 0

Restricted cash 0 0

Guaranteed debt of associated companies 0 0



28 of 94

[700002] Informative data about the Income statement

Concept Accumulated

Current Year

2017-01-01 - 2017-

06-30

Accumulated

Previous Year

2016-01-01 - 2016-

06-30

Quarter Current

Year

2017-04-01 - 2017-

06-30

Quarter Previous

Year

2016-04-01 - 2016-

06-30

Informative data of the Income Statement [abstract]

Operating depreciation and amortization 5,690,141,000 5,206,966,000 2,809,153,000 2,609,295,000



29 of 94

[700003] Informative data - Income statement for 12 months

Concept Current Year

2016-07-01 - 2017-

06-30

Previous Year

2015-07-01 - 2016-

06-30

Informative data - Income Statement for 12 months [abstract]

Revenue 552,647,915,000 517,241,744,000

Profit (loss) from operating activities 41,334,703,000 38,250,931,000

Profit (loss) 41,055,328,000 27,299,453,000

Profit (loss), attributable to owners of parent 41,057,752,000 27,295,456,000

Operating depreciation and amortization 11,176,910,000 10,418,858,000



30 of 94

[800001] Breakdown of credits

Institution [axis] Foreign institution

(yes/no)

Contract signing

date

Expiration

date

Interest

rate

Denomination [axis]

Domestic currency [member] Foreign currency [member]

Time interval [axis] Time interval [axis]

Current year

[member]

Until 1 year

[member]

Until 2 years

[member]

Until 3 years

[member]

Until 4 years

[member]

Until 5 years or more

[member]

Current year

[member]

Until 1 year

[member]

Until 2 years

[member]

Until 3 years

[member]

Until 4 years

[member]


[member]

Banks [abstract]

Foreign trade

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Banks - secured

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Commercial banks

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Other banks

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Total banks

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Stock market [abstract]

Listed on stock exchange - unsecured

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Listed on stock exchange - secured

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Private placements - unsecured

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Private placements - secured

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Total listed on stock exchanges and

private placements

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Other current and non-current liabilities

with cost [abstract]


with cost

OTHER CURRENT LIABILITIES WITH

COST A1

NO 2017-07-24 2017-07-24 0 329,745,000 0 0 0 0 0 0 0 0 0 0

OTHER CURRENT LIABILITIES WITH

COST A2

SI 2017-07-24 2017-07-24 0 0 0 0 0 0 0 116,855,000 0 0 0 0

OTHER NON-CURRENT LIABILITIES WITH

COST A1

NO 2017-07-24 2017-07-24 0 0 278,898,000 251,291,000 270,549,000 10,788,529,000 0 0 0 0 0 0

OTHER NON-CURRENT LIABILITIES WITH

COST A2

SI 2017-07-24 2017-07-24 0 0 0 0 0 0 0 0 82,771,000 83,041,000 88,351,000 1,304,614,000

TOTAL 0 329,745,000 278,898,000 251,291,000 270,549,000 10,788,529,000 0 116,855,000 82,771,000 83,041,000 88,351,000 1,304,614,000

Total other current and non-current

liabilities with cost

TOTAL 0 329,745,000 278,898,000 251,291,000 270,549,000 10,788,529,000 0 116,855,000 82,771,000 83,041,000 88,351,000 1,304,614,000

Suppliers [abstract]

Suppliers

SELF-SERVICE SUPPLIER B1 NO 2017-07-24 2017-07-24 42,747,192,000 0 0 0 0 0 0 0 0 0 0 0

SELF-SERVICE SUPPLIER B2 SI 2017-07-24 2017-07-24 0 0 0 0 0 0 10,371,663,000 0 0 0 0 0

TOTAL 42,747,192,000 0 0 0 0 0 10,371,663,000 0 0 0 0 0



31 of 94

Institution [axis] Foreign institution

(yes/no)

Contract signing

date

Expiration

date

Interest

rate

Denomination [axis]

Domestic currency [member] Foreign currency [member]

Time interval [axis] Time interval [axis]

Current year

[member]

Until 1 year

[member]

Until 2 years

[member]

Until 3 years

[member]

Until 4 years

[member]


[member]

Current year

[member]

Until 1 year

[member]

Until 2 years

[member]

Until 3 years

[member]

Until 4 years

[member]


[member]

Total suppliers

TOTAL 42,747,192,000 0 0 0 0 0 10,371,663,000 0 0 0 0 0


[abstract]


TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Total other current and non-current

liabilities

TOTAL 0 0 0 0 0 0 0 0 0 0 0 0

Total credits

TOTAL 42,747,192,000 329,745,000 278,898,000 251,291,000 270,549,000 10,788,529,000 10,371,663,000 116,855,000 82,771,000 83,041,000 88,351,000 1,304,614,000



32 of 94

[800003] Annex - Monetary foreign currency position

Currencies [axis]

Dollars [member] Dollar equivalent in

pesos [member]

Other currencies

equivalent in dollars

[member]

Other currencies

equivalent in pesos

[member]

Total pesos

[member]

Foreign currency position [abstract]

Monetary assets [abstract]

Current monetary assets 116,200,000 2,096,830,000 362,173,000 6,535,446,000 8,632,276,000

Non-current monetary assets 0 0 0 0 0

Total monetary assets 116,200,000 2,096,830,000 362,173,000 6,535,446,000 8,632,276,000

Liabilities position [abstract]

Current liabilities 311,940,000 5,629,005,000 469,603,000 8,474,008,000 14,103,013,000

Non-current liabilities 13,973,000 252,149,000 157,912,000 2,849,539,000 3,101,688,000

Total liabilities 325,913,000 5,881,154,000 627,515,000 11,323,547,000 17,204,701,000

Net monetary assets (liabilities) (209,713,000) (3,784,324,000) (265,342,000) (4,788,101,000) (8,572,425,000)



33 of 94

[800005] Annex - Distribution of income by product

Income type [axis]

National income

[member]

Export income

[member]

Income of

subsidiaries abroad

[member]

Total income

[member]

VENTAS

SALES 214,464,890,000 0 52,036,514,000 266,501,404,000

ARRENDAMIENTO

LEASE 581,897,000 0 140,307,000 722,204,000

OTROS INGRESOS

OTHER REVENUES 1,040,513,000 0 23,954,000 1,064,467,000

TOTAL 216,087,300,000 0 52,200,775,000 268,288,075,000



34 of 94

[800007] Annex - Financial derivate instruments

Management discussion about the policy uses of financial derivate instruments,

explaining if these policies are allowed just for coverage or for other uses like trading

[text block]

Wal-Mart de México, S.A.B. de C.V., (“ WALMEX” or “the Company”) disclosure concerning

the use of derivative f inancial instruments (IFD, per it s acronym in Spanish ), in compliance

with Mexican National Banking and Securit ies Commission (CNBV, per it s acronym in Spanish)

regulations so that investors have information regarding the s ignif icance of derivatives in the

Company’s f inancial posit ion and results, and can fu l ly assess the inherent r i sks.

Companies are general ly exposed to constant f inancial r isks in the normal course of

operations. In recent years, these risks have increased due to market globalization,

especial ly with regard to exchange rate behavior. As su ch, WALMEX has implemented the

use of IFD to hedge currency exchange rates, with the sole purpose of protecting against

currency exchange rate fluctuations.

The Company seeks to mit igate exchange rate f luctuation r isk in accounts payable

denominated in a foreign currency and related to goods for resale. Currency hedging is only

executed on the basis of documentation support ing these accounts payable commitments

and it i s subject to the Company’s policy which l imits the amount and use of IFD, and

provides specific requirements for the purchase and payment thereof.

The IFD authorized to reduce exposure to foreign currency exchange rate r i sk is the FX -

Forward contract. The FX-Forward is established through a contract that states

s imultaneously the purchase of foreign currency and sel l ing of domestic currency, at a

specific date and defined price. These contracts are specific agreements between WALMEX

and the counterpart and are traded on the “over the counter” or OTC market. The FX -

Forward transactions are executed on the OTC market pursuant to an ISDA contract

(International Swap Dealers Association); ISDA contracts are standardized and formalized by

WALMEX and the authorized financial inst itut ions.

The Company only enters into IFD with counterpart ies that are solvent f inancial inst itut ions

with sol id credit capacity, and that are l icensed and regulated to perform this kind of

operation in the market. WALMEX’s f inance committee authorizes al l counterpart ies based

on credit quality rat ings determined by internati onal rat ing agencies.



35 of 94

The Company’s policy includes regular monitoring of the volume of operations executed

with each authorized counterparty in order to reduce the risk of non -compliance and to

ensure that the market value of open posit ions does not excee d the Company’s maximum

exposure and credit l imits.

FX-Forwards are contracted for the purpose of economic hedging. The Company has

elected not to designate the FX-Forward as hedge accounting; therefore changes to the fair

value of these instruments are recorded directly to earnings dur ing the period of the

changes. Since the Company has not elected hedge accounting for the FX -Forward,

effectiveness test ing is not required.

General description about valuation techniques, standing out the instruments

valuated at cost or fair value, just like methods and valuation techniques [text block]

Counterpart ies to the IFD instruments are the agents of calculation and valuation. However,

the Company uses the Bloomberg platform to perform independent valuations which are

compared with those reported by the counterparty to ensure reasonableness. I t is important

to note that IFD entered into with counterpart ies do not include collateral or margin calls. In

addit ion, there are no negotiated l ines of credit in connection with the IFD t ransactions.

The determination of the fair value of FX -Forward includes standard valuation methodologies

and widely accepted market variables that are endorsed internationally. The fair value is

effectively the present value of the difference between the value of the underlying forward

and value agreed to a contract in it iat ion, mult ipl ied by the number of units of the

underlying. These est imates are reviewed and approved by the Treasury department, which

veri f ies the reasonableness of the results in relat ion to the valuations provided by authorized

counterpart ies.

Management discussion about intern and extern sources of liquidity that could be

used for attending requirements related to financial derivate instruments [text block]



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The Company’s operations provide resources to meet IFD contract requirements. The

Company also has various l ines of credit that could be used i f necessary to meet its IFD

obligations.

Changes and management explanation in principal risk exposures identified, as

contingencies and events known by the administration that could affect future reports

[text block]

As of June 30, 2017, the Company has not identi f ied signif icant changes in the risk exposure

previously identi f ied. These include possible contingencies and events known or expected by

the Administ rat ion.

The Company has identi f ied the fol lowing main r isks withi n it s IFD portfol io:

a) Market r i sk related to fluctuations in currency exchange rates

b) Liquidity r i sk

c) Counterparty credit r i sk

d) Operational r isk

a. Market r isk: the Company is exposed to market r i sks related to variat ions in currency

exchange rates result ing from changes in economic condit ions at the local and international

level , tax and monetary policies, l iquidity, pol it ical events, disasters, etc. as a result , one of

the primary objectives of the Company’s IFD policy is to mit igate foreign exchange risk

through the purchase of FX-Forwards in order to protect the Company against exchange

rate fluctuation in accounts payable denominated in a foreign currency and related to the

purchase of merchandise to be held for sale. The Company does not authorize the purchase

of IFD instruments for the purpose of speculation.

b. Liquidity r i sk: resources available to administer hedge operations are generated by the

Company’s operations.

c. Counterparty Credit r i sk: credit r i sk related to IFD is mit igated and monitored through the

established approval procedures of the f inancial inst itut ions to be the counterpart ies which

the Company is permitted to engage. The Treasury department regular ly monitors and



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updates (annually or more frequently if necessary), th e required credit quality assessment

and ratings of f inancial inst itut ion counterpart ies. In addit ion, the Company has established

l imits to the amount of IFDs that can be executed with approved counterpart ies in order to

further mit igate r isk.

d. Operational r i sk. WALMEX’s Board of Directors specifically authorized the st rategy for the

use of IFD and the Finance Committee approved the related pol icy. The policy regarding

the use of IFD describes the objective, al lowed derivative instruments, l imits and co ntrol

mechanisms required to ensure that derivative transactions are properly conducted, and the

management and minimization of market, l iquidity, credit and operational r i sk. The level of

r i sk tolerance defined for the FX -Forward transactions is periodica lly reviewed by the

Finance Committee, however, compliance with the established parameters i s reviewed

monthly in order to detect opportunit ies and, when appropriate, propose action plans.

Execution and compliance with the approved strategy is regular ly mo nitored internally by

the Treasury and Accounting departments according to the policy.

The results of that monitoring as well as identif ications of inherent r i sks are periodically

reported to the Treasury, Tax and Investor Relations Vicepresident, the Fin ance Committee,

and, as necessary, to the Board of Directors. Addit ionally, the Treasury director i s responsible

for regular monitoring and report ing to Treasury, Tax and Investor Relations Vicepresident,

any events that may affect current IFD operations a nd, where appropriate, for

recommending to the Finance Committee actions to mit igate any events that may put the

Company’s results at r i sk.

The Company is also subject to periodic reviews of it s IFD transactions by internal and

external auditors who evaluate established processes and controls and the proper

application thereof. The internal and external auditors also evaluate accounting records

and the effect of IFD in the income statement and / or balance sheet accounts.

Quantitative information for disclosure [text block]

During the second quarter of 2017, we performed a total of 107 operations of exchange rate

MXN/USD IFDs, for an amount of $131.41 mil l ion of USD (MXN $2.5 bi l l ion). During the same



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period 109 operations expired for an amount of 149.21 mil l ion USD (MXN $2.9 bi l l ion) leaving

46 open IFDs as of June 30, 2017, in the amount of $43.18 mil l ion USD (MXN $794.25 mil l ion).

See table below. The fair value of these instruments represents less than 3% of total

consol idated sales for the quarter or 5% of the assets. Therefore the potential r i sk f rom the

Company’s use of these instruments is not s ignif icant.

Addit ional ly, at June 30, 2017, there are no instances of non -compliance with IFD contracts,

nor are there any margin calls or col lat eral required for any contracts.

A summary of the outstanding IFD is as fol lows:

Market r isk

With respect to the sensit ivity analysis of market r i sks to which the Company is exposed, the

currency exchange rate of the Mexican peso against the US dollar would have impact as

demonstrated in the table below. The effect would not be material .

Liquidity and credit r isk

The Company does not have l iquidity r i sk from its IFD at June 30, 2017.

The Company manages credit r i sk related to its portfol io of derivatives transactions by

engaging only with recognized and creditworthy counterpart ies. At June 30, 2017,

counterparty credit r isk i s immaterial .



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40 of 94

[800100] Notes - Subclassifications of assets, liabilities and equities


Quarter

2017-06-30

Close Previous

Exercise

2016-12-31

Subclassifications of assets, liabilities and equities [abstract]

Cash and cash equivalents [abstract]

Cash [abstract]

Cash on hand 291,792,000 285,909,000

Balances with banks 5,978,856,000 14,907,577,000

Total cash 6,270,648,000 15,193,486,000

Cash equivalents [abstract]

Short-term deposits, classified as cash equivalents 0 0

Short-term investments, classified as cash equivalents 9,704,700,000 12,782,050,000

Other banking arrangements, classified as cash equivalents 0 0

Total cash equivalents 9,704,700,000 12,782,050,000

Other cash and cash equivalents 0 0

Total cash and cash equivalents 15,975,348,000 27,975,536,000

Trade and other current receivables [abstract]

Current trade receivables 476,610,000 2,202,768,000

Current receivables due from related parties 0 0

Current prepayments [abstract]

Current advances to suppliers 0 0

Current prepaid expenses 0 0

Total current prepayments 0 0

Current receivables from taxes other than income tax 3,633,017,000 5,588,183,000

Current value added tax receivables 3,633,017,000 5,588,183,000

Current receivables from sale of properties 0 0

Current receivables from rental of properties 0 0

Other current receivables 1,973,545,000 1,450,156,000

Total trade and other current receivables 6,083,172,000 9,241,107,000

Classes of current inventories [abstract]

Current raw materials and current production supplies [abstract]

Current raw materials 0 0

Current production supplies 0 0

Total current raw materials and current production supplies 0 0

Current merchandise 51,731,721,000 53,665,239,000

Current work in progress 0 0

Current finished goods 0 0

Current spare parts 0 0

Property intended for sale in ordinary course of business 0 0

Other current inventories 0 0

Total current inventories 51,731,721,000 53,665,239,000

Non-current assets or disposal groups classified as held for sale or as held for distribution to owners [abstract]

Non-current assets or disposal groups classified as held for sale 0 11,628,894,000

Non-current assets or disposal groups classified as held for distribution to owners 0 0

Total non-current assets or disposal groups classified as held for sale or as held for distribution to owners 0 11,628,894,000

Trade and other non-current receivables [abstract]

Non-current trade receivables 0 0

Non-current receivables due from related parties 0 0

Non-current prepayments 0 0

Non-current lease prepayments 0 0

Non-current receivables from taxes other than income tax 0 0



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Quarter

2017-06-30

Close Previous

Exercise

2016-12-31

Non-current value added tax receivables 0 0

Non-current receivables from sale of properties 0 0

Non-current receivables from rental of properties 0 0

Revenue for billing 0 0

Other non-current receivables 0 0

Total trade and other non-current receivables 0 0

Investments in subsidiaries, joint ventures and associates [abstract]

Investments in subsidiaries 0 0

Investments in joint ventures 0 0

Investments in associates 0 0

Total investments in subsidiaries, joint ventures and associates 0 0

Property, plant and equipment [abstract]

Land and buildings [abstract]

Land 29,017,624,000 31,023,378,000

Buildings 55,469,482,000 59,473,365,000

Total land and buildings 84,487,106,000 90,496,743,000

Machinery 0 0

Vehicles [abstract]

Ships 0 0

Aircraft 0 0

Motor vehicles 475,461,000 480,180,000

Total vehicles 475,461,000 480,180,000

Fixtures and fittings 0 0

Office equipment 26,159,013,000 27,427,759,000

Tangible exploration and evaluation assets 0 0

Mining assets 0 0

Oil and gas assets 0 0

Construction in progress 4,196,810,000 3,285,624,000

Construction prepayments 0 0

Other property, plant and equipment 12,451,820,000 12,344,104,000

Total property, plant and equipment 127,770,210,000 134,034,410,000

Investment property [abstract]

Investment property completed 5,155,993,000 2,315,193,000

Investment property under construction or development 0 0

Investment property prepayments 0 0

Total investment property 5,155,993,000 2,315,193,000

Intangible assets and goodwill [abstract]

Intangible assets other than goodwill [abstract]

Brand names 784,343,000 909,615,000

Intangible exploration and evaluation assets 0 0

Mastheads and publishing titles 0 0

Computer software 885,371,000 930,086,000

Licences and franchises 0 0

Copyrights, patents and other industrial property rights, service and operating rights 0 0

Recipes, formulae, models, designs and prototypes 0 0

Intangible assets under development 0 0

Other intangible assets 54,095,000 79,283,000

Total intangible assets other than goodwill 1,723,809,000 1,918,984,000

Goodwill 34,316,051,000 39,420,548,000

Total intangible assets and goodwill 36,039,860,000 41,339,532,000

Trade and other current payables [abstract]

Current trade payables 53,118,855,000 65,557,689,000



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Quarter

2017-06-30

Close Previous

Exercise

2016-12-31

Current payables to related parties 605,452,000 753,643,000

Accruals and deferred income classified as current [abstract]

Deferred income classified as current 1,325,904,000 958,473,000

Rent deferred income classified as current 351,451,000 0

Accruals classified as current 6,490,164,000 7,228,428,000

Short-term employee benefits accruals 0 0

Total accruals and deferred income classified as current 7,816,068,000 8,186,901,000

Current payables on social security and taxes other than income tax 508,800,000 2,153,333,000

Current value added tax payables 508,800,000 2,153,333,000

Current retention payables 52,084,000 48,168,000

Other current payables 19,870,243,000 8,245,398,000

Total trade and other current payables 81,971,502,000 84,945,132,000

Other current financial liabilities [abstract]

Bank loans current 0 0

Stock market loans current 0 0

Other current iabilities at cost 446,600,000 533,047,000

Other current liabilities no cost 0 0

Other current financial liabilities 76,903,000 80,809,000

Total Other current financial liabilities 523,503,000 613,856,000

Trade and other non-current payables [abstract]

Non-current trade payables 0 0

Non-current payables to related parties 0 0

Accruals and deferred income classified as non-current [abstract]

Deferred income classified as non-current 5,367,045,000 0

Rent deferred income classified as non-current 5,367,045,000 0

Accruals classified as non-current 0 0

Total accruals and deferred income classified as non-current 5,367,045,000 0

Non-current payables on social security and taxes other than income tax 0 0

Non-current value added tax payables 0 0

Non-current retention payables 0 0

Other non-current payables 0 0

Total trade and other non-current payables 5,367,045,000 0

Other non-current financial liabilities [abstract]

Bank loans non-current 0 0

Stock market loans non-current 0 0

Other non-current liabilities at cost 13,148,044,000 13,077,018,000

Other non-current liabilities no cost 0 0

Other non-current financial liabilities 853,060,000 1,603,875,000

Total Other non-current financial liabilities 14,001,104,000 14,680,893,000

Other provisions [abstract]

Other non-current provisions 0 0

Other current provisions 1,438,561,000 1,223,328,000

Total other provisions 1,438,561,000 1,223,328,000

Other reserves [abstract]

Revaluation surplus 0 0

Reserve of exchange differences on translation 14,815,457,000 24,530,193,000

Reserve of cash flow hedges 0 0

Reserve of gains and losses on hedging instruments that hedge investments in equity instruments 0 0

Reserve of change in value of time value of options 0 0

Reserve of change in value of forward elements of forward contracts 0 0

Reserve of change in value of foreign currency basis spreads 0 0

Reserve of gains and losses on remeasuring available-for-sale financial assets 0 0



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Quarter

2017-06-30

Close Previous

Exercise

2016-12-31

Reserve of share-based payments 0 0

Reserve of remeasurements of defined benefit plans (155,662,000) (155,662,000)

Amount recognised in other comprehensive income and accumulated in equity relating to non-current assets or disposal


0 0

Reserve of gains and losses from investments in equity instruments 0 0

Reserve of change in fair value of financial liability attributable to change in credit risk of liability 0 0

Reserve for catastrophe 0 0

Reserve for equalisation 0 0

Reserve of discretionary participation features 0 0

Reserve of equity component of convertible instruments 0 0

Capital redemption reserve 0 0

Merger reserve 0 0

Statutory reserve 0 0

Other comprehensive income 0 0

Total other reserves 14,659,795,000 24,374,531,000

Net assets (liabilities) [abstract]

Assets 251,053,240,000 287,930,302,000

Liabilities 116,903,894,000 120,904,286,000

Net assets (liabilities) 134,149,346,000 167,026,016,000

Net current assets (liabilities) [abstract]

Current assets 75,532,646,000 104,022,672,000

Current liabilities 86,623,941,000 93,956,822,000

Net current assets (liabilities) (11,091,295,000) 10,065,850,000



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[800200] Notes - Analysis of income and expense

Concept Accumulated

Current Year

2017-01-01 - 2017-

06-30

Accumulated

Previous Year

2016-01-01 - 2016-

06-30

Quarter Current

Year

2017-04-01 - 2017-

06-30

Quarter Previous

Year

2016-04-01 - 2016-

06-30

Analysis of income and expense [abstract]

Revenue [abstract]

Revenue from rendering of services 0 0 0 0

Revenue from sale of goods 266,501,404,000 246,181,681,000 134,791,567,000 123,427,938,000

Interest income 0 0 0 0

Royalty income 0 0 0 0

Dividend income 0 0 0 0

Rental income 722,204,000 633,896,000 375,497,000 311,662,000

Revenue from construction contracts 0 0 0 0

Other revenue 1,064,467,000 1,208,666,000 556,611,000 612,745,000

Total revenue 268,288,075,000 248,024,243,000 135,723,675,000 124,352,345,000

Finance income [abstract]

Interest income 477,081,000 281,865,000 245,283,000 120,557,000

Net gain on foreign exchange 94,995,000 145,472,000 25,597,000 29,580,000

Gains on change in fair value of derivatives 49,568,000 77,559,000 49,568,000 65,286,000

Gain on change in fair value of financial instruments 0 0 0 0

Other finance income 21,776,000 41,959,000 21,776,000 (53,859,000)

Total finance income 643,420,000 546,855,000 342,224,000 161,564,000

Finance costs [abstract]

Interest expense 0 0 0 0

Net loss on foreign exchange 80,548,000 93,406,000 34,062,000 77,371,000

Losses on change in fair value of derivatives 68,784,000 87,966,000 2,719,000 32,751,000

Loss on change in fair value of financial instruments 0 0 0 0

Other finance cost 817,973,000 601,067,000 440,945,000 290,928,000

Total finance costs 967,305,000 782,439,000 477,726,000 401,050,000

Tax income (expense)

Current tax 5,923,873,000 5,620,614,000 2,632,051,000 2,649,193,000

Deferred tax (502,401,000) (592,376,000) 142,742,000 (360,377,000)

Total tax income (expense) 5,421,472,000 5,028,238,000 2,774,793,000 2,288,816,000



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[800500] Notes - List of notes

Disclosure of notes and other explanatory information [text block]

a. Relevant events

I .Sale of Suburbia stores

On August 10, 2016, the Company announced that it had reached an agreement with

El Puerto de Liverpool, S.A.B. de C.V. (Liverpool) to sel l i ts clothing store divis ion,

Suburbia.

On March 10, 2017, the Federal Competit ion Commission of Mexico authorized WALMEX

to sel l the Suburbia clothing stores division to Liverpool.

On Apri l 4, 2017, the Company informed its investors and the general public that it

completed the t ransaction with Liverpool to sel l the Suburbia clothing stores division

I I .Legal proceedings

Wal-Mart de México, S.A.B. de C.V. (“WALMEX”) i s a subsidiary of Wal -Mart Stores, Inc.

(“WMT”). WMT owns approximately 70% of the shares and voting powe r in WALMEX and

has the abil ity to designate at least a majority of the directors of WALMEX . The

remaining shares of WALMEX are publicly t raded on the Mexican Stock Exchange and,

to the best of the knowledge of WALMEX , no shareholder other than WMT and its

affi l iates owns more than 2% of the outstanding shares of WALMEX .

Currently, the Board of Directors of WALMEX i s composed of 11 directors. The Audit

Committee and the Corporate Governance Committee of the Board of Directors are

composed exclusively of independent directors.

WMT is subject to a wide variety of laws and regulations in the United States of America

and in the countries in which it operates, including but not l imited to the U.S. Foreign

Corrupt Practices Act (the “FCPA”).



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As WALMEX publicly disclosed on Apri l 23, 2012, WMT is the subject of an invest igation

under the FCPA by the U.S. Department of Just ice and the U.S. Securit ies and Exchange

Commission fol lowing a disclosure that WMT made to those agencies in November 2011.

The Audit Committee of the Board of Directors of WMT, which is composed solely of

independent directors, i s conducting an internal invest igation into, among other things,

al leged violations of the FCPA and other al leged cr imes or misconduct in connection

with foreign subsidiaries, including WALMEX and whether prior al legations of such

violations and/or misconduct were appropriately ha ndled by WMT. The Audit

Committee of WMT and WMT have engaged outside counsel f rom a number of law f irms

and other advisors who are assist ing in the on -going invest igation of these matters.

WALMEX has also engaged outside counsel to assist in these matters .

WMT is also conducting a voluntary global review of its policies, practices and internal

controls for FCPA compliance. WMT is engaged in st rengthening its global anti -

corruption compl iance programs through appropriate remedial anti -corruption

measures. WALMEX i s taking part in such voluntary global review and strengthening of

programs.

Furthermore, lawsuits relat ing to the matters under invest igation have been fi led by

several of WMT’s shareholders against it and against WALMEX , i t s current di rectors,

certain of its former directors, certain of it s current and former off icers and certain of

WALMEX’s current and former off icers.

WALMEX i s cooperating with WMT in the review of these matters and it intends to

continue ful ly cooperating in such regard.

A number of federal and local government agencies in Mexico have also init iated

invest igations of these matters. WALMEX is cooperating with the Mexican governmental

agencies conducting these invest igations.

The Audit Committee and the Corporate Governance Committee of the Board of

Directors of WALMEX , as wel l as the Board of Directors of WALMEX , have been informed

about these matters and have determined, by an unanimous vote of the independent

directors only, that it i s in the best interests of WALMEX to continue to cooperate at this

t ime with WMT and the U.S. and Mexican agencies conducting these invest igations.



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WALMEX could be exposed to a variety of negative consequences as a result of the

matters noted above. There could be one or more enforcement actions in respect of

the matters that are the subject of some or al l of the ongoing government

invest igations, and such actions, i f brought, may result in judgments, sett lements, f ines,

penalt ies, injunctions, cease and desists orders or other rel ief, cr iminal convictions

and/or penalt ies. The shareholder lawsuits may result in judgments against WMT and

WALMEX and to current and former directors and current and former officers of WMT

and WALMEX named in those proceedings. WALMEX cannot predict accurately at this

t ime the outcome or impact of the government´s invest igations, the shareholder

lawsuits, the internal invest igation and review. In addit ion, WALMEX expects to incur

costs in responding to requests for info rmation or subpoenas seeking documents,

test imony and other information in connection with the government invest igations, and

it cannot predict at this t ime the ult imate amount of al l such costs. These matters may

require the involvement of certain members of WALMEX’s senior management that

could impinge on the t ime they have available to devote to other matters relat ing to

the business. WALMEX may also see ongoing media and governmental interest in these

matters that could impact the perception among certa in audiences of it s role as a

corporate cit izen.

WALMEX , i t s Board of Directors and its Audit Committee and Corporate Governance

Committee wil l at al l t imes ensure compl iance with applicable Mexican law and ensure

that they create value to WALMEX , acting di l igently and adopting reasoned decisions,

without favoring any shareholder or group of shareholders.

Although WALMEX does not presently believe, based on the information currently

available and the advice of its external Mexican counsel , that these matter s wil l have a

material adverse effect on its business, given the inherent uncertaint ies in such

s ituations, WALMEX can provide no assurance that these matters wil l not be material to

it s business in the future.

b. Basis of preparation

The accompanying consol idated financial statements have been prepared in conformity

with International Financial Report ing Standards (IFRS) i ssued by the IASB, as wel l as al l

the interpretations issued by the International Financial Report ing Interpretation

Committee (IFRIC), including those issued by the former Standing Interpretations

Committee (SIC).



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Disclosure of accounting judgements and estimates [text block]

The preparation of the consolidated financial statements in accordance with IFRS requires

the use of accounting est imates in the certain areas; actual results could differ f rom these

est imates.

The fol lowing are the pr imary est imates that affect on the financial statements:

-Al lowance for doubtful accounts

- Impairment of long- l ived property and equipment

- Impairment of goodwil l

-Leases

-Employee benefits

-Provis ions

-Useful l i fe of long-l ived property and equipment as well as intangible assets with defined

useful l ives

-Fair value of derivative financial instruments

Disclosure of authorisation of financial statements [text block]

The consolidated financial statements and accompanying notes for the six -months ended

June 30, 2017 and 2016 were approved by the Company’s management and Board of

Directors on July 27, 2017.

Disclosure of basis of consolidation [text block]

The accompanying consolidated financial statements include the financial statements of

WALMEX and those of its subsidiaries in which has control in Mexico and abroad, which are



49 of 94

grouped as descr ibed in Disclosure of Subsidiaries; and they are prepared for the same

accounting period.

Subsidiar ies are consolidated from the date on which control is t ransferred to WALMEX , and

are no longer consolidated from the date that control i s lost . The results of subsidiar ies

acquired or disposed of during the year are included in the consolidated statements of

comprehensive income from the date of acquisit ion or up to the date of sale, as

appropriate.

Related party balances and transactions have been el iminated in the consolidation , in

conformity with IFRS 10, Consolidated Financial Statements .

Disclosure of basis of preparation of financial statements [text block]

The consolidated statement of comprehensive income was prepared on a functional basis,

which al lows for the disclosure of cost of sales from other costs, operating and administ rat ive

expenses, both expenses are recognized in the income statement at the t im e that are

incurred, in conformity with IAS 1, Presentation of f inancial statements .

Before the financial statements of the Company’s foreign subsidiaries are consolidated, they

are prepared under IFRS and translated to Mexican pesos using the average exch ange rate

for the consolidated statement of comprehensive income and the year -end exchange rate

for the consol idated statement of f inancial posit ion, in conformity with IAS 21, The Effects of

Changes in Foreign Exchange Rates.

The cumulative t ranslat ion ad justment is the effect of t ranslat ing the f inancial statements of

the Company’s foreign subsidiaries into Mexican pesos. This effect is recognized in equity.

The Company prepares it statement of cash flows using the indirect method in accordance

with IAS 7, Statements of Cash Flows .

The preparation of consol idated f inancial statements in accordance with IFRS requires the

use of accounting est imates in certain areas.



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In the notes to consolidated financial statements the amounts are expressed in thousands of

Mexican pesos, except where otherwise indicated.

Disclosure of cash and cash equivalents [text block]

An analysis of cash and cash equivalents, i s as fol lows:

June 30,

2017

December 31,

2016

Cash and cash in banks Ps. 6,270,648 Ps. 15,193,486

Highly marketable investments

9,704,700

12,782,050

Ps. 15,975,348

Ps. 27,975,536

Disclosure of cash flow statement [text block]

In the cash flow statement [520000] accumulated. In the item “cash flows from losing control

of subsidiaries or other businesses” includes Ps.3,292,848 of dividends and capital reduction

that Liverpool paid to WALMEX. Addit ionally, in the item “other inflows (outf lows) of cash

corresponding to in cash flows from (used in) invest ing activit ies” is presented the use of

resources related to employee stock option plan fund -net of Ps.824,461 (Ps.243,984 in 2016).

Disclosure of commitments [text block]

At June 30, 2017, the Company has commitments total ing Ps.57,357,857 (Ps.53,474,795 in

December 2016) for the acquisit ion of inventories and property and equipment, hardware,

maintenance services, as wel l as renovable energy dist r ibution.



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Disclosure of cost of sales [text block]

Inventories are valued using the retai l method, except for merchandise for the Sam’s Club,

distr ibut ion centers and Agro-Industr ial Development (grains, edibles and meat), which are

valued using the average-cost method. These inventory valuation methods are the same as

those applied in the prior year. Inventories, including obsolete, s low -moving and defective

items or items in poor condit ion, are stated at amounts not in excess of their net realizable

value.

Freight and buying al lowances from suppliers are general ly capital ized in inventory and are

recognized in the cost of sales based on the turnover of the inventories that gave rise to

them.

Disclosure of deferred income [text block]

At June 30, 2017, the Company has deferred income for layaway merchandise, unearned

membership fees and rent of Ps.1,325,904 (Ps. 958,473 in December 2016).

Disclosure of deferred taxes [text block]

An analysis of the effects of the temporary differences giving rise to deferred tax assets and

l iabi l i t ies, i s as fol lows:

June 30,

2017

December 31,

2016

Deferred tax assets

Inventories Ps. 925,445 Ps. 767,033

Advance collections 281,007 286,957

Labor obligations 562,373 505,439

Other long-term l iabil i t ies 1,380,287 705,714

Provisions 310,063 315,159



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Reserve for bad debts 80,764 100,325

Tax losses carryforward

from subsidiaries 8,971 8,468

Other items 1,584,605 2,010,634

Ps. 5,133,515 Ps. 4,699,729

Deferred tax l iabil i t ies

Property and equipment Ps. 8,535,079 Ps. 9,621,766

Prepaid expenses 299,226 290,507

Other items 349,330 571,164

Ps. 9,183,635 Ps. 10,483,437

Disclosure of depreciation and amortisation expense [text block]

An analysis of depreciation expense included in the consolidated income statement for the

s ix-months ended June 30, i s as fol lows:

2017 2016

Property, plant and equipment Ps. 5,435,859 Ps. 5,071,292

Investment property 91,505 11,177

Intangible 162,777 124,497

Ps. 5,690,141 Ps. 5,206,966

Disclosure of derivative financial instruments [text block]

The Company has entered into Fx -Forward contracts of foreign currency in order to protect

it self from exposure to variabil ity in the exchange rate for the payment of l iabi l i t ies in Mexico

for the purchase of import goods agreed in US dollars.

The valuation techniques used by the Compan y to determine and disclose the fair value of

it s f inancial instruments are based on Level 2 inputs (Other quoted prices in active markets



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that are directly or indirectly observable inputs), in accordance with IFRS 13, Fair Value

Measurement.

At June 30, 2017, the Company has Fx-Forward contracts with a two month l i fe. Changes in

these contracts are as fol lows:

Number of

Contracts

Notional

amount

Equivalent in

Dollar Pesos

December 31, 2016 38 $ 47,420 Ps. 976,053

New contracts 214 284,909 5,627,977

Exercised (206) ( 289,149) (5,809,783)

June 30, 2017 46 $ 43,180 Ps. 794,247

The fair value of such Fx -Forward contracts as of June 30, 2017 amounts to Ps.(9,460). The

change in fai r value related to those contracts i s Ps.(19,216) net, for the s ix -months ended

June 30, 2017 and is presented under f inance income (costs) in the consol idated statement

of comprehensive income.

Disclosure of discontinued operations [text block]

The results of discontinued operations reported in the consolidated statements of

comprehensive income, which include the results of Suburbia, f rom January 1 to Apri l 4 and

January 1 to June 30, 2016 is as fol lows:

April 4, June 30,

2017 * 2016

Revenues Ps. 12,454,299 Ps. 5,970,782

Costs and expenses ( 2,633,763) ( 5,241,818)

Income tax ( 3,019,663) ( 233,515)

Net income from discontinued

operations

Ps. 6,800,873

Ps. 495,449



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*Net income from discontinued operations includes the profit related to the sale of Suburbia

of Ps.7,050,000, which is subject to the corresponding closing adjustments.

Legal, consult ing, advisory and other expenses related with the disposals of the Suburbia

stores, are recognized during the year incurred and presented in discontinued operations in

the consolidated statement of comprehensive income.

Disclosure of dividends [text block]

At Annual Ordinary Shareholders Meeting held on March 30, 2017, the shareholders adopted

a resolut ion establishing the fol lowing:

The shareholders declared an ordinary cash dividend of Ps.0.64 pesos per share, to be paid

in four instal lments of Ps.0.16 each one on Apri l 26, 2017; August 30, 2017; November 29,

2017; and February 21, 2018. The shareholders also declared an extraordinary cash dividend

of Ps.1.86 pesos per share which includes Ps.0.96 per share related to the sale of the

Suburbia stores division and the extraordinary dividend of Ps.0.90 pesos per share to be paid

in two instal lments: Ps.0.53 pesos on Apri l 26, 2017 and Ps.0.37 pesos on November 29, 2017.

The payment of Ps.0.96 pesos per share related to the sale of Suburbia. I t was paid on Apri l

26, 2017.

Disclosure of earnings per share [text block]

Earnings per share for the six -months ended on June 30, are shown below:

2017 2016

Profit from continuing operations attributable to

owners of parent

Ps. 13,808,034

Ps. 12,408,004

Average of shares 17,461,403 17,461,403

Basic earnings per share from continuing

operations attributable to owners of parent (in

Ps. 0.791

Ps. 0.711



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pesos)

Basic earnings per share from discontinued

operations

Ps. 0.389

Ps. 0.028

Basic earnings per share attributable to owners of

parent (in pesos)

Ps. 1.180

Ps. 0.739

Disclosure of effect of changes in foreign exchange rates [text block]

At June 30, 2017, the exchange rates used to t ranslate the foreign currency denominated

assets and l iabil i t ies into mexican pesos, are as fol lows:

Country

Currency

Close exchange

rate with respect

to peso

Costa Rica Colon C 31.654577

Guatemala Quetzal Q 0.406493

Honduras Lempira L 1.299189

Nicaragua Córdoba C$ 1.664651

El Salvador US Dollar US$ 0.055417

At June 30, 2017, the USD exchange rate Mexican pesos is Ps.18.0451.

Considering the net monetary posit ion in dollars at June 30, 2017, an increase or decrease in

the exchange rate of the US dollar against the Mexican peso of Ps.0.50 pesos, would have

resulted in an increase or decrease respectively, of Ps.18,697 in f inancial income (expense).

Disclosure of employee benefits [text block]

Annual ly, the Company engages an independent expert to perform the actuarial

calculations related to its labor obligations in conformity with IAS 19, Employee Benefits .

Mexico:



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The Company has a defined benefit obligation related to seniority premiums accr uing to

employees. Employees do not make contributions to this fund and the assets are held in a

trust . The Company also recognizes an obligation for ret irement termination benefits. These

obligations are determined using the projected unit credit method.

An analysis of the Company’s assets and l iabil i t ies for senior ity premiums and ret i rement

benefits i s as fol lows:

Seniority Premiums

Retirement benefits

June 30,

2017

December 31,

2016

June 30,

2017

December 31,

2016

Defined benefit obligations Ps. 892,203 Ps. 856,129 Ps. 120,382 Ps. 112,401

Plan assets ( 675,453) ( 709,437) - -

Net projected liability Ps. 216,750 Ps. 146,692 Ps. 120,382 Ps. 112,401

Changes in the net present value of the defined benefit obl igations (DBO), are shown below:

Seniority Premiums

Retirement benefits

June 30,

2017

December 31,

2016

June 30,

2017

December 31,

2016

DBO at beginning of year Ps. 856,129 Ps. 935,158 Ps. 112,401 Ps. 123,396

Net period cost charged to the

results:

-Labor cost from actual

services

64,380

140,223

3,730

8,083

-Interest cost on DBO 33,487 64,535 4,251 8,432

Other comprehensive income

items

-

( 92,344)

-

( 17,929)

Benefits paid ( 61,793) ( 123,483) - -

Transfers - ( 67,960) - ( 9,581)

DBO at period end Ps. 892,203 Ps. 856,129 Ps. 120,382 Ps. 112,401

Changes in the net present value of the plan assets (PA), are shown below:

Seniority premiums



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June 30,

2017

December 31,

2016

PA at beginning of year Ps. ( 709,437) Ps. ( 730,709)

Return on plan assets ( 27,801) ( 50,223)

Other items of comprehensive

income

-

48,465

Contributions of the plan - ( 145,171)

Benefits paid 61,785 123,438

Transfer - 44,763

PA at period end Ps. ( 675,453) Ps. ( 709,437)

Valuation techniques used by the Company to determine and disclose the fai r value of it s

f inancial inst ruments are based on level 1 inputs (observable data as they are quoted prices

in active markets) in conformity with IFRS 13, Fair value measurement .

At June 30, 2017, the plan assets have been invested through the trust mostly in money

market inst ruments.

At June 30, 2017, actuarial gains/losses from the Mexico labor obligations of Ps. 73,560 are

recognized in other comprehensive income items.

Central America:

Changes in the net present value of the DBO, are shown below:

June 30,

2017

December 31,

2016

DBO at beginning of year Ps. 1,426,231 Ps. 1,301,258

Net period cost charged to the

results:

-Labor costs from actual services 84,225 217,997

-Interest cost on DBO 45,000 122,365

Other comprehensive income

items

-

( 241,460)

Benefits paid ( 103,933) ( 226,333)

Translation effects ( 142,942) 252,404

DBO at period end Ps. 1,308,581 Ps. 1,426,231



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At June 30, 2017, actuarial gains/losses from the Central America labor obligations of

Ps.82,102 are recognized in other comprehensive income items.

At June 30, 2017, the assumptions used in the actuarial valuations of Mexico and Central

America, are as fol lows:

Mexico Central America

Financial:

Discount rate 7.75 % 8.39 % - 13.10 %

Salary increase rate 5.25 % 2.50 % - 7.50 %

Minimum salary increase rate 4.00 % 2.00 % - 7.00 %

Inflation rate 4.00 % 2.00 % - 7.00 %

Biometrics:

Mortality IMSS-97(1) RP-2000(2)

Disability 21.07 % 15.4 %

Retirement age 60 years 50-65 years

( 1 ) E x p e r i e n c e f r o m t h e M e x i c a n I n s t i t u t e f o r S o c i a l S e c u r i t y f o r m a l e s a n d f e m a l e s

( 2 ) R P - 2 0 0 0 f o r C o s t a R i c a , G u a t e m a l a , H o n d u r a s , N i c a r a g u a a n d E l S a l v a d o r .

The discount rate in Mexico is determined using the government bond curve issued by the

Federal Government known as the M Bonds.

Disclosure of entity's operating segments [text block]

Segment f inancial information is prepared based on the information used by the Company’s

senior management to make business decis ions and on the criteria established in IFRS 8,

Operating Segments .

The Company operates in Mexico and Central America and it i s primari ly engaged in

operating self-service stores which sel l to the general publ ic.

The Company has identi f ied the fol lowing operating segments by geographical zone:

Mexico:



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Operation of discount stores, hypermarkets, wholesale pr ice membership stores and

supermarkets, located in the Mexican Republic.

Central America:

Operation of discount stores, supermarkets, hypermarkets, warehouse stores and wholesale -

price membership stores in Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador.

An analysis of f inancial information by geographical zones is as fol lows:

Six-months ended June 30, 2017

Total

revenues

Operating

income

Financial

(expenses)

– net

Profit

before

tax

Mexico

Ps. 216,087,300 Ps. 16,444,817 Ps. ( 303,585) Ps. 16,141,232

Central America

52,200,775 3,108,574 ( 20,300) 3,088,274

Consolidated

Ps. 268,288,075 Ps. 19,553,391 Ps. ( 323,885) Ps. 19,229,506

Six-months ended June 30, 2016

Total

revenues

Operating

income

Financial Income

(expenses)

– net

Profit

before

tax

Mexico

Ps. 202,348,655 Ps. 15,071,694 Ps. ( 249,799) Ps. 14,821,895

Central

America

45,675,588

2,602,129

14,215

2,616,344

Consolidated

Ps. 248,024,243 Ps. 17,673,823 Ps. ( 235,584) Ps. 17,438,239

Disclosure of expenses [text block]

Administ rat ive expenses include mainly personnel expenses, depreciat ion and

amort izat ion, rent , advert is ing, maintenance, ut i l i t ies , royalt ies and technical ass is tance.

Disclosure of fair value measurement [text block]



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Assets and l iabil i t ies carried at fai r value are measured using the fai r value hierarchy, which

priorit izes the inputs used in measuring fair value. The levels of the fair value hierarchy are as

fol lows:

-Level 1. Observable data as they are quoted pr ices in active markets,

-Level 2. Other quoted prices in active markets that are directly or indirectly observable

inputs, and

-Level 3. Unobservable for which there is l i t t le or no market data inputs, so that the Company

develops its own assumptions.

Subsequent measurement of the Company’s f inancial assets and l iabi l i t ies i s determined

based on its classif ication.

Disclosure of finance cost [text block]

An analysis of f inancial expenses for the six -months ended June 30, i s as fol lows:

2017 2016

Interest on finance leases Ps. 707,115 Ps. 571,148

Loss on foreign exchange 80,548 93,406

Losses on change in fair value of

derivatives

68,784

87,966

Other finance cost 110,858 29,919

Ps. 967,305 Ps. 782,439

Disclosure of finance income [text block]

Financial income for the six -months ended June 30, i s as fol lows:

2017 2016

Interest income Ps. 498,857 Ps. 323,824

Gain on foreign exchange 94,995 145,472



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Gains on change in fair value of

derivatives

49,568

77,559

Ps. 643,420 Ps. 546,855

Interest income primari ly consists of interest earned on investments.

Disclosure of financial instruments at fair value through profit or loss [text block]

The Company has entered into Fx -Forward contracts of foreign currency in order to protect

it self from exposure to variabil ity in the exchange rate for the payment of l iabi l i t ies in Mexico

for the purchase of import goods agreed in US dollars.

The valuation techniques used by the Compan y to determine and disclose the fair value of

it s f inancial instruments are based on Level 2 inputs (Other quoted prices in active markets

that are directly or indirectly observable inputs), in accordance with IFRS 13, Fair Value

Measurement.

At June 30, 2017, the Company has Fx-Forward contracts with a two month l i fe. Changes in

these contracts are as fol lows:

Number of

contracts

Notional

amount

Equivalent in

pesos

Dollar

December 31, 2016 38 $ 47,420 Ps. 976,053

New contracts 214 284,909 5,627,977

Exercised (206) ( 289,149) (5,809,783)

June 30, 2017 46 $ 43,180 Ps. 794,247

The fair value amounted Ps.(9,460). The change in fair value related to those contracts is

Ps.(19,216) net, for the six -months ended June 30, 2017 and is presented under f inance

income (cost) in the consolidated statement of comprehensive income.

In accordance with our standards of corporate governance, the Company does not

manage derivative financial inst ruments other than the Fx -Forward.



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Disclosure of financial risk management [text block]

The Company is exposed to the effects of future events that could affect the purchasing

power and/or buying habits of its population. These events may be economic, polit ical or

social in nature and some of the most important are described below:

I .Employment and salary. Posit ive or negative changes in employment and/or real salary

levels could affect Mexico’s per capita income and, consequently, the Company’s

business performance.

I I .Changes in interest rates and exchange rates. Historically, Walmart has generated cash

surpluses in Mexico and Central America on which it earns f ina ncial income. A reduction in

interest rates could cause a decrease in the Company’s f inancial income, which would

affect it s earnings growth. However, the Company believes that a reduction in interest

rates would actually have a posit ive effect on its bus iness in the medium and long-term,

s ince it would help to improve the purchasing power of it s customers.

On the other hand, exchange rate f luctuations tend to put upward pressure on inf lat ion and

reduce the population’s purchasing power, which could ult im ately hinder the Company’s

sales, in part icular, due to the purchase of import goods.

I I I .Competit ion. The retai l sector has become very competit ive in recent years, which has led

to the need for al l the players in the market to constantly look for ways to set themselves

apart f rom the competit ion. This puts the Company’s market share at r isk. Other factors

affecting the Company’s market share could be the business expansion of it s competitors

and the possible entrance of new competitors into the market.

IV.Inflat ion. Over the last few years, inflat ion rates in Mexico and Central America have

remained at low levels. A s ignif icant increase in inflat ion rates could have a direct effect



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on the purchasing power of the Company’s customers and the demand for i t s products

and services.

V.Changes in government regulations. The Company is exposed to the changes in different

laws and regulations, which, after becoming effective, they could affect the Company’s

operating results, such as an impact on sales, expenses for payrol l indirect taxes and

changes in applicable rates. Currently, the level of scrut iny and discretion by the tax

authorit ies has greatly increased. Mexican courts have changed their posit ion favoring

those authorit ies ignoring violations of form and procedure.

VI.Recent Developments. At the beginning of January 2017, international and national

events have occurred, that have increased the volati l i ty of some economic indicators,

creating an environment of vulnerabil ity and uncertainty. Among th e events, we can find

the possibi l i ty of the renegotiation or termination of the North American Free Trade

Agreement, possible increases in import duties or tarif fs for the export of Mexican

products, the cancelation of third-party foreign investment projects previously

announced, the depreciation of the Mexican peso, the increase in the prices of gasoline,

as well as violent demonstrations that have affected our stores, among others. Even

though the Company’s market is internal, these events have started t o have some effects

that can result in the loss of confidence by consumers and the result ing decrease of

consumption, inf lat ionary pressures derived from the increases in gasol ine and the

exchange rate, possibi l i ty of general ized increase of prices of good s by suppliers and

increase in our production, operation and distr ibut ion costs, al l of which in the aggregate

could have a material adverse effect on the Company’s f inancial condit ion and results

of operation. Because these events are recent, to this dat e we cannot define the effects

that they could have.

The Company’s activit ies are exposed to various f inancial r i sks such as market r i sk, exchange

rate r i sk and interest rate r isk. The Company is in the care of those risks that impede or

jeopardize their f inancial goals, seeking to minimize the potential negative effects through

different st rategies.

Exchange rate and interest rate r i sks, as well as derivative financial instruments, are

explained below.

Exchange rate r i sk :



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The Company operates with foreing companies and therefore is exposed to the r isk

exchange rate operations with foreign currencies, part icularly the US dol lar. This r i sk may

arise from commercial transactions, recognized monetary assets and l iabil i t ies as well as the

operation in Central America.

As of June 30, 2017, the exchange rate used to translate assets and l iabi l i t ies denominated

in US dollars was Ps.18.0451 per dollar.

Considering the net monetary posit ion in dollars at June 30, 2017, an increase or decrease in

the exchange rate of the US dollar against the Mexican peso of Ps.0.50 pesos, would have

resulted in an increase or decrease respectively, of Ps.18,697 in f inancial income.

Derivative financial instruments :

The Company has entered into FX-Forward contracts in order to protect it sel f f rom exposure

to variabil ity in the exchange rate for the payment of l iabi l i t ies in Mexico for the purchase of

import goods agreed in US dollars. More details of those operations are described in the

corresponding Annex.

Interest rate r i sk :

The Company has temporary investments which generate interest income. I f the interest rate

reduces, the financial income of the Company decreases. The interest rate of these

investments f luctuated during the six -months ended June 30, 2017 between 3.00% and 6.89%.

As of June 30, 2017, the Company recorded financial income from interest of Ps.477,081

(Ps.281,865 in 2016).

Considering the highly l iquid instruments at June 30, 2017, an increase or decrease in the

interest rate of 0.50 % would result in an increase or d ecrease, respectively of Ps. 52,356 in

the Company´s f inancial income.

Disclosure of general information about financial statements [text block]



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The accompanying consolidated financial statements include the Financial Statements of

WALMEX and those of its subsidiaries in which has control in Mexico and abroad, and they

are prepared for the same accounting period.

The Mexican peso is the Company’s functional and report ing currency. The degree of

rounding used in the f inancial statements i s thousands of pesos, except where otherwise

indicated.

Disclosure of going concern [text block]

WALMEX has sufficient resources to continue operating as a going concern and accordingly,

the accompanying consolidated financial statements have been prepared on a going -

concern basis and on a historical -cost basis.

Disclosure of impairment of assets [text block]

As of June 30, 2017, the Company recognized Ps.16,893 as reversal of impairment of assets.

Disclosure of income tax [text block]

WALMEX as an integrating entity and its integrated subsidiaries in Mexico, determine and

pay its income tax under the optional integration regime for groups of entit ies. Also, the tax

provision includes the tax income of subsidiaries located abroad, which is det ermined in

accordance with applicable tax laws of each country.

An analysis of taxes on prof its charged to the income statement for the s ix -months ended

June 30, i s as fol lows:

2017 2016



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Current tax Ps. 5,923,873 Ps. 5,620,614

Deferred tax ( 502,401) ( 592,376)

Ps. 5,421,472 Ps. 5,028,238

As of June 30, 2017, the effective tax rate of the company is 28.20%. The difference in tax

rates established in the tax laws is due to inflat ion and other permanent items effects.

Income tax rates applicable are shown below:

2017

Mexico 30%

Costa Rica 30%

Guatemala 25%

Honduras 30%

Nicaragua 30%

El Salvador 30%

The Company has tax losses from subsidiar ies located in Mexico, that, in conformity with the

current Mexican Income Tax Law, may be carried forward against the taxable income

generated in future years, as fol lows:

Year of

expiration

Amount

2020 Ps. 47

2021 354

2022 813

2023 351

2024 351

2025 11,384

2026 16,604

Ps. 29,904

Disclosure of information about employees [text block]

As of June 30, 2017, WALMEX has 231,368 associates, of which 204 are principal officers.



67 of 94

Disclosure of information about key management personnel [text block]

An analysis of remuneration of the Company’s principal off icer for the six -months ended

June 30, i s as fol lows:

2017 2016

Short-term benefits Ps. 593,012 Ps. 618,712

Termination benefits 47,659 111,000

Share-based payments 46,659 52,976

Ps. 687,330 Ps. 782,688

Disclosure of intangible assets and goodwill [text block]

An analysis of intangible assets i s as fol lows:

December 31,

2016 Additions Disposals Transfers

Translation

effect June 30,

2017

Goodwill $ 39,420,548 $ - $ - $ - $ (5,104,497) $ 34,316,051

Trademarks 974,126 - - - ( 133,612) 840,514

Licences and

software 2,159,949 100,013 ( 10,521) 10,834 ( 50,739) 2,209,536

Trade receivables 250,366 - - - ( 40,115) 210,251

Subtotal 42,804,989 100,013 ( 10,521) 10,834 (5,328,963) 37,576,352

Accumulated

amortization ( 1,465,457) ( 162,777) 14,614 ( 2) 77,130 ( 1,536,492)

Total $ 41,339,532 $ ( 62,764) $ 4,093 $ 10,832 $ (5,251,833) $ 36,039,860

Disclosure of interest expense [text block]

As of June 30, 2017 and 2016, the interest on finance leases was Ps.707,115 and Ps.571,148,

respectively.



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Disclosure of interest income [text block]

As of June 30, 2017 and 2016, the interest earned amounted to Ps.477,081 and Ps.281,865,

respectively.

Disclosure of inventories [text block]

Inventories consist of the fol lowing:

June 30,

2017

December 31,

2016

Merchandise for sale Ps. 50,074,885 Ps. 52,033,246

Agro-industrial development 716,424 777,056

50,791,309 52,810,302

Merchandise in transit 940,412 854,937

Ps. 51,731,721 Ps. 53,665,239

Disclosure of investment property [text block]

An analysis of investment property is as fol lows:

December 31,

2016 Additions Transfers June 30,

2017

Land $ 1,353,370 $ - $ 1,244,589 $ 2,597,959

Buildings 810,646 4,489 1,772,362 2,587,497 Facilities and

leasehold

improvements 489,603 1,861,808 2,351,411

Subtotal 2,653,619 4,489 4,878,759 7,536,867

Accumulated

depreciation ( 338,426) ( 91,505) ( 1,950,943) ( 2,380,874)

Total $ 2,315,193 $ ( 87,016) $ 2,927,816 $ 5,155,993



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Disclosure of issued capital [text block]

The capital stock is represented by shares of the same series, registered, commun or

ordinary, without par value and free subscript ion. The Company’s capital stock must be

represented by a minimum of 3,000,000,000 shares (three bi l l ion) and a maximum of

100,000,000,000 shares (one hundred bi l l ion).

As of June 30, 2017, the nominal capital stock shown and the number of shares are shown

below:

Valid

Coupon

Numbers of shares Capital Stock

Fixed Portion

Variable

Portion

Free

Subscription Fixed Variable Total

73 2,295,809,324 15,165,593,397 17,461,402,631 Ps.5,591,362 Ps.36,935,265 Ps.42,526,627

Disclosure of leases [text block]

As of June 30, 2017, other long-term l iabil i t ies includes the Company´s obligations beyond

one year under f inance leases.

The Company analyzed its services agreements that do not have the legal form of a lease,

but that involve the use of an asset and determined there are not servic e agreements that

must be classi f ied as a lease, in conformity with IFRIC 4, Determining Whether an

Arrangement Contains a lease .

The Company has entered into property lease agreements with third part ies for compulsory

terms ranging from 1 to 15 years.

The Company has also entered into finance leases for the rental of residual water treatment

plants used to meet environmental protection standards. The terms of these agreements are

10 years.



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Future rental payments are as fol lows:

Finance leases

(minimum payments)

Year

Operating leases

(compulsory term)

Present

value

Future

value

2018 Ps. 1,030,750 Ps. 446,600 Ps. 1,674,716

2019 Ps. 1,324,122 Ps. 361,669 Ps. 1,670,660

2020 Ps. 1,348,067 Ps. 334,332 Ps. 1,618,880

2021 Ps. 1,438,697 Ps. 358,900 Ps. 1,609,426

2022 Ps. 1,447,993 Ps. 370,950 Ps. 1,588,699

2023 and

thereafter

Ps. 13,642,526

Ps. 11,722,193

Ps. 28,268,368

As of June 30, 2017, the l iabil i ty arising from the straight - l ine method of operating leases

amounts to Ps. 908,795, of which Ps. 66,240 are presented in short -term l iabil i t ies.

Total operating income from propert ies charged to income for the six -months ended June

30, 2017 and 2016 amounted to Ps.3,072,528 and Ps.2,887,503, respectively.

Disclosure of non-current assets or disposal groups classified as held for sale [text

block]

As mentioned in disclosure of notes and other explanatory information paragraph a.

Revelant events, on Apri l 4, 2017, the Company informed its investors and general public

that the t ransaction with Liverpool to sel l the Suburbia clothing stores division had been

completed.

As of that date, WALMEX sold 100% of it s shares in the Suburb ia business entit ies, as wel l as

certain intangible assets, furniture and its part icipation in own and rented assets in the

amount of Ps.15,839 mi l l ion which includes debt in the form of capital ized leases of

approximately Ps.1,392 mil l ion that Liverpool w il l assume, and Ps.82 mil l ion related to certain

constructions that were carried out since the definit ive agreement was s igned in August

2016 and the closing of the operation. Addit ionally, Suburbia (Now subsidiary of Liverpool)

paid to WALMEX Ps.3,293 mi l l ion of decreed dividends and reduction of capital .



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The Company obtained a net income from discontinued operations of Ps.6,801

mil l ion, which includes a profit to the sale of Suburbia and it is subject to the corresponding

closing adjustments. Addit ional ly, it was recognized Ps.5,047 mil l ion as deferred revenue due

to wil l be recognized in the income statement as rental contracts for 20 years

approximately.

In addit ion, L iverpool wil l pay rent to WALMEX in the future for the right to use of ce rtain

locations that are located on shopping centers with other WALMEX formats

An analysis of Suburbia’s assets and l iabil i t ies classi f ied as held for sale is shown below:

April 4,

2017

December 31,

2016

Current assets Ps. 4,899,000 Ps. 5,652,160

Property and equipment – net 3,323,911 2,463,592

Deferred tax assets 258,535 3,476,882

Other non-current assets 56,220 36,260

Total assets Ps. 8,537,666 Ps. 11,628,894

Suppliers

Ps. 1,411,611

Ps. 2,220,993

Other liabilities 911,536 678,725

Non-current liabilities 985,494 1,051,824

Total liabilities Ps. 3,308,641 Ps. 3,951,542

As of June 30, 2017 the tax benefits that had been recognized in deferred tax assets as of

December 31, 2016 were realized.

Disclosure of other current assets [text block]

As of June 30, 2017, other current assets include prepaid advert ising, property tax and

insurance.

Disclosure of other current liabilities [text block]



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As of June 30, 2017, other current l iabi l i t ies include short -term finance leases, the st raight -

l ine deferred rent related to operating leases for Ps.512,840 (Ps.573,622 in December 2016).

Disclosure of other non-current assets [text block]

As of June 30, 2017, other non-current assets include primari ly deposits in guarantee and

long term investments of Ps.817,441 (Ps.934,012 in December 2016).

Disclosure of other non-current liabilities [text block]

As of June 30, 2017, other non-current l iabi l i t ies include long-term finance lease obligations

and the st raight- l ine deferred rent related to operating leases of Ps.14,001,104 (Ps.14,680,893

in December 2016).

The item rent deferred income classif ied as non-current amounted Ps.5,367,045, which

includes deferred income by the sale of Suburbia.

Disclosure of prepayments and other assets [text block]

Prepaid expenses are recognized as current assets in the consolidated statement of

f inancial posit ion as of the date the prepayments are made. At the t ime the goods are

received, prepaid expenses are charged to the income statement or capital ized in the

corresponding asset l ine when there is certainty that the acquired goods wil l generate future

economic benefits.



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Disclosure of property, plant and equipment [text block]

The property and equipment, i s integrated as fol lows:

December 31,

2016 Additions Disposals Transfers

Translation

effect June 30,

2017

Owned

Land $ 31,023,378 $ 61,619 $ ( 206,395) $ ( 1,051,667) $ ( 809,311) $ 29,017,624

Buildings 48,873,293 696,881 ( 68,795) ( 2,053,972) ( 1,848,285) 45,599,122 Facilities and

leasehold

improvements 53,720,104 693,813 ( 317,789) ( 1,056,756) ( 712,840) 52,326,532 Furniture and

equipment 63,670,932 2,188,708 ( 560,871) 441,831 ( 2,056,958) 63,683,642

Subtotal 197,287,707 3,641,021 (1,153,850) ( 3,720,564) ( 5,427,394) 190,626,920 Accumulated

depreciation (78,883,025) ( 5,143,852) 838,903 1,948,400 1,734,234 ( 79,505,340)

Work in process 3,285,624 2,486,371 ( 151,162) ( 1,295,585) ( 128,438) 4,196,810

Total $ 121,690,306 $ 983,540 $ ( 466,109) $ ( 3,067,749) $ ( 3,821,598) $ 115,318,390

Leased

Buildings $ 14,168,689 $ 541,303 $ ( 16,328) $ ( 25,875) $ ( 305,343) $ 14,362,446 Furniture and

equipment 2,248,595 57,382 ( 14,665) ( 10,926) - 2,280,386

Subtotal 16,417,284 598,685 ( 30,993) ( 36,801) ( 305,343) 16,642,832 Accumulated

depreciation ( 4,073,180) ( 348,503) ( 29,108) 161,996 97,783 ( 4,191,012)

Total $ 12,344,104 $ 250,182 $ ( 60,101) $ 125,195 $ ( 207,560) $ 12,451,820

Gran total $ 134,034,410 $ 1,233,722 $ ( 526,210) $ (2,942,554) $ ( 4,029,158) $ 127,770,210

Disclosure of related party [text block]

a) Related party balances

The consolidated statement of f inancial posit ion includes the fol lowing balances with

related part ies:

June 30,

2017

December 31,

2016

Accounts payable to suppliers:

C.M.A. – U.S.A., L.L.C. (affiliate) Ps. 523,046 Ps. 786,220

Global George, LTD. (affiliate) 97,503 99,005



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Ps. 620,549 Ps. 885,225

Other accounts payable:

Wal-Mart Stores, Inc. (holding

company) Ps. 605,452 Ps. 753,643

Balances receivable from and payable to related part ies relate to unguaranteed current

accounts that bear no interest , and are payable in cash.

b) Related party transactions

WALMEX has entered into the fol lowing open-ended agreements with related part ies:

-Agreement for imports of merchandise for sale, interest -free and payable monthly.

-Agreement for purchase commissions with Global George that are payable on a

recurring basis.

-Agreement for technical ass istance and services with Walmart Stores that are payable

monthly.

-Agreement for royalt ies for trademark use with Walmart Stores, payable quarterly based

on a percentage of sales of the retai l bus inesses.

The terms of the related party t ransactions are consistent with those of an arm’s length

transaction.

The Company had the fol lowing t ransactions with related part ies dur ing the six -months

ended June 30:

2017 2016

Import of merchandise for sale:

C.M.A. – U.S.A., L.L.C. (affiliate) Ps. 2,276,218 Ps. 2,471,096

Global George, LTD. (affiliate) 115,605 81,279

Ps. 2,391,823 Ps. 2,552,375

Technical assistance, services

and royalties:

Wal-Mart Stores, Inc. (holding

company) Ps. 1,617,905 Ps. 1,496,994



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Disclosure of reserves within equity [text block]

As of June 30, 2017, the legal reserve of the Company amounts to Ps.9,104,745 that

represents 20% of the equity, which according to the Mexican Corporations Act, has al ready

reached the maximum of the legal reserve requirement.

Disclosure of revenue [text block]

As of June 30 2017 and 2016, the revenue l ine item includes revenues from sales of goods of

Ps.266,501,404 and Ps.246,181,681, respectively.

Addit ional ly, other revenues related to the Company’s primary business activit ies are as

fol lows:

2017 2016

Memberships Ps. 725,416 Ps. 634,738

Rental 722,204 633,896

Sale of waste 301,561 212,811

Parking 37,490 34,530

Others - 326,587

Ps. 1,786,671 Ps. 1,842,562

For the six-month period ended June 30, 2017, rental income includes Ps.210,466 (Ps.149,673

in 2016) of investment property.

Disclosure of share capital, reserves and other equity interest [text block]

a.Dist r ibuted earnings and capital reductions that exceed the net taxed profits account

(CUFIN per it s acronym in Spanish) and restated contr ibution capital account (CUCA per



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i t s acronym in Spanish) balances are subject to income tax, in conformity with Art icles 10

and 78 of the Mexican Income Tax Law.

As of June 30, 2017, the total balance of the tax accounts related to equity is

Ps.73,062,951 (Ps.85,708,879 in December 2016): in conformity of the current tax laws

effective January 1, 2014.

b.In the share premium l ine in the statement of f inancial posit ion and statement of changes

equity, include the premium on sale of shares and employee stock option plan fund,

because there is not a row for such purpose.

Breakdown is as fol lows:

June 30,

2017

December 31,

2016

Employee stock option plan

fund

Ps. ( 6,498,992)

Ps. ( 5,575,604)

Premium on sale of shares 3,347,494 3,108,097

Ps. ( 3,151,498) Ps. ( 2,467,507)

The premium on sale of shares represents the difference between the cost of shares and the

value at which such shares were sold, net of the corresponding income tax.

Disclosure of share-based payment arrangements [text block]

The employee stock option plan fund consists of 219,391,077 WALMEX shares, which have

been placed in a trust created for the plan.

The total compensation cost charged to operating results in the six -months ended June 30,

2017 was Ps.140,470, which represents no cash outlay for the Company.

Changes in the stock option plan are as fol lows:

Number

of shares

Weighted

average price

per share (pesos)



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Balance at December 31, 2016 199,218,066 33.90

Assigned 46,668,006 38.64

Exercised ( 26,120,556) 28.82

Cancelled ( 5,567,844) 37.21

Balance at June 30, 2017 214,197,672 35.46

Shares available for option grant:

At June 30, 2017 5,193,405

As of June 30, 2017, an analysis of granted and exercisable shares under the stock option

plan fund is as fol lows:

Granted Exercisable

Year

Number

of

shares

Average

remaining

life (in

years)

Weighted

average

price per

share

(pesos)

Range of

pr ice

(pesos)

Number

of shares

Weighted

average

pr ice per

share

(pesos)

2008 6,468,842 0.7 19.46 19.35-21.54 6,468,842 19.46

2009 8,929,347 1.7 15.85 15.85-22.80 8,929,347 15.85

2010 11,136,155 2.7 29.70 29.69-31.05 11,136,155 29.70

2011 12,101,056 3.7 33.75 33.70-33.75 12,101,056 33.75

2012 18,813,441 4.7 39.67 34.74-40.05 18,813,441 39.67

2013 19,543,257 5.7 39.21 39.17-41.89 14,453,843 39.21

2014 26,893,495 6.7 30.84 30.84-39.17 12,389,347 30.84

2015 27,663,703 7.7 36.07 30.50-36.07 8,363,537 36.07

2016 36,261,021 8.7 40.18 40.14-42.63 6,397,538 40.18

2017 46,387,355 9.7 38.64 38.64 - -

214,197,672 6.7 35.46 99,053,106 32.92

Disclosure of subsidiaries [text block]

WALMEX holds the fol lowing wholly-owned groups of companies in Mexico and Central

America:

Group Line of business



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Nueva Walmart

Operation of 1,769 Bodega Aurrerá discount stores,

266 Walmart hypermarkets, 161 Sam’s Club

membership self-service wholesale stores, 94

Superama supermarkets and 10 Medimart

pharmacies.

Import ing

companies

Import goods for sale.

Real estate

Property developments and management of real

estate companies.

Service

companies

Rendering of professional services to Group

companies and not-for-profit services to the

community at large, and shareholding.

Walmart Central

America

Operation of 501 discount stores (Despensa Famil iar

and Pal í), 93 supermarkets (Paiz, La Despensa de Don

Juan, La Unión and Más x Menos), 125 Bodegas, Maxi

Bodega and Maxi Pal í ), 27 Walmart hypermarkets.

These stores are located in Costa Rica, Guatemala,

Honduras, Nicaragua and El Salvador.

Disclosure of summary of significant accounting policies [text block]

A summary of the s ignif icant accounting policies used in the preparation of the

consolidated financial statements of WALMEX as of June 30, 2017 have been applied

consistently with those applied in the year ended December 31, 2016, except when it i s

mentioned.

Disclosure of tax receivables and payables [text block]

The income tax receivable and income tax payable are shown below.

June 30,

2017

December 31,

2016

Income tax receivable

Ps. 898,594

Ps. 576,771



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Income tax payable

Ps. 2,690,375

Ps. 3,222,964

Disclosure of trade and other payables [text block]

As of June 30, 2017 and December 31 2016, accounts payable to suppl iers amounted to

Ps.53,118,855 and Ps.65,557,689, repect ively.

An analysi s of other accounts payable i s as fol lows:

June 30,

2017

December 31,

2016

Dividends Ps. 14,760,907 Ps. 2,506,349

Accrued liabilities and others 10,163,733 8,176,552

Taxes and contributions 1,996,651 6,992,426

Deferred revenue 1,325,904 958,473

Related parties 605,452 753,643

Ps. 28,852,647 Ps. 19,387,443

Disclosure of trade and other receivables [text block]

An analysis of accounts receivable is as fol lows:

June 30,

2017

December 31,

2016

Trade receivables Ps. 497,590 Ps. 2,291,822

Reserve for bad debts ( 20,980) ( 89,054)

Ps. 476,610 Ps. 2,202,768

The other receivables is as fol lows:

June 30,

2017

December 31,

2016



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Other accounts receivable Ps. 5,796,484 Ps. 7,284,302

Reserve for bad debts ( 189,922) ( 245,963)

Ps. 5,606,562 Ps. 7,038,339

Total trade and other accounts

receivable Ps. 6,083,172 Ps. 9,241,107

Average aging of the accounts receivable to customers is 30 to 90 days.



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[800600] Notes - List of accounting policies

Disclosure of summary of significant accounting policies [text block]

A summary of the s ignif icant accounting policies used in the preparation of the

consolidated financial statements of WALMEX as of June 30, 2017 have been applied

consistently with those applied in the year ended December 31, 2016, except when it i s

mentioned.

Description of accounting policy for construction in progress [text block]

Construction in progress includes investments made primari ly for the construction of new

stores. Costs are recorded as incurred; once new stores begin operations they are

reclassi f ied to property and begin depreciating.

Description of accounting policy for depreciation expense [text block]

Depreciation of property and equipment is computed on a st raight - l ine method at the

fol lowing annual rates:

Buildings, constructions and leasehold improvements:

-Civi l works and structure 2.5% to 5.0%

- Instal lat ions and adaptations 5.0% to 12.5%

- Improvements 10.0% to 25.0%

Furniture and equipment 5.0% to 33.3%

Computer equipment 25.0% to 33.3%

Transportation equipment 10.0% to 25.0%



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Description of accounting policy for derivative financial instruments [text block]

The Company has entered into currency hedging through Over The Counter (OTC) currency

forward t ransactions (Fx -Forward) to mit igate the effects caused by variabil ity in the

exchange rate of foreign currency on its purchases of import goods for resale.

In accordance with IFRS 9, Financial Inst ruments , der ivatives are init ial ly recognized at fair

value at the date the derivative contract is init iated and subsequently revalued at fai r value

at the end of each report ing period. The result ing gain or loss i s recognized immediately in

the f inancial income (expense) l ine in the consolidated statement of comprehensive

income.

The maturity of these contracts i s a maximum duration of six months.

In accordance with our standards of corporate governance, the Company does not enter

into derivative financial instruments other than these Fx -Forward.

Description of accounting policy for determining components of cash and cash

equivalents [text block]

Cash and cash equivalents principally consist of bank deposits, credit and debit card

transfer transactions that process in less than seven days, and highly l iquid investments with

maturit ies of less than 90 days, plus accrued interest . Cash is stated at fai r value .

Description of accounting policy for earnings per share [text block]

The basic earnings per share is the result of dividing the net income of the year attr ibutable

to owners of the parent by the weighted average number of outstanding shares, in

conformity with the guidelines of IAS 33, Earnings per Share . Di luted earnings per share is the

same as basic earnings per share since there is currently no potential ly di lut ive common

stock.



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Description of accounting policy for expenses [text block]

Expenses are recognized in the income statement when they are incurred in accordance

with IAS 1, Presentation of Financial Statements .

Description of accounting policy for fair value measurement [text block]

Assets and l iabil i t ies carried at fai r value are measured using the fai r value hierarchy, which

priorit izes the inputs used in measuring fair value. The levels of the fair value hierarchy are as

fol lows:

-Level 1. Observable data as they are quoted pr ices in active markets,

-Level 2. Other quoted prices in active markets that are directly or indirectly observable

inputs, and

-Level 3. Unobservable for which there is l i t t le or no market data inputs, so that the Company

develops its own assumptions.

Subsequent measurement of the Company’s f inancial assets and l iabi l i t ies i s determined

based on its classif ication.

Description of accounting policy for financial assets [text block]

The financial assets are classif ied in one of the fol lowing categories, as required: f inancial

assets at fai r value through prof it or loss, accounts receivable, investments held to matur ity

or f inancial assets held for sale. The Company’s f inancial assets primari ly consist of t rade

receivables and other accounts receivable which are init ial ly recogn ized at fai r value. Fair



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value of an asset is the price in which such asset could be sold in an ordinary t ransaction

with third part ies, capable of being part of such transaction.

Assets recorded at fair value are measured using the fair value hierarchy, as mentioned in

the accounting policy for fair value measurements.

Description of accounting policy for financial liabilities [text block]

Financial l iabi l i t ies including accounts payable to suppliers, other accounts payable and

f inancial leases, are classi f ied at their fair value, as applicable; these l iabi l i t ies are init ial ly

recognized at fair value. Fair value of a l iabil i ty is the amount that would be paid to transfer

the responsibi l i ty to a new creditor in an ordinary t rans action among those part ies.

Liabil it ies recorded at fair value are measured using the fair value hierarchy, as mentioned

in the accounting policy for fair value measurements.

Description of accounting policy for foreign currency translation [text block]

The Company’s foreign currency denominated assets and l iabil i t ies are t ranslated to

functional currency at the prevail ing exchange rate at the date of the consol idated

statement of f inancial posit ion. Exchange differences are recognized in the consolidated

statement of comprehensive income under the financial income (expenses), in conformity

with IAS 21, The Effects of Changes in Foreign Exchange Rates.

Description of accounting policy for functional currency [text block]

The Mexican peso is the Company’s functional and report ing currency because the

Company´s pr imary economic activit ies are in Mexico.



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Description of accounting policy for goodwill [text block]

Goodwil l represents the excess of the purchase pr ice over the fai r value of the net assets of

Walmart Central America at the acquisit ion date, plus the fair value of the non -control l ing

interests, computed in conformity with IFRS 3, Business Combinations .

Goodwil l was assigned in conformity with IAS 38, Intangible Assets , applying the perpetuity

value technique to determine the goodwil l ’s value in use, considering each Central

American country (Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador) as a

minimum cash generating unit .

The Company engages independent experts to evaluate its goodwil l on an annual

basis. This test ing is performed in accordance with IAS 36, Impairment of Assets .

Goodwil l i s converted at the closing exchange rate and the effe ct is recognized in other

comprehensive income.

Description of accounting policy for impairment of assets [text block]

Based on the guidelines of IAS 36 , Impairment of Assets , the Company evaluates impairment

of property and equipment by applying the expected present value technique to determine

value in use, considering each store as the minimum cash generating unit .

The present value technique requires detai led forecasts, which are prepared separately for

each cash-generating unit . These forecasts general ly cover f ive years and for those

projected beyond f ive years, an expected growth percentage is applied.

Impairment losses are recognized in the consol idated statement of comprehensive income in

the other expenses l ine.



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Description of accounting policy for income tax [text block]

Taxes on profits are classi f ied on current and deferred, and are recognized in the

consolidated statement of comprehensive income in the year they are expensed or

accrued, except when they come from items directly recognized in other comprehensive

income, in which case, the corresponding taxes are recognized in equity.

Current taxes on profits are determined based on the tax laws approved in the countries on

which WALMEX has operations, and is the result of applying the applicable tax rates at the

date of the consol idated financial statements on the taxable profits of each entity of the

Group. I t i s presented as a current l iabi l i ty/asset net of prepayments made during the year.

Deferred taxes on prof it s are recognized using the asset and l iabil i ty method, in conformity

with IAS 12, Income Taxes . Under this method, deferred taxes are recognized on al l

temporary differences between the financial report ing and tax values of assets and

l iabi l i t ies, applying the enacted income tax rate, effective as of the date of the

consolidated statement of f inancial posit ion, or the enacted rate that wil l be in effect when

the deferred tax assets and l iabi l i t ies are expected to be recovered or sett led.

The Company periodically evaluates the possibi l i ty of recovering deferred tax assets.

Description of accounting policy for intangible assets and goodwill [text block]

Intangible assets are valued at the lower of either acquisit ion cost or their fai r value at the

acquis it ion date and are classif ied based on their useful l ives, which may be definite or

indefinite. Indefinite long- l ived assets are not amort ized; however, they are tested annually

for impairment, in conformity with IAS 36 , Impairment of Assets . Definite-l ived assets are

amort ized using the straight - l ine method.

Description of accounting policy for investment property [text block]



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Investment property (land, bui ldings, facil i t ies and leasehold improvements) obtains

economic benefits through rental income. Investment property is measured at historical

cost , including transaction costs.

Description of accounting policy for leases [text block]

In conformity with IAS 17, Leases , the Company classi f ies its property lease agreements as

either f inance or operating leases.

Lessee

WALMEX considers a lease to be a finance lease i f i t t ransfers substantial ly al l of the risks and

rewards incidental to ownership of the underlying property. F inance leases are recogni zed

at the present value of minimum lease payment or, i f lower, at market value of the leased

property, and are amort ized over the term of the lease agreement considering the renewals

established in each lease agreement.

Lease agreements that do not quali f y as f inance leases are t reated as operating leases.

F ixed lease payments are recognized in the income statement on a straight - l ine method

over the lease term. The commencement date of lease is considered the occupancy date of

the leased property, including the lessee’s r ights to renewal. Variable lease payments are

based on a percentage of the Company’s sales, and are recognized as an expense in the

period in which they are incurred.

The Company analyzes it s service agreements which are legally not a lease , but which

involve obtaining the use of an asset in exchange for payment, in accordance with IFRIC 4

Determining Whether an Agreement Contains a Lease .

Lessor

The Company obtains rent income of investment property. The income from variable rent is

recognized as accrued, and income from fixed rent is recognized using the straight - l ine

method during the term of the lease agreement with thi rd part ies. These revenues are

presented in other income of the consolidated statement of comprehensive income.



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Description of accounting policy for measuring inventories [text block]

Inventories are valued using the retai l method, except for merchandise for the Sam’s Club,

distr ibut ion centers and Agro-Industr ial Development (grains, edibles and meat), which are

valued using the average-cost method. These inventory valuation methods are the same as

those applied in the prior year. Inventories, including obsolete, s low -moving and defective

items or items in poor condit ion, are stated at amounts not in excess of their net realizable

value.

Freight and buying al lowances from suppliers are capital ized in inventory and are

recognized in the cost of sales based on the turnover of the inventories that gave rise to

them.

Description of accounting policy for non-current assets or disposal groups classified

as held for sale and discontinued operations [text block]

In conformity with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations , non-

current assets and disposal groups are classi f ied as held for sale i f their carrying amount wil l

be recovered principally through a sale transaction rather than through continuing use.

These assets are not subject to depreciation and are measured at the lower of their previous

carrying amount and fair value less costs to sel l .

Assets and l iabil i t ies that meet the criteria to be classi f ied as held for sale are presented

separately in the statement of f inancial posit ion from the rest of the assets and l iabil i t ies.

Revenues, expenses and costs related to th is t ransaction are separately disclosed and

recognized as part of the discontinued operations l ine in the consolidated statement of


Description of accounting policy for property, plant and equipment [text block]



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Property and equipment are recorded at acquisit ion cost and presented net of

accumulated depreciation.

Description of accounting policy for provisions [text block]

In conformity with IAS 37, Provisions, Contingent Liabi l i t ies and Contingent Assets , accrued

l iabi l i t ies are recognized whenever the Company has current obligations (legal or assumed)

result ing from past events, that can be reasonably est imated and that wil l most l ikely give

r ise to a future cash disbursement for their sett lement. Reimbu rsements are recognized net of

the related obligation when it i s certain that the reimbursement wi l l be obtained. Provision

expenses are presented in the consolidated statement of comprehensive income net of any

corresponding reimbursements.

Description of accounting policy for recognition of revenue [text block]

Revenue from merchandise sales is recognized in the consolidated statement of

comprehensive income at the t ime ownership of the products sold is t ransferred to the

customer and the services income at the t ime the service is provided, in conformity with IAS

18, Revenue .

Beginning on January 1, 2017, fees for services and extended guarantees are recognized in

the net sales caption in the consolidated statement of comprehensive income at the t ime

the services are rendered. Prior to January 1, 2017, these revenues were prese nted in the

consolidated statement of comprehensive income under other income.

Sam’s Club membership income is deferred over the twelve -month term of the membership

and it i s presented in the other revenues l ine in the consolidated statement of




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Rental income is recognized as it accrues over the terms of the lease agreements entered

into with third part ies and it i s presented in the other revenues l ine in the consol idated

statement of comprehensive income.

Revenues from the sale of waste are recognized in the other revenues l ine in the

consolidated statement of comprehensive income at the t ime ownership of the products

sold is t ransferred to the customer.

Description of accounting policy for segment reporting [text block]

Segment f inancial information is prepared based on the information used by the Company’s

senior management to make business decisions and assess the Company’s performance.

Segment information is presented based on the geographical zones in which the Compan y

operates, in conformity with IFRS 8, Operating Segments.

Description of accounting policy for share-based payment transactions [text block]

The employee stock option plan fund is comprised of WALMEX shares presented at

acquis it ion cost . The plan is designed to grant stock options to executives of the companies

in the Group, as approved by the Mexican National Banking and Securit ies Commission.

All employee stock options are granted to executives of s ubsidiary companies at a value

that is no less than the market value on the grant date.

In accordance with current corporate policy, WALMEX execut ives may exercise their option

to acquire shares in equal parts over f ive years. The right to exercise an empl oyee stock

option expires after ten years as of the grant date or after sixty days fol lowing the date of

the employee’s termination.

The compensation cost of stock option is calculated using the Black -Scholes f inancial

valuation technique, in conformity wi th IFRS 2, Share-Based Payments .



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Description of accounting policy for subsidiaries [text block]

Subsidiar ies are consolidated from the date on which control is t ransferred to WALMEX , and

are no longer consolidated from the date that control i s lost . The results of subsidiar ies

acquired or disposed of during the year are included in the consolidated statements of

comprehensive income from the date of acquisit ion or up to the date of sale, as

appropriate.

All related party balances and transactions have been el iminated in the consolidation, in

conformity with IFRS 10, Consolidated Financial Statements .

Description of accounting policy for termination benefits [text block]

WALMEX employees in each of the s ix countries are entit led to termination benefits to be

paid in accordance with the Company’s current policies and the each country’s respective

labor laws. Employees in Mexico are also entit led to a seniority premium in accordan ce with

the Mexican Federal Labor Law. These employee benefits are recognized as expense during

the years in which services are rendered, based on actuarial computations performed by

independent experts using the projected unit credit method, in accordance with IAS 19,

Employee Benefits .

Actuarial gains and losses are recognized as they accrue directly in the consolidated

statement of comprehensive income, in conformity with IAS 19.

In Mexico, employee profit sharing expense is presented in operating resul ts as part of the

general expenses l ine and represents a l iabil i ty due and payable in less than one year. Al l

other payments accruing to Mexican employees or their beneficiar ies in the event of

involuntary ret irement or death, are expensed as incurred, pur suant to federal labor laws.

Description of accounting policy for trade and other receivables [text block]



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WALMEX recognizes a reserve for bad debts when there is objective evidence that the

receivables wil l not be recovered, in conformity with its internal procedures.

Description of other accounting policies relevant to understanding of financial

statements [text block]

Basis of preparation

The accompanying consolidated financial statements have been prepared in conformity

with International Financial Report ing Standards (IFRS) i ssued by the IASB, as well as al l the

interpretations issued by the International Financial Reporting Interpretation Committee

(IFRIC), including those issued by the former Standing Interpretations Commi ttee (SIC).

The consol idated statements of comprehensive income were prepared on a functional basis,

which al lows for the disclosure of cost of sales separately from other costs, operating and

administ rat ive expenses, in conformity with IAS 1, Presentation of Financial Statements .

Before the financial statements of the Company’s foreign subsidiaries are consolidated, they

are prepared under IFRS and translated to Mexican pesos using the average exchange rate

for the consolidated statement of comprehensive i ncome and the year-end exchange rate

for the consol idated statement of f inancial posit ion, in conformity with IAS 21, The Effects of

Changes in Foreign Exchange Rates.

The cumulative t ranslat ion adjustment is the effect of t ranslat ing the f inancial statements of

the Company’s foreign subsidiaries into Mexican pesos. This effect is recognized in equity.

The Company prepares it statement of cash flows using the indirect method in accordance

with IAS 7 Statements of Cash Flows .

The preparation of consol idated f inancial statements in accordance with IFRS requires the

use of accounting est imates in certain areas.

WALMEX has sufficient resources to continue operating as a going concern and accordingly,

the accompanying consolidated financial statements have been prepared on a going-



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concern basis and on a historical -cost basis. The Mexican peso is the Company’s functional

and report ing currency, due to manly activity of the Company is in México.



94 of 94

[813000] Notes - Interim financial reporting

Disclosure of interim financial reporting [text block]

The disclosure of notes, statement of compliance with IFRS and other explanatory

information to the consol idated f inancial statements of Wal -Mart de Mexico, S.A.B. de C.V.

and Subsidiar ies are included in the report [800500] Notes - List as well as the disclosure of

the summary of signif icant accounting policies is included in the report [800600] Notes - List

of Accounting Pol icies.

Dividends paid, ordinary shares

30,847,035

Dividends paid, other shares

0

Dividends paid, ordinary shares per share

1.79

Dividends paid, other shares per share

0

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